FIDELITY
(registered trademark)
BLUE CHIP GROWTH
FUND
SEMIANNUAL REPORT
JANUARY 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
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 past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 23 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 27 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMA-
TION 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. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
AND ARE
SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUND NOR
FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY
FIDELITY FUND,
INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS.
READ IT
CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been a few positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
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. A fund's total
return 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, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Blue Chip Growth 2.97% 3.01% 147.57% 227.29%
Blue Chip Growth (incl. 3% sales -0.12% -0.08% 140.14% 217.47%
charge)
S&P 500(registered trademark) 4.17% 0.53% 66.90% 139.09%
Average Growth Fund 2.18% -4.26% 64.81% 126.13%
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. For example, if you had
invested $1,000 in a fund that had a 5% return over the past year, you
would end up with $1,050. You can compare these figures to the performance
of the Standard & Poor's Composite Index of 500 Stocks- a common proxy for
the U.S. stock market. To measure how the fund's performance stacked up
against its peers, you can compare it to the average growth fund, which
currently reflects the performance of over 531 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, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Blue Chip Growth 3.01% 19.88% 18.19%
Blue Chip Growth (incl. 3% sales charge) -0.08% 19.15% 17.69%
S&P 500(registered trademark) 0.53% 10.79% 13.08%
Average Growth Fund -4.26% 10.21% 11.83%
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 (31Standard & Poor's 50
12/31/87 9700.00 10000.00
01/31/88 9767.90 10421.00
02/29/88 10185.00 10906.62
03/31/88 9816.40 10569.60
04/30/88 9797.00 10686.93
05/31/88 9797.00 10779.90
06/30/88 10359.60 11274.70
07/31/88 10155.90 11231.86
08/31/88 9729.10 10849.97
09/30/88 10165.60 11312.18
10/31/88 10146.20 11626.66
11/30/88 9961.90 11460.40
12/31/88 10272.95 11660.96
01/31/89 11031.74 12514.54
02/28/89 10700.99 12202.93
03/31/89 10953.92 12487.26
04/30/89 11702.99 13135.34
05/31/89 12461.79 13667.32
06/30/89 12024.02 13589.42
07/31/89 13191.40 14816.55
08/31/89 13512.43 15106.95
09/30/89 13846.76 15045.01
10/31/89 13640.68 14695.97
11/30/89 13876.20 14995.77
12/31/89 13995.40 15355.66
01/31/90 12823.32 14325.30
02/28/90 13170.97 14510.09
03/31/90 13826.54 14894.61
04/30/90 13697.41 14522.25
05/31/90 15246.94 15938.17
06/30/90 15594.59 15829.79
07/31/90 15227.07 15779.13
08/31/90 13915.94 14352.70
09/30/90 13258.57 13653.72
10/31/90 13178.88 13595.01
11/30/90 14015.63 14473.25
12/31/90 14485.44 14877.05
01/31/91 15619.78 15525.69
02/28/91 16824.39 16635.78
03/31/91 17667.62 17038.36
04/30/91 17476.89 17079.26
05/31/91 18400.42 17817.08
06/30/91 17476.89 17001.06
07/31/91 19012.77 17793.31
08/31/91 19845.96 18215.01
09/30/91 19534.96 17910.82
10/31/91 19926.87 18150.82
11/30/91 19504.82 17419.34
12/31/91 22424.75 19412.12
01/31/92 21719.25 19051.05
02/29/92 21820.04 19298.72
03/31/92 21225.41 18922.39
04/30/92 21507.60 19478.71
05/31/92 21951.06 19574.15
06/30/92 21316.11 19282.50
07/31/92 22192.95 20071.15
08/31/92 21961.14 19659.70
09/30/92 22252.77 19891.68
10/31/92 22561.69 19961.30
11/30/92 23745.90 20641.98
12/31/92 23808.72 20895.88
01/31/93 23860.87 21071.40
02/28/93 23704.44 21357.97
03/31/93 24851.59 21808.63
04/30/93 25247.88 21280.86
05/31/93 26572.33 21851.19
06/30/93 26822.62 21914.55
07/31/93 26822.62 21826.90
08/31/93 28491.21 22654.14
09/30/93 29084.10 22479.70
10/31/93 29409.19 22945.03
11/30/93 28515.19 22727.05
12/31/93 29642.52 23002.05
01/31/94 30819.88 23784.12
02/28/94 30844.41 23139.57
03/31/94 29875.54 22130.68
04/30/94 30758.56 22413.96
05/31/94 31151.02 22781.54
06/30/94 30071.77 22223.40
07/31/94 30832.15 22952.32
08/31/94 32500.08 23893.37
09/30/94 32403.55 23307.98
10/31/94 33899.48 23832.41
11/30/94 32131.57 22964.43
12/31/94 32562.32 23305.00
01/31/95 31746.69 23909.30
$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, 1995, the value of your investment would have grown to
$31,747 - a 217.47% 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 $23,909 - a
139.09% 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. HOW HAS THE FUND PERFORMED, MICHAEL?
A. Pretty well. For the six months and one year ended January 31, 1995, the
fund returned 2.97% and 3.01%, respectively. Both numbers beat the average
growth fund, which returned 2.18% for the six-month period and -4.26 for
the year, according to Lipper Analytical Services.
Q. WHAT FACTORS HELPED THE FUND OUTPERFORM ITS PEERS?
A. During the past six months, the fund was able to take advantage of
uncertainty and volatility in the market by investing in some of the
potentially high-growth and aggressive growth stocks that had been beaten
down by the market. Because the companies themselves had strong earnings
and balance sheets, many of the stocks later rallied, which gave the fund a
nice lift.
Q. CAN YOU GIVE A FEW EXAMPLES?
A. Sure. I pared down some significant holdings such as Nucor and Sears to
take advantage of what I thought were better opportunities in stocks like
Compaq and Oracle.
Q. DO YOU GENERALLY LOOK TO THE TECHNOLOGY INDUSTRY FOR THIS TYPE OF
GROWTH?
A. Although nearly one-third of the fund is invested in technology-related
stocks, the fund is not a reflection of my overall feeling about the
high-tech industry. Instead, it's the result of the company-by-company
analysis I've done on stocks I feel are inexpensive relative to earnings
growth prospects. Compaq is a good example. I bought a lot of Compaq in
January after the company reported a 48% increase in sales and a 55% rise
in earnings. Despite the fact that fourth-quarter results were terrific,
they fell below Wall Street expectations and the stock dropped 15%. Because
I think that the stock is undervalued, and expect earnings to be strong
again next year, I used the dip in the stock as a buying opportunity.
Similarly, I perceive my other technology holdings - such as Oracle and
Silicon Graphics - to be fundamentally strong companies with good earnings
potential.
Q. WHERE ELSE HAVE YOU FOUND VALUES?
A. I've more than doubled the fund's position in Morgan Stanley and also
greatly increased the fund's holding in Merrill Lynch. Both companies are
very large, well-run companies with stock prices that have corrected
recently. Between October 1993 and December 1994, the stock price of Morgan
Stanley fell from about $90
per share to $55 per share. Merrill Lynch declined meaningfully during the
same time period. Both companies suffered from rising interest rates, which
are not generally good for financial companies, especially brokerages.
However, trading at about a 35% to 40% discount from their highs, both
companies look very attractive now as they buy back stock, increase market
share and continue to grow.
Q. IBM CONTINUES TO BE A LARGE POSITION IN THE FUND. WHAT'S THE STORY
THERE?
A. IBM is a classic blue chip turnaround story. After several disappointing
quarters, the company has reinvented itself with new management, reduced
headcount and an emphasis on growing the business. With good earnings
growth and cash flow, the company is in a good position to make important
acquisitions, which makes the stock even more attractive to me.
Q. YOU'VE MENTIONED SOME STOCKS THAT ARE GENERALLY RECOGNIZED AS BLUE CHIPS
OF TODAY. CAN YOU IDENTIFY SOME BLUE CHIPS OF TOMORROW?
A. Sure, Oxford Health Plans and Petsmart come to mind immediately. I
believe that both are good companies with strong growth prospects,
management and balance sheets. They're interesting because they're leaders
in their industries and just happen to be at an early point in their
development. Oxford Health Plans is an HMO in the New York metropolitan
area which has reported impressive growth in membership and earnings while
keeping costs under control. Petsmart is the leading pet superstore in the
U.S. The company controls an increasingly large portion of a market that is
more than $11 billion in size and growing. Because of its attractive
stores, strong management team and lack of meaningful competition, I think
Petsmart is poised to be a blue chip stock of tomorrow.
Q. WHAT INVESTMENTS HAVE BEEN DISAPPOINTING TO YOU OVER THE PAST SIX
MONTHS?
A. I was far too bullish on energy stocks, which have not been strong
performers. I look at companies like Renaissance Energy and Burlington
Resources as growth stocks that sell energy. Unfortunately, warm weather
has impacted the demand for natural gas. This has caused prices to fall and
hurt the earnings, cash flow and stock prices of many of the energy
companies that the fund owned during the period. I've reduced my position
in energy stocks from 15.4% six months ago to 8.3% as of January 31, 1995.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I think the fund is invested in companies that have strong earnings
growth prospects. Because the market hasn't done much in the past six
months, their stock prices have stayed about the same, and in some cases
have gone down. Though I go out of my way to avoid making predictions about
the market, I am more optimistic than I have been in some time.
FUND FACTS
GOAL: to increase the value
of the fund's shares over the
long term by investing mainly
in large, successful growth
companies at the top of
their industries
START DATE: December 31, 1987
SIZE: as of January 31,
1995, more than $3.4 billion
MANAGER: Michael Gordon,
since January 1993;
previously managed Fidelity
Select Chemicals (August
1992 - January 1993) and
Fidelity Select Biotechnology
Portfolios (May 1990 -
August 1992); joined Fidelity
in 1987
(checkmark)
MICHAEL GORDON ON HEALTH CARE
STOCKS:
"My investments in health care
stocks are almost exclusively
in health maintenance
organizations (HMOs). They
have proven to be one of the
most effective ways of
controlling costs in the health
care industry. From time to
time, there have been
concerns in the marketplace
about the viability of HMOs,
which has provided me with
some great buying
opportunities. In addition to
Oxford Health Plans, which I
have identified as a blue chip of
tomorrow, I consider Humana
a blue chip of today. An
HMO that is national in scope,
growth has been steady at
Humana. The company
provides excellent services to
its HMO customers and
delivers impressive
cost-containment numbers to
its corporate sponsors. Though
health care stocks are not new
to the fund, I've had an
opportunity to increase the
fund's holdings over the past
six months."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Oracle Systems Corp. 3.1 3.3
Motorola, Inc. 2.6 2.7
Compaq Computer Corp. 2.6 0.1
International Business Machines Corp. 2.3 2.7
Lowe's Companies, Inc. 2.2 3.0
Oxford Health Plans, Inc. 2.2 2.4
Travelers, Inc. (The) 1.9 1.4
Morgan Stanley Group, Inc. 1.9 0.8
United HealthCare Corp. 1.8 0.9
Petsmart, Inc. 1.7 0.6
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO
Technology 33.0 31.4
Finance 13.5 14.0
Retail & Wholesale 11.9 9.0
Energy 8.3 15.4
Health 6.0 4.2
ASSET ALLOCATION
AS OF JANUARY 31, 1995* AS OF JULY 31, 1994**
Row: 1, Col: 1, Value: 9.0
Row: 1, Col: 2, Value: 40.0
Row: 1, Col: 3, Value: 41.0
Row: 1, Col: 1, Value: 2.5
Row: 1, Col: 2, Value: 40.0
Row: 1, Col: 3, Value: 97.5
Stocks 91.0%
Short-term
Investments 9.0%
FOREIGN
INVESTMENTS 11.5%
Stocks 97.5%
Short-term
Investments 2.5%
FOREIGN
INVESTMENTS 20.6%
*
**
4
INVESTMENTS JANUARY 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.5%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 3.0%
CHEMICALS & PLASTICS - 1.2%
Avery Dennison Corp. 40,700 $ 1,435
Hanna (M.A.) Co. 400,700 9,667
IMC Fertilizer Group, Inc. 6,800 310
Methanex Corp. 350,000 4,322
PT Tri Polyta Indonesia sponsored ADR (a) 1,079,000 23,602
Terra Industries, Inc. 335,700 3,819
Union Carbide Corp. 10,000 255
43,410
IRON & STEEL - 0.4%
Allegheny Ludlum Industries, Inc. 383,300 7,379
J & L Specialty Steel, Inc. 251,200 4,898
Nucor Corp. 1,700 87
Tadano Ltd. 281,000 2,743
15,107
METALS & MINING - 1.2%
Alcan Aluminium Ltd. 7,100 172
Aluminum Co. of America 365,400 28,730
Belden, Inc. 51,900 1,142
Castech Aluminum Group (a) 529,000 7,802
Reynolds Metals Co. 138,600 6,930
44,776
PACKAGING & CONTAINERS - 0.0%
Ball Corp. 10,000 305
PAPER & FOREST PRODUCTS - 0.2%
Champion International Corp. 2,000 77
Fajar Surya Wisesa (a) 4,312,000 5,591
Stone Container Corp. (a) 2,400 41
5,709
TOTAL BASIC INDUSTRIES 109,307
CONSTRUCTION & REAL ESTATE - 0.4%
BUILDING MATERIALS - 0.4%
Carlisle Companies, Inc. 106,000 3,710
Centex Construction Products 186,600 2,146
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
BUILDING MATERIALS - CONTINUED
Cimentas AS (a) 540,000 $ 339
Lafarge Corp. 63,300 1,139
Medusa Corp. 172,600 4,337
Ply-Gem Industries, Inc. 47,600 982
Southdown, Inc. (a) 95,800 1,305
13,958
CONSTRUCTION - 0.0%
Pulte Corp. 6,000 122
TOTAL CONSTRUCTION & REAL ESTATE 14,080
DURABLES - 3.9%
AUTOS, TIRES, & ACCESSORIES - 3.2%
Autozone, Inc. (a) 25,300 667
Chrysler Corp. 620,300 27,914
Dana Corp. 105,700 2,352
Eaton Corp. 15,500 715
Echlin, Inc. 413,100 13,632
Ford Motor Co. 1,200 30
General Motors Corp. 987,957 38,283
Gentex Corp. (a) 237,800 5,291
Magna International, Inc. Class A 340,700 12,288
Suzuki Motor Corp. 1,536,000 14,256
115,428
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 369,200 8,861
Matsushita Electric Industrial Co. Ltd. 1,115,000 15,439
24,300
TOTAL DURABLES 139,728
ENERGY - 8.3%
ENERGY SERVICES - 3.0%
Arethusa Offshore Ltd. (a) 135,400 1,625
Dual Drilling Co. (a)(b) 863,400 7,285
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Energy Service Co., Inc. (a) 1,071,400 $ 12,723
Enterra Corp. (a) 18,900 317
Global Industries Ltd. (a)(b) 739,600 17,196
Global Marine, Inc. (a) 812,600 3,047
Hornbeck Offshore Services, Inc. (a) 298,800 3,063
Marine Drilling Cos., Inc. (a)(b) 2,741,300 6,853
Nabors Industries, Inc. (a) 38,600 251
Newpark Resources, Inc. (a) 5,000 94
Noble Drilling Corp. (a) 3,319,875 16,600
Nowsco Well Service Ltd. 408,700 3,812
Offshore Logistics, Inc. (a) 220,000 2,750
Production Operators Corp. 24,000 540
Rowan Companies, Inc. (a) 163,500 940
Schlumberger Ltd. 29,100 1,535
Sonat Offshore Drilling, Inc. 225,900 4,574
Tidewater, Inc. 721,200 12,080
Weatherford International, Inc. (a) 1,343,900 12,095
107,380
OIL & GAS - 5.3%
Amerada Hess Corp. 372,400 16,898
Amoco Corp. 33,700 1,955
Anadarko Petroleum Corp. 5,700 218
Anderson Exploration Ltd. (a) 1,132,200 9,656
Apache Corp. 44,900 1,044
Barrington Petroleum Ltd. (a) 1,482,800 4,530
Blue Range Resource Corp. Class A (a)(b) 1,375,100 8,185
British Petroleum PLC ADR 572,796 44,463
Burlington Resources, Inc. 693,900 23,940
Camco International, Inc. 452,000 7,967
Devon Energy Corp. 393,000 6,681
Dorset Exploration Ltd. (a) 189,300 975
Grad & Walker Energy Corp. (a) 231,900 865
Jordan Petroleum Ltd. Class A (a)(b) 957,700 4,765
Mark Resources, Inc. (a) 984,000 4,633
Murphy Oil Corp. 5,800 252
Newfield Exploration Co. (a) 88,300 1,689
Northstar Energy Corp. (a) 1,105,900 8,253
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Pancanadian Petroleum Ltd. 394,600 $ 10,552
Parker & Parsley Petroleum Co. 244,100 4,455
Pogo Producing Co. 279,000 4,604
Renaissance Energy Ltd. (a) 754,200 13,333
Renaissance Energy Ltd. (a)(d) 50,000 884
Rio Alto Exploration Ltd. (a) 1,866,600 5,505
Unocal Corp. 132,228 3,454
189,756
TOTAL ENERGY 297,136
FINANCE - 13.5%
BANKS - 0.0%
