FIDELITY
(Registered trademark)
BLUE CHIP GROWTH
FUND
SEMIANNUAL REPORT
JANUARY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 23 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 27 Footnotes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
No one wants to pay more taxes than they have to. But a recent survey of
500 U.S. households, conducted by Fidelity and Yankelovich Partners, showed
that few people took steps to reduce their taxes under the new tax laws
that went into effect last year. In fact, many people were not completely
aware of the changes until they filed their 1993 tax returns.
Whether or not you're someone whose tax bill increased as a result of these
changes, it may make sense to consider ways to keep more of what you earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center. We look forward to
talking with you.
Best regards,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the 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 (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 6 PAST 1 PAST 5 LIFE OF
1994 MONTHS YEAR YEARS FUND
Blue Chip Growth 14.90% 29.17% 179.37% 217.73%
Blue Chip Growth
(incl. 3% sales charge) 11.46% 25.29% 170.99% 208.20%
S&P 500(Registered trademark) 8.97% 12.88% 90.05% 137.12%
Average Growth Fund 10.82% 12.45% 93.26% 136.91%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 31, 1987. You can compare these figures
to the performance of the Standard & Poor's 500 Composite Stock Price
Index - a common proxy for the U.S. stock market. You can also compare them
to the average growth fund, which reflects the performance of over 493
growth funds tracked by Lipper Analytical Services. Both benchmarks include
reinvested dividends and capital gains, if any, and exclude the effects of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Blue Chip Growth 29.17% 22.81% 20.89%
Blue Chip Growth (incl. 3% sales charge) 25.29% 22.07% 20.29%
S&P 500(Registered trademark) 12.88% 13.70% 15.22%
Average Growth Fund 12.45% 13.74% 14.84%
AVERAGE ANNUAL TOTAL 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.
$10,000 OVER LIFE OF FUND
Blue Chip Growth (312) S&P 500
12/31/87 9700.00 10000.00
01/31/88 9767.90 10389.22
02/29/88 10185.00 10873.35
03/31/88 9816.40 10537.37
04/30/88 9797.00 10654.33
05/31/88 9797.00 10747.03
06/30/88 10359.60 11240.31
07/31/88 10155.90 11197.60
08/31/88 9729.10 10816.88
09/30/88 10165.60 11277.68
10/31/88 10146.20 11591.20
11/30/88 9961.90 11425.45
12/31/88 10272.95 11625.39
01/31/89 11031.74 12476.37
02/28/89 10700.99 12165.71
03/31/89 10953.92 12449.17
04/30/89 11702.99 13095.28
05/31/89 12461.79 13625.64
06/30/89 12024.02 13547.98
07/31/89 13191.40 14771.36
08/31/89 13512.43 15060.88
09/30/89 13846.76 14999.13
10/31/89 13640.68 14651.15
11/30/89 13876.20 14950.03
12/31/89 13995.40 15308.83
01/31/90 12823.32 14281.61
02/28/90 13170.97 14465.84
03/31/90 13826.54 14849.19
04/30/90 13697.41 14477.96
05/31/90 15246.94 15889.56
06/30/90 15594.59 15781.51
07/31/90 15227.07 15731.01
08/31/90 13915.94 14308.92
09/30/90 13258.57 13612.08
10/31/90 13178.88 13553.55
11/30/90 14015.63 14429.11
12/31/90 14485.44 14831.68
01/31/91 15619.78 15478.34
02/28/91 16824.39 16585.04
03/31/91 17667.62 16986.40
04/30/91 17476.89 17027.17
05/31/91 18400.42 17762.74
06/30/91 17476.89 16949.21
07/31/91 19012.77 17739.04
08/31/91 19845.96 18159.45
09/30/91 19534.96 17856.19
10/31/91 19926.87 18095.46
11/30/91 19504.82 17366.22
12/31/91 22424.75 19352.91
01/31/92 21719.25 18992.95
02/29/92 21820.04 19239.86
03/31/92 21225.41 18864.68
04/30/92 21507.60 19419.30
05/31/92 21951.06 19514.46
06/30/92 21316.11 19223.69
07/31/92 22192.95 20009.94
08/31/92 21961.14 19599.74
09/30/92 22252.77 19831.01
10/31/92 22561.69 19900.42
11/30/92 23745.90 20579.03
12/31/92 23808.72 20832.15
01/31/93 23860.87 21007.14
02/28/93 23704.44 21292.83
03/31/93 24851.59 21742.11
04/30/93 25247.88 21215.95
05/31/93 26572.33 21784.54
06/30/93 26822.62 21847.72
07/31/93 26822.62 21760.33
08/31/93 28491.21 22585.04
09/30/93 29084.10 22411.14
10/31/93 29409.19 22875.05
11/30/93 28515.19 22657.74
12/31/93 29642.52 22931.89
01/31/94 30819.88 23711.58
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity Blue
Chip Growth Fund on December 31, 1987, when the fund began, and paid a 3%
sales charge. As the chart shows, by January 31, 1994, the value of your
investment would have grown to $30,820 - a 208.20% increase on your initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends reinvested, the same $10,000 investment would have
grown to $23,712 - a 137.12% increase.
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)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Michael Gordon, Portfolio Manager of Fidelity Blue Chip
Growth Fund
Q. MICHAEL, HOW HAS BLUE CHIP DONE?
A. Quite well. For the six months and one year ended January 31, 1994, the
fund had total returns of 14.90% and 29.17%. These beat the average growth
fund, which had returns of 10.82% and 12.45% over the same periods,
according to Lipper Analytical Services. The fund also came out ahead of
the Standard & Poor's 500 Index, which was up 8.97% for the six-month
period and 12.88% for the year.
Q. WHAT HELPED THE FUND OUTDISTANCE ITS PEERS OVER THE PAST SIX MONTHS?
A. Both stock selection and industry selection played a major role in the
fund's success. On the stock side, I focused on stocks that aren't
traditional blue chips, but which I view as the potential "blue chips of
tomorrow." About 90% of the fund's investments fell under this heading.
These are companies with large, high-quality operations, but they just
don't fit the blue-chip mold like a Coke or Pepsi. Most of the traditional
blue chips have done well for the last 10 years. However, in 1993, many of
the more traditional, consumer-oriented blue chips underperformed the
market. Going forward, I'll be selecting from traditional blue chips as
well as the next generation of potential blue chips that may perform well
over the coming decade.
Q. WHAT'S AN EXAMPLE OF A BLUE CHIP STOCK OF TOMORROW?
A. Lowe's, which has been one of the top performing stocks in the fund.
Here's a company that started with a couple hundred, small, unimpressive
home improvement stores. In the last two or three years, management has
completely revamped operations. They've opened huge 100,000 square foot
stores, with 60,000 items, many of them higher profit items. As a result,
Lowe's has been a standout in the retail industry.
Q. HAVE ANY BLUE CHIPS OF TOMORROW BECOME TODAY'S TRADITIONAL BLUE CHIPS?
A. Sure. Intel, the fund's top stock, is a great example. Three or four
years ago, this technology company could have been considered a blue chip
of tomorrow. Now, because of its phenomenal growth, it's viewed as one of
today's traditional blue-chip stocks. Plus, Intel's newly upgraded
micro-chip could be an excellent performer going forward.
Q. WHAT ABOUT INDUSTRY SELECTION?
A. As I mentioned, industry selection was a big factor. The fund's top two
sector concentrations continued to be energy and technology. Natural gas
stocks, which made up the bulk of my energy investment, had terrific
earnings. Right now, in North America, consumers and companies are using
nearly 100% of available natural gas. In addition, because of the cold
weather this winter, gas companies have had lower inventories on hand,
which has increased prices. My numbers show that demand for natural gas
grew by 3% in 1993. Assuming the economy is stronger in 1994, I expect
there could be even more demand and growth in the next six months. Some
stocks that were excellent performers over the last six months were
Anadarko Petroleum and British Petroleum. As for technology, over the last
six months, a large portion of my investment in this sector was in
semiconductors. These stocks have done well and could continue to do so as
personal computer sales increase.
Q. WERE THERE OTHER SECTORS THAT LOOKED GOOD?
A. Definitely. Basic industries, such as steel manufacturing and equipment
production, made up the fund's fourth biggest sector at the end of January.
Companies like Caterpillar and Deere were stand outs. They cut their costs
and sales picked up as the economy improved. My stake in transportation -
especially railroads - nearly doubled over the last six months. Railroads
could continue to do well. With the industry gaining a larger market share
and cutting costs, it stands to benefit from an improving economy.
Q. CURRENTLY ABOUT 13% OF THE FUND IS INVESTED IN FOREIGN ISSUES. WHERE ARE
YOU INVESTING?
A. My biggest foreign investment was in Canadian energy stocks. I'm still
very excited about their prospects even though many of these stocks went
through a sharp correction over the last six months. Northstar Energy of
Canada was my best performer. Its stock was up nearly 30% over the price I
bought it at. I also had up to 7% of the fund in Mexican stocks - mostly
cement companies. Although these stocks did well, I sold them too soon and
missed a significant price increase in the fourth quarter. I also invested
about 3% of the fund in European financial stocks, such as Spar Nord
Holding, which did well as interest rates fell there.
Q. IN HINDSIGHT, WOULD YOU HAVE MADE ANY DIFFERENT DECISIONS OVER THE LAST
SIX MONTHS?
A. Yes. I think most of the mistakes I made came from being overly
cautious. For instance, I wish I'd owned more rapidly-growing technology
stocks, such as Cisco, but I was scared away by their high prices relative
to earnings. Ultimately, the high prices would have been worth it since
these stocks surpassed all earnings expectations. I also wish I 'd bought a
lot more stocks in Hong Kong and the emerging Asian markets. They were
risky, but they could have paid off. One conservative investment that was a
disappointment for me was telephone and electric utilities. They didn't
perform nearly as well as I expected them to.
Q. WHAT'S AHEAD FOR THE FUND?
A. While it's impossible to make any predictions about the market's
direction, I'm optimistic about the fund and its outlook. I still think
that if you pick the best stocks in the best industries, you can outperform
the market over time. I hope the fund can beat the S&P 500, and I
believe that my philosophy of investing in today's blue chips as well as
tomorrow's potential blue chips should help the fund toward this goal in
1994.
FUND FACTS
GOAL: to increase the value
of the fund's shares over the
long term by investing in
large, successful growth
companies at the top of their
industries.
START DATE: December 31, 1987
SIZE: as of January 31,
1994, over $1 billion
MANAGER: Michael Gordon,
since January 1993;
manager, Fidelity Select
Chemical Portfolio, August
1992-January 1993; and
Fidelity Select Biotechnology
Portfolio, May 1990-August
1992
(checkmark)
MICHAEL GORDON ON PICKING
BLUE CHIPS OF THE FUTURE:
"I always have my eyes open
for tomorrow's potential blue
chip stocks. I look for
well-managed companies
with exciting products that are
positioned for growth. In
some cases it doesn't take
long for a company to grow
from a non-traditional blue
chip to a traditional one. As I
noted earlier, Intel, now one of
the largest and most powerful
technology companies
around, was definitely not
considered a traditional blue
chip three or four years ago.
"I think Lotus and CSX , which
are in my top 10 stocks, have
potential to be blue chips of
tomorrow. Lotus is hot for two
reasons - a great new
product, Lotus Notes, and a
strong existing product line.
CSX is a railroad company
that's done an incredible job
cutting costs by reducing
head count and improving
efficiency."
(bullet) The fund increased its
investments in retail stocks
with growth potential, such as
Lowe's, Musicland, and TJX,
which owns the T.J. Maxx
stores.
(bullet) As interest rates neared
bottom and stock prices
soared, the fund sold many of
its finance stocks. As a result,
the fund's stake in the sector
fell from 8.4% on July 31,
1993 to 0.7% on January 31,
1994.
(bullet) United Air Lines, the fund's
second largest stock, looked
good because it was more
cost efficient than many other
airlines.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Intel Corp. 3.2 0.9
UAL Corp. 2.5 0.0
Lowe's Cos., Inc. 1.9 1.5
British Petroleum PLC 1.9 0.2
Unocal Corp. 1.8 0.4
CSX Corp. 1.8 0.8
Anadarko Petroleum Corp. 1.7 0.7
Lotus Development Corp. 1.6 0.1
U.S. Healthcare, Inc. 1.5 0.8
Entergy Corp. 1.3 0.0
TOP FIVE INDUSTRIES AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE INDUSTRIES
6 MONTHS AGO
Energy 17.3 17.6
Technology 15.0 16.4
Utilities 11.1 3.7
Basic Industries 7.0 1.4
Transportation 6.8 3.3
ASSET ALLOCATION
AS OF JANUARY 31, 1994* AS OF JULY 31, 1993*
Row: 1, Col: 1, Value: 14.3
Row: 1, Col: 2, Value: 5.6
Row: 1, Col: 3, Value: 80.09999999999999
Row: 1, Col: 1, Value: 12.5
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 86.40000000000001
Stocks 80.1%
Bonds 5.6%
Short-term
Investments 14.3%
Stocks 86.4%
Bonds 0.1%
Short-term
Investments 13.5%
%
* FOREIGN
INVESTMENTS - 12.8%
* FOREIGN
INVESTMENTS - 19.0%
INVESTMENTS JANUARY 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
COMMON STOCKS - 80.2%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.1%
AEROSPACE & DEFENSE - 0.1%
Aviall, Inc. (a) 3,075 $ 54 05366B10
Boeing Co. 17,000 735 09702310
789
DEFENSE ELECTRONICS - 0.0%
Loral Corp. 800 32 54385910
TOTAL AEROSPACE & DEFENSE 821
BASIC INDUSTRIES - 7.0%
CHEMICALS & PLASTICS - 0.1%
Cytec Industries, Inc. (WI) (a) 50,000 806 23282010
Indo Gulf Fertilizer and Chemicals GDR (b) 21,000 103 45577P10
909
IRON & STEEL - 0.9%
Birmingham Steel Corp. 83,300 2,457 09125010
Huntco, Inc. Class A 1,000 38 44566110
Inland Steel Industries, Inc. (a) 76,200 2,676 45747210
LTV Corp. (a) 80,000 1,410 50192110
Nucor Corp. 103,300 6,095 67034610
USX-U.S. Steel Group 3,000 132 90337T10
12,808
METALS & MINING - 0.2%
Alcan Aluminium Ltd. 40,000 974 01371610
Aluminum Co. of America 6,000 475 02224910
Inco Ltd. 40,000 1,102 45325840
Phelps Dodge Corp. 10,000 543 71726510
Reynolds Metals Co. 2,000 107 76176310
3,201
PAPER & FOREST PRODUCTS - 5.8%
Abitibi-Price Inc. 557,100 7,074 00368010
Bowater, Inc. 387,200 9,293 10218310
Canadian Pacific Forest Products Ltd. (a) 355,400 5,415 13642N10
Cascades, Inc. 105,500 654 14690010
Domtar Inc. (a) 350,500 2,143 25756110
Georgia-Pacific Corp. 189,600 14,267 37329810
Longview Fibre Co. 14,700 318 54321310
Noranda Forest, Inc. 30,000 288 65542L10
QUNO Corp. 16,900 331 74726H10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Smurfit (Jeff) Group PLC (UK) 47,600 $ 257 84699793
Stone Consolidated Corp. (a) 335,000 4,285 86158K10
Stone Container Corp. (a) 190,000 3,134 86158910
Temple-Inland, Inc. 220,000 11,550 87986810
Weyerhaeuser Co. 333,300 16,290 96216610
Willamette Industries, Inc. 48,200 2,772 96913310
78,071
TOTAL BASIC INDUSTRIES 94,989
CONGLOMERATES - 2.4%
Brierley Investments Ltd. 2,850,886 2,316 10901410
Canadian Pacific Ltd. Ord. 25,000 456 13644030
Dial Corp. (The) 208,700 9,105 25247010
ITT Corp. 97,500 9,592 45067910
Litton Industries, Inc. (a) 7,700 527 53802110
United Technologies Corp. 160,000 10,780 91301710
32,776
CONSTRUCTION & REAL ESTATE - 2.7%
BUILDING MATERIALS - 2.0%
Armstrong World Industries, Inc. 296,900 16,701 04247610
Holnam, Inc. (a) 296,100 2,257 43642910
Lafarge Corp. 260,200 6,505 50586210
Medusa Corp. 1,100 36 58507230
Ply-Gem Industries, Inc. 1,100 24 72941610
Tecumseh Products Co. Class A 700 34 87889520
York International Corp. 30,000 1,132 98667010
26,689
CONSTRUCTION - 0.7%
Centex Corp. 32,900 1,456 15231210
Clayton Homes, Inc. (a) 575 15 18419010
Kaufman & Broad Home Corp. 10,000 233 48616810
Lennar Corp. 175,700 6,193 52605710
Pulte Corp. 51,200 1,778 74586710
Schuler Homes, Inc. (a) 3,000 74 80818810
9,749
TOTAL CONSTRUCTION & REAL ESTATE 36,438
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 1.1%
AUTOS, TIRES, & ACCESSORIES - 0.4%
Chrysler Corp. 11,800 $ 726 17119610
Daimler Benz AKT sponsored ADR 21,500 1,016 17119610
Federal-Mogul Corp. 2,700 98 31354910
Ford Motor Co. 4,600 308 34537010
General Motors Corp. 34,000 2,087 37044210
Smith (A.O.) Corp. Class B 19,800 695 83186520
4,930
CONSUMER ELECTRONICS - 0.7%
Whirlpool Corp. 130,900 8,852 96332010
TEXTILES & APPAREL - 0.0%
Fruit of the Loom, Inc. Class A (a) 2,200 56 35941610
Jones Apparel Group, Inc. (a) 900 26 48007410
82
TOTAL DURABLES 13,864
ENERGY - 17.3%
ENERGY SERVICES - 0.9%
BJ Services Co. (a) 69 1 05548210
Energy Service, Inc. (a) 374,400 1,404 29271910
Enterra Corp. (a) 48,400 998 29380510
Global Marine, Inc. (a) 456,500 1,826 37935240
Marine Drilling Cos., Inc. (a) 536,900 2,953 56824020
Noble Drilling Corp. (a) 265,100 2,121 65504210
Offshore Logistics, Inc. (a) 6,200 95 67625510
Rowan Companies, Inc. (a) 4,600 36 77938210
Schlumberger Ltd. 9,500 565 80685710
Tidewater, Inc. 5,000 106 88642310
Tuboscope Vetco Corp. (a) 153,800 1,019 89860010
Western Co. of North America (a) 68,100 936 95804340
12,060
OIL & GAS - 16.4%
Amerada Hess Corp. 55,800 2,706 02355110
Amoco Corp. 70,000 3,763 03190510
Anadarko Petroleum Corp. 494,100 23,470 03251110
Anderson Exploration Ltd. 372,200 9,312 03390110
Apache Corp. 406,000 10,150 03741110
Atlantic Richfield Co. 55,000 6,077 04882510
Blue Range Resource Corp. Class A (a) 831,100 6,801 09579K10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
British Petroleum PLC ADR 367,900 $ 25,109 11088940
Burlington Resources, Inc. 170,100 8,186 12201410
Canadian Natural Resources Ltd. (a) 513,900 7,588 13638510
Encal Energy Ltd. (a) 1,725,400 5,128 29250D10
Excel Energy, Inc. (a)(c) 765,500 3,384 30065410
Exxon Corp. 100,000 6,618 30229010
Grad & Walker Energy Corp. (a) 393,500 4,367 38391010
Jordan Petroleum Ltd. Class A (a)(c) 982,400 6,930 48076110
Murphy Oil Corp. 25,200 1,043 62671710
Noble Affiliates, Inc. 400,608 10,967 65489410
Northstar Energy Corp. (a) 447,400 9,426 66703R10
Pancanadian Petroleum Ltd. 182,200 5,517 69890020
Parker & Parsley Petroleum Co. 347,300 9,117 70101810
Petro-Canada 659,100 6,695 71644E10
Poco Petroleum Ltd. (a) 826,900 6,533 73036110
Renaissance Energy Ltd. (a) 217,200 4,903 75966610
Rio Alto Exploration Ltd. (a) 1,010,200 6,650 76689210
Royal Dutch Petroleum Co. 60,000 6,548 78025770
Unocal Corp. 835,200 24,534 91528910
221,522
TOTAL ENERGY 233,582
FINANCE - 0.6%
BANKS - 0.4%
Citicorp (a) 3,300 144 17303410
Leu Holdings 3,600 1,681 52699B22
Morgan (J.P.) & Co., Inc. 490 35 61688010
Spar Nord Holding (a) 58,050 2,227 84699C22
Syds-Sonderjylland Holding (a) 60,300 1,883 90399F22
5,970
CREDIT & OTHER FINANCE - 0.0%
American Express Co. 3,000 99 02581610
Dean Witter Discover & Co. 4,937 189 24240V10
Household International, Inc. 5,231 173 44181510
Mercury Finance Co. 11,966 202 58939510
663
FEDERAL SPONSORED CREDIT - 0.1%
Federal Home Loan Mortgage Corporation 18,500 1,078 31340030
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - 0.1%
Torchmark Corp. 19,000 $ 905 89102710
Travelers, Inc. (The) 2,066 87 89419010
USF&G Corp. 1,600 22 90329010
1,014
SECURITIES INDUSTRY - 0.0%
Merrill Lynch & Co., Inc. 3,200 143 59018810
Paine Webber Group, Inc. 1,900 56 69562910
199
TOTAL FINANCE 8,924
HEALTH - 6.2%
DRUGS & PHARMACEUTICALS - 1.4%
Chiron Corp. 7,700 732 17004010
Copley Pharmaceutical, Inc. (a) 84 3 21745K10
Elan PLC:
ADR (a) 367,100 16,520 28413120
(1 Advanced Therapeutic Systems Common & 1 ADR
warrant) (a) 47,562 1,605 28413140
Regeneron Pharmaceuticals, Inc. (a) 1,000 16 75886F10
18,876
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
Cordis Corp. (a) 2,000 104 21852510
McKesson Corp. 224,500 13,105 58155610
Owens & Minor, Inc. 300 8 69073010
13,217
MEDICAL FACILITIES MANAGEMENT - 3.8%
Caremark International, Inc. 278,600 5,363 14170410
Columbia Healthcare Corp. 417,685 15,820 19767910
Health Management Associates, Inc. Class A (a) 198,500 6,426 42193310
Humana, Inc. 5,100 103 44485910
HCA Hospital Corporation of America Class A (a) 110,100 4,280 40412010
U.S. Healthcare, Inc. 298,300 19,837 91191010
51,829
TOTAL HEALTH 83,922
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 2.3%
ELECTRICAL EQUIPMENT - 0.8%
American Superconductor Corp. (a) 6,000 $ 192 03011110
General Electric Co. 100,500 10,829 36960410
11,021
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Briggs & Stratton Corp. 7,600 657 10904310
Caterpillar, Inc. 117,500 12,235 14912310
Clark Equipment Co. (a) 800 47 18139610
Deere & Co. 8,300 668 24419910
Harnischfeger Industries, Inc. 186,100 4,490 41334510
Parker-Hannifin Corp. 20,000 765 70109410
TRINOVA Corp. 49,100 1,620 89667810
20,482
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 31,503
MEDIA & LEISURE - 1.5%