Citicorp 303 12
CREDIT & OTHER FINANCE - 2.0%
American Express Co. 1,535,463 48,366
Dean Witter Discover & Co. 14,837 555
Equitable Companies, Inc. 1,286,200 23,152
72,073
FEDERAL SPONSORED CREDIT - 1.8%
Federal Home Loan Mortgage Corporation 440,900 24,690
Federal National Mortgage Association 522,800 37,381
62,071
INSURANCE - 3.0%
Allstate Corp. 3,200 77
American International Group, Inc. 146,200 15,223
GMIS, Inc. (a)(b) 567,700 13,270
MGIC Investment Corp. 358,700 13,003
Travelers, Inc. (The) 1,812,166 66,824
108,397
SECURITIES INDUSTRY - 6.7%
Alex. Brown, Inc. 214,600 7,457
Bear Stearns Companies, Inc. 1,527,055 25,388
Edwards (A.G.), Inc. 50,000 906
Legg Mason, Inc. 10,000 210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - CONTINUED
Lehman Brothers Holdings, Inc. 1,106,700 $ 18,814
Merrill Lynch & Co., Inc. 1,424,200 52,162
Morgan Stanley Group, Inc. 1,105,500 66,468
Nomura Securities Ltd. 377,000 7,338
PaineWebber Group, Inc. 954,250 14,314
Salomon, Inc. 312,600 12,113
Schwab (Charles) Corp. 904,200 36,168
241,338
TOTAL FINANCE 483,891
HEALTH - 6.0%
DRUGS & PHARMACEUTICALS - 1.0%
Allergan, Inc. 371,300 10,768
Biogen, Inc. (a) 547,300 19,908
Elan PLC therapeutic systems unit (1 Advanced Therapeutic
Systems Unit Common & 1 ADR warrant) (a) 47,562 1,278
Phoenix International Life Sciences, Inc. (a)(d) 1,100,000 4,691
36,645
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
Arrow International, Inc. 142,100 4,405
Coherent, Inc. (a) 200,400 4,058
Nellcor, Inc. (a) 70,400 2,385
10,848
MEDICAL FACILITIES MANAGEMENT - 4.7%
Columbia/HCA Healthcare Corp. 890 36
Humana, Inc. (a) 968,400 22,152
Maxicare Health Plans, Inc. (a) 113,900 1,922
Oxford Health Plans, Inc. (a)(b) 922,300 78,280
United HealthCare Corp. 1,362,500 66,082
U.S. Healthcare, Inc. 3,350 153
168,625
TOTAL HEALTH 216,118
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 4.1%
ELECTRICAL EQUIPMENT - 0.6%
C COR Electronics, Inc. (a) 100,600 $ 2,314
California Microwave Corp. (a) 274,300 7,955
Charter Power Systems, Inc. 48,400 1,004
General Electric Co. 1,000 52
Mitsubishi Electric Co. Ord. 1,474,000 9,036
Mori Seiki Co. Ltd. Ord. 12,000 236
Scientific-Atlanta, Inc. 800 16
20,613
INDUSTRIAL MACHINERY & EQUIPMENT - 3.5%
AIDA Engineering Ltd. Ord. 1,127,000 8,605
Amada Metrecs Co. Ltd. 612,000 8,597
Amadasonoike Co. Ltd. 2,006,000 15,981
Case Corp. 584,900 13,233
Caterpillar, Inc. 818,200 42,137
Cincinnati Milacron, Inc. 150,600 3,464
Clark Equipment Co. (a) 1,000 54
Deere & Co. 145,050 10,335
Kennametal, Inc. 365,996 9,516
Tsugami Corp. 813,000 3,703
Toshiba Machine Ltd. Co. 1,680,000 11,193
126,818
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 147,431
MEDIA & LEISURE - 1.4%
ENTERTAINMENT - 0.0%
Disney (Walt) Co. 1,200 61
LEISURE DURABLES & TOYS - 0.1%
Brunswick Corp. 173,400 3,403
LODGING & GAMING - 0.0%
Marcus Corp. 5,000 137
RESTAURANTS - 1.3%
Apple South, Inc. 73,400 872
El Chico Restaurants, Inc. (a) 162,800 1,832
Landry's Seafood Restaurants, Inc. (a)(b) 597,300 17,172
Lone Star Steakhouse Saloon (a) 251,500 6,162
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
O Charleys, Inc. (a) 106,100 $ 1,194
Outback Steakhouse, Inc. (a) 677,200 17,945
Taco Cabana, Inc. (a) 22,000 166
45,343
TOTAL MEDIA & LEISURE 48,944
NONDURABLES - 1.7%
HOUSEHOLD PRODUCTS - 1.1%
Colgate-Palmolive Co. 611,200 38,429
TOBACCO - 0.6%
Philip Morris Companies, Inc. 24,400 1,455
RJR Nabisco Holdings Corp. (a) 3,375,800 19,833
Sampoerna, Hanjaya Mandala (For. Reg.) 100,000 480
21,768
TOTAL NONDURABLES 60,197
RETAIL & WHOLESALE - 11.9%
APPAREL STORES - 0.5%
AnnTaylor Stores Corp. (a) 412,600 13,822
Baby Superstore, Inc. (a) 2,500 135
Gymboree Corp. (a) 26,200 629
Urban Outfitters, Inc. (a) 162,300 4,179
18,765
GENERAL MERCHANDISE STORES - 1.1%
Dayton Hudson Corp. 800 55
Mac Frugals Bargains C/O, Inc. (a) 219,300 3,591
Sears, Roebuck & Co. 770,400 33,994
37,640
GROCERY STORES - 0.0%
Safeway, Inc. (a) 600 19
RETAIL & WHOLESALE, MISCELLANEOUS - 10.3%
Bed Bath & Beyond, Inc. (a) 1,089,100 29,133
Best Buy Co., Inc. (a) 1,610,800 49,935
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Circuit City Stores, Inc. 1,500 $ 34
Home Depot, Inc. (The) 692,900 32,393
Lowe's Companies, Inc. 2,171,300 79,796
Micro Warehouse, Inc. (a) 1,210,500 32,986
Officemax, Inc. (a) 1,147,600 29,838
Office Depot, Inc. (a) 683,900 17,781
Petsmart, Inc. (a)(b) 1,787,800 61,679
Staples, Inc. (a) 1,475,700 37,261
370,836
TOTAL RETAIL & WHOLESALE 427,260
SERVICES - 1.8%
LEASING & RENTAL - 0.6%
Hollywood Entertainment Corp. (a)(b) 889,850 22,691
SERVICES - 1.2%
Block (H & R), Inc. 148,600 5,312
Manpower, Inc. 97,800 2,494
Medaphis Corp. (a) 631,900 31,595
Western Atlas, Inc. 84,200 3,084
42,485
TOTAL SERVICES 65,176
TECHNOLOGY - 33.0%
COMMUNICATIONS EQUIPMENT - 5.3%
Bolt Beranek & Newman, Inc. (a) 261,400 4,182
Broadband Technologies, Inc. (a) 395,200 10,720
Cabletron Systems, Inc. (a) 182,000 6,871
DSC Communications Corp. (a) 400 13
Dialogic Corp. (a) 117,000 2,574
Ericsson (L.M.) Telephone Class B ADR 2,600 140
General DataComm Industries, Inc. (a) 460,000 10,983
General Instrument Corp. (a) 1,320,300 35,978
Network Equipment Technologies (a) 85,400 2,082
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT - CONTINUED
Network General Corp. (a) 10,200 $ 242
Nokia Corp. AB sponsored ADR 771,900 56,445
Nokia Corp. AB 213,900 31,080
Pairgain Technologies, Inc. (a) 130,500 2,137
3Com Corp. (a) 573,300 26,264
189,711
COMPUTER SERVICES & SOFTWARE - 12.8%
Adobe Systems, Inc. 20,700 599
America Online, Inc. (a) 41,200 2,245
Ascend Communications, Inc. (a) 27,500 1,403
Autodesk, Inc. 5,000 166
Bisys Group, Inc. (The) 50,000 1,050
Black Box Corp. 235,600 3,181
Broderbund Software, Inc. (a) 2,800 130
CUC International, Inc. (a) 376,100 13,022
Cambridge Technology Partners Mass., Inc. (a) 36,600 897
Computer Associates International, Inc. 678,700 33,850
Computer Task Group, Inc. 159,600 1,476
Compuware Corp. (a) 10,200 380
Continuum Co., Inc. (a) 216,400 6,573
Electronic Arts (a) 2,900 52
FTP Software, Inc. (a) 100 3
HBO & Co. 35,500 1,265
Informix Corp. (a) 1,726,800 55,689
Lotus Development Corp. (a) 1,070,445 47,769
Medicus Systems Corp. 85,800 1,351
Mercury Interactive Group Corp. (a) 107,800 1,374
Microsoft Corp. (a) 200 12
MicroAge, Inc. (a) 59,800 691
Novell, Inc. (a) 383,900 6,814
Oracle Systems Corp. (a) 2,649,200 112,922
Paychex, Inc. 267,100 10,417
Peoplesoft, Inc. (a)(b) 1,659,700 53,733
Platinum Technology, Inc. (a)(b) 1,308,000 27,141
Shared Medical Systems Corp. 115,000 3,809
Sierra On-Line, Inc. (a) 400 12
Spectrum Holobyte, Inc. (a) 617,900 6,797
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Stratacom, Inc. (a) 21,200 $ 758
Sybase, Inc. (a) 1,088,200 47,337
Wonderware Corp. (a) 522,000 15,399
458,317
COMPUTERS & OFFICE EQUIPMENT - 10.0%
ADAPTEC, Inc. (a) 703,400 19,256
Apple Computer, Inc. 4,900 198
Compaq Computer Corp. (a) 2,630,000 94,022
Danka Business Systems PLC sponsored ADR 248,000 5,859
Digital Equipment Corp. (a) 1,065,900 36,107
EMC Corp. (a) 4,300 80
Fore Systems, Inc. (a) 1,000 64
International Business Machines Corp. 1,143,000 82,439
Quantum Corp. (a) 1,398,300 20,625
Seagate Technology (a) 860,500 21,835
Silicon Graphics, Inc. (a) 1,263,800 39,494
Stratus Computer, Inc. (a) 1,100 29
Sun Microsystems, Inc. (a) 348,200 11,404
Tandem Computers, Inc. 314,300 5,618
Xerox Corp. 191,800 20,978
358,008
ELECTRONIC INSTRUMENTS - 0.0%
KLA Instruments Corp. (a) 1,700 85
ELECTRONICS - 4.9%
Altera Corp. (a) 3,200 142
Analog Devices, Inc. (a) 450 10
Applied Digital Access, Inc. 35,900 947
Atmel Corp. (a) 49,400 1,550
Bell Microproducts, Inc. (a)(b) 513,400 6,161
CTS Corp. 29,400 878
Cypress Semiconductor Corp. (a) 465,400 10,937
Hitachi Ltd. 2,416,000 20,702
Intel Corp. 587,400 40,751
LSI Logic Corp. (a) 39,700 1,687
Micron Technology, Inc. 600 27
Motorola, Inc. 1,591,800 94,115
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Texas Instruments, Inc. 1,300 $ 90
VLSI Technology, Inc. (a) 900 11
178,008
TOTAL TECHNOLOGY 1,184,129
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.0%
Pittston Company Services Group 2,600 70
RAILROADS - 0.2%
CSX Corp. 112,200 8,036
Conrail, Inc. 2,900 155
8,191
TRUCKING & FREIGHT - 0.0%
Swift Transportation Co., Inc. (a) 6,000 135
TOTAL TRANSPORTATION 8,396
UTILITIES - 1.3%
CELLULAR - 1.2%
Airtouch Communications (a) 815,600 22,428
Cellular Communications, Inc. Class P (a) 15,000 775
Vodafone Group PLC sponsored ADR 594,000 18,117
41,320
TELEPHONE SERVICES - 0.1%
Ameritech Corp. 4,800 211
BellSouth Corp. 1,800 107
Pacific Telesis Group 5,000 153
Pakistan Telecommunications Voucher GDR (a)(d) 36,700 3,376
Southwestern Bell Corp. 7,600 324
4,171
TOTAL UTILITIES 45,491
TOTAL COMMON STOCKS
(Cost $3,126,751) 3,247,284
PREFERRED STOCKS - 0.5%
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - 0.5%
NONDURABLES - 0.3%
TOBACCO - 0.3%
RJR Nabisco Holdings Corp. depositary
shares representing 1/10 pfd., Series C 1,600,000 $ 10,000
UTILITIES - 0.2%
TELEPHONE SERVICES - 0.2%
Philippine Long Distance Telephone (GDR) 131,000 6,550
TOTAL CONVERTIBLE PREFERRED STOCKS 16,550
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd. (a)(c) 2,315 5
TOTAL PREFERRED STOCKS
(Cost $17,549) 16,555
U.S. TREASURY OBLIGATIONS - 4.1%
PRINCIPAL
AMOUNT (000S)
U.S. Treasury Bill, yield at date of purchase
5.86%, 4/20/95 (Cost $148,100) $ 150,000 148,122
REPURCHASE AGREEMENTS - 4.9%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreement,
(U.S. Treasury obligations) in a
joint trading account at 5.81%
dated 1/31/95 due 2/1/95 $ 177,516 177,487
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,469,887) $ 3,589,448
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
14,611,748 JPY 2/2/95 $ 146,609 $ (1,791)
(Payable amount $148,400)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 4.1%
CONTRACTS TO SELL
17,841,448 JPY 2/2/95 to 5/2/95 $ 179,687 5,010
(Receivable amount $184,697)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 5.0%
$ 3,219
CURRENCY ABBREVIATIONS
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) Affiliated company (see Note 6 of Notes to Financial Statements).
(c) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Gulf Canada
Resources Ltd. 10/15/93 $ 6,000
(d) Security exempt from registration under
Rule 144A of the Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At the period end, the value of these securities amounted to
$8,951,000 or 0.3% of net assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 88.5%
Japan 3.3
Canada 2.7
Finland 2.4
United Kingdom 1.9
Others (individually less than 1%) 1.2
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1995, the aggregate cost of investment securities for income
tax purposes was $3,473,912,000. Net unrealized appreciation aggregated
$115,536,000, of which $297,819,000 related to appreciated investment
securities and $182,283,000 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, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 3,589,448
agreements of $177,487) (cost $3,469,887) -
See accompanying schedule
Receivable for investments sold 53,096
Unrealized appreciation on foreign currency contracts 5,010
Receivable for closed foreign currency contracts 757
Receivable for fund shares sold 29,984
Dividends receivable 3,292
Other receivables 103
TOTAL ASSETS 3,681,690
LIABILITIES
Payable for investments purchased $ 161,332
Unrealized depreciation on foreign currency contracts 1,791
Payable for fund shares redeemed 15,707
Accrued management fee 1,979
Other payables and accrued expenses 1,571
TOTAL LIABILITIES 182,380
NET ASSETS $ 3,499,310
Net Assets consist of:
Paid in capital $ 3,394,180
Undistributed net investment income 14,490
Accumulated undistributed net realized gain (loss) on (32,139)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 122,779
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 138,318 shares outstanding $ 3,499,310
NET ASSET VALUE and redemption price per share $25.30
($3,499,310 (divided by) 138,318 shares)
Maximum offering price per share (100/97.00 of $25.30) $26.08
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 12,441
Dividends
Interest 7,578
TOTAL INCOME 20,019
EXPENSES
Management fee $ 8,965
Basic fee
Performance adjustment 1,005
Transfer agent fees 5,180
Accounting fees and expenses 378
Non-interested trustees' compensation 13
Custodian fees and expenses 120
Registration fees 586
Audit 68
Legal 9
Miscellaneous 14
Total expenses before reductions 16,338
Expense reductions (523) 15,815
NET INVESTMENT INCOME 4,204
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain (loss) of 37,083
$16,061 on sales of investment in affiliated issuers)
Foreign currency transactions (13,078) 24,005
Change in net unrealized appreciation (depreciation) on:
Investment securities 910
Assets and liabilities in foreign currencies 13,503 14,413
NET GAIN (LOSS) 38,418
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 42,622
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JANUARY JULY 31,
31, 1994
1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 4,204 $ 2,809
Net investment income
Net realized gain (loss) 24,005 104,229
Change in net unrealized appreciation (depreciation) 14,413 30,724
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 42,622 137,762
FROM OPERATIONS
Distributions to shareholders: - (332)
From net investment income
From net realized gain (64,194) (147,694)
TOTAL DISTRIBUTIONS (64,194) (148,026)
Share transactions 1,955,119 2,243,190
Net proceeds from sales of shares
Reinvestment of distributions 62,248 141,684
Cost of shares redeemed (725,003) (933,920)
Net increase (decrease) in net assets resulting from 1,292,364 1,450,954
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,270,792 1,440,690
NET ASSETS
Beginning of period 2,228,518 787,828
End of period (including undistributed net investment $ 3,499,310 $ 2,228,518
income of $14,490 and $10,286, respectively)
OTHER INFORMATION
Shares
Sold 75,095 89,635
Issued in reinvestment of distributions 2,477 5,832
Redeemed (27,914) (37,436)
Net increase (decrease) 49,658 58,031
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JULY 31,
ENDED
JANUARY 31,
1995
(UNAUDITED) 1994 1993 1992 1991 1990
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning $ 25.14 $ 25.72 $ 22.02 $ 18.94 $ 15.33 $ 13.56
of period
Income from Investment
Operations
Net investment income .03 D .12 .10 .09 .12 .12
Net realized and .71 3.43 4.36 3.07 3.64 1.94
unrealized gain (loss)
Total from investment .74 3.55 4.46 3.16 3.76 2.06
operations
Less Distributions - (.01) (.14) (.08) (.15) (.12)
From net investment
income
From net realized gain (.58) (4.12) (.62) - - (.17)
Total distributions (.58) (4.13) (.76) (.08) (.15) (.29)
Net asset value, end of $ 25.30 $ 25.14 $ 25.72 $ 22.02 $ 18.94 $ 15.33
period
TOTAL RETURN B, C 2.97% 14.95% 20.86% 16.73% 24.86% 15.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,499 $ 2,229 $ 788 $ 476 $ 219 $ 131
(in millions)
Ratio of expenses to 1.08% 1.22% 1.25% 1.27% 1.26% 1.26%
average net assets A
Ratio of expenses to 1.12% 1.27% 1.25% 1.27% 1.26% 1.26%
average net assets before A
expense reductions
Ratio of net investment .29% .21% .46% .55% .80% 1.14%
income to average A
net assets
Portfolio turnover rate 172% 271% 319% 71% 99% 68%
A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER-SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1995 (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 (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
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION.
The accounting records of the 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 prevailing rates
of exchange at period end. Purchases and sales of securities, income
receipts, and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, currency gains and
losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received.
The effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the
effects of changes in market prices of those securities, but are included
with the net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, 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 withheld where recovery of such taxes is uncertain.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions 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 and may
affect net investment income per share. Undistributed net investment
income may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining at
fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY
CONTRACTS. The fund may use foreign currency contracts to facilitate
transactions in foreign securities and to manage the fund's currency
exposure. Contracts to buy generally are used to acquire exposure to
foreign currencies, while contracts to sell are used to hedge the fund's
investments against currency fluctuations. Also, a contract to buy or sell
can offset a previous contract. These contracts involve market risk in
excess of the unrealized gain or loss reflected in the fund's Statement of
Assets and Liabilities. The U.S. dollar value of the currencies the fund
has committed to buy or sell is shown in the schedule of investments under
the caption "Forward Foreign Currency Contracts." This amount represents
the aggregate exposure to each currency the fund has acquired or hedged
through currency contracts at period end. Losses may arise from changes in
the value of the foreign currency or if the counterparties do not perform
under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss)is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date. Contracts that have been offset with different
counterparties are reflected as both a contract to
2. OPERATING POLICIES - CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
buy and a contract to sell in the schedule of investments under the
caption "Forward Foreign Currency Contracts."
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 SEC), the fund, along with other
affiliated entities of FMR, may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) amounted
to $5,000 or 0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $3,384,653,000 and $2,360,873,000, respectively, of which U.S.
government
and government agency obligations aggregated $171,997,000 and $177,296,000,
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 and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2700% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. The
basic fee is subject to a performance adjustment (up to a maximum of
(plus/minus) .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 .68% of average
net assets after the performance adjustment.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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
$4,968,000 and $8,000 , respectively, on sales of shares of the fund.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
During the period August 1, 1994 to December 31, 1994, FSC received fees
based on the type, size, number of accounts and the number of transactions
made by shareholders. Effective January 1, 1995, the Board of Trustees
approved a revised transfer agent contract pursuant to which FSC receives
account fees and asset-based fees that vary according to account size. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements.
ACCOUNTING FEES. 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 $1,564,000 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
$523,000 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
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Bell Microproducts, Inc. (a) $ 1,836 $ 173 $ - $ 6,161
Blue Range Resource Corp.
Class A (a) 748 - - 8,185
Broderbund Software, Inc. (a) - 20,391 - -
C COR Electronics, Inc. (a) 888 7,830 - -
Dual Drilling Co. (a) 740 - - 7,285
GMIS, Inc. (a) 2,879 - - 13,270
Global Industries Ltd. (a) 4,092 - - 17,196
Hollywood Entertainment Corp. (a) 2,268 - - 22,691
Jordan Petroleum Ltd. Class A (a) 1,103 1,925 - 4,765
Landry's Seafood
Restaurants, Inc. (a) 5,606 - - 17,172
Marine Drilling Cos., Inc. (a) 1,464 - - 6,853
Oxford Health Plans, Inc. (a) 3,855 - - 78,280
Peoplesoft, Inc. (a) 3,937 - - 53,733
Petsmart, Inc. (a) 10,979 - - 61,679
Platinum Technology, Inc. (a) 1,872 241 - 27,141
Wonderware Corp. (a) 639 2,762 - -
TOTALS $ 42,906 $ 33,322 $ - $ 324,411
(a) Non-income producing
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Michael Gordon, Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
Mid-Cap Stock Fund
New Millennium(trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Growth 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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(registered trademark)
DIVIDEND GROWTH
FUND
SEMIANNUAL REPORT
JANUARY 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
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 past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 16 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 20 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMA-
TION 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. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
AND ARE
SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUND NOR
FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY
FIDELITY FUND,
INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS.
READ IT
CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been a few positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
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. A fund's total
return 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 investments that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1995 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Dividend Growth 7.65% 1.91% 27.32%
S&P 500(registered trademark) 4.17% 0.53% 14.09%
Average Growth Fund 2.18% -4.26% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on April 27, 1993. For example, if you had invested $1,000 in a
fund that had a 5% return over the past year, you would end up with $1,050.
You can compare the fund's returns to those of the Standard & Poor's
Composite Index of 500 Stocks - a common proxy for the U.S. stock market.
To measure how the fund's performance stacked up against its peers, you can
compare it to the average growth fund, which currently reflects the
performance of 531 growth funds tracked by Lipper Analytical Services. Both
benchmarks include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1995 PAST 1 LIFE OF
YEAR FUND
Dividend Growth 1.91% 14.65%
S&P 500(registered trademark) 0.53% 7.75%
Average Growth Fund -4.26% 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
Fidelity Dividend GrStandard & Poor's 50
04/27/93 10000.00 10000.00
04/30/93 10150.00 10155.08
05/31/93 10480.00 10427.23
06/30/93 10700.00 10457.47
07/31/93 10800.00 10415.64
08/31/93 11550.00 10810.40
09/30/93 11820.00 10727.16
10/31/93 12080.00 10949.21
11/30/93 11680.00 10845.19
12/31/93 12171.52 10976.42
01/31/94 12493.14 11349.62
02/28/94 12302.18 11042.04
03/31/94 11715.48 10560.61
04/30/94 11786.36 10695.78
05/31/94 11604.10 10871.20
06/30/94 11310.45 10604.85
07/31/94 11826.86 10952.69
08/31/94 12616.67 11401.75
09/30/94 12485.04 11122.41
10/31/94 13041.95 11372.66
11/30/94 12474.91 10958.47
12/31/94 12691.16 11120.98
01/31/95 12732.20 11409.35
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Dividend Growth Fund on April 27, 1993, when the fund started. As the chart
shows, by January 31, 1995, the value of your investment would have grown
to $12,732 - a 27.32% 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 $11,409 - a
14.09% 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 Fergus Shiel, Portfolio Manager of Fidelity
Dividend Growth Fund
Q. HOW HAS THE FUND PERFORMED, FERGUS?
A. Very well. The fund returned 7.65% for the six months ended January 31,
1995, and 1.91% for the year. That far outperforms the average growth fund
which returned 2.18% and -4.26% for the same time periods, respectively,
according to Lipper Analytical Services.
Q. WHAT HELPED THE FUND OUTPERFORM ITS PEERS?
A. Two things. First, most of my holdings are significant free cash flow
generators. Generating excess cash gives them the ability to start or
increase dividends, buy up shares of their own stock or make acquisitions.
Second, because of the size of the fund, I had the opportunity to be very
nimble and capitalize on the ebbs and flows in the market, which helped
performance.
Q. WHERE ARE YOU FINDING OPPORTUNITIES NOW?
A. I'm very interested in industries that are pursuing cost-cutting
initiatives or are in transition. One can find good examples in the health
care industry. Health stocks used to be evaluated based on the speed at
which revenues grew. Today revenues tend to grow more slowly because of
pricing pressure but there are good opportunities to streamline costs. In
addition, certain segments of the health care industry are seeing
consolidation. Stocks like St. Jude Medical, Baxter International and
Becton Dickinson are capitalizing on cost rationalization and consolidation
trends. As a result, they are huge free cash flow generators and attractive
investments.
Q. WHERE ELSE DID COST CUTTING MEASURES MAKE A DIFFERENCE?
A. Digital, one of the fund's largest holdings, is a well-known example.
The company has reduced its number of employees by more than half and has
cut out other costs in its overall structure. It also has begun a products
transition from proprietary systems to open systems. Though gross margins
in the new product line are lower, Digital is more viable in the
marketplace with open systems products. Revenue growth is beginning and
should pay off for investors.
Q. WHAT OTHER INVESTMENT STRATEGIES DID YOU EMPLOY DURING THE PERIOD?
A. Certainly another important area for the fund is technology,
specifically wireless telecommunications. Nokia and Ericsson - two of the
fund's largest holdings - are leading equipment providers within the
industry. The wireless industry is growing very quickly because of
subscriber growth and increased competition among service providers. Over
time, many markets will have four or five wireless providers, each
requiring its own network to deliver service. On the subscriber side,
wireless penetration is about 7% in the U.S. However, in more developed
telecommunications markets, the number is about twice that. In Stockholm,
Sweden, for example, wireless penetration is about 30%. As competition and
penetration increase, companies such as Nokia and Ericsson are in a
position to prosper.
Q. IT LOOKS LIKE YOU'VE INCREASED YOUR HOLDINGS IN CONSUMER NONDURABLES AND
FINANCIAL STOCKS DURING THE PAST SIX MONTHS. WHAT STRATEGY ARE YOU
PURSUING: TURNAROUNDS, COST-CUTTERS OR FREE CASH FLOW GENERATORS?
A. None of the above. Earlier in the report I mentioned the ability to
capitalize on the ebbs and flows of the market. The nondurable holdings in
the fund are largely tobacco stocks. Companies like Philip Morris, RJR and
American Brands are extraordinarily cheap right now and that's why they're
in the fund. Similarly, financial stocks have been beaten down lately and
stocks like Merrill Lynch are likely to benefit if we see a rally in the
market. They may not be long-term holdings, but simply an attractive place
to invest extra cash.
Q. WHAT'S YOUR FEELING ABOUT FOREIGN STOCKS?
A. I don't own them as part of a set strategy. I prefer to own American
stocks because there's better information and research available on them. I
also think the days of buying stocks overseas because the U.S. market was
too expensive are over. In the past, people looked overseas for companies
that were surrogates for U.S. companies, but cheaper. That said, there will
always be individual foreign stocks that are great investments. Nokia and
Ericsson are both domiciled outside the U.S. but are addressing a
world-wide market with their products and are experiencing world-wide
growth. The fund also gets some overseas exposure by owning American
companies such as Digital and Philip Morris that do a large portion of
their business overseas.
Q. WHAT INVESTMENTS HAVE BEEN DISAPPOINTING OVER THE PAST SIX MONTHS?
A. It's been disappointing to me that the market has been trendless and
that it's been difficult for any one group or type of stock to establish
leadership. The best performing group has been technology, but even that
has been erratic. For example, the fund holds shares of Data General and
Wang Labs bought at higher prices. Outside of technology, retailing has
been unstable. Rex stores, Welcome Home and S&K Famous Brands are examples
of securities that did not perform as expected.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I think we're in for more of the same. I expect to continue to see a
trendless market with lots of fluctuation in individual stocks and stock
groups. However, with a fund of this size, there are fewer liquidity
constraints of a larger fund. I'm free to buy the good stocks when they
drop by 10% - 20% and then profit if they climb again.
FUND FACTS
GOAL: to increase the value
of the fund's shares over the
long term by investing mainly
in large, successful growth
companies at the top of
their industries
START DATE: December 31, 1987
SIZE: as of January 31,
1995, more than $3.4 billion
MANAGER: Michael Gordon,
since January 1993;
previously managed Fidelity
Select Chemicals (August
1992 - January 1993) and
Fidelity Select Biotechnology
Portfolios (May 1990 -
August 1992); joined Fidelity
in 1987
(checkmark)
MICHAEL GORDON ON HEALTH CARE
STOCKS:
"My investments in health care
stocks are almost exclusively
in health maintenance
organizations (HMOs). They
have proven to be one of the
most effective ways of
controlling costs in the health
care industry. From time to
time, there have been
concerns in the marketplace
about the viability of HMOs,
which has provided me with
some great buying
opportunities. In addition to
Oxford Health Plans, which I
have identified as a blue chip of
tomorrow, I consider Humana
a blue chip of today. An
HMO that is national in scope,
growth has been steady at
Humana. The company
provides excellent services to
its HMO customers and
delivers impressive
cost-containment numbers to
its corporate sponsors. Though
health care stocks are not new
to the fund, I've had an
opportunity to increase the
fund's holdings over the past
six months."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Philip Morris Companies, Inc. 4.0 3.1
RJR Nabisco Holdings Corp. 2.5 2.6
Nokia Corp. AB sponsored ADR 2.5 1.1
Southwestern Bell Corp. 2.3 0.7
Ericsson (L.M.) Telephone Co.
Class B ADR 2.3 3.8
Ameritech Corp. 2.2 1.0
Brunswick Corp. 2.1 0.9
Digital Equipment Corp. 2.0 0.0
Becton, Dickinson & Co. 1.9 0.5
Armco, Inc. 1.9 3.3
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO
Technology 19.2 16.8
Health 10.9 5.0
Nondurables 10.7 7.7
Media & Leisure 10.6 5.7
Utilities 8.0 10.3
ASSET ALLOCATION
AS OF JANUARY 31, 1995* AS OF JULY 31, 1994**
Row: 1, Col: 1, Value: 9.6
Row: 1, Col: 2, Value: 90.40000000000001
Row: 1, Col: 1, Value: 1.8
Row: 1, Col: 2, Value: 98.2
Stocks 90.4%
Short-term
investments 9.6%
FOREIGN
INVESTMENTS 9.3%
Stocks 99.2%
Short-term
investments 0.8%
FOREIGN
INVESTMENTS 12.6%
*
**
INVESTMENTS JANUARY 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.6%
General Motors Corp. Class H 20,000 $ 675,000
BASIC INDUSTRIES - 3.0%
CHEMICALS & PLASTICS - 1.1%
Ethyl Corp. 75,000 759,375
Union Carbide Corp. 20,000 510,000
1,269,375
IRON & STEEL - 1.9%
Armco, Inc. (a) 350,000 2,231,250
TOTAL BASIC INDUSTRIES 3,500,625
CONGLOMERATES - 1.4%
Allied-Signal, Inc. 20,000 715,000
GenCorp, Inc. 50,000 637,500
Lancaster Colony Corp. 10,000 310,000
1,662,500
DURABLES - 2.1%
AUTOS, TIRES, & ACCESSORIES - 1.7%
Chrysler Corp. 45,000 2,025,000
HOME FURNISHINGS - 0.4%
Haverty Furniture Companies, Inc. 23,100 242,550
Welcome Home (a) 42,500 276,250
518,800
TOTAL DURABLES 2,543,800
ENERGY - 1.6%
OIL & GAS - 1.6%
Beau Canada Exploration 148,500 178,362
British Petroleum PLC ADR 15,000 1,164,375
Richland Petroleum Corp. Class A (a) 84,000 507,445
1,850,182
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 6.7%
BANKS - 2.2%
Bank of New York Co., Inc. 27,000 $ 810,000
Bankers Trust New York Corp. 14,000 876,750
Morgan (J.P.) & Co., Inc. 14,000 882,000
2,568,750
CREDIT & OTHER FINANCE - 0.9%
American Express Co. 30,892 973,098
Dean Witter Discover & Co. 4,100 153,238
1,126,336
INSURANCE - 1.2%
Aetna Life & Casualty Co. 15,000 742,500
Allstate Corp. 30,000 723,750
1,466,250
SECURITIES INDUSTRY - 2.4%
Merrill Lynch & Co., Inc. 60,000 2,197,500
Morgan Stanley Group, Inc. 10,200 613,275
2,810,775
TOTAL FINANCE 7,972,111
HEALTH - 10.9%
DRUGS & PHARMACEUTICALS - 1.9%
ALZA Corp. Class A (a) 25,000 587,500
Elan Corp. PLC ADR (a) 30,000 1,057,500
North American Biologicals, Inc. (a) 95,000 617,500
2,262,500
MEDICAL EQUIPMENT & SUPPLIES - 9.0%
Baxter International, Inc. 70,000 2,065,000
Beckman Instruments, Inc. 46,400 1,421,000
Becton, Dickinson & Co. 42,600 2,236,500
Cytocare, Inc. (a) 15,000 75,938
Medisense, Inc. (a) 40,000 775,000
Mentor Corp. 55,000 1,120,625
Owens and Minor, Inc. 20,000 272,500
Pall Corp. 40,000 760,000
St. Jude Medical, Inc. 50,000 1,900,000
10,626,563
TOTAL HEALTH 12,889,063
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 3.1%
ELECTRICAL EQUIPMENT - 1.6%
Amphenol Corp. Class A (a) 35,000 $ 796,250
California Amplifier, Inc. (a) 190,000 1,140,000
1,936,250
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Case Corp. 11,300 255,663
Commercial Intertech Corp. 2,000 38,000
Deere & Co. 20,000 1,425,000
1,718,663
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 3,654,913
MEDIA & LEISURE - 10.6%
BROADCASTING - 1.4%
Viacom, Inc. Class B (non-vtg.) (a) 35,000 1,614,375
ENTERTAINMENT - 2.6%
Disney (Walt) Co. 30,000 1,526,250
Players International, Inc. (a) 75,000 1,537,500
3,063,750
LEISURE DURABLES & TOYS - 2.1%
Brunswick Corp. 125,000 2,453,125
LODGING & GAMING - 0.9%
President Casinos, Inc. (a) 120,000 1,050,000
PUBLISHING - 2.9%
Gannett Co., Inc. 25,000 1,271,875
Lee Enterprises, Inc. 6,000 212,250
News Corp. Ltd. sponsored ADR (vtg.) 20,000 285,000
Reader's Digest Association, Inc. (The) Class A (non-vtg.) 13,000 624,000
Tribune Co. 20,000 1,047,500
3,440,625
RESTAURANTS - 0.7%
Brinker International, Inc. 30,000 528,750
McDonald's Corp. 10,000 326,250
855,000
TOTAL MEDIA & LEISURE 12,476,875
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - 10.7%
BEVERAGES - 0.7%
PepsiCo, Inc. 22,000 $ 811,250
FOODS - 0.4%
Chiquita Brands International, Inc. 40,000 515,000
TOBACCO - 9.6%
American Brands, Inc. 35,000 1,330,000
Imasco Ltd. 40,000 1,147,792
Philip Morris Companies, Inc. 80,000 4,770,000
RJR Nabisco Holdings Corp. (a) 500,000 2,937,500
UST, Inc. 15,000 442,500
Universal Corp. 40,000 790,000
11,417,792
TOTAL NONDURABLES 12,744,042
RETAIL & WHOLESALE - 7.1%
APPAREL STORES - 0.1%
S & K Famous Brands, Inc. (a) 24,400 176,900
GENERAL MERCHANDISE STORES - 1.3%
Dollar General Corp. 20,000 645,000
Family Dollar Stores, Inc. 70,000 945,000
1,590,000
RETAIL & WHOLESALE, MISCELLANEOUS - 5.7%
Best Products, Inc. (a) 90,000 517,500
Circuit City Stores, Inc. 25,000 562,500
Hancock Fabrics, Inc. 72,500 743,125
Home Depot, Inc. (The) 30,000 1,402,500
Land's End, Inc. (a) 20,000 322,500
Lillian Vernon Corp. 50,000 900,000
Micro Warehouse, Inc. (a) 31,400 855,650
Petsmart, Inc. (a) 10,200 351,900
Rex Stores Corp. (a) 35,000 573,125
Toys "R" Us, Inc. 20,000 585,000
6,813,800
TOTAL RETAIL & WHOLESALE 8,580,700
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 4.0%
ADVERTISING - 1.5%
ADVO-Systems, Inc. 85,000 $ 1,498,125
CMG Information Services, Inc. (a) 15,000 326,250
1,824,375
PRINTING - 0.9%
Reynolds & Reynolds Co. Class A 45,000 1,068,750
SERVICES - 1.6%
CDI Corp. (a) 100,000 1,950,000
TOTAL SERVICES 4,843,125
TECHNOLOGY - 19.2%
COMMUNICATIONS EQUIPMENT - 6.6%
DSC Communications Corp. (a) 35,700 1,146,863
Ericsson (L.M.) Telephone Co. Class B 4,600 247,533
Ericsson (L.M.) Telephone Co. Class B ADR 50,000 2,693,750
Nokia Corp. AB 5,500 799,157
Nokia Corp. AB sponsored ADR (a) 40,000 2,925,000
7,812,303
COMPUTER SERVICES & SOFTWARE - 8.0%
Ascend Communications, Inc. 10,000 510,000
Ceridian Corp. (a) 34,500 1,017,750
CompUSA, Inc. 60,000 1,095,000
Electronics for Imaging Incorporated 15,400 512,050
HBO & Co. 20,000 712,500
Novell, Inc. (a) 110,000 1,952,500
Peoplesoft, Inc. (a) 40,000 1,295,000
Ross Systems, Inc. (a) 153,800 653,650
Stratacom, Inc. (a) 11,900 425,425
Wonderware Corp. (a) 45,000 1,327,500
9,501,375
COMPUTERS & OFFICE EQUIPMENT - 4.6%
Data General Corp. (a) 170,000 1,317,500
Digital Equipment Corp. (a) 71,100 2,408,513
Filenet Corp. 25,000 768,750
International Business Machines Corp. 10,000 721,250
Wang Laboratories, Inc. (Del.) 18,300 253,913
5,469,926
TOTAL TECHNOLOGY 22,783,604
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 1.4%
AIR TRANSPORTATION - 1.4%
AMR Corp. (a) 15,000 $ 841,875
Delta Air Lines, Inc. 15,000 810,000
1,651,875
UTILITIES - 8.0%
TELEPHONE SERVICES - 8.0%
ALC Communications Corp. (a) 69,100 2,003,900
Ameritech Corp. 60,000 2,632,500
Frontier Corp. 45,000 945,000
GTE Corp. 35,000 1,185,625
Southwestern Bell Corp. 65,000 2,770,621
9,537,646
TOTAL COMMON STOCKS
(Cost $102,465,679) 107,366,061
REPURCHASE AGREEMENTS - 9.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a
joint trading account at 5.81%
dated 1/31/95 due 2/1/95 $ 11,466,850 11,465,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $113,930,679) $ 118,831,061
LEGEND
(a) Non-income producing
INCOME TAX INFORMATION
At January 31, 1995, the aggregate cost of investment securities for income
tax purposes was $114,112,701. Net unrealized appreciation aggregated
$4,718,360, of which $7,655,600 related to appreciated investment
securities and $2,937,240 related to depreciated investment securities.
At July 31, 1994, the fund had a capital loss carryforward of approximately
$1,099,000 which will expire on July 31, 2002.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS JANUARY 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 118,831,061
agreements of $11,465,000) (cost $113,930,679) -
See accompanying schedule
Cash 691
Receivable for investments sold 4,933,394
Receivable for fund shares sold 3,475,922
Dividends receivable 125,334
Interest receivable 514
TOTAL ASSETS 127,366,916
LIABILITIES
Payable for investments purchased $ 11,190,381
Payable for fund shares redeemed 2,653,199
Accrued management fee 67,301
Other payables and accrued expenses 84,256
TOTAL LIABILITIES 13,995,137
NET ASSETS $ 113,371,779
Net Assets consist of:
Paid in capital $ 107,625,318
Undistributed net investment income 71,094
Accumulated undistributed net realized gain (loss) on 774,985
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 4,900,382
investments
NET ASSETS, for 9,131,864 shares outstanding $ 113,371,779
NET ASSET VALUE, offering price and redemption price per $12.41
share ($113,371,779 (divided by) 9,131,864 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 540,719
Dividends
Interest 241,983
TOTAL INCOME 782,702
EXPENSES
Management fee $ 285,458
Basic fee
Performance adjustment 66,072
Transfer agent fees 196,224
Accounting fees and expenses 27,780
Non-interested trustees' compensation 353
Custodian fees and expenses 18,831
Registration fees 34,698
Audit 14,686
Legal 987
Interest 1,855
Total expenses before reductions 646,944
Expense reductions (9,205) 637,739
NET INVESTMENT INCOME 144,963
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 3,503,847
Foreign currency transactions (169) 3,503,678
Change in net unrealized appreciation (depreciation) on 1,999,559
investment securities
NET GAIN (LOSS) 5,503,237
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 5,648,200
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED JANUARY JULY 31, 1994
31, 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 144,963 $ 96,599
Net investment income
Net realized gain (loss) 3,503,678 (296,730)
Change in net unrealized appreciation (depreciation) 1,999,559 2,287,585
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 5,648,200 2,087,454
FROM OPERATIONS
Distributions to shareholders: (73,869) (74,046)
From net investment income
From net realized gain (1,106,818) -
In excess of net realized gain - (1,012,776)
TOTAL DISTRIBUTIONS (1,180,687) (1,086,822)
Share transactions 141,883,343 192,121,803
Net proceeds from sales of shares
Reinvestment of distributions 1,158,767 1,069,824
Cost of shares redeemed (106,493,101) (140,293,684)
Net increase (decrease) in net assets resulting from 36,549,009 52,897,943
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 41,016,522 53,898,575
NET ASSETS
Beginning of period 72,355,257 18,456,682
End of period (including undistributed net investment $ 113,371,779 $ 72,355,257
income of $71,094 and $8,641, respectively)
OTHER INFORMATION
Shares 11,439,065 16,269,312
Sold
Issued in reinvestment of distributions 95,766 89,434
Redeemed (8,598,946) (11,871,410)
Net increase (decrease) 2,935,885 4,487,336
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS YEAR APRIL 27,1993
ENDED ENDED (COMMENCEMENT
JANUARY 31, JULY 31, OF OPERATIONS) TO
1995 1994 JULY 31, 1993
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.68 $ 10.80 $ 10.00
Income from Investment Operations
Net investment income .02 .02 (.01)
Net realized and unrealized gain (loss) .87 1.01 .81
Total from investment operations .89 1.03 .80
Less Distributions (.01) (.01) -
From net investment income
From net realized gain (.15) - -
In excess of net realized gain - (.14) -
Total distributions (.16) (.15) -
Net asset value, end of period $ 12.41 $ 11.68 $ 10.80
TOTAL RETURN B,C 7.65% 9.51% 8.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 113,372 $ 72,355 $ 18,457
Ratio of expenses to average net assets 1.37% A 1.40% 2.50%
A,D
Ratio of expenses to average net assets before 1.39% A 1.43% 4.18%
expense reductions A,D
Ratio of net investment income to average net assets .31% A .13% (.73)% A
Portfolio turnover rate 289% A 291% 90% A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS
SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1995 (Unaudited)
7. 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 for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange), are valued primarily using dealer-supplied valuations or at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities maturing within sixty days of their purchase date are
valued at amortized cost or original cost plus accrued interest, both of
which approximate current value.
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 prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward foreign
currency contracts, disposition of foreign currencies, currency gains and
losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. The effects of
changes in foreign currency exchange rates on investments in securities are
not segregated in the Statement of Operations from the effects of changes
in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, 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. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions 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 and may
affect net investment income per share. Undistributed net investment income
may include temporary book and tax basis differences which will reverse in
a subsequent period. Any taxable income or gain remaining at fiscal year
end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
8. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY
CONTRACTS. The fund may use foreign currency contracts to facilitate
transactions in foreign securities and to manage the fund's currency
exposure. Contracts to buy generally are used to acquire exposure to
foreign currencies, while contracts to sell are used to hedge the fund's
investments against currency fluctuations. Also, a contract to buy or sell
can offset a previous contract. Losses may arise from changes in the value
of the foreign currency or if the counterparties do not perform under the
contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
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
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
fund, along with other affiliated entities of FMR, may transfer uninvested
cash balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements that mature in 60 days or
less from the date of purchase, and are collateralized by U.S. Treasury or
Federal Agency obligations.
9. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $155,015,641 and $123,849,149, respectively.
10. 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 and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2700% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. The
basic fee is subject to a performance adjustment (up to a maximum of
(plus/minus) .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 .76% of average
net assets after the performance adjustment.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
During the period August 1, 1994 to December 31, 1994, FSC received fees
based on the type, size, number of accounts and the number of transactions
made by shareholders. Effective January 1, 1995, the Board of Trustees
approved a revised transfer agent contract pursuant to which FSC receives
account fees and asset-based fees that vary according to account size. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements.
ACCOUNTING FEES. 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 $107,766 for the period.
11. 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
5. BANK BORROWINGS - CONTINUED
loan and the average daily loan balances during the periods for which loans
were outstanding amounted to $3,527,000 and $2,075,333, respectively. The
weighted average interest rate was 5.4%.
12. 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
$9,205 under this arrangement.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
Mid-Cap Stock Fund
New Millennium(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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(registered trademark)
GROWTH & INCOME
PORTFOLIO
SEMIANNUAL REPORT
JANUARY 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
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 past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 28 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 32 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMA-
TION 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. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
AND ARE
SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUND NOR
FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY
FIDELITY FUND,
INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS.
READ IT
CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been a few positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
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. A fund's total
return 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, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Growth & Income 2.79% -0.29% 92.47% 314.80%
Growth & Income (incl. 3% sales -0.29% -3.28% 86.70% 302.35%
charge)
S&P 500(registered trademark) 4.17% 0.53% 66.90% 201.13%
Average Growth & Income Fund 1.34% -2.50% 60.71% 158.66%
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 example, if you had
invested $1,000 in a fund that had a 5% return over the past year, you
would end up with $1,050. For comparison, you can look at the performance
of the Standard & Poor's Composite Index of 500 Stocks - a common proxy for
the U.S. stock market. To measure how the fund's performance stacked up
against its peers, you can compare it to the average growth & income fund,
which currently reflects the performance of over 381 growth & income funds
tracked by Lipper Analytical Services Inc. 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, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Growth & Income -0.29% 13.99% 16.93%
Growth & Income (incl. 3% sales -3.28% 13.30% 16.54%
charge)
S&P 500(registered trademark) 0.53% 10.79% 12.88%
Average Growth & Income Fund -2.50% 9.83% 10.91%
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 (027Standard & Poor's 50
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
02/28/94 39582.35 29143.41
03/31/94 37841.11 27872.76
04/30/94 38596.87 28229.53
05/31/94 38719.91 28692.49
06/30/94 38047.88 27989.53
07/31/94 39142.53 28907.58
08/31/94 40643.26 30092.80
09/30/94 40171.38 29355.52
10/31/94 40650.05 30016.02
11/30/94 39140.40 28922.84
12/31/94 39763.93 29351.76
01/31/95 40235.29 30112.85
$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, 1995, the value
of your investment would have grown to $40,235 - a 302.35% 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 $30,113 - a 201.13% 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 Steven Kaye, Portfolio Manager of Fidelity Growth and
Income Portfolio
Q. STEVE, HOW HAS THE FUND DONE?
A. The fund had a total return of 2.79% for the six months ended January
31, 1995, compared to 1.34% for the average growth and income fund tracked
by Lipper Analytical Services, and 4.17% for the Standard & Poor's Index of
500 Stocks. For the 12 months ended January 31, 1995, the fund had a total
return of -0.29%, compared to -2.50% for the Lipper average and 0.53% for
the S&P 500.
Q. WHY DID THE FUND LAG THE INDEX, BUT BEAT THE AVERAGE FUND?
A. The fund trailed the S&P 500 index because the fund was underweighted in
financial and utility stocks during the period. These stocks have performed
well over the past few months and helped the index as interest rates have
stabilized. As far as beating the Lipper average is concerned, several
factors helped. First, the fund benefited from its holdings in American
Cyanamid and Caesar's World, which were acquired by American Home Products
and ITT, respectively. Second, the fund's investments in health care;
aerospace and defense; and nondurables performed well. Finally, the fund
had a large cash and short-term investment position during much of the
period.
Q. WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE?
A. The performance and behavior of the markets have been dictated for the
most part by rising interest rates. The Federal Reserve Board raised
short-term rates steadily over the period in an effort to stave off
inflation. Stocks have suffered as interest rates have ratcheted up,
because short-term Treasury bills and other short-term investments have
become more attractive. In addition, higher interest rates can eat into a
company's future earnings, because the rates make it more expensive for the
company to borrow money. As a result, the stock market has been surging and
falling without much movement one way or the other. In 1994, the companies
listed in the S&P 500 posted a significant increase in earnings, but the
overall stock market was generally flat. This is unusual.
Q. LET'S LOOK AT HEALTH CARE. WHAT'S THE STORY THERE?
A. Health care made up 12% of the fund at the end of the period. While this
sector was helped by the lack of significant health care reform in 1994,
changes within the industry have had more impact. There has been
consolidation, with mergers and acquisitions taking excess operating costs
out of the system. Health care inflation has slowed while it still is a
growth business. American Home Products and Columbia/HCA have been solid
performers for the fund.
Q. WHAT ABOUT AEROSPACE AND
DEFENSE?
A. The fund had a 4.1% stake in this sector at the end of the period. As
the U.S. defense budget has decreased, consolidation within the industry
has cut costs faster than revenues have declined. President Clinton has
said he will raise defense outlays, and the new Republican majority in
Congress favors increased defense spending. In addition, it looks as if
we're starting to see the bottom in orders for new aircraft. I've invested
the fund in companies such as McDonnell Douglas to take advantage of the
potential upswing. The fund also holds shares of United Technologies and
Sundstrand, which are poised to take advantage of the fact that older
planes need to be retooled or refitted with spare parts.
Q. AND CONSUMER NONDURABLES?
A. This sector - whose performance helped fuel growth in the stock market
in the 1980s - has come back into favor with investors after a few years on
the outs. In the second half of 1994, investors were moving away from
cyclicals - stocks that usually rise and fall in tandem with the economy -
because there were signs that the economy was slowing down. Instead,
traditional, stable growth stocks - companies with modest earnings growth -
such as tobacco companies were attracting interest. Phillip Morris was a
solid performer for the fund, although RJR Nabisco was not.
Q. WHY IS THAT?
A. That stock lagged because the company's majority shareholder sold a
significant portion of its RJR holdings in order to finance its acquisition
of Borden, causing the market to be flooded temporarily with RJR stock. As
a result, the price of RJR fell.
Q. WHAT WERE SOME OF THE OTHER
DISAPPOINTMENTS FOR THE FUND?
A. The cyclical-oriented holdings in the fund didn't do well. When the
economy is strong, industrial commodity stocks benefit. But, with the
perception that the economy was peaking, chemical companies such as Union
Carbide and du Pont suffered, as did aluminum producer Aluminum Co. of
America. WMX Technologies, a pollution control company, also was a
disappointment because of problems with its hazardous waste business and
international operations, in addition to the fact that pollution control is
considered a cyclical business. One move that didn't work out as intended
was a sale of the fund's investment in Intel. I sold out of the stock
because the company's quarterly reports didn't meet my expectations, and
the company was having problems with its new Pentium microprocessing chip.
The fund made money on Intel but could have made more, because the stock
has risen sharply.
Q. WHY WERE THE FUND'S CASH AND SHORT-TERM INVESTMENT POSITIONS RELATIVELY
LARGE AT TIMES DURING THE PERIOD?
A. Despite the fact that the stock market remained relatively flat in 1994,
I felt that valuations - stock prices compared to other measures such as
earnings and dividends - were very high throughout the year, which tempered
my buying. The fact that the return on the fund's short-term investments
also has been strong relative to stock market returns, with less risk, has
helped performance. The fund also received large cash inflows from the sale
of its shares in American Cyanamid and Caesar's World, which were 1.2% of
the fund six months ago.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. At some point, interest rates will peak and start to decline, and that
will be good for the stock market. Until then, I don't see much variation
from the stop/start market we've seen this year. I'll be looking for cheap
stocks during periodic drops in the market, with the goal of taking the
fund to a more fully invested position. It also looks like we're in the
late innings of the economic recovery. That means a move away from
cyclicals and to more traditional growth names, which hopefully will ride
us through the next recession.
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,
1995, more than $9 billion
MANAGER: Steven Kaye, since
January 1993; manager Fidelity
Blue Chip Growth Fund,
October 1990-December
1992; Fidelity Select Energy
Services, Biotechnology, and
Health Care Portfolios,
1986-1990; joined Fidelity in
1985
(checkmark)
STEVE KAYE ON REGIONAL
OPERATING BELL COMPANIES
(RBOCS):
"At some point, you might
read in the paper that your
local phone company is
cutting rates on local phone
service. At the same time,
there's a good chance the
phone company will be
deregulated and allowed to
offer more services in an
unregulated environment.
Eventually, you might be able
to have one bill from the
phone company for
telephone, cellular phone,
cable television and long
distance service.