BROADCASTING - 0.2%
Capital Cities/ABC, Inc. 4,000 2,620 13985910
EZ Communications, Inc. (a) 3,000 48 26928810
Peoples Choice TV Corp. (a) 1,900 58 71084710
Preferred Entertainment, Inc. (a) 2,000 39 74036T10
Tele-Communications, Inc. Class A (a) 2,000 55 87924010
Time Warner, Inc. 2,889 115 88731510
2,935
ENTERTAINMENT - 0.1%
Carnival Cruise Lines, Inc. Class A 13,100 648 14365810
Iwerks Entertainment, Inc. (a) 1,000 26 46591610
Royal Carribean Cruises Ltd. 21,200 575 78015392
1,249
LEISURE DURABLES & TOYS - 0.9%
Brunswick Corp. 400,300 7,806 11704310
Fleetwood Enterprises, Inc. 194,800 4,894 33909910
Mattel, Inc. 6,250 142 57708110
12,842
LODGING & GAMING - 0.2%
Boomtown, Inc. 6,700 122 09858810
Hilton Hotels Corp. 5,000 320 43284810
International Game Technology 3,000 89 45990210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - CONTINUED
La Quinta Motor Inns, Inc. 600 $ 18 50419510
Marcus Corp. 5,000 148 56633010
Mirage Resorts, Inc. (a) 58,100 1,445 60462E10
2,142
PUBLISHING - 0.0%
Harcourt Gen Inc. 100 4 41163G10
RESTAURANTS - 0.1%
Shoney's, Inc. (a) 30,000 690 82503910
TOTAL MEDIA & LEISURE 19,862
NONDURABLES - 0.5%
FOODS - 0.5%
Archer-Daniels-Midland Co. 261,400 6,927 03948310
PRECIOUS METALS - 0.0%
American Barrick Resources Corp. 10,000 277 02451E10
Homestake Mining Co. 9,700 214 43761410
491
RETAIL & WHOLESALE - 5.4%
APPAREL STORES - 0.5%
Burlington Coat Factory Warehouse Corp. (a) 13,200 292 12157910
TJX Companies, Inc. 210,700 5,952 87254010
6,244
GENERAL MERCHANDISE STORES - 1.4%
Consolidated Stores Corp. (a) 864,400 15,667 21014910
Dayton Hudson Corp. 1,900 125 23975310
Mercantile Stores Co., Inc. 2,300 91 58753310
Penney (J.C.) Co., Inc. 9,300 487 70816010
Price/Costco, Inc. 60,400 1,072 74143W10
Sears, Roebuck & Co. 19,800 1,087 81238710
18,529
GROCERY STORES - 0.8%
Safeway, Inc. (a) 175,800 3,604 78651420
Supervalue, Inc. 176,500 6,884 86853610
10,488
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISC - 2.7%
Bed Bath & Beyond, Inc. (a) 300 $ 9 07589610
Best Buy Co., Inc. (a) 4,500 208 08651610
Home Depot, Inc. (The) 2,016 79 43707610
Lowe's Companies, Inc. 424,800 25,913 54866110
Micro Warehouse, Inc. (a) 300 14 59501B10
Musicland Stores Corp. 282,000 5,323 62758B10
Spiegel, Inc. Class A 170,400 3,215 84845710
Sport Supply Group, Inc. 115,300 2,234 84891510
Sport Supply Group, Inc. (warrants) (a) 60,725 250 84891512
Tandy Corp. 1,000 48 87538210
37,293
TOTAL RETAIL & WHOLESALE 72,554
SERVICES - 0.2%
LEASING & RENTAL - 0.0%
Blockbuster Entertainment Corp. 1,000 28 09367610
Hollywood Entertainment Corp. (a) 2,000 31 43614110
Ryder Systems, Inc. 2,300 62 78354910
121
SERVICES - 0.2%
Interim Services 3,000 75 78354910
Pittston Company Services Group 80,800 2,485 72570110
2,560
TOTAL SERVICES 2,681
TECHNOLOGY - 15.0%
COMMUNICATIONS EQUIPMENT - 0.5%
Cisco Systems, Inc. (a) 54,900 3,980 17275R10
DSC Communications Corp. (a) 9,200 553 23331110
Ericsson (L.M.) Telephone Co. Class B (a) 6,400 294 29482120
General Instrument Corp. (a) 1,900 112 37012110
Newbridge Networks Corp. (a) 20,000 1,340 65090110
6,279
COMPUTER SERVICES & SOFTWARE - 3.2%
Adobe Systems, Inc. 148,200 4,483 00724F10
Broderbund Software, Inc. 39,000 1,424 11201410
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Ceridian Corp. 180,000 $ 4,095 15677T10
Computer Associates International, Inc. 200 7 20491210
Compuware Corp. (a) 205,400 6,727 20563810
Equifax Inc. 166,000 4,129 29442910
Informix Corp. (a) 2,900 47 45677910
Learning Co. 1,500 25 52200610
Lotus Development Corp. (a) 367,300 21,395 54570010
Microsoft Corp. (a) 2,300 196 59491810
Oracle Systems Corp. (a) 11,800 379 68389X10
Sterling Software, Inc. (a) 11,900 402 85954710
Sybase, Inc. (a) 15,800 727 87113010
44,036
COMPUTERS & OFFICE EQUIPMENT - 5.8%
ADAPTEC, Inc. (a) 205,000 3,946 00651F10
Apple Computer, Inc. 450,600 14,757 03783310
AST Research, Inc. (a) 56,100 1,697 00190710
Compaq Computer Corp. (a) 175,000 15,050 20449310
Cray Research, Inc. (a) 70,700 2,218 22522410
Creative Technologies, Corp. (a) 94,700 3,208 22599992
EMC Corp. (a) 1,600 33 26864810
Exabyte (a) 158,700 3,135 30061510
Hewlett-Packard Co. 93,700 8,000 42823610
International Business Machines Corp. 85,700 4,863 45920010
Seagate Technology (a) 410,700 9,908 81180410
Silicon Graphics, Inc. (a) 8,800 226 82705610
Sun Microsystems, Inc. (a) 78,000 2,067 86681010
SynOptics Communications, Inc. (a) 45,400 1,305 87160910
Xerox Corp. 88,900 8,723 98412110
79,136
ELECTRONIC INSTRUMENTS - 0.4%
Applied Materials, Inc. (a) 96,600 4,262 03822210
KLA Instruments Corp. (a) 15,000 521 48248010
4,783
ELECTRONICS - 5.1%
Advanced Micro Devices, Inc. (a) 500 10 00790310
Analog Devices, Inc. (a) 4,900 126 03265410
Bell Microproducts, Inc. (a) 26,700 234 07813710
Intel Corp. 664,100 43,333 45814010
LSI Logic Corp. (a) 113,700 2,118 50216110
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Micron Technology, Inc. 2,800 $ 163 59511210
Motorola, Inc. 126,500 12,460 62007610
National Semiconductor Corp. (a) 86,700 1,561 63764010
Texas Instruments, Inc. 101,200 7,109 88250810
VLSI Technology, Inc. (a) 123,700 1,392 91827010
68,506
TOTAL TECHNOLOGY 202,740
TRANSPORTATION - 6.8%
AIR TRANSPORTATION - 2.6%
AMR Corp. (a) 15,700 1,128 00176510
Delta Air Lines, Inc. 11,900 666 24736110
UAL Corp. (a) 227,800 33,487 90254910
35,281
RAILROADS - 3.6%
CSX Corp. 261,100 23,956 12640810
Conrail, Inc. 102,900 6,689 20836810
Illinois Central Corp., Series A 127,300 4,774 45184110
Santa Fe Pacific Corp. 444,900 10,900 80218310
Southern Pacific Rail Corp. (a) 119,200 2,518 84358410
48,837
TRUCKING & FREIGHT - 0.6%
Bilspedition B Free shares (a) 400,000 1,447 09011092
Celadon Group, Inc. 4,000 67
Consolidated Freightways, Inc. (a) 138,500 3,601 20923710
Federal Express Corp. (a) 6,600 502 31330910
Landstar System, Inc. 3,000 63 51509810
MS Carriers, Inc. (a) 8,700 215 55353310
Swift Transportation Co., Inc. (a) 50,500 1,143 87075610
TNT Freightways Corp. 11,150 275 87259J10
Werner Enterprises, Inc. 4,100 121 95075510
7,434
TOTAL TRANSPORTATION 91,552
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 11.1%
CELLULAR - 0.0%
Cellular Communications, Inc. Red. Class P 15,000 $ 704 15091793
Nextel Communications, Inc. Class A (a) 200 8 65332V10
712
ELECTRIC UTILITY - 7.2%
Consolidated Edison Co. of New York, Inc. 157,000 4,887 20911110
DQE, Inc. 30,000 998 23329J10
Detroit Edison Company 160,000 4,740 25084710
Dominion Resources, Inc. (Va.) 100,000 4,325 25747010
Duke Power Co. 11,800 496 26439910
Entergy Corp. (New) 455,418 16,964 29364G10
FPL Group, Inc. 77,800 2,869 30257110
Houston Industries, Inc. 73,900 3,372 44216110
Illinois Power Co. 280,300 6,096 45209210
Long Island Lighting Co. 183,700 4,317 54267110
NIPSCO Industries, Inc. 57,100 1,827 62914010
New England Electric Systems 129,700 4,977 64400110
Niagara Mohawk Power Corp. 395,700 8,013 65352210
PSI Resources, Inc. 60,000 1,537 69363210
Pacific Gas & Electric Co. 230,000 7,791 69430810
Peco Energy Co. 185,000 5,342 69330410
Pinnacle West Capital Corp. (a) 136,800 3,061 72348410
Public Service Enterprise Group, Inc. 70,000 2,214 74457310
SCEcorp 252,400 4,922 78388210
Southern Co. 140,400 6,107 84258710
Wisconsin Energy Corp. 81,000 2,167 97665710
97,022
GAS - 0.2%
Sonat, Inc. 80,000 2,490 83541510
TELEPHONE SERVICES - 3.7%
Ameritech Corp. 340,000 14,280 03095410
BellSouth Corp. 156,800 9,643 07986010
NYNEX Corp. 25,000 1,025 67076810
Pacific Telesis Group 220,000 12,678 69489010
Southwestern Bell Corp. 298,600 12,504 84533310
50,130
TOTAL UTILITIES 150,354
TOTAL COMMON STOCKS
(Cost $986,871) 1,083,980
PREFERRED STOCKS - 0.0%
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd., Series 1, adj. rate 80,685 $ 252 40218L40
Gulf Canada Resources Ltd. (a)(b) 2,315 7 40218L92
TOTAL PREFERRED STOCKS
(Cost $209) 259
U.S. TREASURY OBLIGATIONS - 5.5%
PRINCIPAL AMOUNT (000S)
Treasury Bills, yield at maturity
3.13%, 3/3/94
(Cost $74,829) $ 75,000 74,855 99399H5Q
REPURCHASE AGREEMENTS - 14.3%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.19% dated
1/31/94 due 2/1/94 193,871 193,854
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,255,763) $ 1,352,948
LEGEND
1. Non-income producing
2. 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 $110,000 or 0.0% of net
assets.
3. Affiliated company (see Note 6 of Notes to Financial Statements).
OTHER INFORMATION
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 87.2%
Canada 8.0
United Kingdom 1.9
Ireland 1.4
Others (individually less than 1%) 1.5
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1994, the aggregate cost of investment securities for income
tax purposes was $1,256,053. Net unrealized appreciation aggregated
$96,895, of which $108,044 related to appreciated investment securities and
$11,149 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JANUARY 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 1,352,948
agreements of $193,854) (cost $1,255,763) (Notes 1
and 2) - See accompanying schedule
Receivable for investments sold 82,792
Receivable for fund shares sold 27,417
Dividends receivable 886
Other receivables 58
TOTAL ASSETS 1,464,101
LIABILITIES
Payable for investments purchased $ 128,609
Payable for fund shares redeemed 5,175
Accrued management fee 712
Other payables and accrued expenses 732
TOTAL LIABILITIES 135,228
NET ASSETS $ 1,328,873
Net Assets consist of (Note 1):
Paid in capital $ 1,172,962
Distributions in excess of net investment income (206)
Accumulated undistributed net realized gain (loss) on 58,932
investments
Net unrealized appreciation (depreciation) on investment 97,185
securities
NET ASSETS, for 52,883 shares outstanding $ 1,328,873
NET ASSET VALUE and redemption price per share $25.13
($1,328,873 (divided by) 52,883 shares)
Maximum offering price per share (100/97.00 of $25.13) $25.91
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 4,027
Dividends
Interest 2,296
TOTAL INCOME 6,323
EXPENSES
Management fee (Note 4) $ 3,105
Basic fee
Performance adjustment 439
Transfer agent fees (Note 4) 2,238
Accounting fees and expenses (Note 4) 225
Non-interested trustees' compensation 3
Custodian fees and expenses 232
Registration fees 229
Audit 16
Legal 4
Miscellaneous 6
Total expenses before reductions 6,497
Expense reductions (Note 5) (272) 6,225
NET INVESTMENT INCOME 98
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 116,753
(NOTES 1 AND 3)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on 19,543
investment securities
NET GAIN (LOSS) 136,296
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 136,394
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JULY 31,
JANUARY 31, 1994 1993
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 98 $ 2,728
Net investment income
Net realized gain (loss) on investments 116,753 121,482
Change in net unrealized appreciation (depreciation) 19,543 (10,298)
on
investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 136,394 113,912
FROM OPERATIONS
Distributions to shareholders: (332) (3,304)
From net investment income
From net realized gain (147,698) (14,111)
TOTAL DISTRIBUTIONS (148,030) (17,415)
Share transactions 702,688 575,637
Net proceeds from sales of shares
Reinvestment of distributions from: 299 2,990
Net investment income
Net realized gain 141,388 13,201
Cost of shares redeemed (291,694) (376,470)
Net increase (decrease) in net assets resulting from 552,681 215,358
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 541,045 311,855
NET ASSETS
Beginning of period 787,828 475,973
End of period (including under (over) distribution of net $ 1,328,873 $ 787,828
investment income of $(206) and $770, respectively)
OTHER INFORMATION
Shares
Sold 28,152 24,389
Issued in reinvestment of distributions from: 12 133
Net investment income
Net realized gain 5,820 601
Redeemed (11,730) (16,107)
Net increase (decrease) 22,254 9,016
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JULY 31,
ENDED
JANUARY 31,
1994
(UNAUDITED) 1993 1992 1991 1990 1989
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE
DATA
Net asset value, $ 25.72 $ 22.02 $ 18.94 $ 15.33 $ 13.56 $ 10.47
beginning of period
Income from
Investment
Operations
Net investment .00 .10 .09 .12 .12 .10
income
Net realized and 3.54 4.36 3.07 3.64 1.94 3.02
unrealized gain
(loss) on
investments
Total from investment 3.54 4.46 3.16 3.76 2.06 3.12
operations
Less Distributions
From net investment (.01) (.14) (.08) (.15) (.12) (.03)
income
From net realized (4.12) (.62) - - (.17) -
gain
Total distributions (4.13) (.76) (.08) (.15) (.29) (.03)
Net asset value, end of $ 25.13 $ 25.72 $ 22.02 $ 18.94 $ 15.33 $ 13.56
period
TOTAL RETURN(dagger)(double dagger) 14.90% 20.86% 16.73% 24.86% 15.43% 29.89%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 1,329 $ 788 $ 476 $ 219 $ 131 $ 54
period (in millions)
Ratio of expenses to 1.24%*(diamond) 1.25% 1.27% 1.26% 1.26% 1.56%
average net assets
Ratio of expenses to 1.29%*(diamond) 1.25% 1.27% 1.26% 1.26% 1.56%
average net assets
before expense
reductions
Ratio of net investment .02%* .46% .55% .80% 1.14% .97%
income to average
net assets
Portfolio turnover rate 338%* 319% 71% 99% 68% 83%
</TABLE>
* ANNUALIZED
(dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN.
(double dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(diamond) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Blue Chip Growth Fund (the fund) is a fund of Fidelity Securities
Fund (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not
readily available (and in certain cases debt securities which trade on an
exchange), are valued primarily using dealer-supplied valuations or at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities maturing within sixty days are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. 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 fund is 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 where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales. Permanent book and tax basis
differences relating to shareholder distributions will result in
reclassifications to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective August 1,
1993 the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of August 1, 1993 have been reclassified to reflect
an increase in paid in capital of $6,280,568, a decrease in undistributed
net investment income of $685,951 and a decrease in accumulated net
realized gain on investments of $5,594,617.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission , the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,751,995,000 and $1,497,087, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic 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 ranging from
.31% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .30%.
The basic fee is subject to a performance adjustment (up to a maximum of +
or - .20%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annualized rate of .71% of average net
assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR,
is the general distributor of the fund. FDC is paid a 3% sales charge on
sales of shares of the fund. Prior to October 12, 1990, FDC was paid a 2%
sales charge and a 1% deferred sales charge. Shares purchased before
October 12, 1990 are subject to the deferred sales charge upon redemption.
For the period, FDC received sales charges and deferred sales charges of
$1,803,000 and $13,000, respectively, on sales of shares of the fund.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,030,000 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$272,000 under this arrangement.
6. TRANSACTIONS WITH AFFILIATED
COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
PURCHASE SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Excel Energy, Inc. (a) $ 324 $ - $ - $ 3,384
Jordan Petroleum Ltd. Class A (a) 1,609 - - 6,930
TOTALS $ 1,933 $ - $ - $ 10,314
(a) Non-income producing
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Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
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* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
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VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Fidelity Fifty
Growth Company Fund
Low-Priced Stock Fund
Magellan(Registered trademark) Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
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Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(Registered trademark)
DIVIDEND GROWTH
FUND
SEMIANNUAL REPORT
JANUARY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT SUMMARY 10 A summary of major shifts in the
fund's investments at the end of the
period.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 27 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 31 Footnotes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
No one wants to pay more taxes than they have to. But a recent survey of
500 U.S. households, conducted by Fidelity and Yankelovich Partners, showed
that few people took steps to reduce their taxes under the new tax laws
that went into effect last year. In fact, many people were not completely
aware of the changes until they filed their 1993 tax returns.
Whether or not you're someone whose tax bill increased as a result of these
changes, it may make sense to consider ways to keep more of what you earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center. We look forward to
talking with you.
Best regards,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the 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 (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 6 LIFE OF
MONTHS FUND
Dividend Growth 15.68% 24.93%
S&P 500(Registered trademark) 8.97% 12.33%
Average Growth Fund 10.82% 15.38%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, or since the fund started on
April 28, 1993. You can compare these figures to the performance of the
Standard & Poor's 500 Composite Stock Price Index - a common proxy for
the U.S. stock market. You can also compare them to the average growth
fund, which reflects the performance of 493 growth funds tracked by Lipper
Analytical Services. Both benchmarks include reinvested dividends and
capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL 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. In the fund's next report we'll report these
numbers for the fund and the benchmarks.
$10,000 OVER LIFE OF FUND
04/28/93 10000.00 10000.00
04/30/93 10150.00 10051.03
05/31/93 10480.00 10320.39
06/30/93 10700.00 10350.32
07/31/93 10800.00 10308.92
08/31/93 11550.00 10699.63
09/30/93 11820.00 10617.24
10/31/93 12080.00 10837.02
11/30/93 11680.00 10734.07
12/31/93 12171.52 10863.95
01/31/94 12493.14 11233.32
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Dividend Growth Fund on April 28, 1993, when the fund started. As the chart
shows, by January 31, 1994, the value of your investment would have grown
to $12,493 - a 24.93% increase on your initial investment. For comparison,
look at how the S&P 500 did over the same period. With dividends
reinvested, the same $10,000 investment would have grown to $11,233 - a
12.33% increase.
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)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Abigail Johnson, Portfolio Manager of Fidelity
Dividend Growth Fund
Q. ABBY, HOW DID THE FUND PERFORM?
A. Very well. The fund had a total return of 15.68% for the six months
ended January 31, 1994, which compares to a 10.82% total return for the
average growth fund tracked by Lipper Analytical Services. Since the fund
began on April 28, 1993, it has returned 24.93%. That again tops the
average growth fund, which returned 15.38% during the same period.
Q. WHAT'S BEHIND THE FUND'S SUCCESS?
A. The strengthening economy fueled many of the best performing stocks over
the last six months. The fund took advantage by investing in these cyclical
stocks, which move up and down in tandem with the economy. For example,
industrial cyclicals did very well. The fund had a 6.9% stake in industrial
machinery and equipment on January 31. The stocks of farm equipment
manufacturers like AGCO - which was up 130% from the end of July to the end
of January - and Deere - up 27% - helped the fund. In addition, larger
conglomerates that have a stake in industrial cyclical businesses - like
Textron (up 12%) and General Electric (up 9%) - performed well. The fact
that the dividends of all four of these companies are growing only added to
their attractiveness.
Q. YOU BOOSTED THE FUND'S STAKE IN THE CONSTRUCTION AND REAL ESTATE AND
HOME FURNISHINGS SECTORS OVER THE LAST SIX MONTHS. WAS THIS A PLAY ON THE
IMPROVING ECONOMY AS WELL?