"The RBOC story should play
out over the next five to 10
years. Today, these
companies may not show
strong profits because they
have to deal with regulators. If
deregulation comes,
consumers should be happy
because prices should go
down and the RBOCs
probably will offer many more
services. And the companies
and shareholders should win,
because they probably will
make a lot more money."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S INVESTMENTS
% OF FUND'S IN THESE STOCKS
INVESTMENTS 6 MONTHS AGO
Philip Morris Companies, Inc. 3.2 1.6
General Electric Co. 2.9 2.8
Ameritech Corp. 1.6 1.0
American Express Co. 1.5 0.8
British Petroleum PLC ADR 1.5 1.5
Federal National Mortgage Association 1.5 1.1
American Home Products 1.4 0.0
Tyco International Ltd. 1.3 0.1
SBC Communications, Inc. 1.3 1.0
International Business Machines Corp. 1.2 0.6
</TABLE>
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1995
% OF FUND'S INVESTMENTS
% OF FUND'S IN THESE MARKET SECTORS
INVESTMENTS 6 MONTHS AGO
Health 12.0 8.4
Nondurables 8.7 5.8
Energy 7.8 8.7
Finance 7.4 10.6
Industrial Machinery & Equipment 6.3 6.3
ASSET ALLOCATION
AS OF JANUARY 31, 1995* AS OF JULY 31, 1994**
Row: 1, Col: 1, Value: 15.7
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 41.0
Row: 1, Col: 5, Value: 40.0
Row: 1, Col: 1, Value: 12.7
Row: 1, Col: 2, Value: 3.2
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 5, Value: 40.1
Stocks 81.4%
Bonds 0.6%
Convertibles 1.3%
Other securities
and short-term
investments 16.7%
FOREIGN
INVESTMENTS 8.9%
Stocks 80.1%
Bonds 4.0%
Convertibles 3.2%
Other securities
and short-term
investments 12.7%
FOREIGN
INVESTMENTS 13.4%
*
**
INVESTMENTS JANUARY 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 81.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 4.1%
AEROSPACE & DEFENSE - 2.4%
Aviall, Inc. 383,100 $ 2,777
Flightsafety International, Inc. 578,300 21,686
General Motors Corp. Class H 1,093,500 36,906
Lockheed Corp. 868,500 62,532
Martin Marietta Corp. 740,100 33,027
McDonnell Douglas Corp. 1,044,900 52,245
Sundstrand Corp. 590,800 26,586
235,759
DEFENSE ELECTRONICS - 1.4%
Litton Industries, Inc. 834,300 29,618
Loral Corp. 1,530,500 59,498
Raytheon Co. 638,200 42,600
131,716
SHIPBUILDING & REPAIR - 0.3%
General Dynamics Corp. 599,300 25,845
TOTAL AEROSPACE & DEFENSE 393,320
BASIC INDUSTRIES - 6.0%
CHEMICALS & PLASTICS - 3.9%
Akzo NV Ord. 139,500 15,773
Albemarle Corp. 483,200 6,342
du Pont (E.I.) de Nemours & Co. 1,063,500 56,631
Eastman Chemical Co. 322,000 16,020
Ferro Corp. 1,279,400 30,066
Great Lakes Chemical Corp. 1,373,900 78,141
Imperial Chemical Industries PLC ADR 221,800 10,341
Lyondell Petrochemical Co. 306,100 6,772
Minnesota Mining & Manufacturing Co. 1,022,800 53,569
NL Industries, Inc. (a) 501,000 6,012
Nalco Chemical Co. 483,500 16,560
Olin Corp. 318,200 15,830
Union Carbide Corp. 2,273,700 57,979
370,036
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 0.9%
Alcan Aluminium Ltd. 1,261,700 $ 30,488
Aluminum Co. of America 343,500 27,008
Reynolds Metals Co. 611,700 30,585
88,081
PAPER & FOREST PRODUCTS - 1.2%
Champion International Corp. 358,600 13,717
Federal Paper Board Co., Inc. 980,000 27,440
International Paper Co. 107,000 7,610
James River Corp. of Virginia 1,529,700 33,080
Temple-Inland, Inc. 704,900 32,073
113,920
TOTAL BASIC INDUSTRIES 572,037
CONGLOMERATES - 4.0%
Allied-Signal, Inc. 659,000 23,559
Coltec Industries, Inc. (a) 758,400 11,755
GenCorp, Inc. 173,400 2,211
Hanson Trust PLC sponsored ADR 321,200 5,902
ITT Corp. 888,900 79,557
Mark IV Industries, Inc. 538,366 10,364
Textron, Inc. 281,400 14,527
Tyco International Ltd. 2,639,674 127,694
United Technologies Corp. 1,382,900 88,851
Whitman Corp. 1,094,500 17,786
382,206
CONSTRUCTION & REAL ESTATE - 2.4%
BUILDING MATERIALS - 0.2%
Lafarge Corp. 1,173,437 21,122
CONSTRUCTION - 0.1%
Pulte Corp. 146,700 2,971
REAL ESTATE INVESTMENT TRUSTS - 2.1%
Avalon Properties, Inc. 387,750 7,416
Bay Apartment Community 246,000 4,889
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Beacon Properties Corp. 510,500 $ 8,998
CBL & Associates Properties, Inc. 803,300 15,865
Cali Reality Corp. (a) 252,000 4,032
Camden Property Trust (SBI) 256,700 6,000
Carr Realty Corp. 185,100 3,332
Crown American Realty Trust (SBI) 1,238,800 16,879
Developers Diversified Realty Corp. 459,500 12,981
Duke Realty Investors, Inc. 350,100 9,103
Equity Residential Property Trust (SBI) 1,029,300 27,405
Evans Withycombe Residential, Inc. 171,600 3,432
Highwoods Properties, Inc. 278,000 5,838
Irvine Apartment Communities, Inc. 191,400 3,038
Liberty Property Trust (SBI) 417,900 8,254
Macerich Company 469,500 9,507
Manufactured Home Communities, Inc. 640,500 10,328
Oasis Residential, Inc. 163,040 3,607
Simon Properties Group, Inc. 250,400 5,853
Speiker Properties, Inc. 194,100 3,931
Storage Equities, Inc. (f) 1,301,300 18,218
Urban Shopping Centers, Inc. 621,800 12,902
201,808
TOTAL CONSTRUCTION & REAL ESTATE 225,901
DURABLES - 1.9%
AUTOS, TIRES, & ACCESSORIES - 1.1%
Bandag, Inc. 206,900 12,052
Echlin, Inc. 247,400 8,164
General Motors Corp. 267,506 10,366
Honda Motor Co. Ltd. 413,000 6,423
Magna International, Inc. Class A 280,863 10,130
Snap-on Tools Corp. 417,400 13,200
Suzuki Motor Corp. 13,000 121
TRW, Inc. 420,800 26,984
Toyota Motor Corp. 999,000 19,045
106,485
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.4%
Matsushita Electric Industrial Co. Ltd. 1,300,000 $ 18,000
Sony Corp. 395,000 18,191
36,191
TEXTILES & APPAREL - 0.4%
Liz Claiborne, Inc. 676,800 11,252
Mohawk Industries, Inc. 118,100 1,506
NIKE, Inc. Class B 15,400 1,093
Nisshinbo Industries 465,000 4,899
Unifi, Inc. 944,200 25,729
44,479
TOTAL DURABLES 187,155
ENERGY - 7.5%
ENERGY SERVICES - 1.8%
Enterra Corp. (a) 240,200 4,023
Halliburton Co. 1,055,700 38,269
Helmerich & Payne, Inc. 638,200 16,274
Nowsco Well Service Ltd. 164,200 1,532
Schlumberger Ltd. 1,910,700 100,789
Smith International, Inc. (a) 528,300 6,142
Tidewater, Inc. 364,800 6,110
173,139
OIL & GAS - 5.7%
Amerada Hess Corp. 962,100 43,655
Amoco Corp. 768,200 44,556
British Petroleum PLC:
ADR 1,847,913 143,444
Ord. 3,873,700 25,094
Burlington Resources, Inc. 404,900 13,969
Chevron Corp. 700,400 31,255
Exxon Corp. 500,000 31,250
Inverness Petroleum Ltd. (a) 212,500 1,133
Kerr-McGee Corp. 489,900 23,209
Mobil Corp. 485,800 41,961
Murphy Oil Corp. 774,300 33,682
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Occidental Petroleum Corp. 119,100 $ 2,233
Renaissance Energy Ltd. (a) 328,400 5,806
Royal Dutch Petroleum Co. 377,700 42,255
Total SA Class B 44,900 2,532
Total SA Class B sponsored ADR 1,246,076 35,357
Unocal Corp. 1,206,375 31,517
552,908
TOTAL ENERGY 726,047
FINANCE - 7.1%
BANKS - 0.5%
Chemical Banking Corp. 550,000 21,381
Deutsche Bank AG 15,000 6,794
Mellon Bank Corp. 200,000 7,000
NBD Bancorp, Inc. 445,300 13,304
NationsBank Corp. 67,863 3,156
51,635
CLOSED END INVESTMENT COMPANY - 0.0%
ASA Ltd. 57,000 2,458
CREDIT & OTHER FINANCE - 1.9%
American Express Co. 4,599,230 144,876
Beneficial Corp. 709,000 28,449
Dean Witter Discover & Co. 146,400 5,472
178,797
FEDERAL SPONSORED CREDIT - 2.2%
Federal Home Loan Mortgage Corporation 1,128,800 63,213
Federal National Mortgage Association 1,970,700 140,905
Student Loan Marketing Association 225,600 8,432
212,550
INSURANCE - 2.0%
Alexander & Alexander Services, Inc. 154,350 3,106
Allstate Corp. 723,100 17,445
General Re Corp. 182,300 23,539
Loews Corp. 280,600 25,920
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
MBIA, Inc. 593,200 $ 35,814
Midocean Reinsurance Co. Ltd. Ord. Class A (a)(h) 900,000 18,900
Travelers, Inc. (The) 1,677,867 61,871
186,595
SAVINGS & LOANS - 0.2%
Ahmanson (H.F.) & Co. 1,395,600 22,853
SECURITIES INDUSTRY - 0.3%
Daiwa Securities Co. Ltd. 830,000 10,743
Lehman Brothers Holdings, Inc. 283,020 4,811
Nomura Securities Co. Ltd. 509,000 9,908
25,462
TOTAL FINANCE 680,350
HEALTH - 11.9%
DRUGS & PHARMACEUTICALS - 5.7%
Allergan, Inc. 1,691,900 49,065
American Home Products Corp. 1,875,800 131,540
Astra AB Class A Free shares 650,000 16,363
Astra AB Class B Free shares 298,720 7,381
Bristol-Myers Squibb Co. 1,024,400 63,001
Cephalon, Inc. (a) 601,900 4,890
Chiron Corp. (a) 43,223 2,961
COR Therapeutics, Inc. (a) 617,000 8,021
Genentech, Inc. (redeemable) 121,500 5,862
Genzyme Corp. 341,100 12,024
Lilly (Eli) & Co. 195,300 12,865
Pfizer, Inc. 1,170,200 95,664
Rhone Poulenc Rorer, Inc. 1,245,700 48,582
Sankyo Co. Ltd. 200,000 4,736
Schering-Plough Corp. 861,900 67,659
Scios, Inc. (a) 685,000 5,309
Takeda Chemical Industries Ltd. 400,000 4,937
Yamanouchi Pharmaceutical 200,000 4,074
544,934
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 4.8%
Abbott Laboratories 350,000 $ 12,381
Acuson Corp. (a) 722,600 11,562
Baxter International, Inc. 2,552,600 75,302
Beckman Instruments, Inc. 725,500 22,218
Becton, Dickinson & Co. 1,087,900 57,115
Boston Scientific Corp. (a) 1,136,300 21,022
Guidant Corp. (f) 835,600 14,936
Johnson & Johnson 1,340,300 77,905
McKesson Corp. 74,500 2,747
Medtronic, Inc. 589,600 35,007
Pall Corp. 2,286,300 43,440
St. Jude Medical, Inc. 1,707,100 64,870
SciMed Life Systems, Inc. (a) 460,000 27,255
465,760
MEDICAL FACILITIES MANAGEMENT - 1.4%
Columbia/HCA Healthcare Corp. 1,664,081 66,771
Ornda Healthcorp (a) 615,000 8,917
Quorum Health Group, Inc. (a) 283,300 5,206
U.S. Healthcare, Inc. 292,000 13,359
United HealthCare Corp. 835,600 40,527
134,780
TOTAL HEALTH 1,145,474
HOLDING COMPANIES - 0.0%
Triarc Companies, Inc. Class A (a) 123,600 1,560
INDUSTRIAL MACHINERY & EQUIPMENT - 6.2%
ELECTRICAL EQUIPMENT - 3.4%
American Superconductor Corp. (a) 304,750 6,247
General Electric Co. 5,482,000 282,323
Mitsubishi Electric Co. Ord. 1,000,000 6,131
Murata Manufacturing Co. Ord. 375,000 11,928
Omron Corp. 400,000 6,863
Philips Electronics 200,000 6,297
Scientific-Atlanta, Inc. 496,400 9,990
329,779
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.9%
Caterpillar, Inc. 429,200 $ 22,104
Cooper Industries, Inc. 805,100 30,795
Harnischfeger Industries, Inc. 321,851 8,569
Keystone International, Inc. 551,500 9,376
Komatsu Limited Ord. 770,000 6,760
TRINOVA Corp. 52,700 1,245
Watts Industries, Inc. Class A 427,100 8,542
87,391
POLLUTION CONTROL - 1.9%
Browning-Ferris Industries, Inc. 2,199,400 68,181
Safety Kleen Corp. 726,700 11,446
WMX Technologies, Inc. 2,772,700 78,675
Wheelabrator Technologies, Inc. 1,412,800 22,428
180,730
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 597,900
MEDIA & LEISURE - 3.0%
BROADCASTING - 0.6%
Home Shopping Network, Inc. 457,000 3,770
Infinity Broadcasting Corp. (a) 135,415 4,316
Viacom, Inc. Class B (non-vtg.) (a) 1,106,845 51,053
59,139
ENTERTAINMENT - 0.4%
Disney (Walt) Co. 534,400 27,188
Players International, Inc. (a) 531,700 10,900
38,088
LEISURE DURABLES & TOYS - 0.1%
Hasbro, Inc. 421,700 12,704
LODGING & GAMING - 1.5%
Aztar Corp. (a)(f) 2,325,500 14,825
Circus Circus Enterprises, Inc. (a) 455,000 12,171
Marriott International, Inc. 488,000 14,762
Mirage Resorts, Inc. (a) 1,259,150 28,174
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - CONTINUED
President Riverboat Casinos, Inc. (a) 1,386,300 $ 12,130
Promus Companies, Inc. (a) 1,783,600 60,642
142,704
PUBLISHING - 0.2%
American Media, Inc. Class A 256,500 1,796
McGraw-Hill, Inc. 175,100 11,382
13,178
RESTAURANTS - 0.2%
McDonald's Corp. 559,300 18,247
Starbucks Corp. (a) 179,300 4,303
22,550
TOTAL MEDIA & LEISURE 288,363
NONDURABLES - 8.7%
BEVERAGES - 1.5%
Dr. Pepper/Seven-Up Companies, Inc. (a) 506,000 16,508
PepsiCo, Inc. 2,550,000 94,031
Seagram Co. Ltd. 1,279,000 36,815
147,354
FOODS - 1.8%
Borden, Inc. 1,066,800 14,268
ConAgra, Inc. 1,321,200 40,792
Hormel (George A) & Co. 213,400 5,362
Nabisco Holdings Class A 428,900 12,116
Nestle SA (Reg.) 37,000 33,791
Pet, Inc. 252,000 6,521
RalCorp Holdings, Inc. (a) 134,666 3,181
Ralston Continental Baking Group 408,200 1,582
Ralston Purina Co. 224,100 10,085
SYSCO Corp. 1,729,500 46,913
174,611
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.9%
Procter & Gamble Co. 490,000 $ 31,973
Rubbermaid, Inc. 747,400 22,515
Tambrands, Inc. 740,500 32,119
86,607
TOBACCO - 4.5%
Philip Morris Companies, Inc. 5,111,200 304,755
RJR Nabisco Holdings Corp. (a) 16,137,500 94,808
UST, Inc. 1,116,000 32,922
432,485
TOTAL NONDURABLES 841,057
PRECIOUS METALS - 0.2%
Santa Fe Pacific Gold Corp. 1,912,240 19,361
RETAIL & WHOLESALE - 5.9%
DRUG STORES - 0.7%
Revco (D.S.), Inc. (a) 2,053,393 45,688
Rite Aid Corp. 396,300 9,957
Walgreen Co. 192,400 9,139
64,784
GENERAL MERCHANDISE STORES - 2.3%
Carson Pirie Scott & Co. (a)(f) 1,670,700 29,864
Dayton Hudson Corp. 640,000 43,920
Dillard Department Stores, Inc. Class A 544,600 14,296
Federated Department Stores, Inc. (a) 142,200 2,684
Hornbach Baumarket AG (Bearer) 10,779 5,338
May Department Stores Co. (The) 928,000 32,596
Price/Costco, Inc. 533,900 7,341
Sears, Roebuck & Co. 1,792,000 79,072
Wal-Mart Stores, Inc. 250,000 5,750
220,861
GROCERY STORES - 1.0%
Food Lion, Inc. Class A 4,534,200 24,655
Kroger Co. (The) (a) 527,600 12,465
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - CONTINUED
Safeway, Inc. (a) 1,227,900 $ 39,446
Stop & Shop Companies, Inc. (a) 871,800 20,269
96,835
RETAIL & WHOLESALE, MISCELLANEOUS - 1.9%
Amway Japan Ltd. sponsored ADR 375,500 5,726
Boots Co. PLC (The) 2,300,000 16,898
Circuit City Stores, Inc. 527,000 11,857
Home Depot, Inc. (The) 1,540,800 72,032
Land's End, Inc. 155,200 2,503
Lowe's Companies, Inc. 181,200 6,659
Office Depot, Inc. (a) 261,600 6,802
Officemax, Inc. (a) 88,300 2,296
Toys "R" Us, Inc. (a) 1,886,600 55,183
179,956
TOTAL RETAIL & WHOLESALE 562,436
SERVICES - 1.3%
PRINTING - 0.3%
Donnelley (R.R.) & Sons Co. 510,000 15,428
Toppan Printing Co. Ltd. 500,000 6,622
22,050
SERVICES - 1.0%
ADT Ltd. 4,309,100 43,091
BET Public Ltd. Co. Ord. 3,000,000 4,882
Jostens, Inc. 615,000 11,531
Western Atlas, Inc. 1,080,700 39,581
99,085
TOTAL SERVICES 121,135
TECHNOLOGY - 4.1%
COMMUNICATIONS EQUIPMENT - 0.3%
Cabletron Systems, Inc. (a) 557,450 21,044
Cisco Systems, Inc. 100,000 3,338
24,382
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 0.4%
Microsoft Corp. (a) 50,600 $ 3,004
Novell, Inc. (a) 1,582,200 28,084
Oracle Systems Corp. (a) 214,600 9,147
Platinum Technology, Inc. (a) 100,000 2,075
42,310
COMPUTERS & OFFICE EQUIPMENT - 2.4%
Canon, Inc. 386,000 5,693
Digital Equipment Corp. (a) 921,300 31,209
International Business Machines Corp. 1,630,300 117,585
Pitney Bowes, Inc. 605,000 18,679
Sun Microsystems, Inc. (a) 1,109,700 36,343
Xerox Corp. 217,600 23,800
233,309
ELECTRONICS - 0.6%
AMP, Inc. 620,500 44,056
Hitachi Ltd. 1,700,000 14,567
58,623
PHOTOGRAPHIC EQUIPMENT - 0.4%
Polaroid Corp. 1,334,200 40,860
TOTAL TECHNOLOGY 399,484
TRANSPORTATION - 1.1%
AIR TRANSPORTATION - 0.3%
AMR Corp. (a) 534,000 29,971
RAILROADS - 0.7%
CSX Corp. 450,000 32,231
Canadian Pacific Ltd. Ord. 606,700 8,247
Chicago & North Western Holdings Corp. (a) 175,200 3,745
Illinois Central Corp., Series A 228,200 7,502
Santa Fe Pacific Corp. 818,200 14,625
66,350
TRUCKING & FREIGHT - 0.1%
TNT Freightways Corp. 382,950 10,244
TOTAL TRANSPORTATION 106,565
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 6.0%
CELLULAR - 0.3%