A. Yes. The lowest mortgage rates in decades helped trigger a housing boom
in many parts of the country. The fund benefited from a jump in the stocks
of several home builders, including Lennar, Pulte and Schuler. To construct
homes you need raw materials; concrete companies like Lafarge and Medusa as
well as gypsum manufacturer Republic Gypsum all helped the fund. Once
families move into new or existing homes they often buy new furniture and
appliances. So I looked for opportunities in these areas as well.
Q. WHAT DID YOU FIND?
A. Two of the fund's top ten investments at the end of January were Rowe
Furniture and Leggett & Platt; both companies are experiencing dividend
growth. Rowe's orders are booming, which stems, in part, from its guarantee
to deliver custom-ordered upholstered furniture in 30 days or less. Leggett
& Platt is a couple of steps back in the furniture manufacturing cycle.
The company produces components that it sells to furniture makers, items
like movements for easy chairs. Both stocks have benefited from rising home
sales, and both have helped the fund. The fund's home furnishing stocks
fall under the durables group, which I increased from 2.9% of the fund six
months ago to 10.2% on January 31.
Q. WHAT OTHER SECTORS DID YOU FAVOR?
A. Many technology stocks - 6.7% of the fund on January 31 - had a strong
last six months, though they were volatile. Investors speculated about the
roles these companies will play in the building of the information
superhighway we've been hearing so much about lately. Scientific Atlanta
and General Instruments make converter boxes and infrastructure equipment
for cable TV companies. Both stocks helped the fund before they got very
expensive and I cut back on our stake in them. Glenayre Technologies makes
paging systems; many paging networks are being upgraded here in the U.S.
This is also a growing business overseas, especially in foreign countries
that don't have good telephone networks. Motorola is another company that's
cashing in on this trend, and both stocks helped the fund. Other sectors
where I found some winners included energy and health care, although both
groups had their share of problems last year.
Q. ANY EXAMPLES?
A. On the energy side, I focused on natural gas stocks, like Burlington
Resources, and on exploration and production companies that are showing
signs of growth. I found many of these small "E and P" companies in Canada,
and several performed well. As for health care, uncertainty over reform
hurt many stocks. But health maintenance organizations, or HMOs, such as
U.S. Healthcare and United Healthcare, helped the fund immensely. Some
people say regional cooperatives will eventually replace HMOs once Congress
finishes with health-care reform, but I don't agree. I think if there's a
health delivery vehicle in the private sector that works, as many of these
HMOs do, lawmakers will stick with them rather than create a new level of
bureaucracy.
Q. SIX MONTHS AGO, FINANCE WAS THE FUND'S LARGEST SECTOR INVESTMENT AT
13.6%. BY JANUARY 31, THAT INVESTMENT HAD FALLEN TO 6.7%. WHAT HAPPENED?
A. For some time, falling interest rates helped the profit margins of banks
and other financial companies. However, by late summer, investors had
driven up the prices on many of these stocks to levels that were quite
high, and it appeared that rates might be bottoming out. Fortunately, I
sold some of the fund's financial stocks before they took a plunge in
October. The fund still has investments in what I would call special
situations; Citicorp is an example. The company recovered more slowly than
many of its competitors, and I think there's still some performance left in
it. Citicorp's stock is up 32% over the last six months. This sector is an
example of how Wall Street turned into a stock picker's market over the
past six months. It was as important to steer clear of the losers as it was
to find the winners.
Q. BROADLY SPEAKING, WHAT DID YOU AVOID?
A. Consumer non-durables, retail and electric utilities were three big
areas I tried to sidestep. Fortunately, the fund had a lower percentage in
these sectors than the Standard & Poor's 500 index, which helped
performance. All three of these sectors were among market laggards over the
past six months.
Q. THAT SAID, YOU STILL INCREASED THE FUND'S STAKE IN ALL UTILITIES, FROM
9.6% TO 10.1% OVER THE PAST SIX MONTHS. WHAT WERE YOU BUYING?
A. The stocks of telephone companies, mostly. Many of these stocks have
been very mediocre performers lately, which has been disappointing. But I'm
looking for improved performance going forward because of their prospects
for superior revenue and earnings growth. For example, the addition of new
telephone lines helps boost revenues. And line growth at the regional bell
companies has been up 2-4%, while call volumes have been up over 5%. In
addition, many of those companies have successfully restructured and cut
costs. Even after dividends and capital spending, the telephone companies
still have had leftover cash.
Q. DESPITE THE FUND'S STRONG SHOWING, WERE THERE ANY DISAPPOINTMENTS?
A. Sure. I mentioned how well industrial machinery and technology companies
performed, and I should have invested more heavily in these areas. I'm
conservative about the technology sector because few companies pay
dividends, and their stocks can be so volatile. But there were some missed
opportunities; Compaq Computer comes to mind as a stock I wish I had bought
for the fund. Also, the fund's largest investment, Home Shopping Network,
has been a little disappointing so far.
Q. WHY?
A. HSN's stock price was essentially flat over the last six months, and
when one stock makes up more than 4% of the fund, as this one does, it
hurts performance. However, I look at the stock as a long-term investment.
There is a regulatory issue brewing in the Senate that investors have
worried might be detrimental to the company, but I'm not too concerned. HSN
is a turnaround story, and I feel the company's new management will be very
good for business. The company has good earnings potential and the
opportunity to join with merchandisers and retailers to broaden the
audience for its programming.
Q. IN FACT, MEDIA AND LEISURE IS NOW THE FUND'S LARGEST SECTOR, AT 13.8%.
WHERE HAVE YOU FOUND OPPORTUNITIES?
A. The strengthening economy is helping the profit margins of many
broadcasting companies. Advertisers are willing to spend more money than
they did during the recession, and that's boosted broadcasters' revenues.
As consumers begin to spend more, some of the entertainment companies are
benefiting. Carnival Cruise Lines has seen a solid jump in demand for their
vacation packages; Carnival's stock has helped the fund. An increase in
travelers has also meant higher occupancy rates for hotels and motels. The
fund is invested in Hilton Hotels, La Quinta Motor Inns, and Marriott
International, among others.
FUND FACTS
GOAL: to increase the value
of the fund's shares by
investing in companies that
have the potential to
increase their dividends or
begin paying dividends
START DATE: April 28, 1993
SIZE: as of January 31,
1994, over $82 million
MANAGER: Abigail Johnson,
since April 1993; manager,
Fidelity's Select Developing
Communications Portfolio,
June 1991-February 1993;
Select
Telecommunications Portfolio,
September 1991-May 1992;
Select Automation &
Machinery, Capital Goods and
Industrial Technology
Portfolios,
October 1988-July 1992
(checkmark)
ABIGAIL JOHNSON ON THE
INFORMATION SUPERHIGHWAY:
"The fund has benefited so far
from investing in companies
that could be major players in
the building of the information
superhighway - the vast
communications system that
is meshing the technologies
of computers, telephones and
televisions to bring us an
array of services in our
homes. But the investing
landscape is changing. The
prices of many of these
stocks have risen on the
promise of good things to
come; now it's about time to
see results. I'm cautious, and
I'll be looking to separate the
speculation surrounding the
information superhighway
from the reality of what these
companies can deliver."
(bullet) The fund had a 9.0% stake
in foreign stocks on January
31. That's up from six months
ago, when the fund had a
3.6% stake overseas.
(bullet) Premark International was
one of the fund's top five
investments on January 31,
and a company with strong
dividend growth. Premark
manufactures Tupperware,
which is selling strongly in
Europe, Asia and Latin
America. Tupperware sales in
the United States haven't been
as impressive, but are
improving.
DISTRIBUTIONS
The Board of Trustees of
Dividend Growth Fund voted
to pay on March 7, 1994, to
shareholders of record at the
opening of business on March
4, 1994, a distribution of $.09
derived from capital gains
realized from sales of portfolio
securities.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I'm cautiously optimistic. The economy is still growing, and I feel good
about the business prospects of the stocks the fund owns, but there's
always that potential for a significant market correction. Stock valuations
- - yardsticks like price-to-earnings and dividend ratios - are very high.
It's been a successful nine months so far, but it would be misleading to
expect the fund to continue to deliver returns of this caliber
indefinitely.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Home Shopping Network, Inc. 4.1 2.8
Rowe Furniture Corp. 2.5 0.0
General Electric Co. 2.1 1.9
Premark International, Inc. 1.5 1.4
Travelers, Inc. (The) 1.0 0.0
BIC Corp. 1.0 1.2
Leggett & Platt, Inc. 0.8 0.4
Santa Fe Pacific Corp. 0.8 0.6
Textron, Inc. 0.8 1.7
Ford Motor Co. 0.8 0.5
TOP FIVE INDUSTRIES AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE INDUSTRIES
6 MONTHS AGO
Media & Leisure 13.8 10.6
Durables 10.2 2.9
Utilities 10.1 9.6
Energy 7.2 3.7
Industrial Machinery & 6.9 8.2
Equipment
ASSET ALLOCATION
AS OF JANUARY 31, 1994* AS OF JULY 31, 1993**
Row: 1, Col: 1, Value: 5.8
Row: 1, Col: 2, Value: 1.7
Row: 1, Col: 3, Value: 92.5
Row: 1, Col: 1, Value: 11.8
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 87.5
Stocks 92.5%
Bonds 1.7%
Short-term
Investments 5.8%
Stocks 87.5%
Bonds 0.7%
Short-term
Investments 11.8%
* FOREIGN
INVESTMENTS - 9.0%
** FOREIGN
INVESTMENTS - 3.6%
INVESTMENTS JANUARY 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.9%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.2%
AEROSPACE & DEFENSE - 0.5%
Flightsafety International, Inc. 2,200 $ 76,450 33942310
Martin Marietta Corp. 3,360 150,780 57290010
McDonnell Douglas Corp. 2,000 228,500 58016910
455,730
DEFENSE ELECTRONICS - 0.7%
General Motors Corp. Class H 3,380 132,665 37044250
Loral Corp. 11,800 470,525 54385910
603,190
TOTAL AEROSPACE & DEFENSE 1,058,920
BASIC INDUSTRIES - 2.8%
CHEMICALS & PLASTICS - 0.8%
Akzo NV Ord. 1,500 162,515 01019910
du Pont (E.I.) de Nemours & Co. 600 33,600 26353410
GEON 8,900 240,300 37246W10
Grace (W.R.) & Co. 2,000 91,250 38388310
Imperial Chemical Industries PLC ADR 500 24,375 45270450
Quaker State Corp. 10,200 133,875 74741010
685,915
IRON & STEEL - 0.8%
Nucor Corp. 5,000 295,000 67034610
Schnitzer Steel, Inc. Class A 5,000 155,000 80688210
TriMas Corp. 10,000 238,750 89621510
688,750
METALS & MINING - 0.7%
Belden, Inc. (a) 13,000 251,875 07745910
Castle AM & Co. 10,000 190,000 14841110
Foster LB Co. Class A (a) 25,000 84,375 35006010
526,250
PAPER & FOREST PRODUCTS - 0.5%
Albany International Corp. Class A 9,000 169,875 01234810
Pentair, Inc. 3,905 141,068 70963110
Temple-Inland, Inc. 2,000 105,000 87986810
415,943
TOTAL BASIC INDUSTRIES 2,316,858
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONGLOMERATES - 2.0%
Grupo Carso SA de CV Class A-1 (a) 28,000 $ 323,736 40099594
Lancaster Colony Corp. 6,400 292,800 51384710
Litton Industries, Inc. (a) 3,500 239,750 53802110
Textron, Inc. 11,275 666,634 88320310
Whitman Corp. 10,450 165,882 96647K10
1,688,802
CONSTRUCTION & REAL ESTATE - 4.4%
BUILDING MATERIALS - 2.4%
Armstrong World Industries, Inc. 7,000 393,750 04247610
Cemex SA, Series B (a) 9,000 287,826 15299293
Lafarge Corp. 20,800 520,000 50586210
Medusa Corp. 12,000 390,000 58507230
Republic Gypsum Co. 18,500 268,250 76047310
Shaw Group (a) 100 2,450 82028010
USG Corp. (a) 4,200 133,350 90329340
1,995,626
CONSTRUCTION - 0.8%
Lennar Corp. 4,000 141,000 52605710
Pulte Corp. 6,800 236,300 74586710
Redman Industries (a) 8,100 200,475 75764210
Schuler Homes, Inc. (a) 4,000 98,000 80818810
675,775
ENGINEERING - 0.6%
Glenayre Technologies, Inc. 11,800 498,550 37789910
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Equity Residential Properties Trust (SBI) 4,000 116,500 29476L10
Manufactured Home Community 8,700 376,275 56468210
492,775
TOTAL CONSTRUCTION & REAL ESTATE 3,662,726
DURABLES - 10.0%
AUTOS, TIRES, & ACCESSORIES - 2.7%
Armor All Products Corp. 2,000 43,500 04225610
Chrysler Corp. 8,400 516,600 17119610
Ford Motor Co. 9,900 663,300 34537010
General Motors Corp. 1,000 61,375 37044210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Goodyear Tire & Rubber Co. 11,000 $ 532,125 38255010
Valeo SA 2,000 495,966 91899010
2,312,866
CONSUMER ELECTRONICS - 1.3%
Fedders USA, Inc. (a) 60,100 435,725 31313510
Sunbeam-Oster, Inc. 21,300 449,963 86707110
Whirlpool Corp. 3,700 250,213 96332010
1,135,901
HOME FURNISHINGS - 5.0%
Bassett Furniture Industries, Inc. 8,800 302,500 07020310
LADD Furniture, Inc. 28,200 289,050 50573910
Leggett & Platt, Inc. 14,780 687,270 52466010
O'Sullivan Industries Holdings, Inc. (a) 500 12,063 68860910
Pulaski Furniture Corp. 16,000 416,000 74555310
River Oaks Furniture, Inc. 2,000 39,500 76828210
Rowe Furniture Corp. 122,250 2,078,250 77952810
Stanley Furniture (a) 26,000 383,500 85430520
4,208,133
TEXTILES & APPAREL - 1.0%
Dyersburg Corp. 4,600 36,800 26757510
Hartmarx Corp. (a) 41,500 280,125 41711910
Pillowtex Corp. (a) 13,000 245,375 72150110
Quaker Fabric Corp. (a) 12,000 180,000 74739910
Westpoint Stevens, Inc. Class A (a) 2,900 56,550 96123810
798,850
TOTAL DURABLES 8,455,750
ENERGY - 7.1%
COAL - 0.2%
Pittston Co. Minerals Group 5,440 148,240 72570120
ENERGY SERVICES - 0.0%
Tuboscope Vetco Corp. (a) 3,800 25,175 89860010
OIL & GAS - 6.9%
Amerada Hess Corp. 9,400 455,900 02355110
Apache Corp. 9,500 237,500 03741110
Archer Resources Ltd. (a) 12,600 161,168 03950K10
British Petroleum PLC ADR 9,000 614,250 11088940
Brown Tom, Inc. (a) 14,100 167,438 11566020
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Burlington Resources, Inc. 10,000 $ 481,250 12201410
Cabre Exploration Ltd. (a) 11,000 101,388 12690610
Canadian Natural Resources Ltd. (a) 17,000 251,025 13638510
Chevron Corp. 4,900 457,538 16675110
Cross Timbers Oil Co. 2,500 36,250 22757310
Encal Energy Ltd. (a) 38,000 112,938 29250D10
Enterprise Oil PLC 14,000 98,242 29399110
Grad & Walker Energy Corp. 7,500 83,236 38391010
Kerr-McGee Corp. 3,500 161,000 49238610
Louis Dreyfus Natural Gas Corp. (a) 2,000 41,000 54601110
Murphy Oil Corp. 4,100 169,638 62671710
Newfield Exploration Co. (a) 500 10,500 65129010
Northstar Energy Corp. (a) 6,500 136,940 66703R10
Nuevo Energy Corporation (a) 7,600 165,300 67050910
Paramount Resources Ltd. 12,100 200,293 69932010
Poco Petroleums Ltd. (a) 18,000 142,207 73036110
Prima Energy Corp. (a) 13,000 208,000 74190120
Renaissance Energy Ltd. (a) 3,700 83,518 75966610
Repsol SA sponsored ADR 5,200 177,450 76026T20
Rio Alto Exploration Ltd. (a) 21,900 144,182 76689210
Snyder Oil Corp. 7,200 134,100 83348210
Tarragon Oil & Gas Ltd. (a) 12,700 155,280 87629E20
Total Compagnie Francaise des Petroles Class B (a) 2,000 110,675
20434510
Total SA sponsored ADR 4,000 110,000 89151E10
Unocal Corp. 6,500 190,938 91528910
Vintage Petroleum, Inc. 10,600 186,825 92746010
5,785,969
TOTAL ENERGY 5,959,384
FINANCE - 6.7%
BANKS - 1.7%
Bank of Boston Corp. 6,000 153,750 06071610
Citicorp (a) 14,700 643,125 17303410
Mellon Bank Corp. 9,300 519,638 58550910
TR Financial Corp. (a) 8,900 112,363 87263010
1,428,876
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.7%
Dean Witter Discover & Co. 4,000 $ 153,500 24240V10
GFC Financial Corp. 12,315 381,765 36160910
Partner Re Holdings (a) 2,000 39,500 70299522
574,765
FEDERAL SPONSORED CREDIT - 1.0%
Federal Home Loan Mortgage Corporation 8,280 482,310 31340030
Federal National Mortgage Association 4,000 349,500 31358610
831,810
INSURANCE - 2.5%
American Bankers Insurance Group, Inc. 4,560 120,270 02445610
American Income Holding, Inc. 12,660 330,743 02672810
Life Partners Group, Inc. 7,050 121,613 53215710
Penncorp. Financial Group, Inc. 15,750 273,656 70809410
Protective Life Corp. 4,580 197,513 74367410
St. Paul Companies, Inc. (The) 3,100 273,963 79286010
Travelers, Inc. (The) 19,966 841,068 89419010
2,158,826
SAVINGS & LOANS - 0.6%
Bay View Capital, Inc. 11,800 259,600 07262L10
Golden West Financial Corp. 4,200 186,375 38131710
Great Western Financial Corp. 1,700 32,938 39144210
Haven Bancorp, Inc. (a) 1,400 17,675 41935210
496,588
SECURITIES INDUSTRY - 0.2%
Nomura Securities Co. Ltd. 5,000 106,716 65536130
Paine Webber Group, Inc. 1,280 37,920 69562910
144,636
TOTAL FINANCE 5,635,501
HEALTH - 6.9%
DRUGS & PHARMACEUTICALS - 3.7%
Allergan, Inc. 7,400 172,050 01849010
Amgen, Inc. (a) 3,200 156,000 03116210
Biogen, Inc. (a) 3,000 156,375 09059710
Bristol-Myers Squibb Co. 4,000 231,500 11012210
IMCERA Group, Inc. 7,900 299,213 45245410
Merck & Co., Inc. 11,300 412,450 58933110
Pfizer, Inc. 8,040 519,585 71708110
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Rhone Poulenc Rorer, Inc. 4,665 $ 167,357 76242T10
Schering-Plough Corp. 9,400 592,200 80660510
SmithKline Beecham PLC ADR 2,000 59,000 83237840
Warner-Lambert Co. 5,000 325,625 93448810
3,091,355
MEDICAL EQUIPMENT & SUPPLIES - 1.5%
Johnson & Johnson 10,200 432,225 47816010
Medtronic, Inc. 3,700 310,800 58505510
Mentor Corp. 31,500 496,125 58718810
1,239,150
MEDICAL FACILITIES MANAGEMENT - 1.7%
Columbia Healthcare Corp. 15,500 587,063 19767910
U.S. Healthcare, Inc. 8,660 575,890 91191010
United HealthCare Corp. 3,265 279,158 91058110
1,442,111
TOTAL HEALTH 5,772,616
INDUSTRIAL MACHINERY & EQUIPMENT - 6.7%
ELECTRICAL EQUIPMENT - 4.0%
Alcatel Alsthom CGE 2,000 266,327 01390492
California Amplifier, Inc. (a) 38,400 316,800 12990010
General Electric Co. 16,100 1,734,775 36960410
Genlyte Group, Inc. (a) 5,000 22,500 37230210
Itel Corp. (a) 10,600 303,425 46564210
Roper Industries, Inc. 4,900 123,725 77669610
Scientific-Atlanta, Inc. 12,270 348,161 80865510
Star Paging International Holdings Ltd. 563,000 220,510 85599692
3,336,223
INDUSTRIAL MACHINERY & EQUIPMENT - 2.5%
AGCO Corp. 9,100 361,725 00108410
Applied Power, Inc. Class A 4,400 83,050 03822510
Briggs & Stratton Corp. 2,000 173,000 10904310
CMI Corp. Oklahoma Class A 14,500 121,438 12576130
Deere & Co. 2,380 191,590 24419910
Joy Technologies, Inc. Class A (a) 54,400 646,000 48120610
Park-Ohio Industries, Inc. (a) 12,000 175,500 70067710
Stewart & Stevenson Services, Inc. 4,200 199,500 86034210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Watts Industries, Inc. Class A 800 $ 42,600 94274910
Welbilt Corporation (a) 5,000 101,250 94908710
2,095,653
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc. 7,080 207,975 92929Q10
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 5,639,851
MEDIA & LEISURE - 13.8%
BROADCASTING - 6.4%
BET Holdings, Inc. Class A (a) 30,800 612,150 08658510
Clear Channel Communications, Inc. (a) 8,400 334,950 18450210
Gaylord Entertainment Co. Class A 3,800 107,350 36790110
Home Shopping Network, Inc. 244,600 3,485,550 43735110
Jacor Communications, Inc. Class A 15,000 206,250 46985840
Peoples Choice TV Corp. (a) 2,000 61,500 71084710
Scandinavian Broadcasting Corp. (a) 3,000 82,500 80699E92
Silver King Communications, Inc. (a) 4,000 43,000 82774010
TCA Cable TV, Inc. 6,200 160,425 87224110
Tele-Communications, Inc. Class A (a) 11,000 299,751 87924010
5,393,426
ENTERTAINMENT - 2.2%
All American Communications 20,000 170,000 01648020
Carnival Cruise Lines, Inc. Class A 11,800 584,100 14365810
Disney (Walt) Co. 9,600 453,600 25468710
Paramount Communications, Inc. 2,400 191,100 69921610
Players International, Inc. 4,000 103,000 72790310
Royal Carribean Cruises Ltd. 9,600 260,400 78015392
Savoy Pictures Entertainment, Inc. (a) 4,000 73,000 80537510
1,835,200
LEISURE DURABLES & TOYS - 1.4%
ARCTCO, Inc. 4,000 94,000 03966510
Brunswick Corp. 6,000 117,000 11704310
Callaway Golf Co. 2,000 138,750 13119310
Coachmen Industries, Inc. 11,800 187,325 18987310
Cobra Industries, Inc. (a) 14,000 119,000 19104E10
Fleetwood Enterprises, Inc. 5,945 149,368 33909910
Outboard Marine Corp. 17,100 412,538 69002010
1,217,981
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 2.5%
Argosy Gaming Corp. 2,100 $ 43,575 04022810
Aztar Corp. (a) 4,900 35,525 05480210