Airtouch Communications (a) 174,100 $ 4,788
Rogers Communications, Inc. Class B (a) 520,000 6,283
Vodafone Group PLC sponsored ADR 479,500 14,625
25,696
ELECTRIC UTILITY - 0.4%
Veba Vereinigte Elektrizitaets & Bergwerks AG Ord. 114,300 38,432
TELEPHONE SERVICES - 5.3%
AT&T Corp. 498,600 24,868
Ameritech Corp. 3,495,200 153,352
Bell Atlantic Corp. 282,500 15,326
BellSouth Corp. 1,084,400 64,251
Frontier Corp. 478,500 10,048
MCI Communications Corp. 137,600 2,528
NYNEX Corp. 2,252,000 88,954
Koninklijke PPT Nederland 926,100 30,351
SBC Communications, Inc. 2,986,200 127,287
516,965
TOTAL UTILITIES 581,093
TOTAL COMMON STOCKS
(Cost $7,264,258) 7,831,444
PREFERRED STOCKS - 0.4%
CONVERTIBLE PREFERRED STOCKS - 0.4%
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Chrysler Corp. Series A, $4.625 (a)(g) 24,000 2,988
Ford Motor Co., Series A, $4.20 98,200 8,065
TOTAL DURABLES 11,053
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
ENERGY - 0.1%
OIL & GAS - 0.1%
Atlantic Richfield Co. exchangeable 396,100 $ 9,308
FINANCE - 0.0%
BANKS - 0.0%
Norwest Corp., Series B, $3.50 57,400 3,789
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
U.S. Surgical Corp. $2.20 (g) 238,200 6,372
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Westinghouse Electric Corp. $1.30 (g) 875,350 12,364
TOTAL CONVERTIBLE PREFERRED STOCKS 42,886
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Telecom Italia 1,549,900 3,431
TOTAL PREFERRED STOCKS
(Cost $44,384) 46,317
CORPORATE BONDS - 1.4%
MOODY'S RATINGS (D) PRINCIPAL
AMOUNT (000S) (C)
CONVERTIBLE BONDS - 0.9%
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.1%
Hoogovens En Staalfabrieken NV
4 1/2%, 4/11/01 - NLG 13,750 8,550
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
CONGLOMERATES - 0.1%
Mark IV Industries, Inc. 6 1/4%, 2/15/07 B1 $ 4,800 $ 6,432
Polly Peck International PLC euro
7 1/4%, 1/4/05 (b) - 7,500 3,300
9,732
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Liberty Property LP 8%, 7/1/01 - 1,591 1,581
ENERGY - 0.1%
INDEPENDENT POWER - 0.1%
California Energy, Inc. 5%, 7/31/00 (g) B1 6,200 5,580
FINANCE - 0.3%
BANKS - 0.3%
Bank of New York Co., Inc. 7 1/2%, 8/15/01 A3 18,972 29,312
MEDIA & LEISURE - 0.2%
LODGING & GAMING - 0.1%
Argosy Gaming Co. 12%, 6/1/01 B3 10,000 9,350
RESTAURANTS - 0.1%
Starbucks Corp. 4 1/2%, 8/1/03 B2 7,500 7,003
TOTAL MEDIA & LEISURE 16,353
RETAIL & WHOLESALE - 0.1%
GROCERY STORES - 0.1%
Food Lion, Inc. 5%, 6/1/03 (g) A3 6,700 5,804
Kroger Co. 6 3/8%, 12/1/99 B2 3,800 4,935
TOTAL RETAIL & WHOLESALE 10,739
TOTAL CONVERTIBLE BONDS 81,847
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - 0.5%
ENERGY - 0.1%
OIL & GAS - 0.1%
Mesa Capital Corp. secured 0%, 6/30/98 (e) B3 $ 8,750 $ 7,635
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.1%
Citicasters, Inc. 9 3/4%, 2/15/04 B- 6,250 6,078
SCI Television, Inc. secured 11%, 6/30/05 B3 7,250 7,277
13,355
LODGING & GAMING - 0.2%
Aztar Corp. 13 3/4%, 10/1/04 B2 10,000 10,325
Harrah's Jazz Co. 14 1/4%, 11/15/01 B1 11,010 11,698
22,023
TOTAL MEDIA & LEISURE 35,378
RETAIL & WHOLESALE - 0.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Color Tile, Inc. 10 3/4%, 12/15/01 B2 6,090 5,161
TOTAL NONCONVERTIBLE BONDS 48,174
TOTAL CORPORATE BONDS
(Cost $136,282) 130,021
U.S. TREASURY OBLIGATIONS - 12.5%
U.S. Treasury Bills yields at date of purchase
5.33%-5.86%, 3/9/95-4/20/95 Aaa 1,200,000 1,188,450
8 1/8%, 8/15/19 Aaa 10,000 10,342
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,198,578) 1,198,792
FOREIGN GOVERNMENT OBLIGATIONS (I) - 0.0%
Republic of Ecuador 7 5/8%, 12/21/04 (g)
(Cost $84) - 119 71
OTHER SECURITIES - 0.0%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
PURCHASED BANK DEBT - 0.0%
Republic of Ecuador loan participation (a)
(Cost $435) $ 1,000 $ 394
REPURCHASE AGREEMENTS - 4.3%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 5.81%
dated 1/31/95 due 2/1/95 $ 413,733 413,666
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $9,057,687) $ 9,620,705
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN SETTLEMENT UNREALIZED
THOUSANDS DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
4,477,359 JPY 2/15/95 $ 44,992 $ (508)
2,476,375 JPY 2/15/95 24,884 (116)
TOTAL CONTRACTS TO BUY
(Payable amount $70,500) $ 69,876 (624)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.7%
CONTRACTS TO SELL
57,669 DEM 3/2/95 $ 37,862 (1,099)
11,828,154 JPY 2/15/95 118,858 3,012
7,282,677 JPY 3/9/95 73,344 334
55,282 SEK 4/11/95 7,340 (5)
TOTAL CONTRACTS TO SELL
(Receivable amount $239,646) $ 237,404 2,242
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.5%
$ 1,618
CURRENCY ABBREVIATIONS
DEM - German deutsche mark
JPY - Japanese yen
NLG - Netherland guilder
SEK - Swedish krona
LEGEND
(a) Non-income producing
(b) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(c) Principal amount is stated in United States dollars unless otherwise
noted.
(d) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(e) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(f) Affiliated company (see Note 7 of Notes to Financial Statements).
(g) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $33,179,000 or 0.3% of net
assets.
(h) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION SECURITY
DATE COST
Midocean
Reinsurance Co.
Ltd. Ord. Class A 11/4/92 $ 15,000,000
(i) Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 0.5% AAA, AA, A 0.4%
Baa 0.0% BBB 0.0%
Ba 0.0% BB 0.1%
B 0.8% B 0.6%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.1%.
INCOME TAX INFORMATION
At January 31, 1995, the aggregate cost of investment securities for income
tax purposes was $9,065,295,000. Net unrealized appreciation aggregated
$555,410,000, of which $784,885,000 related to appreciated investment
securities and $229,475,000 related to depreciated investment securities.
At July 31, 1994, the fund was required to defer $998,000 of losses on
futures contracts and options.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS(EXCEPT PER SHARE AMOUNTS) JANUARY 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 9,620,705
agreements of $413,666) (cost $9,057,687) -
See accompanying schedule
Cash 195
Receivable for investments sold 167,646
Unrealized appreciation on foreign currency contracts 3,346
Receivable for fund shares sold 28,994
Dividends receivable 15,401
Interest receivable 3,238
Other receivables 437
TOTAL ASSETS 9,839,962
LIABILITIES
Payable for investments purchased $ 259,624
Unrealized depreciation on foreign currency contracts 1,728
Payable for fund shares redeemed 19,713
Accrued management fee 4,090
Other payables and accrued expenses 2,480
TOTAL LIABILITIES 287,635
NET ASSETS $ 9,552,327
Net Assets consist of:
Paid in capital $ 8,884,615
Undistributed net investment income 30,039
Accumulated undistributed net realized gain (loss) on 73,177
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 564,496
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 447,561 shares outstanding $ 9,552,327
NET ASSET VALUE and redemption price per share $21.34
($9,552,327 (divided by) 447,561 shares)
Maximum offering price per share (100/97.00 of $21.34) $22.00
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 95,023
Dividends (including $1,142 received from affiliated
issuers)
Interest (including security lending fees of $19) 45,013
TOTAL INCOME 140,036
EXPENSES
Management fee $ 23,841
Transfer agent fees 11,243
Accounting and security lending fees 387
Non-interested trustees' compensation 77
Custodian fees and expenses 180
Registration fees 352
Audit 240
Legal 37
Reports to shareholders 193
Miscellaneous 91
Total expenses before reductions 36,641
Expense reductions (647) 35,994
NET INVESTMENT INCOME 104,042
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized loss of $1,309 275,102
on sales of investment in affiliated issuers)
Foreign currency transactions (11,267)
Short sales 302 264,137
Change in net unrealized appreciation (depreciation) on:
Investment securities (126,818)
Short sales (1,423)
Assets and liabilities in foreign currencies 9,887 (118,354)
NET GAIN (LOSS) 145,783
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 249,825
FROM 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, 1995 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 104,042 $ 163,731
Net investment income
Net realized gain (loss) 264,137 483,457
Change in net unrealized appreciation (depreciation) (118,354) (154,747)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 249,825 492,441
FROM OPERATIONS
Distributions to shareholders: (82,864) (165,953)
From net investment income
From net realized gain (508,137) (247,094)
TOTAL DISTRIBUTIONS (591,001) (413,047)
Share transactions 1,483,397 3,791,186
Net proceeds from sales of shares
Reinvestment of distributions 577,652 401,972
Cost of shares redeemed (924,746) (2,161,673)
Net increase (decrease) in net assets resulting from 1,136,303 2,031,485
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 795,127 2,110,879
NET ASSETS
Beginning of period 8,757,200 6,646,321
End of period (including undistributed net investment $ 9,552,327 $ 8,757,200
income of $30,039 and $8,861, respectively)
OTHER INFORMATION
Shares
Sold 68,464 170,517
Issued in reinvestment of distributions 26,851 18,230
Redeemed (42,694) (97,260)
Net increase (decrease) 52,621 91,487
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED JULY 31,
ENDED
JANUARY 31,
1995
(UNAUDITED) 1994 1993 1992 1991 1990
SELECTED PER-SHARE DATA
Net asset value, $ 22.17 $ 21.90 $ 21.34 $ 19.92 $ 17.10 $ 18.56
beginning of
period
Income from
Investment
Operations
Net investment .24 .45 .53 .50 .46 .58
income
Net realized and .37 1.07 3.02 1.94 3.10 (.02)
unrealized
gain (loss)
Total from invest .61 1.52 3.55 2.44 3.56 .56
ment operations
Less Distributions (.20) (.48) (.59) (.38) (.52) (.75)
From net
investment
income
From net (1.24) (.77) (2.40) (.64) (.22) (1.27)
realized
gain
Total (1.44) (1.25) (2.99) (1.02) (.74) (2.02)
distributions
Net asset value, $ 21.34 $ 22.17 $ 21.90 $ 21.34 $ 19.92 $ 17.10
end of period
TOTAL RETURN B, C 2.79% 7.08% 19.10% 12.75% 21.89% 3.22%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, $ 9,552 $ 8,757 $ 6,646 $ 4,199 $ 2,686 $ 1,910
end of period
(in millions)
Ratio of expenses .78% .82% .83% .86% .87% .87%
to average net A
assets
Ratio of expenses .79% .83% .83% .86% .87% .87%
to average net A
assets before
expense
reductions
Ratio of net 2.24% 2.09% 2.67% 2.49% 2.62% 3.43%
investment A
income to
average net
assets
Portfolio turnover 85% 92% 87% 221% 215% 108%
rate A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN. (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS.)
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1995 (Unaudited)
13. 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 (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
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the 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 prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, currency gains and losses realized between the trade
and settlement dates on securities transactions, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. Further, the effects of changes in foreign currency
exchange rates on investments in securities are not segregated in the
Statement of Operations from the effects of changes in market prices of
those securities, but are included with the net realized and unrealized
gain or loss on investment securities.
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. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, market discount, non-taxable dividends and losses
deferred due to futures and options and 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 and may
affect net investment income per share. Undistributed net investment income
may include temporary book and tax basis differences which will reverse in
a subsequent period. Any taxable income or gain remaining at fiscal year
end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
14. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. These contracts
involve market risk in excess of the unrealized gain or loss reflected in
the fund's Statement of Assets and Liabilities. The U.S. dollar value of
the currencies the fund has committed to buy or sell is shown in the
schedule of investments under the caption "Forward Foreign Currency
Contracts." This amount represents the aggregate exposure to each currency
the fund has acquired or hedged through currency contracts at period end.
Losses may arise from changes in the value of the foreign currency or if
the counterparties do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date. Contracts that have been offset with different
counterparties are reflected as both a contract to buy and a contract to
sell in the schedule of investments under the caption "Forward Foreign
Currency Contracts."
2. OPERATING POLICIES - CONTINUED
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.
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.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) amounted
to $18,900,000 or 0.2% of net assets.
15. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $3,693,205,000 and $3,445,729,000, respectively, of which sales
of U.S. government and government agency obligations aggregated
$28,700,000.
16. 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 and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2700% to .5200% for the period August 1, 1994 to January
31, 1995. In the event that these rates were lower than the contractual
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
rates in effect during those periods, FMR voluntarily implemented the above
rates, as they resulted in the same or a lower management fee. The annual
individual fund fee rate is .20%. For the period, the management fee was
equivalent to an annualized rate of .51% of average net assets.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the fund, received sales
charges of $1,727,000 on sales of shares of the fund.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
During the period August 1, 1994 to December 31, 1994, FSC received fees
based on the type, size, number of accounts and the number of transactions
made by shareholders. Effective January 1, 1995, the Board of Trustees
approved a revised transfer agent fee contract pursuant to which FSC
receives account fees and asset-based fees that vary according to account
size and type of account. FSC pays for typesetting, printing and mailing of
all shareholder reports, except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting
records and administers the security lending program. The security lending
fee
is based on the number and duration of lending transactions. The accounting
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 $2,196,000 for the period.
17. 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
$647,000 under this arrangement.
18. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end there were no loans
outstanding.
19. 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
DOLLAR AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Amli Residential Properties Trust (SBI) $ - $ 4,797 $ 334 $ -Aztar Corp.
(a) 3,841 940 - 14,825
Carson Pirie Scott & Co. (a) 10,853 - - 29,864
Cephalon, Inc. (a) - 2,222 - -
Guidant Corp. - 3,544 - 14,936 Storage Equities, Inc. - - 555
18,218
Summit Property Trust (SBI) - 3,173 253 -
TNT Freightways Corp. - 988 - -
TOTALS $ 14,694 $ 15,664 $ 1,142 $ 77,843
(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)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)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.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East 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
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
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
8885 Ladue Road
Ladue, 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
4611 Sharon Road
Charlotte, 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
215 South State 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
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Steven Kaye, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
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 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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(registered trademark)
OTC
PORTFOLIO
SEMIANNUAL REPORT
JANUARY 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
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 past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 25 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 29 Notes 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. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR
GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been a few positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
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. A fund's total
return 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, 1995 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
OTC 4.54% -5.45% 84.90% 341.17%
OTC (incl. 3% sales charge) 1.41% -8.29% 79.35% 327.93%
NASDAQ 4.58% -5.66% 81.62% 170.97%
Average Mid-Cap Fund 4.06% -5.04% 91.56% 226.33%
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 ten
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, you would end up with $1,050. You can compare
these figures to the performance of the NASDAQ Composite Index - a common
proxy for over-the-counter stocks. To measure how the fund's performance
stacked up against its peers, you can compare it to the average mid-cap
fund, which currently reflects the performance of 92 mid-cap funds tracked
by Lipper Analytical Services. Unlike most other funds in this category,
this fund invests in large companies as well as small ones. 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, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
OTC -5.45% 13.08% 16.00%
OTC (incl. 3% sales charge) -8.29% 12.39% 15.65%
NASDAQ -5.66% 12.68% 10.48%
Average Mid-Cap Fund -5.04% 13.54% 12.20%
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 10 YEARS
OTC Portfolios (093)NASDAQ
01/31/85 9700.00 10000.00
02/28/85 10600.78 10196.27
03/31/85 10750.90 10017.94
04/30/85 10859.33 10066.74
05/31/85 11593.30 10434.16
06/30/85 11801.81 10627.92
07/31/85 12310.58 10810.55
08/31/85 12402.32 10682.10
09/30/85 11576.62 10058.49
10/31/85 12283.98 10496.59
11/30/85 13060.35 11264.80
12/31/85 13741.84 11658.77
01/31/86 14716.62 12047.72
02/28/86 15786.29 12900.25
03/31/86 16579.92 13444.56
04/30/86 16950.86 13749.55
05/31/86 17364.92 14358.09
06/30/86 17511.57 14550.05
07/31/86 16001.95 13325.08
08/31/86 16795.58 13737.35
09/30/86 15078.93 12582.35
10/31/86 15818.97 12944.74
11/30/86 15577.31 12850.74
12/31/86 15307.78 12516.33
01/31/87 17194.53 14067.46
02/28/87 19034.81 15248.30
03/31/87 18988.34 15430.57
04/30/87 18774.57 14991.39
05/31/87 18941.86 14945.82
06/30/87 19322.93 15237.53
07/31/87 20252.37 15605.67
08/31/87 21200.39 16324.72
09/30/87 21070.27 15941.51
10/31/87 14722.23 11600.29
11/30/87 13829.98 10949.41
12/31/87 15552.19 11857.55
01/31/88 16104.59 12366.70
02/29/88 17177.52 13166.49
03/31/88 17570.57 13442.41
04/30/88 18101.73 13607.10
05/31/88 17942.38 13288.12
06/30/88 19132.17 14160.75
07/31/88 19068.43 13897.74
08/31/88 18611.64 13510.94
09/30/88 19323.38 13911.37
10/31/88 19312.76 13723.00
11/30/88 18686.00 13327.95
12/31/88 19106.55 13684.25
01/31/89 20338.53 14399.00
02/28/89 20284.49 14341.94
03/31/89 21170.66 14593.83
04/30/89 22208.12 15340.87
05/31/89 23202.35 16008.97
06/30/89 23148.32 15618.59
07/31/89 24164.16 16284.18
08/31/89 25244.85 16839.97
09/30/89 25388.99 16968.78
10/31/89 24532.93 16348.40
11/30/89 24758.21 16364.91
12/31/89 24913.48 16319.34
01/31/90 23144.55 14919.63
02/28/90 23787.80 15279.15
03/31/90 24690.82 15627.56
04/30/90 23973.35 15072.48
05/31/90 25544.36 16468.25
06/30/90 25593.84 16587.37
07/31/90 25259.85 15724.43
08/31/90 23082.70 13678.15
09/30/90 21812.35 12361.32
10/31/90 21352.34 11834.95
11/30/90 22834.61 12883.39
12/31/90 23729.79 13413.71
01/31/91 25598.48 14861.86
02/28/91 27582.36 16255.83
03/31/91 29131.07 17305.35
04/30/91 29079.87 17392.18
05/31/91 30500.59 18159.67
06/30/91 29028.68 17076.43
07/31/91 31076.55 18013.63
08/31/91 32714.86 18861.86
09/30/91 32427.36 18904.92
10/31/91 33837.25 19482.60
11/30/91 32237.57 18797.99
12/31/91 35395.23 21038.39
01/31/92 36923.60 22253.68
02/29/92 36995.02 22729.46
03/31/92 35809.46 21663.80
04/30/92 34752.46 20763.55
05/31/92 35252.39 21001.44
06/30/92 34481.07 20222.46
07/31/92 35209.54 20840.69
08/31/92 34338.23 20205.24
09/30/92 35398.06 20928.24
10/31/92 36717.15 21714.03
11/30/92 39308.77 23420.52
12/31/92 40683.18 24289.56
01/31/93 40952.82 24985.29
02/28/93 39350.87 24067.81
03/31/93 40714.90 24762.47
04/30/93 39525.34 23732.33
05/31/93 40588.02 25135.63
06/30/93 40635.60 25258.34
07/31/93 41079.71 25285.25
08/31/93 41841.03 26653.75
09/30/93 42990.94 27369.21
10/31/93 43557.97 27960.53
11/30/93 42406.73 27068.17
12/31/93 44073.51 27872.26
01/31/94 45260.24 28721.56
02/28/94 44785.55 28435.59
03/31/94 42996.32 26676.00
04/30/94 41809.58 26330.82
05/31/94 41590.49 26379.26
06/30/94 40056.87 25330.46
07/31/94 40933.23 25911.73
08/31/94 42978.06 27471.12
09/30/94 43087.61 27423.39
10/31/94 44073.51 27897.02
11/30/94 42631.17 26922.14
12/31/94 42885.56 26980.98
01/31/95 42793.42 27097.24
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity OTC
Portfolio on January 31, 1985 and paid a 3% sales charge. As the chart
shows, by January 31, 1995, the value of your investment would have grown
to $42,793 - a 327.93% increase on your initial investment. For comparison,
look at how the NASDAQ did over the same period. The same $10,000
investment would have grown to $27,097 - a 170.97% 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 OTC
Portfolio
Q. HOW DID THE FUND PERFORM, ABBY?
A. The fund's performance picked up recently, as market conditions
improved. The fund had a total return of 4.54% for the six months ended
January 31, 1995. That about mirrored the total return of the NASDAQ
Composite Index during the same period, which was 4.58%. For the 12 months
ended January 31, the fund had a total return of -5.45%, compared to -5.66%
for the index.
Q. SIX MONTHS AGO YOU TALKED ABOUT NEGATIVE EFFECTS OF RISING INTEREST
RATES ON OTC STOCKS. WHY DID THE FUND'S PERFORMANCE IMPROVE LATER IN THE
YEAR?
A. By late summer, interest rates had already risen significantly. Rather
than continue to worry about the effects of higher rates on future
corporate earnings, investors began to invest more heavily in the stocks of
companies that showed strong current earnings. And there was no shortage of
those. The best earnings surprises in the second half of 1994 emerged from
the technology sector. Anywhere from 20% to 40% of the fund was invested in
technology stocks over the past six months, so it benefited accordingly.
Many of the fastest growing companies in the world are in the U.S.
technology sector; they continue to benefit from the strong demand for
personal computers and related products. Because many of these stocks had
languished earlier in the year due to interest rate worries, their
valuations - prices relative to earnings - had become very attractive. That
helped fuel the recent surge.
Q. WERE THERE STANDOUTS WITHIN THE TECHNOLOGY GROUP?
A. Two of the fund's largest investments - Intel and Microsoft - were among
its most interesting stories. Many shareholders probably read about the
trouble Intel experienced with its new microprocessor, the Pentium.
However, a flaw discovered in the chip turned out to be more of a public
relations problem than an operational problem. As Intel began replacing the
defective chips, I continued to believe that this would be a short-term
dilemma. Now, that appears to be the case. Acceptance of the Pentium is
greater than many people expected, and the company's earnings are strong.
Although it suffered temporarily, Intel's stock price rose 17% over the
past six months.
Q. AND MICROSOFT?
A. The product making news at Microsoft - its new PC operating system,
Windows '95 - hasn't even hit the market yet. Although release of the
system has been delayed, I continue to believe that millions of PC users
will ultimately upgrade to the new software. That's why I feel that the
company's future earnings potential is excellent. In the meantime, 1994
earnings were strong. Because its price has risen recently, the stock is no
longer as cheap as it was six months ago. For that reason, and because
there are still some questions surrounding the release of Windows '95, I'll
probably hold off on increasing the fund's stake in Microsoft for now.
Q. WERE THERE OTHER TECHNOLOGY STOCKS THAT DID WELL?
A. Sure. The stocks of companies that manufacture relational database
software, such as Oracle Systems, generally did well. They are benefiting
from a large-scale move in corporate America away from the old mainframe
computer set-ups toward a client server environment - groups of PCs tied
together by local or wide area networks. In addition, Sun Microsystems is
experiencing strong sales of its computer workstations, and that success
has been reflected in the company's earnings and stock price. Of course,
not every technology stock performed well. Applied Materials manufactures
equipment used to make semiconductors. The company posted strong earnings,
but its stock price fell amid investor concerns that the demand for
semiconductors had peaked. However, I'm optimistic about the company's
future earnings potential, which is why I'm sticking with the stock for
now.
Q. THE FUND'S STAKE IN TECHNOLOGY HAS INCREASED FROM 23.7% SIX MONTHS AGO
TO 39.0% ON JANUARY 31. DOES THIS MEAN YOU'RE OPTIMISTIC ABOUT THE FUTURE
OF THE SECTOR?
A. First, I should note that part of that increase is due to the recent
appreciation in the value of these stocks, but I also have bought more of
them. To answer the question, I am optimistic looking ahead. Again, this
sector has some of the fastest growing companies in the U.S. Over the long
term, I expect technology stocks to turn in strong performance. A word of
caution, though. This sector has a history of volatility. Investors in
these stocks are very sensitive to the slightest bit of bad news. So in the
short term, there will be ups and downs.
Q. OVER THE PAST SIX MONTHS, YOU'VE REDUCED THE FUND'S STAKE IN FINANCIAL
STOCKS FROM 12.6% TO 7.8%. WHY?
A. The prices of most of these stocks tend to rise and fall with interest
rates. Because higher rates often squeeze the profit margins of banks and
other financial companies, I reduced investments in the sector as rates
rose in 1994. The financial sector is a significant portion of the NASDAQ
index - roughly 15%. Although the fund was underweighted in these stocks
relative to the index, it would have been better off not owning any.
Q. WERE THERE OTHER DISAPPOINTMENTS?
A. Ironically, one was a bank stock - State Street Bank - that the fund
owned because I felt that its processing operations wouldn't be negatively
affected by rising rates. However, competition increased, profit margins
didn't improve and the stock suffered. I ended up selling it last fall. I
can blame Mother Nature for the poor performance of another stock - Arctco,
which manufactures snowmobiles. This winter, the company has lacked a key
ingredient necessary for success: snow. Sales have lagged and the stock
fell in January.
Q. LET'S TALK ABOUT YOUR OUTLOOK. HOW ARE THE NEXT SIX MONTHS SHAPING UP?
A. I'm generally optimistic. The market seems to be favoring growth stocks
- those with fast growing earnings - over cyclical stocks, whose earnings
are closely tied to the economy. That's good news for the fund, which
invests mostly in growth stocks. However, the strong earnings of OTC
companies have driven up their stock prices lately. For these stocks to
continue to rise, earnings must continue to come through in 1995. Any
slowdown in earnings - possibly due to higher interest rates - could spell
volatility.
FUND FACTS
GOAL: to increase the value
of the fund's shares over the
long term by investing mainly
in large, successful growth
companies at the top of
their industries
START DATE: December 31, 1987
SIZE: as of January 31,
1995, more than $3.4 billion
MANAGER: Michael Gordon,
since January 1993;
previously managed Fidelity
Select Chemicals (August
1992 - January 1993) and
Fidelity Select Biotechnology
Portfolios (May 1990 -
August 1992); joined Fidelity
in 1987
(checkmark)
MICHAEL GORDON ON HEALTH CARE
STOCKS:
"My investments in health care
stocks are almost exclusively
in health maintenance
organizations (HMOs). They
have proven to be one of the
most effective ways of
controlling costs in the health
care industry. From time to
time, there have been
concerns in the marketplace
about the viability of HMOs,
which has provided me with
some great buying
opportunities. In addition to
Oxford Health Plans, which I
have identified as a blue chip of
tomorrow, I consider Humana
a blue chip of today. An
HMO that is national in scope,
growth has been steady at
Humana. The company
provides excellent services to
its HMO customers and
delivers impressive
cost-containment numbers to
its corporate sponsors. Though
health care stocks are not new
to the fund, I've had an
opportunity to increase the
fund's holdings over the past
six months."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Intel Corp. 5.8 3.9
Microsoft Corp. 3.2 2.7
Oracle Systems Corp. 1.8 1.9
U.S. Healthcare, Inc. 1.6 2.1
Tele-Communications, Inc. Class 1.5 1.6
A
Amgen, Inc. 1.3 1.1
Novell, Inc. 1.3 0.4
Ericsson (L.M.) Telephone Co. 1.1 0.8
Class B ADR
Wisconsin Central Transportation 1.1 0.9
Corp.
MCI Communications Corp. 1.1 0.6
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO
Technology 39.0 23.7
Health 9.6 7.7
Finance 7.8 12.6
Media & Leisure 7.4 5.5
Utilities 4.7 4.4
ASSET ALLOCATION
AS OF JANUARY 31, 1995* AS OF JULY 31, 1994**
Row: 1, Col: 1, Value: 11.6
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 43.0
Row: 1, Col: 4, Value: 43.4
Row: 1, Col: 1, Value: 23.9
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 38.0
Row: 1, Col: 4, Value: 38.1
Stocks 88.1%
Bonds 0.3%
Short-term
investments 11.6%
FOREIGN
INVESTMENTS 4.8%
Stocks 76.1%
Bonds 0.0%
Short-term
investments 23.9%
FOREIGN
INVESTMENTS 4.4%
*
**
INVESTMENTS JANUARY 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.1%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 3.2%
CHEMICALS & PLASTICS - 1.2%
Applied Extrusion Technologies Inc. (a) 100,000 $ 1,069
Fuller (H.B.) Co. (a) 30,000 953
Kemira OY sponsored ADR (a)(c) 150,000 2,081
Mississippi Chemical Corp. 159,900 2,778
OM Group, Inc. 203,100 4,570
PT Tri Polyta Indonesia sponsored ADR (a) 41,000 897
Petrolite Corporation 53,300 1,336
Triple S Plastics, Inc. (a) 135,300 1,421
Union Carbide Corp. 65,900 1,680
16,785
IRON & STEEL - 0.9%
Gibraltar Steel Corp. (a) 94,201 1,036
Huntco, Inc. Class A 70,000 1,610
Kentucky Electric Steel, Inc. (a) 154,400 1,505
Schnitzer Steel, Inc. Class A (b) 318,100 7,157
Steel Technologies, Inc. 124,000 1,426
12,734
METALS & MINING - 0.1%
Foster LB Co. Class A (a) 25,000 94
Olympic Steel, Inc. (a) 88,500 974
1,068
PACKAGING & CONTAINERS - 0.1%
Shorewood Packaging Corp. (a) 40,000 730
U.S. Can Corp. (a) 13,000 255
985
PAPER & FOREST PRODUCTS - 0.9%
Jefferson Smurfit Corp. (a) 139,700 2,253
Riverside Forest Products 321,000 5,161
Willamette Industries, Inc. 96,900 4,748
12,162
TOTAL BASIC INDUSTRIES 43,734
CONGLOMERATES - 0.1%
Lancaster Colony Corp. 36,666 1,137
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - 2.4%
BUILDING MATERIALS - 0.5%
Hoganas AB Class B Free shares (a) 93,000 $ 1,493
RB&W Corp. (a) 49,000 404
Tecumseh Products Co. Class A 120,500 5,694
7,591
CONSTRUCTION - 1.3%
Beazer Homes USA, Inc. (a) 150,000 2,100
Redman Industries (a) 148,800 2,678
Schuler Homes, Inc. (a) 332,800 3,994
Southern Energy Homes, Inc. (a) 376,000 4,417
Toll Brothers, Inc. (a) 200,000 2,200
U.S. Home Corp. (a) 200,000 3,450
18,839
ENGINEERING - 0.3%
Glenayre Technologies, Inc. (a) 132,600 4,807
REAL ESTATE - 0.2%
Price Enterprises, Inc. (a) 200,000 2,200
REAL ESTATE INVESTMENT TRUSTS - 0.1%
RES Hotel Investors, Inc. 85,000 1,148
TOTAL CONSTRUCTION & REAL ESTATE 34,585
DURABLES - 1.7%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Air Sensors, Inc. (a) 50,000 513
Armor All Products Corp. 82,800 1,780
Edelbrock Corp. (a) 3,000 40
Jason, Inc. (a) 119,000 1,071
3,404
HOME FURNISHINGS - 0.2%
Bassett Furniture Industries, Inc. 84,400 2,532
LADD Furniture, Inc. 90,100 439
Stanley Furniture (a) 65,800 576
3,547
TEXTILES & APPAREL - 1.3%
Cygne Designs, Inc. (a) 61,400 706
Donnkenny, Inc. (Del.) (a) 94,200 1,543
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Interface, Inc. Class A 202,800 $ 2,611
Justin Industries, Inc. 381,000 4,428
Mohawk Industries, Inc. (a) 55,900 713
Nautica Enterprises, Inc. (a) 75,500 2,142
Quaker Fabric Corp. (a) 94,700 1,018
Westpoint Stevens, Inc. Class A (a) 353,000 4,810
17,971
TOTAL DURABLES 24,922
ENERGY - 0.7%
ENERGY SERVICES - 0.6%
Global Industries Ltd. (a) 117,400 2,730
Marine Drilling Cos., Inc. (a) 20,000 50
Newpark Resources, Inc. (a) 45,000 849
Noble Drilling Corp. (a) 310,000 1,549
Offshore Logistics, Inc. (a) 154,950 1,937
Pride Petroleum Services, Inc. (a) 146,600 715
Tuboscope Vetco Corp. (a) 100,000 763
8,593
OIL & GAS - 0.1%
Coda Energy, Inc. (a) 296,700 1,632
TOTAL ENERGY 10,225
FINANCE - 7.8%
BANKS - 4.8%
B B & T Financial Corp. 76,666 2,271
Bank of New Hampshire Corp. 110,000 2,819
BanPonce Corp. 281,761 8,276
Boatmen's Bancshares, Inc. 162,100 4,943
Dauphin Deposit Corp. 39,900 938
Deposit Guaranty Corp. 25,000 797
Fifth Third Bancorp 290,300 14,587
First American Corp. 75,068 2,252
First Commerce Bancshares, Inc.:
Class A 115,600 2,139
Class B 445,900 4,904
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
HUBCO, Inc. 92,600 $ 1,563
Hancock Holding Co. 50,000 1,438
Liberty Bancorporation, Inc. 69,700 2,126
Meridian Bancorp, Inc. 100,000 2,838
Northern Trust Corp. 167,850 5,538
Regions Financial Corp. 98,200 3,106
Trans Financial Bancorp, Inc. 60,000 870
Union Planters Corp. 20,342 455
West One Bancorp 30,000 814
Whitney Holding Corp. 30,000 698
Zions Bancorporation 132,200 4,991
68,363
INSURANCE - 1.3%
Allied Group, Inc. 148,500 3,712
Berkley (W.R.) Corp. 25,600 954
Commerce Group, Inc. 104,100 1,588
HealthCare Compare Corp. 116,700 4,055
NAC Re Corp. 78,400 2,587
SAFECO Corp. 116,300 6,135
19,031
SAVINGS & LOANS - 1.5%
Astoria Financial Corp. (a) 46,100 1,392
Charter One Financial Corp. 332,900 6,574
Collective Bancorp, Inc. 182,800 3,198
Commercial Federal Corp. (a) 158,700 3,313
GP Financial Corp. 105,500 2,275
Quaker City Bancorp (a) 100,000 925
WFS BanCorp, Inc. 35,000 543
Washington Mutual, Inc. 164,000 2,891
21,111
SECURITIES INDUSTRY - 0.2%
Concord Holding Corp. 229,500 3,328
TOTAL FINANCE 111,833
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 9.6%
DRUGS & PHARMACEUTICALS - 3.5%
Amgen, Inc. (a) 299,200 $ 19,037
Amylin Pharmaceuticals, Inc. (a) 200,000 1,100
Biogen, Inc. (a) 130,000 4,729
Cell Genesys, Inc. (a) 191,000 1,218
Cellpro, Inc. (a) 95,600 1,099
Centocor, Inc. (a) 50,000 869
Cephalon, Inc. (a) 221,200 1,797
Immunex Corp. (a) 99,100 1,511
IVAX Corp. 233,546 4,904
Noven Pharmaceuticals, Inc. (a) 176,400 1,389
Sepracor, Inc. (a) 648,600 4,054
Sigma Aldrich Corp. 65,000 2,324
Somatix Therapy Corp. (a) 248,900 964
Telor Ophthalmic Pharmaceuticals, Inc. (a)(b) 500,000 438
Vertex Pharmaceuticals, Inc. (a) 120,900 1,874
Watson Pharmaceuticals, Inc. (a) 116,500 2,883
50,190
MEDICAL EQUIPMENT & SUPPLIES - 2.9%
Advanced Technology Laboratories, Inc. (a) 185,000 2,960
American Medical Electronics, Inc. (a) 150,000 938
Baxter International, Inc. 166,600 4,914
Biomet, Inc. (a) 100,000 1,513
Circon Corp. (a) 144,700 2,206
Datascope Corp. (a) 89,100 1,582
Healthdyne, Inc. (a) 10,400 94
Medisense, Inc. (a) 280,100 5,426
Mitek Surgical Products, Inc. (a) 20,000 593
Nellcor, Inc. (a) 125,400 4,248
St. Jude Medical, Inc. 213,500 8,112
Spacelabs Medical, Inc. (a) 140,000 3,308
Thermo Cardiosystems, Inc. (a) 100,000 2,063
U.S. Surgical Corp. 50,000 1,163
Utah Medical Products, Inc. (a) 42,000 425
Vital Signs, Inc. 151,400 1,892
41,437
MEDICAL FACILITIES MANAGEMENT - 3.2%
Abbey Healthcare Group, Inc. (a) 61,200 1,561
Advantage Health Corp. (a) 100,600 2,792
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
American Homepatient, Inc. (a) 57,500 $ 1,466
Coventry Corp. (a) 100,000 2,600
FHP International Corp. (a) 100,000 2,575
Homedco Group, Inc. (a) 108,800 4,508
Maxicare Health Plans, Inc. (a) 172,000 2,903
Oxford Health Plans, Inc. (a) 39,700 3,370
Quorum Health Group, Inc. (a) 19,400 356
U.S. Healthcare, Inc. 499,700 22,861
44,992
TOTAL HEALTH 136,619
HOLDING COMPANIES - 0.2%
Nolato AB B Free shares 296,500 3,021
INDUSTRIAL MACHINERY & EQUIPMENT - 2.1%
ELECTRICAL EQUIPMENT - 0.6%
California Microwave Corp. (a) 100,000 2,900
Genlyte Group, Inc. (a) 5,000 23
Scientific-Atlanta, Inc. 219,100 4,410
Spectrum Control, Inc. (a) 250,000 531
7,864
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Applied Power, Inc. Class A 87,400 2,130
Asyst Technologies, Inc. 75,000 1,894
Brenco, Inc. 108,000 1,215
Enerflex Systems Ltd. 371,500 4,389
Goulds Pumps, Inc. 144,300 2,922
Greenfield Industries, Inc. 128,200 2,836
NN Ball & Roller, Inc. 188,100 3,974
Park-Ohio Industries, Inc. (a) 164,700 2,203
21,563
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 29,427
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 7.3%
BROADCASTING - 3.7%
ACS Enterprises, Inc. (a) 99,400 $ 1,168
American Telecasting, Inc. (a) 123,100 1,354
British Sky Broadcasting Group ADR (a) 12,000 290
Central European Media Class C (a) 24,000 258
Citicasters, Inc. (a) 100,000 2,625
Evergreen Media Corp. Class A (a) 54,200 949
Heftel Broadcasting Corp. Class A (a) 100,000 1,300
Infinity Broadcasting Corp. (a) 61,300 1,954
International Cabletel, Inc. (a) 81,900 2,293
Lin Television Corp. (a) 37,500 973
People's Choice TV Corp. (a) 65,100 1,269
TCA Cable TV, Inc. 185,000 4,139
Tele-Communications, Inc. Class A (a) 988,600 21,008
Telewest Communications PLC (a) 1,449,000 3,925
Viacom, Inc. Class A (a) 100,000 4,700
Viacom, Inc. (non-vtg.) Class B (a) 100,000 4,613
52,818
ENTERTAINMENT - 0.8%
American Classic Voyages Co. 146,800 2,129
Live Entertainment of Canada, Inc. (a) 280,300 2,390
Players International, Inc. (a) 169,300 3,471
Rentrak Corp. (a) 241,000 1,927
Scientific Games Holdings Corp. (a) 23,700 1,209
11,126
LEISURE DURABLES & TOYS - 0.8%
Arctco, Inc. 388,350 5,632
Aritmos AB Free (a) 600,000 2,621
Kompan International AS Class B 9,000 2,018
Monark Stiga (a) 150,000 529
10,800
LODGING & GAMING - 0.6%
Argosy Gaming Corp. (a) 33,300 387
Doubletree Corp. (a) 65,000 1,203
International Game Technology Corp. 100,000 1,375
President Casinos, Inc. (a) 124,100 1,085
Promus Companies, Inc. (a) 100,000 3,400
Station Casinos, Inc. (a) 46,700 549
Supertel Hospitality, Inc. (a) 13,300 170
8,169
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 1.4%
Apple South, Inc. 95,000 $ 1,128
Applebee's International, Inc. 5,000 85
Bertucci's, Inc. (a) 135,500 1,118
Boston Chicken, Inc. (a) 55,000 849
Buffets, Inc. (a) 165,000 1,609
Landry's Seafood Restaurants, Inc. (a) 40,600 1,167
Lone Star Steakhouse Saloon (a) 145,000 3,553
Outback Steakhouse, Inc. (a) 276,700 7,333
Ryan's Family Steak Houses, Inc. (a) 30,000 244
Starbucks Corp. (a) 91,800 2,203
Taco Cabana, Inc. (a) 150,000 1,134
20,423
TOTAL MEDIA & LEISURE 103,336
NONDURABLES - 1.3%
AGRICULTURE - 0.5%
Delta & Pine Land Co. 176,200 3,128
Kanthal AB B Free shares 225,200 3,570
6,698
BEVERAGES - 0.4%
Dr. Pepper/Seven-Up Companies, Inc. (a) 116,200 3,791
LVMH 8,250 1,307
5,098
FOODS - 0.3%
Tyson Foods, Inc. 184,600 4,453
TOBACCO - 0.1%
Monk Austin, Inc. 150,000 1,781
TOTAL NONDURABLES 18,030
RETAIL & WHOLESALE - 4.1%
APPAREL STORES - 0.3%
Ross Stores, Inc. 135,400 1,455
Sportmart, Inc. Class A (non-vtg.) (a) 63,300 570
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Sportmart, Inc. (New) (a) 15,700 $ 163
Urban Outfitters, Inc. (a) 74,300 1,913
4,101
APPLIANCE STORES - 0.1%
Cellstar Corp. (a) 100,000 2,125
GENERAL MERCHANDISE STORES - 1.1%
Casey's General Stores, Inc. 272,500 4,019
Freds, Inc. Class A 228,200 2,111
Lechters, Inc. (a) 100,000 1,700
Michaels Stores, Inc. (a) 110,000 3,630
Nordstrom, Inc. 25,100 1,017
Price/Costco, Inc. (a) 217,400 2,989
15,466
GROCERY STORES - 0.5%
Food Lion, Inc. Class B 115,000 618
Quality Food Centers, Inc. 105,000 2,520
Richfood Holdings, Inc. Class A 265,000 4,439
7,577
RETAIL & WHOLESALE, MISCELLANEOUS - 2.1%
Cameron Ashley, Inc. (a)(b) 328,000 5,002
Cannondale Corp. (a) 1,000 12
Futures Shops Ltd. (a) 211,400 2,911
Gateway 2000, Inc. (a) 259,600 5,419
Good Guys, Inc. (a) 155,800 1,928
Micro Warehouse, Inc. (a) 104,300 2,842
Rex Stores Corp. (a) 70,800 1,159
Sodak Gaming, Inc. (a) 125,000 1,938
Spiegel, Inc. Class A 191,200 1,721
Sunglass Hut International, Inc. (a) 86,000 2,000
Viking Office Products, Inc. (a) 120,000 3,120
Wickes Lumber Co. (a) 112,800 1,664
29,716
TOTAL RETAIL & WHOLESALE 58,985
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 0.7%
LEASING & RENTAL - 0.3%
Hollywood Entertainment Corp. (a) 145,200 $ 3,703
PRINTING - 0.2%
Cyrk, Inc. (a) 100,000 2,550
New England Business Service, Inc. 34,400 636
3,186
SERVICES - 0.2%
Accustaff, Inc. (a) 85,500 1,283
Norrell Corp. GA 9,000 173
Zebra Technologies Corp. Class A (a) 42,500 1,700
3,156
TOTAL SERVICES 10,045
TECHNOLOGY - 39.0%
COMMUNICATIONS EQUIPMENT - 5.0%
Aspect Telecommunications Corp. (a) 93,200 3,169
Brite Voice Systems, Inc. (a) 150,600 2,410
Cisco Systems, Inc. (a) 214,400 7,156
Coherent Communications Systems Corp. (a) 18,600 363
DSC Communications Corp. (a) 230,500 7,405
Dialogic Corp. (a) 76,600 1,685
Digital Systems International, Inc. (a) 393,700 2,854
Dynatech Corp. (a) 264,500 8,133
Ericsson (L.M.) Telephone Co. Class B ADR 300,600 16,194
General Instrument Corp. (a) 196,800 5,363
ITI Technologies (a) 2,000 49
InterVoice, Inc. (a) 100,000 1,625
Network General Corp. (a) 61,500 1,461
Telco Systems, Inc. (a) 150,000 2,006
3Com Corp. (a) 254,400 11,654
71,527
COMPUTER SERVICES & SOFTWARE - 13.7%
Adobe Systems, Inc. (a) 50,000 1,447
BancTec, Inc. (a) 100,000 1,813
Banyan Systems, Inc. (a) 250,000 4,344
Black Box Corp. 307,500 4,150
Boole & Babbage, Inc. (a) 90,300 2,574
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Broderbund Software, Inc. (a) 34,200 $ 1,582
Cerner Corp. (a) 50,000 2,263
Chipcom Corp. (a) 60,000 2,355
Cognos, Inc. (a) 78,400 1,302
Compuware Corp. (a) 4,800 179
Delrina Corporation (a) 100,000 1,395
Electronic Arts (a) 96,400 1,723
Frame Technology Corp. (a) 72,000 1,134
HBO & Co. 120,000 4,275
Hummingbird Communications Ltd. (a) 50,000 835
Informix Corp. (a) 344,000 11,093
Integrated Systems, Inc. (a) 27,300 563
Intelligent Electronics, Inc. 100,000 950
Lotus Development Corp. (a) 141,600 6,319
McAfee Associates, Inc. (a) 90,700 1,372
Medic Computer Systems, Inc. (a) 110,000 3,795
Mercury Interactive Group Corp. (a) 100,000 1,275
MicroAge, Inc. (a) 50,500 584
Microsoft Corp. (a) 753,200 44,720
Novell, Inc. (a) 1,026,400 18,218
Oracle Systems Corp. (a) 584,900 24,931
Parametric Technology Corp. (a) 284,980 10,473
Peoplesoft, Inc. (a) 62,200 2,014
Platinum Technology, Inc. (a) 67,500 1,401
SPSS, Inc. (a) 99,500 1,182
Sierra On-Line, Inc. (a) 116,000 3,553
Softkey International, Inc. (a) 100,000 2,413
Softdesk, Inc. (a) 171,700 2,876
Spectrum Holobyte, Inc. (a) 29,300 322
State of The Art, Inc. (a) 143,900 1,349
Stratacom, Inc. (a) 10,000 358
SunGard Data Systems, Inc. (a) 162,600 5,813
Sybase, Inc. (a) 83,000 3,611
Symantec Corp. (a) 499,800 9,871
Systems & Computer Technology Corp. (a) 98,500 1,625
VMark Software, Inc. (a) 76,200 1,219
Wind River Systems, Inc. (a) 50,000 425
193,696
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 6.9%
AST Research, Inc. (a) 590,000 $ 8,850
ADAPTEC, Inc. (a) 192,500 5,270
Apple Computer, Inc. 315,200 12,726
Bay Networks, Inc. (a) 150,000 4,406
Compaq Computer Corp. (a) 50,000 1,788
Comverse Technology, Inc. (a) 99,000 1,225
Danka Business Systems PLC sponsored ADR 15,700 371
Digital Equipment Corp. (a) 130,000 4,404
Exabyte (a) 25,000 428
Filenet Corp. (a) 100,000 3,075
Hutchinson Technology, Inc. (a) 70,000 1,733
International Business Machines Corp. 150,000 10,819
International Imaging Materials, Inc. (a) 10,600 302
Maxtor Corporation (a) 165,000 866
Merisel, Inc. (a) 45,000 293
Micom Communication Corp. (a) 72,533 571
Microtouch Systems, Inc. (a) 13,000 423
Norand Corp. (a) 171,300 6,295
Plannar Systems, Inc. (a) 29,500 693
Pyramid Technology Corp. (a) 70,000 1,103
Read Rite Corp. (a) 155,000 2,344
Sequent Computer Systems, Inc. (a) 75,000 1,209
Silicon Graphics, Inc. (a) 60,500 1,891
Sun Microsystems, Inc. (a) 450,200 14,744
Tech Data Corp. (a) 355,500 4,710
Wang Laboratories, Inc. (a) 504,600 7,001
97,540
ELECTRONIC INSTRUMENTS - 1.6%
American Sensors, Inc. (a) 19,000 280
Analogic Corp. (a) 188,500 3,676
Applied Materials, Inc. (a) 227,800 8,770
KLA Instruments Corp. (a) 67,900 3,395
Lam Research Corp. (a) 31,000 1,163
Sensonor AS 300,000 2,153
Silicon Valley Group, Inc. (a) 150,000 2,963
22,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - 11.6%
Allgon AB B Free shares 352,500 $ 7,371
Altera Corp. (a) 140,000 6,230
Cascade Communications Corp. (a) 7,500 446
Cirrus Logic, Inc. (a) 111,600 3,111
Cyrix Corp. (a) 101,800 2,494
DH Technology, Inc. (a) 100,000 2,275
Intel Corp. 1,187,900 82,410
Kemet Corp. (a) 10,000 285
Linear Technology Corp. 234,300 11,598
Maxim Integrated Products, Inc. (a) 205,200 5,951
Methode Electronics, Inc. Class A 56,700 836
Microchip Technology, Inc. (a) 217,650 4,870
Micron Technology, Inc. 130,000 5,736
Molex, Inc. 178,750 5,809
Motorola, Inc. 120,000 7,095
Robinson Nugent, Inc. (b) 301,500 2,714
S-3, Inc. (a) 100,000 1,663
Sierra Semiconductor Corp. (a) 65,000 1,154
Tencor Instruments (a) 51,400 1,889
Texas Instruments, Inc. 95,000 6,555
VLSI Technology, Inc. (a) 100,000 1,250
Xilinx, Inc. (a) 22,300 1,288
Zilog, Inc. (a) 26,300 763
163,793
PHOTOGRAPHIC EQUIPMENT - 0.2%
Megahertz Corp. (a) 212,300 3,450
TOTAL TECHNOLOGY 552,406
TRANSPORTATION - 3.4%
AIR TRANSPORTATION - 0.7%
Northwest Airlines Corp. Class A (a) 455,000 8,361
ValuJet Airlines (a) 70,000 1,470
9,831
RAILROADS - 1.3%
MK Rail Corp. 275,000 2,647
Wisconsin Central Transportation Corp. (a) 390,600 15,624
18,271
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - 1.4%
Aasche Transportation (a) 24,000 $ 186
Arnold Industries, Inc. 112,500 2,109
Builders Transport, Inc. (a) 191,200 2,223
Landair Services, Inc