Boyd Gaming Corp. (a) 7,000 128,625 10330410
Four Seasons Hotels, Inc. 15,500 134,118 35100E10
Hilton Hotels Corp. 3,000 192,000 43284810
Hospitality Franchise Systems, Inc. (a) 4,400 243,650 44091210
La Quinta Motor Inns, Inc. 7,250 221,125 50419510
Marriott International, Inc. 6,000 176,250 57190010
Mirage Resorts, Inc. (a) 14,250 354,469 60462E10
President Riverboat Casinos, Inc. (a) 4,650 84,863 74084810
Promus Companies, Inc. (a) 3,000 151,875 74342A10
Sholodge, Inc. 3,000 72,750 82503410
Station Casinos, Inc. 3,000 55,500 85768910
WMS Industries, Inc. (a) 7,300 181,588 92929710
2,075,913
PUBLISHING - 0.7%
American Greetings Corp. Class A 15,350 466,256 02637510
Banta Corp. 3,900 139,913 06682110
MaClean Hunter Ltd. 2,200 23,381 55474980
629,550
RESTAURANTS - 0.6%
McDonald's Corp. 8,000 486,000 58013510
TOTAL MEDIA & LEISURE 11,638,070
NONDURABLES - 3.5%
AGRICULTURE - 0.3%
Pioneer Hi-Bred International, Inc. 5,439 213,481 72368610
BEVERAGES - 0.7%
Coca-Cola Femsa SA de CV sponsored ADR (a) 2,000 69,500 19124110
Dr. Pepper/Seven-Up Companies, Inc. (a) 22,800 544,350 25613130
613,850
HOUSEHOLD PRODUCTS - 2.3%
First Brands Corp. 6,000 216,750 31935610
Maybelline, Inc. 5,000 126,875 57787510
Premark International, Inc. 14,765 1,271,636 74045910
Procter & Gamble Co. 6,000 357,000 74271810
1,972,261
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
TOBACCO - 0.2%
Philip Morris Companies, Inc. 3,000 $ 180,750 71815410
TOTAL NONDURABLES 2,980,342
RETAIL & WHOLESALE - 3.7%
APPAREL STORES - 0.2%
TJX Companies, Inc. 6,500 183,625 87254010
DRUG STORES - 0.1%
Rite Aid Corporation 3,600 67,050 76775410
GENERAL MERCHANDISE STORES - 1.5%
Dayton Hudson Corp. 2,430 159,773 23975310
Dillard Department Stores, Inc. Class A 1,900 68,163 25406310
Federated Department Stores, Inc. (a) 9,700 212,188 31410J10
Freds, Inc. Class A 7,500 103,125 35610810
May Department Stores Co. (The) 8,700 343,650 57777810
Penney (J.C.) Co., Inc. 6,800 356,150 70816010
1,243,049
GROCERY STORES - 0.5%
Promodes SA Ord. (a) 1,500 277,962 74699692
Safeway, Inc. (a) 7,700 157,850 78651420
435,812
RETAIL & WHOLESALE, MISCELLANEOUS - 1.4%
CML Group, Inc. 14,850 269,156 12582010
Futures Shops Ltd. 10,600 225,311 36091310
Home Depot, Inc. (The) 2,000 78,000 43707610
Little Switzerland, Inc. 8,800 63,800 53752810
Redoute (LA) 1,900 335,626 75799492
Sodak Gaming, Inc. 5,500 149,875 83377710
Tiffany & Company, Inc. 1,500 43,875 88654710
1,165,643
TOTAL RETAIL & WHOLESALE 3,095,179
SERVICES - 1.4%
ADVERTISING - 0.2%
ADVO-Systems, Inc. 8,000 145,000 00758510
LEASING & RENTAL - 0.2%
Blockbuster Entertainment Corp. 7,500 207,188 09367610
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
PRINTING - 0.3%
Reynolds & Reynolds Co. Class A 4,865 $ 217,101 76169510
SERVICES - 0.7%
Chemed Corp. 8,900 283,688 16359610
Interim Services 500 12,563 16359610
Oroamerica, Inc. (a) 4,000 56,000 68702710
Pittston Company Services Group 7,700 236,775 72570110
589,026
TOTAL SERVICES 1,158,315
TECHNOLOGY - 6.7%
COMMUNICATIONS EQUIPMENT - 1.4%
Digital Link Corp. 500 7,000 22599992
General Instrument Corp. (a) 2,000 117,500 37012110
Keptel, Inc. (a) 21,800 277,950 49205610
MB Communications, Inc. 14,000 266,000 55262M10
Nokia AB free shares 5,900 347,795 65599992
Porta Systems Corp. 14,800 168,350 73564710
1,184,595
COMPUTER SERVICES & SOFTWARE - 0.3%
Electronics For Imaging Incorporated 14,600 237,250 28608210
COMPUTERS & OFFICE EQUIPMENT - 2.3%
BIC Corp. 26,900 807,000 08873410
Creative Technologies, Corp. (a) 3,500 118,563 22599992
Hewlett-Packard Co. 3,850 328,694 42823610
International Business Machines Corp. 5,000 283,750 45920010
Merisel, Inc. (a) 12,900 237,038 58984910
Xerox Corp. 2,000 196,250 98412110
1,971,295
ELECTRONIC INSTRUMENTS - 0.7%
Applied Materials, Inc. (a) 12,600 555,975 03822210
ELECTRONICS - 2.0%
Intel Corp. 8,380 546,795 45814010
Linear Technology Corp. 1,600 69,200 53567810
Micron Technology, Inc. 7,270 424,386 59511210
Motorola, Inc. 6,600 650,100 62007610
1,690,481
TOTAL TECHNOLOGY 5,639,596
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 6.1%
AIR TRANSPORTATION - 1.2%
AMR Corp. (a) 5,680 $ 408,250 00176510
Atlantic Coast Airlines, Inc. (a) 23,000 186,875 04839610
Mesa Airlines, Inc. (a) 9,100 163,800 59048110
UAL Corp. (a) 1,500 220,500 90254910
979,425
RAILROADS - 2.7%
Burlington Northern, Inc. 2,100 135,713 12189710
CSX Corp. 1,000 91,750 12640810
Chicago & North Western Holdings Corp. (a) 8,700 232,725 16715510
Illinois Central Corp., Series A 12,325 462,188 45184110
Kansas City Southern Industries, Inc. 10,290 474,626 48517010
Santa Fe Pacific Corp. 27,400 671,300 80218310
Southern Pacific Rail Corp. (a) 8,200 173,225 84358410
2,241,527
TRUCKING & FREIGHT - 2.2%
Airborne Freight Corp. 5,000 174,375 00926610
Arkansas Best Corp. 17,400 256,650 04079010
Builders Transport, Inc. (a) 9,100 155,838 12008410
Celadon Group, Inc. (a) 1,000 16,625 15083810
Landair Services, Inc. 7,000 155,750 51475910
Landstar System, Inc. 21,000 438,375 51509810
MS Carriers, Inc. (a) 15,000 371,250 55353310
Roadway Services, Inc. 700 49,000 76974810
TNT Freightways Corp. 6,350 157,163 87259J10
Werner Enterprises, Inc. 3,400 100,300 95075510
1,875,326
TOTAL TRANSPORTATION 5,096,278
UTILITIES - 8.9%
CELLULAR - 1.0%
Cellular Communications Puerto Rico, Inc. (a) 12,000 288,000 15091910
Cencall Communications Corp. (a) 4,400 135,300 15129710
Dial Page, Inc. (a) 1,400 67,200 25247P10
Mobile Telecommunications Technologies, Inc. (a) 7,800 155,025 60740610
Pactel Corp. (a) 3,000 75,750 69525210
Rogers Communications, Inc. Class B (a) 8,100 137,128 77510920
858,403
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - 1.2%
CMS Energy Corp. 5,000 $ 121,250 12589610
Commonwealth Edison Co. 4,500 127,688 20279510
Entergy Corp. 17,480 651,130 29364G10
Illinois Power Co. 3,000 65,250 45209210
965,318
GAS - 0.6%
Enron Corp. 15,670 515,151 29356110
TELEPHONE SERVICES - 6.1%
ALC Communications Corp (a) 2,400 76,800 00157530
ALLTEL Corp. 8,770 244,464 02003910
Ameritech Corp. 11,400 478,800 03095410
Bell Atlantic Corp. 2,600 147,550 07785310
BellSouth Corp. 2,800 172,200 07986010
Comsat Corp., Series 1 17,520 475,230 20564D10
GTE Corp. 2,000 68,750 36232010
LCI International, Inc. (a) 5,400 201,150 50181310
LDDS Communications, Inc. (a) 17,618 484,495 50182L10
MCI Communications Corp. 8,100 223,763 55267310
NYNEX Corp. 7,860 322,260 67076810
Pacific Telesis Group 6,900 397,613 69489010
Precision Systems, Inc. (a) 40,000 140,000 74032910
Southwestern Bell Corp. 13,760 576,200 84533310
Telebras PN (Pfd. Reg.) 6,000,000 285,180 95499792
Telefonos de Mexico SA sponsored ADR representing
shares Ord. Class L 4,000 295,500 87940378
Telesp PN (Pfd. Reg.) 600,000 248,550 87999B93
U.S. West, Inc. 7,200 315,000 91288910
5,153,505
TOTAL UTILITIES 7,492,377
TOTAL COMMON STOCKS
(Cost $70,769,455) 77,290,565
CONVERTIBLE PREFERRED STOCKS - 0.6%
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Chrysler Corp., Series A, $4.625 (b) 40 $ 6,880 17119670
ENERGY - 0.2%
OIL & GAS - 0.2%
Snyder Oil $6.00 6,500 178,750 83348240
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
AGCO Corp., depositary shares representing
1/10 share $1.625 100 5,250 00108420
SERVICES - 0.1%
SERVICES - 0.1%
Pittston Co. $3.125 (b) 1,000 52,500 72570140
UTILITIES - 0.3%
CELLULAR - 0.2%
Mobile Telecommunications Technologies Corp. $2.25 (a)(b) 6,000 198,000
60740620
TELEPHONE SERVICES - 0.1%
LCI International $1.25 (a) 2,000 59,000 50181320
TOTAL UTILITIES 257,000
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $605,188) 500,380
CORPORATE BONDS - 1.5%
MOODY'S RATINGS PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 0.5%
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE - 0.0%
Mid-Atlantic Realty Trust 7 5/8%, 9/15/03 - $ 10,000 9,800 595232AA
RETAIL & WHOLESALE - 0.2%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Intertan, Inc. 9%, 8/30/00 - 150,000 152,364 461120AA
CORPORATE BONDS - CONTINUED
PRINCIPAL AMOUNT (000S)
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.2%
Porta Systems Corp. euro 6%, 7/1/02 - $ 200,000 $ 152,500 7356479A
UTILITIES - 0.1%
CELLULAR - 0.1%
Cellular Communications Puerto Rico., Inc.
8 1/4%, 8/1/00 Caa 30,000 53,100 150919AA
Mobile Telecommunications Technologies Corp.
6 3/4%, 5/15/02 - 35,000 65,100 607406AA
118,200
TOTAL CONVERTIBLE BONDS 432,864
NONCONVERTIBLE BONDS - 1.0%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Joy Technologies, Inc. 10 1/4%, 9/1/03 B1 200,000 210,500 481206AD
UTILITIES - 0.8%
CELLULAR - 0.8%
Horizon Cellular Telephone Corp. 0%, 10/1/00 Caa 300,000 219,000
440415AA
Pagemart, Inc. 0%, 11/1/00 (b) - 7,000 427,000 695534AA
646,000
TOTAL NONCONVERTIBLE BONDS 856,500
TOTAL CORPORATE BONDS
(Cost $1,240,823) 1,289,364
FOREIGN GOVERNMENT OBLIGATIONS - 0.2%
French Government OAT 8 1/2%, 4/25/03 Aaa FRF 600,000 122,069 351996AQ
Spanish Government 10.9%, 8/30/03 Aa2 ESP 7,000,000 60,035 84699AAL
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $174,804) 182,104
REPURCHASE AGREEMENTS - 5.8%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.19% dated
1/31/94 due 2/1/94 $4,897,434 $ 4,897,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $77,687,270) $ 84,159,413
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
244,870 FRF 2/9/94 $ 41,556 $ 295
10,163,000 ESP 2/9/94 72,433 2,827
TOTAL CONTRACTS TO SELL
(Receivable amount $117,111) $ 113,989 $ 3,122
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.1%
CURRENCY TYPE ABBREVIATIONS
FRF - French franc
ESP - Spanish peseta
LEGEND
7. Non-income producing
8. 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 $684,380 or 0.8% of net
assets.
INCOME TAX INFORMATION
At January 31,1994, the aggregate cost of investment securities for income
tax purposes was $77,695,106. Net unrealized appreciation aggregated
$6,464,307, of which $8,703,932 related to appreciated investment
securities and $2,239,625 related to depreciated investment securities.
The fund hereby designates $330,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 84,159,413
agreements of $4,897,000) (cost $77,687,205) (Notes
1 and 2) - See accompanying schedule
Short foreign currency contracts (Note 2) $ (113,989)
Contracts held, at value
Receivable for contracts held 117,111 3,122
Cash 955
Receivable for investments sold 2,758,978
Receivable for fund shares sold 918,612
Dividends receivable 78,632
Interest receivable 29,779
TOTAL ASSETS 87,949,491
LIABILITIES
Payable for investments purchased 2,688,300
Payable for fund shares redeemed 2,563,961
Accrued management fee 43,738
Other payables and accrued expenses 80,939
TOTAL LIABILITIES 5,376,938
NET ASSETS $ 82,572,553
Net Assets consist of (Note 1):
Paid in capital $ 75,247,093
Undistributed net investment income (Note 1) (6,618)
Accumulated undistributed net realized gain (loss) on 856,748
investments
Net unrealized appreciation (depreciation) on:
Investment securities 6,472,208
Foreign currency contracts 3,122
NET ASSETS, for 6,643,123 shares outstanding $ 82,572,553
NET ASSET VALUE, offering price and redemption price per $12.43
share ($82,572,553 (divided by) 6,643,123 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 434,849
Dividends
Interest 118,763
TOTAL INCOME 553,612
EXPENSES
Management fee (Note 4) $ 218,544
Transfer agent fees (Note 4) 186,457
Accounting fees and expenses (Note 6) 25,067
Non-interested trustees' compensation 173
Custodian fees and expenses 34,550
Registration fees 41,338
Audit 8,825
Legal 113
Interest (Note 6) 2,541
Miscellaneous 148
Total expenses before reductions 517,756
Expense reductions (Note 5) (6,176) 511,580
NET INVESTMENT INCOME 42,032
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:
Investment securities 1,277,829
Foreign currency contracts (8,794) 1,269,035
Change in net unrealized appreciation (depreciation) on:
Investment securities 5,858,970
Foreign currency contracts 3,122 5,862,092
NET GAIN (LOSS) 7,131,127
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 7,173,159
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS APRIL 28, 1993
ENDED (COMMENCEMENT
JANUARY 31, OF OPERATIONS) TO
1994 JULY 31,1993
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 42,032 $ (17,672)
Net investment income (loss)
Net realized gain (loss) on investments 1,269,035 1,020
Change in net unrealized appreciation (depreciation) 5,862,092 613,238
on
investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 7,173,159 596,586
FROM OPERATIONS
Distributions to shareholders (22,184) -
From net investment income
From net realized gain (422,101) -
TOTAL DISTRIBUTIONS (444,285) -
Share transactions 152,484,894 20,226,698
Net proceeds from sales of shares
Reinvestment of distributions 438,271 -
Cost of shares redeemed (95,536,168) (2,366,602)
Net increase (decrease) in net assets resulting from 57,386,997 17,860,096
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 64,115,871 18,456,682
NET ASSETS
Beginning of period 18,456,682 -
End of period (including undistributed net investment $ 82,572,553 $ 18,456,682
income of $(6,618) and $17,672, respectively)
OTHER INFORMATION
Shares
Sold 12,950,235 1,934,498
Issued in reinvestment of distributions 37,111 -
Redeemed (8,052,866) (225,855)
Net increase (decrease) 4,934,480 1,708,643
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 28, 1993
JANUARY 31, (COMMENCEMENT
1994 OF OPERATIONS) TO
(UNAUDITED) JULY 31,
1993
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.80 $ 10.00
Income from Investment Operations
Net investment income .02 (.01)
Net realized and unrealized gain (loss) on investments 1.67 .81
Total from investment operations 1.69 .80
Less Distributions
From net investment income (.01) -
From net realized gain (.05) -
Total distributions (.06) -
Net asset value, end of period $ 12.43 $ 10.80
TOTAL RETURN(dagger)(double dagger) 15.68% 8.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 82,573 $ 18,457
Ratio of expenses to average net assets 1.45%*(dagger)(dagger) 2.50%*#
Ratio of expenses to average net assets before 1.47%*(dagger)(dagger) 4.18%*#
expense reductions
Ratio of net investment income to average net assets .12%* (.73)%*
Portfolio turnover rate 126%* 90%*
</TABLE>
* ANNUALIZED
(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN.
(double dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(dagger)(dagger) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
# EXPENSES LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1993 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Dividend Growth Fund (the fund) is a fund of Fidelity Securities
Fund (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
are valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. The fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. By so qualifying, the fund
will not be subject to income taxes to the extent that it distributes all
of its taxable income for its tax year ended January 31, 1994. The schedule
of investments includes information regarding income taxes under the
caption "Income Tax Information."
INVESTMENT INCOME. 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 fund is 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 where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, partnerships and losses deferred due to
wash sales. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to
paid in capital. Undistributed net investment income includes temporary
book and tax basis differences which will reverse in a subsequent period.
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 fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $96,146,713 and $41,421,424, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic 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 ranging from
.30% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .30%.
The basic fee is subject to a performance adjustment (up to a maximum of +
or - .20%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. The fund's performance
adjustment will not take effect until April 1994. For the period, the
management fee was equivalent to an annualized rate of .62% of average net
assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $48,883 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$6,176 under this arrangement.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the 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. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $3,237,000 and $2,532,600,
respectively. The weighted average interest rate was 3.625%. Interest
expense includes $2,541 paid under the bank borrowing program.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(Registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Fidelity Fifty Fund
Growth Company Fund
Low-Priced Stock Fund
Magellan(Registered trademark) Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(Registered trademark)
OTC
PORTFOLIO
SEMIANNUAL REPORT
JANUARY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 19 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 23 Footnotes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Best regards,
Edward C. Johnson 3d, Chairman
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Alan Radlo,
Portfolio Manager of Fidelity
OTC Portfolio
Q. ALAN, HOW HAS THE FUND DONE?
A. Not as well as I would have liked. For the six months and one year ended
January 31, 1994, the fund had total returns of 10.18% and 10.52%. Over the
same period, the NASDAQ Composite Index had returns of 13.59% and 14.95%.
Q. WHY DID THE FUND LAG THE NASDAQ INDEX?
A. There were a couple reasons. First, over 30% of the NASDAQ is made up of
technology and telecommunication stocks - far more than the fund. These
stocks ended up increasing in value, mostly because there were several big
takeovers. For instance, AT&T took over McCaw Cellular, whose stock
price soared as a result. Since this stock made up about 2% of the index,
the NASDAQ profited handsomely. Second, the fund also lagged the index
because it was heavily invested in finance and health care, sectors that
didn't perform as well as I had hoped. A third drag on performance was the
fund's large amount of cash. Over the past six months, I've made some
significant changes in my strategy to address these issues. As a result,
the fund's performance has improved.
Q. WHAT CHANGES HAVE YOU MADE?
A. To start, I've increased the fund's stake in my top 10 stocks. As a
result, my top 10 investments now make up about 22% of the fund - up from
14% six months ago. This approach can be unsuccessful if a particular stock
fails, but more rewarding if a stock performs well. It also allows my top
stocks to add more to the fund's performance. To be more in line with the
NASDAQ's strategy, I also increased my technology investments. Plus, I
dramatically cut the fund's stake in banks and repositioned my investment
in health care. Finally, I added more cyclical stocks - those that tend to
move in tandem with the economy - and shifted about 15% of the fund into
non-OTC stocks. All of these changes are well in line with the fund's
directive.
Q. WHAT DO YOU MEAN BY NON-0TC STOCKS?
A. Non-OTC stocks are listed on the New York Stock Exchange or the American
Stock Exchange, or bought on foreign markets. With the exception of foreign
non-OTC stocks, non-OTC stocks are typically larger and more established
than stocks that trade on the NASDAQ. However, many of the non-OTC stocks I
own are similar in size to my OTC stocks. It's worth noting that I can
never have more than 35% of the fund's investments in non-OTC stocks at any
one time. In the past the fund had almost no non-OTC stocks. Now Boston
Scientific, which I bought on the NYSE, is one of my top 10 investments.
Over the past two years, this stock has grown at a rate of 30%. I've also
purchased a number of non-OTC foreign stocks, boosting my stake in foreign
investments from about 6% to 9% of the fund. One of the foreign stocks I've
invested in is Riverside, a small Canadian lumber company that recently
doubled in price.
Q. WHAT HAVE YOU DONE TO INCREASE THE FUND'S STAKE IN TECHNOLOGY?
A. Technology has grown from 9% of the fund's investments last July to 12%
on January 31. Now I have about the same amount in technology as the
average OTC fund. I've focused on top-performing companies like Intel and
Microsoft, key stocks for any OTC fund. I also like Cisco, one of the
largest networking companies around, and Newbridge Networks, a fast-growing
telecommunication company. I've chosen my investments very carefully
because traditionally this is a high-risk sector. Even the top companies
can have wildly different performance. For instance, Newbridge was
unrecognized three years ago. Now it's the tenth biggest company on the
NASDAQ.
Q. YOU SAID EARLIER THAT YOU CUT YOUR FINANCIAL STOCKS DRAMATICALLY. WHAT
DOES THAT MEAN?
A. It means dramatically. Over the last six months, I decreased my
financial investments from 29% of the fund to about 10%. The survivors of
this cut were the banks with high service income such as State Street,
Northern Trust, and Fifth Third. High service income means these banks earn
their money primarily through selling mutual fund and data processing
services to the mutual fund and securities industries. Companies like these
have done very well during much of the period.
Q. WHAT ABOUT HEALTH CARE?
A. I still have a large stake - about 16% of the fund - in health care. In
fact, on January 31 it was the fund's largest sector. I've repositioned the
fund to include more companies that I think are well positioned for the
health-care changes coming out of Washington, such as HMOs, rehabilitation
hospitals, and generic drug companies. U.S. Healthcare, an HMO in the
Northeast, has been an excellent stock, and it's positioned to do well no
matter what's in store for health care in the U.S. Ultimately, I think the
companies that provide alternative medical services at a low cost could be
major winners.
Q. OVER THE LAST SIX MONTHS, YOU'VE INCREASED YOUR STAKE IN THE MEDIA AND
LEISURE SECTOR FROM 1.6% TO 11.1%. WHAT'S BEHIND THIS MOVE?
A. This sector has done very well in the last six months. This is largely
because gaming stocks have paid off as more state and local governments
across the U.S. have legalized gambling as a way to raise revenues. One
stock that's been a great bet is International Game Technology, the leading
manufacturer of gaming machines. Another sector leader was the broadcasting
industry. I owned companies that made excellent gains as telephone
utilities, cellular companies and entertainment firms formed strategic
alliances. My largest stake in this industry - one of my top 10 stocks - is
a cable company called Tele-Communications.
Q. WHAT CAN SHAREHOLDERS EXPECT IN THE NEXT SIX MONTHS?
A. As we've discussed, I've taken a number of steps to try to improve the
fund's performance. Over the next six months, I may make some additional
changes to the fund as the market shifts. For instance, if there's a market
correction, a period when stock prices fall, I'll take advantage of it by
buying good stocks that are usually expensive. In general, we'll probably
see more modest returns over the next six months. The dramatic gains of the
late 80's and early 90's could be more difficult to come by if we settle
into a slow growth economy.
FUND FACTS
GOAL: to increase the value
of the fund's shares by
investing in large and small
companies traded in the
over-the-counter market
START DATE: December 31,
1984
SIZE: as of January 31,
1994, over $1.3 billion
MANAGER: Alan Radlo, since
May 1990; manager, Fidelity
U.S. pension accounts and
Canadian mutual funds,
1985-1990
(checkmark)
ALAN RADLO ON CYCLICAL STOCKS:
"There's been a major shift to
cyclical stocks over the last
six months. Cyclical stocks
are stocks that usually
increase in value when the
economy improves or
decrease in value when the
economy performs poorly. For
instance, travel-related
companies do well in an
improving economy because
more people take business
trips. I've chosen cyclicals
with good long-term track
records and high-growth
potential, such as
manufacturing companies.
I've also focused on
transportation stocks.
Regional airlines have done
well because they've gained
access to routes that the
major airlines have shed. As a
result, my two top airline
investments, Mesa Airlines
and Comair have been
excellent performers over the
last six months."
(bullet) The fund had success with
franchises offering a unique
product that dominated their
markets. For example, Duty
Free International, the border
crossing company that leads
its industry, grew about 30%
over the last six months.
(bullet) Cash and other short-term
investments made up 21% of
the fund on January 31, 1994.
The fund is looking for
opportunities to spend, but
continues to hold on to cash
when top-performing stocks
are too expensive.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Mesa Airlines, Inc. 2.9 1.6
U.S. Healthcare, Inc. 2.8 0.9
Intel Corp. 2.6 1.9
Duty Free International, Inc. 2.5 0.4
Comair Holdings, Inc. 2.1 0.2
Tele-Communications, Inc. Class 2.0 0.0
A
Boston Scientific Corp. 1.9 0.4
Microsoft Corp. 1.9 1.5
Orbital Sciences Corporation 1.8 1.2
Callaway Golf Co. 1.7 0.0
TOP FIVE INDUSTRIES AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE INDUSTRIES
6 MONTHS AGO
Health 15.6 13.5
Technology 12.0 9.0
Media & Leisure 11.1 1.6
Finance 10.3 29.0
Transportation 9.7 5.5
ASSET ALLOCATION
AS OF JANUARY 31, 1994 * AS OF JULY 31, 1993 **
Row: 1, Col: 1, Value: 21.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 39.0
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 1, Value: 23.3
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 36.7
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 20.0
Stocks 76.7%
Bonds 0.0%
Short-term
Investments 23.3%
Stocks 79.0%
Bonds 0.0%
Short-term
Investments 21.0%
* FOREIGN
INVESTMENTS 9.0%
** FOREIGN
INVESTMENTS 5.8%
INVESTMENTS JANUARY 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 79.0%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.8%
Orbital Sciences Corporation (a)(b) 1,291,100 $ 24,531 68556410
BASIC INDUSTRIES - 3.0%
CHEMICALS & PLASTICS - 0.6%
Petrolite Corporation 258,300 8,266 71672310
IRON & STEEL - 1.8%
Atchison Casting Corp. (a)(b) 298,700 5,750 04661310
Gibraltar Steel Corp. (a) 205,000 3,126 37476F10
Kentucky Electric Steel, Inc. (a) 154,400 2,220 49127B10
Schnitzer Steel, Inc. Class A 162,000 5,022 80688210
Shiloh Industries, Inc. 300,000 3,937 82454310
Steel Technologies, Inc. 201,500 3,904 85814710
23,959
PAPER & FOREST PRODUCTS - 0.6%
Riverside Forest Products 257,800 5,237 76890410
Timberwest Forest Ltd. (a)(c) 220,000 2,607 88690820
7,844
TOTAL BASIC INDUSTRIES 40,069
CONSTRUCTION & REAL ESTATE - 2.7%
BUILDING MATERIALS - 0.8%
Lilly Industrial Coatings, Inc. Class A 10,700 257 53249110
Tecumseh Products Co. Class A 206,300 10,108 87889520
10,365
CONSTRUCTION - 1.4%
Redman Industries (a) 94,800 2,346 75764210
Schuler Homes, Inc. (a) 380,400 9,320 80818810
Southern Energy Homes, Inc. (a) 376,000 6,204 84281410
Sundance Homes, Inc. (a) 128,700 1,400 86724Q10
19,270
ENGINEERING - 0.5%
Glenayre Technologies, Inc. 149,300 6,308 37789910
TOTAL CONSTRUCTION & REAL ESTATE 35,943
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 2.6%
AUTOS, TIRES, & ACCESSORIES - 1.9%
Deflectashield Corp. 91,500 $ 1,556 24476410
Hayes-Dana, Inc. 221,000 3,055 42077610
Spartan Motors, Inc. 282,600 4,345 84681910
Titan Wheel International, Inc. 234,300 6,502 88832810
Wabash National Corp. 200,800 7,731 92956610
Williams Controls, Inc. (a)(b) 967,600 2,600 96946510
25,789
TEXTILES & APPAREL - 0.7%
Galey & Lord, Inc. (a) 199,400 3,240 36352K10
Justin Industries, Inc. 400,900 6,415 48217110
9,655
TOTAL DURABLES 35,444
ENERGY - 0.7%
ENERGY SERVICES - 0.4%
Canadian Fracmaster Ltd. (a) 500,000 5,032 13591310
OIL & GAS - 0.3%
Arakis Energy Corp. (a) 400,000 2,446 03852L10
Canadian Foremost Ltd. (a)(b) 327,500 2,279 13570830
4,725
TOTAL ENERGY 9,757
FINANCE - 10.3%
BANKS - 8.2%
Bancfirst Corp. 61,900 897 05945F10
Bank of New Hampshire Corp. 110,000 1,980 06385410
Bok Financial (a) 20,000 520 05561Q20
CPB, Inc. 175,300 4,645 12590310
Chittenden Corp. 281,875 5,426 17022810
Colonial BancGroup, Inc. Class A 77,000 1,463 19549320
Commerce Bank, Virginia Beach (b) 233,887 5,964 20056M10
Compass Bancshares, Inc. 152,750 3,399 20449H10
Deposit Guaranty Corp. 100,000 2,850 24955510
Fifth Third Bancorp 308,800 15,517 31677310
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
First Citizens Bancshares, Inc. (N.C.) 118,898 $ 5,291 31946M10
First Commerce Bancshares, Inc.:
Class A 125,600 1,853 31977710
Class B 472,900 5,911 31977720
First Commerce Corp. 5,379 141 31977910
First Commercial Corp. 1,406 30 31982510
First Western Bancorp 256,675 7,893 33750510
Hancock Holding Co. 229,400 7,111 41012010
Huntington Bancshares, Inc. 2,253 54 44615010
Intercontinental Bank Miami, Fla 60,500 1,150 45853L10
Northern Trust Corp. 267,850 11,518 66585910
One Valley Bancorp West Virginia, Inc. 120,560 3,436 68241910
State Street Boston Corp. 561,600 21,341 85747310
Sterling Bancshares, Inc. 33,800 608 85890710
Trico Bancshares 72,552 1,596 89609510
110,594
CREDIT & OTHER FINANCE - 0.4%
Arbor National Holdings, Inc. (a) 131,000 2,227 03876110
Nolato AB B Free shares 11,500 394 65599J22
Sydostinvest AB B Free shares (a) 1,000,000 3,365 88799B22
5,986
INSURANCE - 0.7%
Allied Group, Inc. 195,300 5,176 01922010
Phoenix Re Corp. 155,500 4,004 71912310
9,180
SAVINGS & LOANS - 0.6%
Charter One Financial Corp. 200,400 3,932 16090310
Conservative Savings Corp. (b) 152,600 1,946 20848210
Maryland Federal Bancorp, Inc. 67,500 1,772 57406110
7,650
SECURITIES INDUSTRY - 0.4%
Midland Walwyn, Inc. (a) 500,000 5,502 59780110
TOTAL FINANCE 138,912
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 15.6%
DRUGS & PHARMACEUTICALS - 6.5%
Alpha-Beta Technology, Inc. (a) 149,500 $ 4,336 02071K10
Amgen, Inc. (a) 319,200 15,561 03116210
Astra A Free shares 440,000 10,558 04632292
Biogen, Inc. (a) 109,500 5,708 09059710
Cell Genesys, Inc. (a) 220,000 4,070 15092110
Copley Pharmaceutical, Inc. (a) 113,800 3,471 21745K10
Gilead Sciences, Inc. (b) 1,107,400 14,119 37555810
Sepracor, Inc. (a) 675,000 5,738 81731510
Sigma Aldrich Corp. 91,200 4,526 82655210
Somatix Therapy Corp. (a) 368,900 3,043 83444710
Telor Ophthalmic Pharmaceuticals, Inc. (a)(b) 500,000 1,875 87969G10
Teva Pharmaceutical Industries Ltd. ADR 145,900 4,632 88162420
Vertex Pharmaceuticals, Inc. (a) 150,000 2,850 92532F10
Watson Pharmaceuticals, Inc. (a) 121,400 3,369 94268310
Zenith Laboratories, Inc. (a) 289,200 4,627 98936520
88,483
MEDICAL EQUIPMENT & SUPPLIES - 5.2%
AMBU International AS Class B 6,500 1,131 02399992
Boston Scientific Corp. (a) 1,688,800 25,754 10113710
Cardinal Distribution, Inc. 449,800 19,791 14148710
Mitek Surgical Products, Inc. (a)(b) 422,400 7,286 60671F10
SciMed Life Systems, Inc. (a) 150,100 6,379 80861410
Sofamor/Danek Group, Inc. (a) 126,100 4,477 83400510
Zoll Medical Corp. (a) 151,700 5,461 98992210
70,279
MEDICAL FACILITIES MANAGEMENT - 3.9%
Advantage Health Corp. (a)(b) 566,100 8,916 00755P10
Homedco Group, Inc. (a) 110,000 3,932 43739A10
Syncor International Corp. (a) 102,700 2,465 87157J10
U.S. Healthcare, Inc. 561,200 37,320 91191010
52,633
TOTAL HEALTH 211,395
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
ELECTRICAL EQUIPMENT - 0.3%
Holophane Corp. 162,200 $ 2,798 43645B10
Spectrum Control, Inc. (a) 250,000 1,187 84761510
3,985
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
ATS Automation (b) 500,000 4,515 00194010
Bearings, Inc. 44,000 1,425 07400520
Brenco, Inc. 85,000 733 10706110
Enerflex Systems Ltd. 318,400 3,773 29265B10
Hallmark Technologies, Inc. (b) 500,000 1,975 40626R10
JLG Industries, Inc. 142,300 3,895 46621010
16,316
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 20,301
MEDIA & LEISURE - 11.1%
BROADCASTING - 3.7%
Multimedia, Inc. (a) 313,000 10,955 62545K10
Tele-Communications, Inc. Class A (a) 1,000,000 27,250 87924010
Viacom, Inc. (non-vtg.) (a) 328,900 11,429 92552430
49,634
ENTERTAINMENT - 0.2%
Players International, Inc. 128,500 3,309 72790310
LEISURE DURABLES & TOYS - 2.7%
Brio AB B Free shares 22,700 331 10999722
Callaway Golf Co. 337,300 23,400 13119310
Canstar Sports, Inc. 200,000 1,768 13790710
Coastcast Corp. (a) 290,600 9,263 19057T10
Kompan International AS Class B 6,780 1,633 50099C92
36,395
LODGING & GAMING - 4.2%
Circus Circus Enterprises, Inc. (a) 405,000 14,985 17290910
Four Seasons Hotels, Inc. 250,000 2,163 35100E10
International Game Technology 551,000 16,255 45990210
President Riverboat Casinos, Inc. (a) 490,800 8,957 74084810
Primadonna Resorts, Inc. 231,000 5,688 74154810
Station Casinos, Inc. 458,100 8,475 85768910
56,523
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - 0.2%
Steck-Vaughn Publishing Corp. (a) 254,500 $ 2,545 85804510
RESTAURANTS - 0.1%
Bertucci's, Inc. (a) 121,700 2,191 08606310
TOTAL MEDIA & LEISURE 150,597
NONDURABLES - 2.0%
AGRICULTURE - 0.4%
Delta & Pine Land Co. (a) 151,200 2,721 24735710
Kanthal AB B Free shares (a) 150,000 2,057 48899E22
4,778
BEVERAGES - 0.3%
Mondavi Robert Corp. Class A (a) 521,000 4,624 60920010
FOODS - 1.3%
Brothers Gourmet Coffees, Inc. (a)(b) 970,500 16,499 11482210
Odwalla, Inc. 82,000 984 67611110
17,483
TOTAL NONDURABLES 26,885
RETAIL & WHOLESALE - 4.9%
APPAREL STORES - 0.3%
Designs, Inc. (a) 283,400 3,613 25057L10
GENERAL MERCHANDISE STORES - 0.3%
Younkers, Inc. (a) 216,200 4,378 98776710
RETAIL & WHOLESALE, MISC - 4.3%
Duty Free International, Inc. (b) 1,881,800 34,108 26708410
Futures Shops Ltd. 128,800 2,738 36091310
Green Forest Lumber Corp. (sub. voting) 268,100 2,421 39290010
Grossman's, Inc. (a) 432,000 1,728 39921510
Rex Stores Corp. (a) 83,200 1,695 76162410
Tiffany & Company, Inc. 531,800 15,555 88654710
58,245
TOTAL RETAIL & WHOLESALE 66,236
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 0.0%
Zebra Technologies Corp. Class A (a) 15,000 $ 704 98920710
TECHNOLOGY - 12.0%
COMMUNICATIONS EQUIPMENT - 2.1%
Cisco Systems, Inc. (a) 99,000 7,177 17275R10
DSC Communications Corp. (a) 180,000 10,823 23331110
Digital Link Corp. 2 28 23331110
Newbridge Networks Corp. (a) 160,000 10,720 65090110
28,748
COMPUTER SERVICES & SOFTWARE - 3.1%
Crosscommunications Corp. (a) 54,800 1,106 22757K10
EICON Technology Corp. (a) 150,000 1,665 28248F10
Electronics For Imaging, Inc. (a) 164,000 2,665 28608210
Microsoft Corp. (a) 296,600 25,248 59491810
Parametric Technology Corp. (a) 162,880 5,436 69917310
Rand A Technology Corp. (b) 559,500 5,210 75190810
41,330
COMPUTERS & OFFICE EQUIPMENT - 1.1%
Beamscope Canada (a)(b) 598,800 5,406 07391710
Norand Corp. (a) 243,700 7,159 65542110
Tseng Laboratories, Inc. (a) 194,000 2,183 89852810
14,748
ELECTRONIC INSTRUMENTS - 1.4%
Analogic Corp. (a) 188,500 3,063 03265720
Cognex Corp. (a) 790,800 14,432 19242210
Sensonor AS 300,000 1,631 81799E22
19,126
ELECTRONICS - 4.3%
Allgon AB B Free shares 200,000 5,713 01899822
Benefon Oy (a)(b) 25,000 6,122 08199822
Intel Corp. 529,100 34,524 45814010
Maxim Integrated Products, Inc. (a) 71,200 3,542 57772K10
Methode Electronics, Inc. Class A 404,100 6,062 59152020
Robinson Nugent, Inc. (b) 301,500 2,487 77081010
58,450
TOTAL TECHNOLOGY 162,402
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 9.7%
AIR TRANSPORTATION - 5.9%
Amtran, Inc. (b) 587,100 $ 6,311 03234G10
Comair Holdings, Inc. (b) 1,107,350 28,237 19978910
Great Lakes Aviation (a) 196,500 2,555 39054K10
Mesa Airlines, Inc. (a)(b) 2,207,874 39,742 59048110
Tower Air, Inc. 180,000 3,060 89169710
79,905
RAILROADS - 1.5%
Johnstown America Industries, Inc. (a) 291,000 7,493 47947710
Wisconsin Central Transportation Corp. (a) 205,700 12,445 97659210
19,938
TRUCKING & FREIGHT - 2.3%
Arnold Industries, Inc. 325,000 6,622 04259510
Builders Transport, Inc. (a) 246,200 4,216 12008410
Landair Services, Inc. 85,300 1,898 51475910
Landstar System, Inc. 101,300 2,115 51509810
Linjebuss AB Class A 300,000 9,141 53599422
MNX, Inc. (a) 160,900 2,172 55311410
Werner Enterprises, Inc. 153,900 4,540 95075510
30,704
TOTAL TRANSPORTATION 130,547
UTILITIES - 1.1%
CELLULAR - 0.9%
IDB Communications Group, Inc. (a) 141,900 7,751 44935510
Mobile Telecommunications Technologies, Inc. (a) 202,900 4,033 60740610
11,784
TELEPHONE SERVICES - 0.2%
ABL CDA, Inc. 200,000 1,091 00095110
Doro Telefoni AB (a)(b) 100,000 1,714 25899922
2,805
TOTAL UTILITIES 14,589
TOTAL COMMON STOCKS
(Cost $939,183) 1,068,312
U.S. TREASURY OBLIGATIONS - 14.8%
U.S. Treasury Bills, yields at date of purchase
2.79%-2.97%, 2/3/94-2/17/94 (Cost $199,844) $200,000 $ 199,857 912794H7
REPURCHASE AGREEMENTS - 6.2%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.19% dated
1/31/94 due 2/1/94 $84,616 84,609
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,223,636) $ 1,352,778
LEGEND
7. Non-income producing
8. Affiliated company (see Note 6 of Notes to Financial Statements).
9. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $2,607,000 or 0.2% of net
assets.
INCOME TAX INFORMATION
At January 31, 1994, the aggregate cost of investment securities for income
tax purposes was $1,225,053,000. Net unrealized appreciation aggregated
$127,725,000 of which $159,779,000 related to appreciated investment
securities and $32,054,000 related to depreciated investment securities.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS
ENDED
JANUARY 31,
1994 YEARS ENDED JULY 31,
(UNAUDITED) 1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, $ 25.90 $ 24.65 $ 24.28 $ 20.42 $ 22.36 $ 17.95
beginning of period
Income from
Investment
Operations
Net investment .07 .06 .08 .19 .51 .50
income
Net realized and 2.34 3.68 2.92 4.30 .47 4.21
unrealized gain
(loss) on
investments
Total from investment 2.41 3.74 3.00 4.49 .98 4.71
operations
Less Distributions
From net investment (.10) (.25) (.12) (.05) (.51) (.30)
income
From net realized (3.42) (2.24) (2.51) (.58) (2.41) -
gain
Total distributions (3.52) (2.49) (2.63) (.63) (2.92) (.30)
Net asset value, end of $ 24.79 $ 25.90 $ 24.65 $ 24.28 $ 20.42 $ 22.36
period
TOTAL RETURN (dagger) (double dagger) 10.18% 16.67% 13.30% 23.03% 4.53% 26.72%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 1,372 $ 1,327 $ 1,037 $ 864 $ 697 $ 772
period (in millions)
Ratio of expenses to .87%* 1.08% 1.17% 1.29% 1.35% 1.32%
average net assets
Ratio of expenses to .88%* 1.08% 1.17% 1.29% 1.35% 1.32%
average net assets
before expense
reductions
Ratio of net investment .50%* .53% .59% 1.00% 2.30% 2.02%
income to average
net assets
Portfolio turnover rate 255%* 213% 245% 198% 212% 118%
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIOD SHOWN. (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity OTC Portfolio (the fund) is a fund of Fidelity Securities Fund
(the trust) and is authorized to issue an unlimited number of shares. The
trust is registered under the Investment Company Act of 1940, as amended
(the 1940 Act), as an open-end management investment company organized as a
Massachusetts business trust. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not
readily available (and in certain cases debt securities which trade on an
exchange), are valued primarily using dealer-supplied valuations or at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities maturing within sixty days are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. 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 fund is informed of the
ex-dividend date. Interest income is accrued as earned. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as part of the
dividends paid deduction for income tax purposes. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective August 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of July 31, 1993 have been reclassified to reflect
an increase in paid in capital of $97,714,000, a decrease in undistributed
net investment income of $14,971,000 and a decrease in accumulated net
realized gain on investments of $82,743,000.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,317,505,000 and $1,388,609,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic 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 ranging from
.31% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .35%.
The basic fee is subject to a performance adjustment (up to a maximum of +
or - .20%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
management fee was equivalent to an annualized rate of .51% of average
net assets after the performance adjustment.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SALES LOAD. For the period, Fidelity Distributors Corporation , an
affiliate of FMR and the general distributor of the fund, received sales
charges of $531,000 on sales of shares of the fund.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $95,000 for the period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the 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. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $99,837,000 and $35,204,000,
respectively. The weighted average interest rate was 5.33%.
6. TRANSACTIONS WITH
AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions with companies which are or
were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
ATS Automation $ 121 $ - $ - $ 4,515
Advantage Health Corp. (a) 388 623 - 8,916
Amtran, Inc. 357 763 - 6,311
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Atchison Casting Corp. (a) $ 2,145 $ 1,698 $ - $ 5,750
Beamscope Canada (a) 1,779 - - 5,406
Benefon Oy (a) 900 - - 6,122
Brothers Gourmet Coffees, Inc. (a) 7,910 - - 16,499
Canadian Foremost Ltd. (a) 602 - - 2,279
Coastal Banc Savings Association - 1,582 - -
Cognex Corp. (a) 2,966 4,080 - -
Comair Holdings, Inc. 2,571 4,127 28,237
Commerce Bank, Virginia
Beach 1,213 - 58 5,964
Conservative Savings Corp. - - - 1,946
Doro Telefoni AB (a) - - - 1,714
Duty Free International, Inc. 8,807 - 90 34,108
Gilead Sciences, Inc. 1,837 - - 14,119
Hallmark Technologies, Inc. 402 - - 1,975
Irwin Financial Corp. - 1,098 - -
Longhorn Steaks 100 1,268 - -
Mesa Airlines, Inc. (a) 9,406 2,610 - 39,742
Metropolitan Bancorp - 1,499 - -
Mitek Surgical Products, Inc. (a) 443 - - 7,286
Orbital Sciences Corporation (a) 2,941 1,008 - 24,531
PDA Engineering - 965 - -
Rand A Technology Corp. 1,436 - 5,210
Riverside Forest Products - 1,842 - -
Robinson Nugent, Inc. 130 - 8 2,487
Sterling Bancshares, Inc. - 1,130 15 -
Summit Bancorp, Inc. - 610 - -
Telor Opthalmic Pharmaceuticals,
Inc. (a) 169 - - 1,875
Total Pharmaceutical Care, Inc. - 3,618 - -
Williams Controls, Inc. (a) 545 - - 2,600
TOTALS $ 47,168 $ 28,521 $ 171 $ 227,592
(a) NON-INCOME PRODUCING
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$57,000 under this arrangement.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(Registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Alan Radlo, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Fidelity Fifty
Growth Company Fund
Low-Priced Stock Fund
Magellan(Registered trademark) Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(Registered trademark)
GROWTH & INCOME
PORTFOLIO
SEMIANNUAL REPORT
JANUARY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 35 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 39 Footnotes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
No one wants to pay more taxes than they have to. But a recent survey of
500 U.S. households, conducted by Fidelity and Yankelovich Partners, showed
that few people took steps to reduce their taxes under the new tax laws
that went into effect last year. In fact, many people were not completely
aware of the changes until they filed their 1993 tax returns.
Whether or not you're someone whose tax bill increased as a result of these
changes, it may make sense to consider ways to keep more of what you earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center. We look forward to
talking with you.
Best regards,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the 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 (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Growth & Income 10.38% 20.68% 123.09% 316.00%
Growth & Income 7.07% 17.06% 116.39% 303.52%
(incl. 3% sales charge)
S&P 500(Registered trademark) 8.97% 12.88% 90.05% 199.55%
Average Growth & Income 9.19% 13.62% 82.14% n/a
Fund
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 30, 1985. For comparison, you can look
at the performance of the Standard & Poor's 500 Composite Stock Price
Index - a common proxy for the U.S. stock market. You can also look at the
average growth & income fund, which reflects the performance of over
331 growth & income funds tracked by Lipper Analytical Services. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Growth & Income 20.68% 17.41% 19.25%
Growth & Income (incl. 3% sales 17.06% 16.69% 18.81%
charge)
S&P 500(Registered trademark) 12.88% 13.70% 14.51%
Average Growth & Income Fund 13.62% 12.57% n/a
AVERAGE ANNUAL TOTAL 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.
$10,000 OVER LIFE OF FUND
Growth & Income (027) S&P 500
12/30/85 9700.00 10000.00
12/31/85 9700.00 10081.75
01/31/86 10252.90 10138.21
02/28/86 11232.60 10896.55
03/31/86 12580.90 11504.57
04/30/86 12697.30 11374.57
05/31/86 13104.70 11979.70
06/30/86 13444.20 12182.15
07/31/86 12861.59 11501.17
08/31/86 13552.86 12354.56
09/30/86 12686.33 11332.84
10/31/86 13301.34 11986.74
11/30/86 13340.43 12278.02
12/31/86 13086.06 11964.93
01/31/87 14666.60 13576.61
02/28/87 15363.61 14112.88
03/31/87 15825.00 14520.74
04/30/87 15805.98 14391.51
05/31/87 15865.22 14516.72
06/30/87 16447.70 15249.81
07/31/87 17359.64 16022.98
08/31/87 17708.02 16620.63
09/30/87 17568.67 16256.64
10/31/87 13908.03 12754.96
11/30/87 13164.69 11703.95
12/31/87 13841.69 12594.62
01/31/88 14709.54 13124.86
02/29/88 15489.51 13736.47
03/31/88 15156.86 13312.02
04/30/88 15400.97 13459.78
05/31/88 15600.69 13576.88
06/30/88 16321.81 14200.06
07/31/88 16310.61 14146.10
08/31/88 16120.17 13665.13
09/30/88 16703.97 14247.27
10/31/88 17031.94 14643.34
11/30/88 16783.13 14433.94
12/31/88 17022.17 14686.53
01/31/89 18088.20 15761.59
02/28/89 17893.34 15369.13
03/31/89 18446.32 15727.23
04/30/89 19232.74 16543.47
05/31/89 20134.82 17213.48
06/30/89 20273.23 17115.36
07/31/89 21637.21 18660.88
08/31/89 22103.53 19026.63
09/30/89 21984.84 18948.62
10/31/89 21290.20 18509.02
11/30/89 21643.61 18886.60
12/31/89 22060.99 19339.88
01/31/90 20904.62 18042.17
02/28/90 21225.84 18274.92
03/31/90 21598.67 18759.20
04/30/90 21041.53 18290.22
05/31/90 22596.33 20073.52
06/30/90 22491.32 19937.02
07/31/90 22334.58 19873.22
08/31/90 20427.65 18076.68
09/30/90 19249.75 17196.35
10/31/90 19209.64 17122.40
11/30/90 20158.76 18228.51
12/31/90 20561.64 18737.08
01/31/91 22439.48 19554.02
02/28/91 24330.83 20952.13
03/31/91 25671.08 21459.18
04/30/91 26024.60 21510.68
05/31/91 27520.27 22439.94
06/30/91 25651.14 21412.19
07/31/91 27222.73 22410.00
08/31/91 28015.36 22941.12
09/30/91 27768.26 22558.00
10/31/91 28264.89 22860.28
11/30/91 26789.21 21939.01
12/31/91 29164.99 24448.83
01/31/92 29862.45 23994.08
02/29/92 30517.20 24306.00
03/31/92 29890.36 23832.04
04/30/92 30562.54 24532.70
05/31/92 30676.95 24652.91
06/30/92 30074.10 24285.58
07/31/92 30692.55 25278.86
08/31/92 30376.14 24760.64
09/30/92 30687.27 25052.82
10/31/92 30930.31 25140.50
11/30/92 31886.24 25997.80
12/31/92 32529.60 26317.57
01/31/93 33437.33 26538.64
02/28/93 33816.92 26899.56
03/31/93 35058.06 27467.14
04/30/93 35008.26 26802.44
05/31/93 35738.64 27520.74
06/30/93 36288.93 27600.55
07/31/93 36556.01 27490.15
08/31/93 37991.54 28532.03
09/30/93 38198.34 28312.33
10/31/93 38625.81 28898.40
11/30/93 37753.78 28623.86
12/31/93 38882.40 28970.21
01/31/94 40352.30 29955.20
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Growth & Income Portfolio on December 30, 1985, when the fund started,
and paid a 3% sales charge. As the chart shows, by January 31, 1994, the
value of your investment would have grown to $40,352 - a 303.52% increase
on your initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends reinvested, the same $10,000
investment in the S&P 500 would have grown to $29,955 - a 199.55%
increase.
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 or 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)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Steve Kaye,
Portfolio Manager of Fidelity Growth & Income Portfolio
Q. STEVE, HOW HAS THE FUND PERFORMED?
A. The fund returned 10.38% and 20.68% for the six months and year ended
January 31, 1994. That compared to 9.19% and 13.62% for the average growth
and income fund, which Lipper Analytical Services tracks. During the same
periods, the S&P 500 returned 8.97% and 12.88%.
Q. WHAT TYPES OF STOCKS HELPED THE FUND COME OUT AHEAD OVER THE PAST SIX
MONTHS?
A. The fund is broadly diversified, so its gains came from a variety of
sources. For example, among the fund's top investments were automobile
manufacturers such as Chrysler and Ford. Their stocks performed well as the
economy grew stronger and the firms continued to pick up market share from
foreign competitors. We also owned shares of railroad companies such as
CSX, Santa Fe Pacific and Kansas City Southern that have done a good job of
taking business away from truckers.
Q. WHAT WERE THE DISAPPOINTMENTS DURING THE PERIOD?
A. Energy stocks, for one, which accounted for around 7% of the fund's
total investments. That sector has been weak in recent months because of
falling oil prices. But I'm still optimistic that companies such as British
Petroleum and Royal Dutch Petroleum will benefit from cost-cutting and
higher profit margins in their refining businesses. So I've maintained a 6%
investment in that sector.
Q. WHAT SIGNIFICANT CHANGES HAVE YOU MADE IN THE FUND SINCE JULY?
A. I cut back its stake in financial stocks from around 17% of total
investments six months ago to about 12% at the end of January. Most of this
came from selling regional banks whose stock prices had climbed to reflect
the improvement in their loan portfolios, and the effect of falling
interest rates, which improved their profit margins. Some of the money from
the sale of financial stocks went into consumer stocks such as Philip
Morris. Those stocks have been unpopular with investors for the last few
years because of the perception that consumer loyalty to major brand names
is dead. But at their recent prices, the shares look attractive even based
on their more modest earnings prospects. In addition, many of these stocks
provide attractive yields.
Q. DESPITE THAT SHIFT, FINANCIAL STOCKS STILL MAKE UP THE FUND'S LARGEST
SECTOR. WHAT ARE YOU FOCUSING ON NOW?
A. I've shifted more money into stocks of financial companies that don't
rely on improving balance sheets or falling interest rates to boost their
earnings. For example, one of the fund's largest investments at the end of
January was the Federal National Mortgage Association, which buys mortgages
and holds them or repackages them as securities. It's attractive because
its management has done such a good job of increasing its share of the
growing mortgage market. The fund also continues to hold Citicorp, which
posted sizable gains during the past six months. I believe the stock will
continue to rise as investors realize that the firm has recovered from its
financial problems and has tremendous growth potential in international
markets.
Q. HEALTH-CARE STOCKS WERE ABOUT 7% OF THE FUND'S INVESTMENTS. AREN'T YOU
CONCERNED THAT HEALTH-CARE REFORM WILL CURTAIL THEIR PROFITS?
A. Not really. Everyone assumes that health-care reform will be the end of
the world for these firms. But there are still plenty of opportunities for
well-managed companies to make money. Many of the larger hospital companies
are merging so that they have the size and clout to dominate their markets
and keep costs low, which should help them prosper in the coming
environment. For example, the fund owned shares of HCA - Hospital Corp. of
America - and Columbia Hospital, which will merge - in early February to
form Columbia Healthcare, a company with more than $10 billion in annual
sales.
Q. WHAT'S YOUR OUTLOOK ON CYCLICALS - STOCKS WHOSE EARNINGS ARE CLOSELY
LINKED TO THE ECONOMY?
A. I still have a significant investment in auto stocks. They're pretty far
along in their current upswing, but I expect they'll benefit further as the
European economies turn around and boost car sales overseas. The fund also
owns shares of industrial firms that will do well as the U.S. economy gains
momentum. They include chemical companies such as Union Carbide and
Monsanto. I sold some of the fund's stake in retail stocks during the past
several months after their prices rose, but the fund still has 4% of its
investments in that sector, which should do well as consumer confidence
recovers further. And the fund's largest investment, General Electric, has
extremely broad exposure to various sectors of the U.S. and overseas
economies, so it should prosper from economic growth here and abroad.
Q. IS THE FUND'S SIZABLE STAKE IN UTILITIES DESIGNED TO BOOST ITS YIELD?
A. I try to maintain a dividend yield on the fund that is equal to or
greater than the yield on the S&P 500, about 2.69% on average during
January. But the utilities in the fund, which make up about 10% of its
investments, are also chosen for their potential to grow earnings. They
include regional bell operating companies (RBOCs) such as Ameritech and
Southwestern Bell that have cut costs to improve their profits. These firms
also will play an important role in emerging businesses such as cable and
wireless communication. Late last summer, I sold off some of the RBOCs
because they'd gotten expensive. But since then their shares have declined
in price, so I've recently built up my stake in the group again.
Q. OVER THE PAST SIX MONTHS YOU INCREASED YOUR CASH POSITION FROM AROUND 8%
TO 14%. DOES THAT MEAN YOU SEE PROBLEMS AHEAD FOR THE STOCK MARKET?
A. Not necessarily. Lately, it has simply become more difficult to find
cheap stocks to replace the ones I sell. That suggests to me that a market
correction would be healthy, because it would remind investors that there
are risks associated with investing in stocks. But I don't like to make
stock market predictions. I would prefer to keep calling companies and
coming up with good stocks for the fund.
FUND FACTS
GOAL: to increase the fund's
share price over the
long-term and provide some
current income
START DATE: December 30,
1985
SIZE: as of January 31,
1994, over $8 billion
MANAGER: Steven Kaye,
since January 1993;
manager,
Fidelity Blue Chip Fund,
October 1990-December
1992;
Fidelity Select Energy
Services, Biotechnology, and
Health Care Portfolios,
1986-1990
(checkmark)
STEVE KAYE ON HIS INVESTMENT
STRATEGY:
"My basic approach to
stock-picking is to talk to
hundreds of companies a year.
I don't base my investments on
a particular view about what
will happen in the economy or
the markets. Instead, I look at
individual companies whose
shares provide good value at
reasonable risk. The fund isn't
limited to a single approach. I
like to buy earnings growth
cheaply, but if I see an
attractive situation where
earnings growth has been poor
I'll buy the stock as long as I
think the firm will likely develop
some decent earnings
momentum over the next year
or so.
"I try very hard to avoid stocks
trading at extremely high levels
that can suffer big losses if they
suddenly become unpopular.
That 's exactly what happened
to health-care stocks and food,
beverage and tobacco
companies, which were once
on just about everyone's list of
favorites. Now that investors
have lost interest in those
sectors, the stocks are less
risky, so I've been adding them
to the fund's investments.
Meanwhile, the shares pay
very attractive dividend yields."
(bullet) The fund's top sector
concentrations on January
31, 1994 included a 12%
stake in finance, 10% in
utilities and 7% in healthcare.
(bullet) At the end of January, about
13% of the fund's investments
were overseas.
INVESTMENT CHANGES
TOP TEN INVESTMENTS AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
General Electric Co. 2.9 3.1
Chrysler Corp., Series A, $4.625 1.5 1.1
Citicorp 1.4 1.4
HCA - Hospital Corporation of
America Class A 1.2 0.7
Federal National Mortgage
Association 1.1 1.1
Philip Morris Companies, Inc. 1.0 0.3
Entergy Corp. 1.0 1.0
Ameritech Corp. 1.0 0.9
British Petroleum PLC ADR 1.0 0.4
Southwestern Bell Corp. 1.0 0.9
TOP FIVE INDUSTRIES AS OF JANUARY 31, 1994*
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 11.5 17.0
Utilities 10.1 12.4
Energy 7.4 7.9
Health 7.0 4.6
Durables 6.5 5.2
* EXCLUDES SECURITIES WITH MATURITIES OF LESS THAN ONE YEAR
ASSET ALLOCATION
AS OF JANUARY 31, 1994* AS OF JULY 31, 1993**
Row: 1, Col: 1, Value: 13.6
Row: 1, Col: 2, Value: 6.3
Row: 1, Col: 3, Value: 6.8
Row: 1, Col: 4, Value: 73.3
Stocks 72.2%
Bonds 10.0%
Convertibles 9.5%
Other securities
and short-term
investments 8.3%
Stocks 73.3%
Bonds 6.8%
Convertibles 6.4%
Other securities
and short-term
investments 13.5%
Row: 1, Col: 1, Value: 8.300000000000001
Row: 1, Col: 2, Value: 9.5
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 72.2
* FOREIGN
INVESTMENTS 13.0%
** FOREIGN
INVESTMENTS 12.3%
INVESTMENTS JANUARY 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 73.2%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.9%
AEROSPACE & DEFENSE - 0.7%
Flightsafety International, Inc. 482,600 $ 16,770 33942310
Grumman Corp. 124,700 5,097 40018110
Martin Marietta Corp. 453,600 20,355 57290010
McDonnell Douglas Corp. 112,400 12,842 58016910
Thiokol Corp. 194,900 5,262 88410310
60,326
DEFENSE ELECTRONICS - 1.2%
General Motors Corp. Class H 484,500 19,017 37044250
Loral Corp. 1,095,000 43,663 54385910
Raytheon Co. 503,200 34,092 75511110
96,772
TOTAL AEROSPACE & DEFENSE 157,098
BASIC INDUSTRIES - 4.9%
CHEMICALS & PLASTICS - 2.7%
Akzo NV:
Ord. 322,000 34,887 01019910
sponsored ADR 9,100 494 01019930
American Pacific Corp. (b) 50,000 731 02874010
Cabot Corp. 261,100 13,708 12705510
Ferro Corp. 87,000 3,045 31540510
GEON 1,018,200 27,491 37246W10
Georgia Gulf Corp. (b) 387,200 9,390 37320020
IMC Fertilizer Group, Inc. 39,900 1,741 44966910
Imperial Chemical Industries PLC:
ADR 355,000 17,306 45270450
Ord. 1,576,400 18,848 45270440
Lyondell Petrochemical Co. 154,000 3,504 55207810
Monsanto Co. 316,000 24,372 61166210
Morton International, Inc. 51,100 5,487 61933110
Olin Corp. 275,900 13,554 68066520
Scotts Co. Class A 247,000 4,600 81018610
Union Carbide Corp. 1,773,600 45,227 90558110
224,385
IRON & STEEL - 0.3%
Allegheny Ludlum Industries, Inc. 994,100 22,119 01690010
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 0.6%
Alumax, Inc. 98,100 $ 2,624 02219710
Noranda, Inc. 522,200 10,461 65542210
Reynolds Metals Co. 548,200 29,260 76176310
Wolverine Tube, Inc. (b) 374,200 8,560 97809310
50,905
PACKAGING & CONTAINERS - 0.1%
Owens-Illinois, Inc. (b) 444,900 5,172 69076840
PAPER & FOREST PRODUCTS - 1.2%
Abitibi-Price, Inc. 695,000 8,824 00368010
Abitibi Price, Inc. (institutional receipts) (i) 139,800 657 00368070
Bowater, Inc. 146,500 3,516 10218310
Georgia-Pacific Corp. 100,600 7,570 37329810
International Paper Co. 407,300 30,598 46014610
QUNO Corp. 164,200 3,212 74726H10
Repola OY 558,300 11,747 75999A92
Temple-Inland, Inc. 417,500 21,919 87986810
Willamette Industries, Inc. 118,600 6,820 96913310
94,863
TOTAL BASIC INDUSTRIES 397,444
CONGLOMERATES - 3.8%
Allied-Signal, Inc. 89,500 7,037 01951210
Canadian Pacific Ltd. Ord. 2,149,500 39,220 13644030
Dial Corp. (The) 1,226,700 53,515 25247010
Grupo Carso SA de CV Class A-1 (b) 270,000 3,122 40099594
Hanson Trust PLC:
Ord. 1,618,364 7,031 41135210
sponsored ADR 771,200 16,677 41135230
ITT Corp. 642,100 63,167 45067910
Litton Industries, Inc. (b) 376,200 25,770 53802110
Mark IV Industries, Inc. 454,350 9,371 57038710
Textron, Inc. 817,500 48,335 88320310
United Technologies Corp. 305,900 20,610 91301710
Whitman Corp. 1,272,700 20,204 96647K10
314,059
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - 2.4%
BUILDING MATERIALS - 0.7%
Cemex SA, Series B (b) 215,000 $ 6,876 15299293
Lafarge Corp. 1,639,600 40,990 50586210
Medusa Corp. 402,550 13,083 58507230
60,949
CONSTRUCTION - 0.1%
Hopewell Holdings Ltd. 1,872,000 2,133 44099999
Pulte Corp. 146,700 5,098 74586710
7,231
REAL ESTATE INVESTMENT TRUSTS - 1.6%
Avalon Properties, Inc. 653,650 14,217 05346910
CBL & Associates Properties, Inc. 491,300 9,458 12483010
Chelsea GCA Realty, Inc. (b) 160,900 4,545 16326210
Crown American Realty Trust (SBI) 1,016,700 14,488 22818610
Developers Diversified Realty Corp. 267,500 7,590 25159110
Duke Realty Investors, Inc. 130,100 2,992 26441150
Equity Residential Properties Trust (SBI) 691,200 20,131 29476L10
Federal Realty Investment Trust (SBI) 100,000 2,412 31374720
Manufactured Home Communities, Inc. 186,000 8,045 56468210
Oasis Residential, Inc. 60,000 1,530 67421610
Simon Properties Group, Inc. (b) 847,000 20,752 82880510
Urban Shopping Centers, Inc. (b) 621,800 13,757 91706010
Vornado Realty Trust 319,000 11,165 92904210
131,082
TOTAL CONSTRUCTION & REAL ESTATE 199,262
DURABLES - 3.7%
AUTOS, TIRES, & ACCESSORIES - 2.4%
Echlin, Inc. 577,900 20,082 27874910
Federal-Mogul Corp. 280,000 10,115 31354910
General Motors Corp. 535,000 32,836 37044210
Goodyear Tire & Rubber Co. 824,100 39,866 38255010
Honda Motor Co. Ltd. 563,000 9,012 43812810
Magna International, Inc. Class A 200,000 10,064 55922240
Snap-on Tools Corp. 329,900 14,144 83303410
Suzuki Motor Corp. 1,387,000 15,950 86958592
TRW, Inc. 341,900 25,557 87264910
Toyota Motor Corporation 849,000 15,309 89399999
192,935
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.9%
Aktiebolaget Electrolux (b) 207,500 $ 9,563 01019810
Matsushita Electric Industrial Co. Ltd. 500,000 7,987 57687910
Newell Co. 418,500 17,525 65119210
Sony Corp. 345,000 20,218 83569999
Whirlpool Corp. 233,500 15,790 96332010
71,083
HOME FURNISHINGS - 0.3%
Leggett & Platt, Inc. 456,000 21,204 52466010
TEXTILES & APPAREL - 0.1%
Guilford Mills, Inc. 30,200 672 40179410
Unifi, Inc. 360,700 8,927 90467710
9,599
TOTAL DURABLES 294,821
ENERGY - 7.0%
ENERGY SERVICES - 1.1%
Enterra Corp. (b) 240,200 4,954 29380510
Halliburton Co. 655,100 21,127 40621610
Helmerich & Payne, Inc. 638,200 17,630 42345210
Schlumberger Ltd. 494,500 29,361 80685710
Smith International, Inc. (b) 803,100 7,931 83211010
Tidewater, Inc. 519,800 11,046 88642310
92,049
OIL & GAS - 5.9%
Amerada Hess Corp. 864,700 41,938 02355110
Anadarko Petroleum Corp. 160,400 7,619 03251110
Anderson Exploration Ltd. (b) 324,600 8,121 03390110
Apache Corp. 833,308 20,833 03741110
British Petroleum PLC:
ADR 1,155,300 78,849 11088940
Ord. 3,873,700 22,049 11088910
Burlington Resources, Inc. 351,300 16,906 12201410
Canadian Natural Resources Ltd. (b) 137,800 2,035 13638510
Chevron Corp. 600,200 56,043 16675110
Inverness Petroleum Ltd. (b) 709,400 5,605 46190810
Kerr-McGee Corp. 570,500 26,243 49238610
Louisiana Land & Exploration Co. 190,100 7,913 54626810
Murphy Oil Corp. 774,300 32,037 62671710
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Occidental Petroleum Corp. 469,100 $ 8,444 67459910
Renaissance Energy Ltd. (b) 328,400 7,413 75966610
Repsol SA sponsored ADR 913,000 31,156 76026T20
Royal Dutch Petroleum Co. 702,700 77,297 78025770
Unocal Corp. 1,188,900 34,924 91528910
485,425
TOTAL ENERGY 577,474
FINANCE - 10.2%
BANKS - 3.9%
BNP CI Ord. 220,300 10,649 05599996
Banc One Corp. 500,000 18,750 05943810
BankAmerica Corp. 525,000 24,412 06605010
Citicorp 2,605,100 113,973 17303410
First Fidelity Bancorporation 72,914 3,217 32019510
First Interstate Bancorp 637,300 44,691 32054810
First Union Corp. 53,506 153 33735810
Mellon Bank Corp. 851,263 47,564 58550910
NationsBank Corp. 202,563 10,280 63858510
Shawmut National Corp. 355,300 8,483 82048410
Signet Banking Corp. 399,990 15,350 82668110
State Street Boston Corp. 451,000 17,138 85747310
Wells Fargo & Co. 58,000 7,953 94974010
322,613
CLOSED END INVESTMENT COMPANY - 0.0%
ASA Ltd. 57,000 2,879 00205010
CREDIT & OTHER FINANCE - 1.8%
American Express Co. 1,337,400 43,800 02581610
Argentaria Corp. Bancaria de Esp. 62,200 2,957 21991392
Beneficial Corp. 866,200 34,323 08172110
Dean Witter Discover & Co. 397,616 15,259 24240V10
Household International, Inc. 982,455 32,544 44181510
Student Loan Corp. 32,200 628 86390210
Triarc Companies, Inc. Class A (b) 732,700 15,204 89592710
144,715
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
FEDERAL SPONSORED CREDIT - 1.8%
Federal Home Loan Mortgage Corporation 883,800 $ 51,481 31340030
Federal National Mortgage Association 999,100 87,296 31358610
Student Loan Marketing Association 255,400 12,483 86387150
151,260
INSURANCE - 1.9%
Allstate Corp. 993,900 28,326 02000210
American Bankers Insurance Group, Inc. 314,600 8,298 02445610
American Income Holding, Inc. 584,200 15,262 02672810
Capital Holding Corp. 364,200 13,202 14018610
Exel Ltd. 256,000 11,168 30161610
General Re Corp. 44,400 5,067 37056310
Loews Corp. 114,100 11,310 54042410
Midocean Reinsurance Ord. (b) 900,000 17,381 59899993
Penncorp Financial Group, Inc. 741,800 12,889 70809410
Travelers, Inc. (The) 708,866 29,861 89419010
152,764
SAVINGS & LOANS - 0.3%
Ahmanson (H.F.) & Co. 1,395,600 26,167 00867710
SECURITIES INDUSTRY - 0.5%
Daiwa Securities 1,125,000 18,526 23499010
Nikko Securities 900,000 11,674 65399010
Nomura Securities Co. Ltd. 159,000 3,395 65536130
PaineWebber Group, Inc. 248,000 7,347 69562910
40,942
TOTAL FINANCE 841,340
HEALTH - 6.5%
DRUGS & PHARMACEUTICALS - 3.5%
Allergan, Inc. 504,700 11,734 01849010
Astra A Free shares 400,000 9,598 04632292
COR Therapeutics, Inc. (b) 512,000 8,064 21775310
Cephalon, Inc. (b) 648,500 11,835 15670810
Chiron Corp. (b) 253,600 24,124 17004010
Genentech, Inc. (redeemable) (b) 363,800 18,326 36871020
Immulogic Pharmaceutical Corp. (b) 125,000 1,656 45252R10
Immune Response Corp. (b) 435,000 5,764 45252T10
Magainin Pharmaceuticals, Inc. (b) 220,900 3,921 55903610
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Merck & Co., Inc. 1,369,327 $ 49,980 58933110
Pfizer, Inc. 1,199,400 77,511 71708110
Schering-Plough Corp. 974,600 61,400 80660510
Scios, Inc. (b) 395,000 3,703 80890510
287,616
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Bausch & Lomb, Inc. 303,900 15,993 07170710
Johnson & Johnson 570,000 24,154 47816010
Medtronic, Inc. 261,000 21,924 58505510
62,071
MEDICAL FACILITIES MANAGEMENT - 2.2%
Columbia Healthcare Corp. 1,353,132 51,250 19767910
HCA - Hospital Corporation of America Class A (b) 2,583,000 100,414
40412010
Medical Care America, Inc. (b) 480,700 11,777 58450C10
National Medical Enterprises, Inc. 1,194,800 18,967 63688610
182,408
TOTAL HEALTH 532,095
INDUSTRIAL MACHINERY & EQUIPMENT - 5.1%
ELECTRICAL EQUIPMENT - 3.6%
Duracell International, Inc. 260,600 10,359 26633L10
General Electric Co. 2,241,000 241,468 36960410
Itel Corp. (b) 484,883 13,880 46564210
Murata Manufacturing Co. 341,000 13,803 62699110
Philips Electronics 619,500 15,624 71833799
Scientific-Atlanta, Inc. 50,000 1,425 80865510
296,559
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Caterpillar, Inc. 422,000 43,941 14912310
Deere & Co. 234,100 18,845 24419910
Indresco, Inc. (b) 175,000 2,450 45590510
Parker-Hannifin Corp. 399,700 15,289 70109410
TRINOVA Corp. 574,800 18,968 89667810
Tenneco, Inc. 198,800 11,431 88037010
Watts Industries, Inc. Class A 166,100 8,845 94274910
119,769
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 0.0%
Attwoods PLC ADR 142,200 $ 1,671 04987020
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 417,999
MEDIA & LEISURE - 3.2%
BROADCASTING - 0.5%
Grupo Televisa GDS (b)(f) 123,500 8,768 40049J20
Home Shopping Network, Inc. 2,186,500 31,158 43735110
Infinity Broadcasting Corp. (b) 308,125 10,014 45662610
49,940
ENTERTAINMENT - 0.3%
Carnival Cruise Lines, Inc. Class A 446,300 22,092 14365810
LODGING & GAMING - 1.4%
Aztar Corp. (b) 1,018,100 7,381 05480210
Boomtown, Inc. 340,100 6,207 09858810
La Quinta Motor Inns, Inc. 126,150 3,848 50419510
Marriott International, Inc. 864,700 25,401 57190010
Mirage Resorts, Inc. (b) 1,303,650 32,428 60462E10
President Riverboat Casinos, Inc. (b) 1,064,900 19,434 74084810
Promus Companies, Inc. (b) 335,000 16,959 74342A10
111,658
PUBLISHING - 0.3%
American Greetings Corp. Class A 253,000 7,685 02637510
Houghton Mifflin Co. 75,000 3,375 44156010
Times Mirror Co., Series A 312,700 11,335 88736010
22,395
RESTAURANTS - 0.7%
McDonald's Corp. 981,200 59,608 58013510
TOTAL MEDIA & LEISURE 265,693
NONDURABLES - 4.2%
BEVERAGES - 0.4%
Dr. Pepper/Seven-Up Companies, Inc. (b) 1,354,000 32,327 25613130
FOODS - 1.1%
CPC International, Inc. 582,100 28,450 12614910
ConAgra, Inc. 826,200 21,791 20588710
Dean Foods Co. 263,500 8,564 24236110
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
FOODS - CONTINUED
Dole Food, Inc. 249,700 $ 7,273 25660510
IBP, Inc. 79,000 1,965 44922310
Ralston Continental Baking Group 363,400 3,271 75126210
Ralston Purina Co. 354,800 15,611 75127730
86,925
HOUSEHOLD PRODUCTS - 1.2%
First Brands Corp. 198,300 7,164 31935610
Orkla AS:
Class A Free shares 103,000 4,037 39299193
Class B (non-vtg.) 358,950 13,924 39299192
Premark International, Inc. 443,300 38,179 74045910
Procter & Gamble Co. 600,000 35,700 74271810
99,004
TOBACCO - 1.5%
Philip Morris Companies, Inc. 1,415,000 85,254 71815410
RJR Nabisco Holdings Corp. (b) 3,742,500 28,069 74960K10
UST, Inc. 230,800 6,578 90291110
119,901
TOTAL NONDURABLES 338,157
RETAIL & WHOLESALE - 3.5%
DRUG STORES - 0.3%
Revco (D.S.), Inc. (b) 1,291,400 20,340 76133910
Rite Aid Corporation 428,600 7,983 76775410
28,323
GENERAL MERCHANDISE STORES - 1.5%
Carter Hawley Hale Stores, Inc. (b) 1,674,100 16,322 14622730
Consolidated Stores Corp. (b) 713,400 12,930 21014910
May Department Stores Co. (The) 431,600 17,048 57777810
Penney (J.C.) Co., Inc. 702,600 36,799 70816010
Sears, Roebuck & Co. 678,200 37,216 81238710
120,315
GROCERY STORES - 1.1%
Food Lion, Inc. Class A 1,354,900 9,061 34477520
Kroger Co. (The) (b) 490,000 10,964 50104410
Safeway, Inc. (b) 1,890,100 38,747 78651420
Starbucks Corp. (b) 120,000 2,880 85524410
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - CONTINUED
Stop & Shop Companies, Inc. (b) 910,300 $ 21,164 86209910
Supervalu, Inc. 292,000 11,388 86853610
94,204
RETAIL & WHOLESALE, MISCELLANEOUS - 0.6%
Circuit City Stores, Inc. 200,000 3,900 17273710
Home Depot, Inc. (The) 306,900 11,969 43707610
Lowe's Companies, Inc. 130,200 7,942 54866110
Office Depot, Inc. (b) 324,400 11,800 67622010
Toys "R" Us, Inc. (b) 402,700 14,699 89233510
50,310
TOTAL RETAIL & WHOLESALE 293,152
SERVICES - 0.4%
PRINTING - 0.2%
Reynolds & Reynolds Co. Class A 341,700 15,248 76169510
SERVICES - 0.2%
ADT Ltd. 1,297,800 12,978 00091530
Chemed Corp. 123,300 3,930 16359610
Kelly Services, Inc. Class A 101,100 3,008 48815220
19,916
TOTAL SERVICES 35,164
TECHNOLOGY - 2.8%
COMMUNICATIONS EQUIPMENT - 0.9%
ADC Telecommunications, Inc. (b) 97,500 3,583 00088610
Cabletron Systems, Inc. (b) 253,500 30,452 12692010
Cisco Systems, Inc. (b) 311,500 22,584 17275R10
DSC Communications Corp. (b) 184,000 11,063 23331110
Digital Link 11,000 154
Newbridge Networks Corp. (b) 78,200 5,239 65090110
73,075
COMPUTER SERVICES & SOFTWARE - 0.2%
BancTec, Inc. (b) 456,050 10,261 05978410
Cheyenne Software, Inc. 182,100 6,852 16688810
Microsoft Corp. (b) 40,300 3,431 59491810
20,544
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 1.2%
Canon, Inc. 200,000 $ 3,036 13780199
Hewlett-Packard Co. 161,500 13,788 42823610
International Business Machines Corp. 90,800 5,153 45920010
Merisel, Inc. (b) 518,400 9,526 58984910
SynOptics Communications, Inc. (b) 284,000 8,165 87160910
Xerox Corp. 572,300 56,157 98412110
95,825
ELECTRONICS - 0.5%
AMP, Inc. 417,200 26,075 03189710
Intel Corp. 25,000 1,631 45814010
Motorola, Inc. 48,200 4,748 62007610
Texas Instruments, Inc. 107,900 7,580 88250810
40,034
TOTAL TECHNOLOGY 229,478
TRANSPORTATION - 3.8%
AIR TRANSPORTATION - 0.3%
AMR Corp. (b) 229,000 16,459 00176510
UAL Corp. (b) 73,700 10,834 90254910
27,293
RAILROADS - 2.8%
Burlington Northern, Inc. 100,000 6,462 12189710
CSX Corp. 791,500 72,620 12640810
Chicago & North Western Holdings Corp. (b) 925,100 24,746 16715510
Conrail, Inc. 256,500 16,672 20836810
Illinois Central Corp., Series A 889,200 33,345 45184110
Kansas City Southern Industries, Inc. 241,600 11,144 48517010
Santa Fe Pacific Corp. 2,006,600 49,162 80218310
Trinity Industries, Inc. 366,350 16,074 89652210
230,225
TRUCKING & FREIGHT - 0.7%
Airborne Freight Corp. 363,900 12,691 00926610
Rollins Truck Leasing Corp. 277,750 5,520 77574110
TNT Freightways Corp. 1,179,350 29,189 87259J10
Werner Enterprises, Inc. 110,700 3,266 95075510
XTRA Corp. 102,800 5,024 98413810
55,690
TOTAL TRANSPORTATION 313,208
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 9.8%
CELLULAR - 0.5%
Pactel Corp. (b) 100,000 $ 2,525 69525210
Rogers Communications, Inc. Class B (b) 620,000 10,496 77510920
Vodafone Group PLC sponsored ADR 282,900 25,037 92857T10
38,058
ELECTRIC UTILITY - 3.5%
Central & South West Corp. 145,800 4,338 15235710
DPL, Inc. 260,850 5,543 23329310
DQE, Inc. 412,400 13,712 23329J10
Duke Power Co. 295,600 12,415 26439910
Eastern Utilities Associates 133,584 3,607 27717310
Entergy Corp. 2,255,400 84,014 29364G10
Houston Industries, Inc. 268,100 12,232 44216110
Illinois Power Co. 522,500 11,364 45209210
Long Island Lighting Co. 1,148,700 26,994 54267110
NIPSCO Industries, Inc. 289,500 9,264 62914010
Niagara Mohawk Power Corp. 295,600 5,986 65352210
PSI Resources, Inc. 893,800 22,904 69363210
Peco Energy Co. 450,400 13,005 69330410
Pinnacle West Capital Corp. (b) 1,434,400 32,095 72348410
Portland General Corp. 488,800 9,715 73650610
Public Service Co. of New Mexico (b) 528,600 7,004 74449910
Southern Co. 100,000 4,350 84258710
Texas Utilities Co. 47,700 1,842 88284810
Union Electric Co. 165,000 6,353 90654810
286,737
GAS - 0.7%
Enron Corp. 425,000 13,972 29356110
MCN Corp. 200,000 7,375 55267J10
ONEOK, Inc. 374,700 7,400 68267810
Panhandle Eastern Corp. 199,600 5,015 69846210
Sonat, Inc. 457,200 14,230 83541510
UGI Corporation 445,715 10,307 90268110
58,299
TELEPHONE SERVICES - 5.1%
ALC Communications Corp. (b) 756,500 24,208 00157530
Ameritech Corp. 1,948,500 81,837 03095410
Bell Atlantic Corp. 177,500 10,073 07785310
BellSouth Corp. 260,500 16,021 07986010
Comsat Corp., Series 1 532,000 14,431 20564D10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
GTE Corp. 225,000 $ 7,734 36232010
LCI International, Inc. (b) 187,900 6,999 50181310
LDDS Communications, Inc. (b) 1,456,740 40,060 50182L10
MCI Communications Corp. 1,179,900 32,595 55267310
Pacific Telesis Group 617,200 35,566 69489010
Southwestern Bell Corp. 1,869,200 78,273 84533310
Sprint Corporation 768,000 27,840 85206110
Telefonos de Mexico SA sponsored ADR representing
shares Ord. Class L 425,000 31,397 87940378
U.S. West, Inc. 292,000 12,775 91288910
419,809
TOTAL UTILITIES 802,903
TOTAL COMMON STOCKS
(Cost $4,980,046) 6,009,347
PREFERRED STOCKS - 4.1%
CONVERTIBLE PREFERRED STOCKS - 4.0%
BASIC INDUSTRIES - 0.3%
IRON & STEEL - 0.1%
Inland Steel Industries, Inc., Series G, exchangeable $4.625 66,600
4,329 45747250
METALS & MINING - 0.2%
Reynolds Metals Co. $3.31 361,800 19,899 76176350
TOTAL BASIC INDUSTRIES 24,228
CONSTRUCTION & REAL ESTATE - 0.2%
REAL ESTATE - 0.2%
Rouse Co., Series A 245,900 12,664 77927320
DURABLES - 2.5%
AUTOS, TIRES, & ACCESSORIES - 2.5%
Chrysler Corp., Series A, $4.625 (f) 696,300 119,764 17119670
Ford Motor Co. (Del.), Series A, $4.20 674,800 75,493 34537020
Masotech, Inc. $1.20 250,000 5,937 57467030
201,194
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
ENERGY - 0.1%
OIL & GAS - 0.1%
Diamond Shamrock, Inc. 5% (f) 89,000 $ 5,318 25274730
FINANCE - 0.3%
BANKS - 0.2%
Bank of New York Co., Inc. 7 3/4% 172,300 8,680 06405787
Chemical Banking Corp. $5.00 (b)(f) 60,000 4,815 16372285
Norwest Corp., Series B, $3.50 (g) 57,400 4,448 66938080
17,943
CREDIT & OTHER FINANCE - 0.1%
American Express Co. 6 1/4% 272,000 11,798 02581613
SAVINGS & LOANS - 0.0%
Ahmanson (H.F.) & Co., Series D, $3.00 18,400 927 00867770
TOTAL FINANCE 30,668
MEDIA & LEISURE - 0.5%
BROADCASTING - 0.5%
CBS, Inc., Series B, $10.00 (g) 190,000 41,990 12484593
Evergreen Media Corp. exchangeable $3.00 32,500 1,580 30024820
43,570
UTILITIES - 0.1%
TELEPHONE SERVICES - 0.1%
LCI International, Inc. $1.25 344,700 10,169 50181320
TOTAL CONVERTIBLE PREFERRED STOCKS 327,811
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
UTILITIES - 0.1%
TELEPHONE SERVICES - 0.1%
SIP (Societa Ital Per L'Eser) Spa Di Risp N/C Ord. 1,549,900 3,395
78401796
Stet Societa Finanziaria Telefonica Spa 3,500,000 7,937 85982592
TOTAL NONCONVERTIBLE PREFERRED STOCKS 11,332
TOTAL PREFERRED STOCKS
(Cost $251,271) 339,143
CORPORATE BONDS - 4.2%
PRINCIPAL AMOUNT (000S)
CONVERTIBLE BONDS - 2.4%
BASIC INDUSTRIES - 0.0%
PACKAGING & CONTAINERS - 0.0%
Polly Peck International PLC euro 7 1/4%,
1/4/05 (c) - $ 7,500 $ 1,425 731991AA
CONGLOMERATES - 0.1%
Mark IV Industries, Inc. 6 1/4%, 2/15/07 B1 4,800 6,816 570387AF
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUST- 0.0%
Mid-Atlantic Realty Trust 7 5/8%, 9/15/03 - 1,080 1,058 595232AA
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.3%
Magna Intenational, Inc. 10%, 5/1/01 (f) - 4,550 26,754 559222AC
TEXTILES & APPAREL - 0.0%
Unifi, Inc. 6%, 3/15/02 Baa1 2,250 2,385 904677AC
TOTAL DURABLES 29,139
ENERGY - 0.1%
INDEPENDENT POWER - 0.1%
California Energy, Inc. 5%, 7/31/00 (f) Ba3 6,200 6,448 130190AB
FINANCE - 0.4%
BANKS - 0.4%
Bank of New York Co., Inc. 7 1/2%, 8/15/01 Baa1 21,972 33,507 064057AK
HEALTH - 0.5%
DRUGS & PHARMACEUTICALS - 0.2%
Astra AB 9 1/4%, 8/30/94 - SEK 11,112 6,800 0463229A
IVAX Corp. 6 1/2%, 11/15/01 (f) - 6,100 6,893 465823AA
13,693
CORPORATE BONDS - CONTINUED
PRINCIPAL AMOUNT (000S)
CONVERTIBLE BONDS - CONTINUED
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
Medco Containment Services, Inc.:
6%, 9/1/01 (f) AAA $ 14,750 $ 21,166 583905AC
6%, 9/1/01 Aaa 650 933 583905AB
22,099
TOTAL HEALTH 35,792
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.2%
Sensormatic Electronics Corp. 7%, 5/15/01 (g) Ba2 6,533 13,883 817265AC
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.2%
Time Warner, Inc. liquid yield option 0%,
6/22/13 Ba1 38,520 15,264 887315AS
ENTERTAINMENT - 0.0%
Discovery Zone, Inc. liquid yield option 0%,
10/14/13 B3 7,000 2,573 25468BAA
PUBLISHING - 0.2%
News America Holdings, Inc. gtd. exchangeable
0%, 3/31/02 (g) Ba3 15,600 13,572 652478AC
TOTAL MEDIA & LEISURE 31,409
NONDURABLES - 0.0%
FOODS - 0.0%
Sysco Corp. liquid yield option 0%, 10/12/04 A2 5,136 3,470 871829AA
RETAIL & WHOLESALE - 0.2%
GROCERY STORES - 0.2%
Food Lion, Inc. 5%, 6/1/03 (f) A3 6,700 7,236 344775AA
Kroger Co. 6 3/8%, 12/1/99 B3 3,800 4,959 501044BE
Starbucks Corp. 4 1/2%, 8/1/03 B2 2,000 1,955 855244AA
14,150
CORPORATE BONDS - CONTINUED
PRINCIPAL AMOUNT (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.1%
General Instrument Corp. 5%, 6/15/00 (g) B1 $ 6,500 $ 9,051 370121AA
ELECTRONICS - 0.1%
Motorola, Inc. liquid yield option 0%, 9/27/13 A1 6,750 4,674 620076AJ
TOTAL TECHNOLOGY 13,725
TOTAL CONVERTIBLE BONDS 190,822
NONCONVERTIBLE BONDS - 1.8%
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.1%
Inland Steel Industries, Inc. 12 3/4%, 12/15/02 Ba3 5,000 5,788
457472AB
Stelco Co. 10 1/4%, 4/30/96 - CAD 4,500 3,352 858076AE
9,140
CONGLOMERATES - 0.1%
Coltec Industries, Inc. 10 1/4%, 4/1/02 Ba2 6,000 6,465 196879AB
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
DAL Tile International, Inc. secured 0%, 7/15/98 Caa 3,210 2,026
23426RAA
USG Corp. 10 1/4%, 12/15/02 B2 3,500 3,588 903293AK
5,614
ENERGY - 0.2%
ENERGY SERVICES - 0.1%
TransTexas Gas Corp. 10 1/2%, 9/1/00 B1 3,530 3,768 893895AA
OIL & GAS - 0.1%
Mesa Capital Corp. secured 0%, 6/30/98 (e) - 10,000 9,063 590910AF
TOTAL ENERGY 12,831
CORPORATE BONDS - CONTINUED
PRINCIPAL AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 0.6%
BANKS - 0.6%
First Bank Systems, Inc. 9.56%, 2/7/94 Baa1 $ 10,000 $ 10,025 3192799H
KeyCorp 6.15%, 1/16/95 A2 5,000 5,103 49326EBD
Morgan (J.P.) & Co., Inc. 5 3/8%, 1/21/95 Aa1 15,000 15,219
6168809D
Republic National Bank New York 5 1/5%,
1/17/95 Aa1 15,000 15,162 760677BE
45,509
CREDIT & OTHER FINANCE - 0.0%
GPA Delaware, Inc.:
8 1/2%, 3/3/97 - 2,000 1,760 3619289C
8 3/4%, 12/15/98 Caa 280 237 361928AA
8 5/8%, 1/15/99 - 1,500 1,245 3619289B
General Electric Capital Corp. peso linked
11.09%, 10/29/96 (h) Aaa 2,000 2,005 36962FPE
5,247
TOTAL FINANCE 50,756
HEALTH - 0.0%
MEDICAL FACILITIES MANAGEMENT - 0.0%
American Healthcare Management, Inc.
10%, 8/1/03 B2 5,000 5,275 026496AD
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.2%
SCI Television, Inc. secured 11%, 6/30/05 - 7,250 7,612 783895AJ
SPI Holding, Inc. reset pay-in-kind 11 1/2%,
12/1/02 B- 7,000 7,175 78462GAF
14,787
LODGING & GAMING - 0.0%
La Quinta Inns, Inc. 9 1/4%, 5/15/03 B2 5,000 5,163 504195AB
PUBLISHING - 0.1%
News America Holdings, Inc. 9 1/4%, 2/1/13 Ba1 7,500 8,598 652478AH
TOTAL MEDIA & LEISURE 28,548
CORPORATE BONDS - CONTINUED
PRINCIPAL AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - 0.1%
BEVERAGES - 0.1%
Dr. Pepper/Seven-Up Companies, Inc. 0%,
11/1/02 (e) B3 $ 7,500 $ 6,000 256131AD
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.1%
Apparel Retailers, Inc. 12 3/4%, 8/15/05 Caa 1,160 719 037795AB
Specialty Retailers, Inc. 10%, 8/15/00 (f) B1 5,000 5,100 847514AC
5,819
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Color Tile, Inc. 10 3/4%, 12/15/01 B2 7,000 7,333 196267AD
TOTAL RETAIL & WHOLESALE 13,152
UTILITIES - 0.1%
CELLULAR - 0.0%
Cencall Communications Corp. 0%,
1/15/04 (e) Caa 1,970 1,221 151297AB
ELECTRIC UTILITY - 0.1%
Long Island Lighting Co. 10 1/4%, 6/15/94 Baa3 10,000 10,208 542671CB
TOTAL UTILITIES 11,429
TOTAL NONCONVERTIBLE BONDS 149,210
TOTAL CORPORATE BONDS
(Cost $307,128) 340,032
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 1.9%
U.S. TREASURY OBLIGATIONS - 1.5%
6 7/8%, 2/15/94 Aaa 15,000 15,019 912827ZW
8 7/8%, 2/15/94 Aaa 15,000 15,030 912827WY
7%, 5/15/94 Aaa 15,000 15,162 912827A7
9 1/2%, 5/15/94 Aaa 35,000 35,623 912827XG
9 1/2%, 10/15/94 Aaa 28,700 29,893 912827VK
8 1/8%, 8/15/19 Aaa 10,000 12,145 912810ED
122,872
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
PRINCIPAL AMOUNT (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.4%
Federal Home Loan Bank:
9.55%, 4/25/94 Aaa $ 10,000 $ 10,144 313388VN
5.89%, 11//25/94 Aaa 10,000 10,187 313388C9
Federal National Mortgage Association
7.45%, 7/11/94 Aaa 10,000 10,178 313586Y5
30,509
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS
(Cost $158,344) 153,381
FOREIGN GOVERNMENT SECURITIES - 3.1%
Argentinean Government:
BOCON:
3.3125%, 4/1/01 (h) B1 8,853 7,661 039995AF
3.9775%, 4/1/01 (h) - ARP 620 503 039995AH
3.3125%, 9/1/02 (h) - 3,115 2,567 039995AM
euro 3.9775%, 9/1/02 (h) - ARP 808 613 039995AJ
3.9775%, 4/1/07 (h) - ARP 3,090 2,237 039995AW
Brady euro:
4%, 3/31/23 B1 40,750 28,576 039995AD
4 1/4%, 3/31/23 B1 500 435 039995AL
4.1875%, 3/31/05 (h) BB- 11,250 9,914 039995AU
4.1875%, 3/31/05 (f)(h) - 750 661 039995AT
Brazilian Government IDU euro 4.3125%,
1/1/01 (h) B2 2,970 2,554 1057569E
Danish Government Bullet:
9%, 11/15/00 Aa1 DKK 80,000 14,010 2485059A
8%, 5/15/03 Aa1 DKK 57,300 9,687 249998AG
French Government:
8 1/2%, 10/25/08 Aaa FRF 100,000 21,172 351996AL
8 1/2%, 4/25/23 Aaa FRF 372,000 81,445 351996AC
Mexican Government:
Bondes 10.31%, 9/22/94 (h) - MXN 12,300 3,962 597998TE
Brady:
4.1875%, 12/31/19 (h) Ba3 1,500 1,397 597998QD
4.3125%, 12/31/19 (h) Ba3 10,750 10,010 597998RJ
6 1/4%, 12/31/19 Ba3 18,750 15,492 597998PF
Cetes 0%, 6/30/94 - MXN 19,700 6,066 597998UR
Moroccan Government Trust 4 1/2%,
1/3/09 (f)(h) - 16,500 13,757
New Zealand Government 8%, 4/15/04 Aa3 NZD 15,500 10,409 6501629K
Nigerian Government Brady 5 1/2%,
11/15/20 (e) - 1,250 745 997999AC
FOREIGN GOVERNMENT SECURITIES - CONTINUED
PRINCIPAL AMOUNT (000S)
Siderurgica Brasileiras SA inflation indexed 6%,
8/15/99 - BRC 753 $ 117 82599PAA
Swedish Government 10 3/4%, 1/23/97 Aa2 SEK 75,000 10,659 8702009Q
TOTAL FOREIGN GOVERNMENT SECURITIES
(Cost $234,574) 254,649
OTHER SECURITIES - 1.1%
INDEXED SECURITIES - 1.1%
Bankers Trust Company notes (h)(j):
2.322%, 11/9/94 (coupon inversely indexed
to HELIBOR and principal indexed to value
of 2-year Finnish securities, both multiplied
by 8) 2,500 2,765 0669919B
0%, 1/27/95 (coupon inversely indexed to
STIBOR and principal indexed to value of
2-year Swedish securities, both multiplied
by 9) 5,000 4,948 06699DAB
6.245%, 2/3/95 (coupon inversely indexed
to HELIBOR and principal indexed to value
of 2-year Finnish securities, both multiplied
by 8) 8,000 7,857 06699DAD
11.6143%, 2/3/95 (coupon inversely indexed
to LIBOR and principal indexed to value
of 4-year Canadian securities, both multiplied
by 5) 25,000 24,620 06699DAE
Bayerische Landesbank cert. of dep. (h)(j):
3 1/8%, 9/13/94 (coupon inversely indexed
to STIBOR and principal indexed to value
of 2-year Swedish securities, both multiplied
by 6) 10,000 10,184 072999AH
6.106%, 1/27/95 (coupon inversely indexed
to HELIBOR and principal indexed to value
of 2-year Finnish securities, both multiplied
by 8) 12,750 12,290 072999AS
0%, 1/27/95 (inversely indexed to 2-year
SEK LIBOR, multiplied by 9) 5,000 4,851 072999AT
6.2675%, 1/27/95 (coupon inversely indexed
to HELIBOR and principal indexed to value
of 2-year Finnish securities, both multiplied
by 8) 7,300 7,074 072999AU
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
INDEXED SECURITIES - CONTINUED
Citibank Nassau (h)(j):
0%, 11/10/94 (coupon inversely indexed to
ITL LIBOR and principal indexed to value of
2-year Italian securities, both multiplied
by 8) $ 5,000 $ 5,123 223991AY
0%, 11/29/94 (coupon inversely indexed to
ITL LIBOR and principal indexed to value of
2-year Italian securities, both multiplied
by 8) 5,000 5,284 223991BE
0%, 1/27/95 (coupon inversely indexed to
STIBOR and principal indexed to 2-year
Swedish securities, both multiplied
by 9) 5,000 4,800 223991BS
TOTAL OTHER SECURITIES
(Cost $90,551) 89,796
COMMERCIAL PAPER - 0.1%
Banco International Mexico 0%, 4/14/94
(Cost $9,732) MXN 31,137 9,795 282996AJ
REPURCHASE AGREEMENTS - 12.3%
MATURITY AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.19%
dated 1/31/94 due 2/1/94 $ 1,013,779 1,013,689
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $7,045,335) $ 8,209,832
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
114,062 FRF 2/1/94 $ 19,374 $ (82)
2,258,038 JPY 2/28/94 20,751 (52)
TOTAL CONTRACTS TO BUY
(Payable amount $40,259) $ 40,125 $ (134)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.5%
CONTRACTS TO SELL
161,697 DKK 2/7/94 $ 24,021 $ 115
720,347 FRF 2/1/94 to 4/28/94 121,636 82
6,138,568 JPY 2/28/94 to 2/28/94 56,473 168
138,184 NOK 2/7/94 to 4/11/94 17,475 (657)
TOTAL CONTRACTS TO SELL
(Receivable amount $219,313) $ 219,605 $ (292)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.7%
SECURITIES SOLD SHORT
AMOUNTS IN THOUSANDS
NUMBER OF SHARES ISSUER VALUE
131 CBS, Inc. $ 40,117
136 General Instrument Corp. 8,002
226 News Corp. Ltd. ADR 13,045
157 Norwest Corp. 4,149
416 Sensormatic Electronics Corp. 13,763
TOTAL SECURITIES SOLD SHORT
(Total proceeds $67,554) $ 79,076
THE VALUE OF SECURITIES SOLD SHORT AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.0%
CURRENCY ABBREVIATIONS
ARP - Argentinean peso
BRC - Brazilian cruzeiro
CAD - Canadian dollar
DKK - Danish krone
FRF - French franc
ITL - Italian lira
JPY - Japanese yen
MXN - Mexican peso
NZD - New Zealand dollar
NOK - Norwegian krone
SEK - Swedish krona
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. Non-income producing
3. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
4. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
5. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
6. 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 $226,680,000 or 2.8% of net
assets.
7. Security pledged to cover margin requirements on open short sale
transactions (see Note 2 of Notes to Financial Statements). At the period
end the value of securities pledged amounted to $82,944,000.
8. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
9. Market value reflects the payment of the first installment. Additional
equal payments of $699,000 are payable in January and October of 1995.
10. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 1.9% AAA, AA, A 5.6%
Baa 0.9% BBB 0.7%
Ba 1.3% BB 0.8%
B 1.4% B 1.1%
Caa 0.1% 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 1.3%.
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 87.0%
United Kingdom 2.4
Netherlands 1.9
Canada 1.7
Japan 1.4
France 1.4
Mexico 1.2
Others (individually less than 1%) 3.0
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1994, the aggregate cost of investment securities for income
tax purposes was $7,051,075,000. Net unrealized appreciation aggregated
$1,158,757,000, of which $1,250,803,000 related to appreciated investment
securities and $92,046,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JANUARY 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 8,209,832
agreements of $1,013,689) (cost $7,045,335) (Notes 1 and
2) - See accompanying schedule
Securities sold short, at value (proceeds received $67,554) (Note (79,076) $ 8,130,756
2)
Long foreign currency contracts held, at value (cost $40,259) 40,125
(Note 2)
Short foreign currency contracts (Note 2) (219,605)
Contracts held, at value
Receivable for contracts held 219,313 (292)
Restricted cash on securities sold short (Note 2) 67,554
Cash 70
Receivable for investments sold 253,466
Receivable for fund shares sold 27,601
Dividends receivable 9,897
Interest receivable 16,430
Other receivables 3,164
TOTAL ASSETS 8,548,771
LIABILITIES
Payable for foreign currency contracts held (Notes 1 and 2) 40,259
Payable for investments purchased 253,254
Payable for fund shares redeemed 11,756
Accrued management fee 3,475
Other payables and accrued expenses 2,443
TOTAL LIABILITIES 311,187
NET ASSETS $ 8,237,584
Net Assets consist of (Note 1):
Paid in capital $ 6,868,395
Distributions in excess of net investment income 220
Accumulated undistributed net realized gain (loss) on 216,420
investments
Net unrealized appreciation (depreciation) on:
Investment securities 1,164,497
Foreign currency contracts (426)
Short sales (11,522)
NET ASSETS, for 357,177 shares outstanding $ 8,237,584
NET ASSET VALUE and redemption price per share ($8,237,584 $23.06
(divided by) 357,177 shares)
Maximum offering price per share (100/97.00 of $23.06) $23.77
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 63,158
Dividends (including $2 received from affiliated issuers)
(Note 6)
Interest 43,343
TOTAL INCOME 106,501
EXPENSES
Management fee (Note 4) $ 19,226
Transfer agent fees (Note 4) 9,716
Accounting fees and expenses (Note 4) 386
Non-interested trustees' compensation 18
Custodian fees and expenses 289
Registration fees 574
Audit 55
Legal 32
Miscellaneous 394
Total expenses before reductions 30,690
Expense reductions (Note 5) (368) 30,322
NET INVESTMENT INCOME 76,179
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:
Investment securities 339,458
Foreign currency contracts 3,610 343,068
Change in net unrealized appreciation (depreciation) on:
Investment securities 325,541
Foreign currency contracts (6,281)
Short sales (4,307) 314,953
NET GAIN (LOSS) 658,021
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 734,200
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JULY 31,
JANUARY 31, 1994 1993
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 76,179 $ 138,527
Net investment income
Net realized gain (loss) on investments 343,068 175,544
Change in net unrealized appreciation (depreciation) 314,953 612,689
on
investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 734,200 926,760
FROM OPERATIONS
Distributions to shareholders: (90,623) (145,686)
From net investment income
From net realized gain (247,030) (484,558)
TOTAL DISTRIBUTIONS (337,653) (630,244)
Share transactions 1,666,341 2,629,566
Net proceeds from sales of shares
Reinvestment of distributions from: 87,659 140,620
Net investment income
Net realized gain 241,409 472,581
Cost of shares redeemed (800,693) (1,091,633)
Net increase (decrease) in net assets resulting from 1,194,716 2,151,134
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,591,263 2,447,650
NET ASSETS
Beginning of period 6,646,321 4,198,671
End of period (including undistributed net investment $ 8,237,584 $ 6,646,321
income of $220 and $13,832, respectively)
OTHER INFORMATION
Shares
Sold 74,718 128,243
Issued in reinvestment of distributions from: 3,995 7,018
Net investment income
Net realized gain 10,976 24,981
Redeemed (35,965) (53,563)
Net increase (decrease) 53,724 106,679
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JULY 31,
ENDED JANUARY
31,
1994
(UNAUDITED) 1993 1992 1991 1990 1989
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE
DATA
Net asset value, $ 21.90 $ 21.34 $ 19.92 $ 17.10 $ 18.56 $ 14.56
beginning of period
Income from
Investment
Operations
Net investment .23 .53 .50 .46 .58 .76(dagger)
income
Net realized and 1.98 3.02 1.94 3.10 (.02) 3.86
unrealized gain
(loss) on
investments
Total from investment 2.21 3.55 2.44 3.56 .56 4.62
operations
Less Distributions
From net investment (.28) (.59) (.38) (.52) (.75) (.62)
income
From net realized (.77) (2.40) (.64) (.22) (1.27) -
gain
Total distributions (1.05) (2.99) (1.02) (.74) (2.02) (.62)
Net asset value, end of $ 23.06 $ 21.90 $ 21.34 $ 19.92 $ 17.10 $ 18.56
period
TOTAL RETURN (double dagger) 10.38%# 19.10% 12.75% 21.89% 3.22% 32.66%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 8,238 $ 6,646 $ 4,199 $ 2,686 $ 1,910 $ 1,428
period (in millions)
Ratio of expenses to .82%*(diamond) .83% .86% .87% .87% .89%
average net assets
Ratio of expenses to .83%*(diamond) .83% .86% .87% .87% .89%
average net assets
before expense
reductions
Ratio of net investment 2.06%* 2.67% 2.49% 2.62% 3.43% 4.76%
income to average
net assets
Portfolio turnover rate 103%* 87% 221% 215% 108% 97%
</TABLE>
* ANNUALIZED
(double dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
# THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
(diamond) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
(dagger) NET INVESTMENT INCOME PER SHARE CONTAINS A SPECIAL DIVIDEND FROM
QUANTUM CHEMICAL CORP. OF $.09 PER SHARE.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Growth & Income Portfolio (the fund) is a fund of Fidelity
Securities Fund (the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange), are valued primarily using dealer-supplied valuations or at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities maturing within sixty days are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INVESTMENT INCOME. 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 fund is informed of the
ex-dividend date. Interest income is accrued as earned. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, equalization, market discount, non-taxable
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
dividends, net operating losses, expiring capital loss carryforwards and
losses deferred due to wash sales excise tax regulations. The fund also
utilized earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective August 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of July 31, 1993 have been reclassified to reflect
an increase in paid in capital of $55,647,000, an increase in undistributed
net investment income of $832,000 and a decrease in accumulated net
realized gain on investments of $56,479,000.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS -
CONTINUED
determining that the value of these underlying securities remains at least
equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
SHORT SALES AGAINST THE BOX. The fund may hedge its 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.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $3,893,144,000 and $3,442,266,000, respectively, of which sales
of U.S. government and government agency obligations aggregated
$132,150,000.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, 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 ranging from
.31% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .20%.
For the period, the
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
management fee was equivalent to an annualized rate of .52% of average net
assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the fund, received sales
charges of $4,472,000 on sales of shares of the fund.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,965,000 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$368,000 under this arrangement.
6. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions with companies which are or
were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNT IN THOUSANDS PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Cephalon, Inc. (a) $ 927 - - $ 11,835
Summit Care Corp. (a) $ 753 - -
TNT Freightways 110 278 $ 2 29,189
TOTALS $ 1,037 $ 1,031 $ 2 $ 41,024
(a) non-income producing
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(Registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Steven Kaye, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Market Index Fund
Puritan Fund
Real Estate Investment Portfolio
Utilities Income Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE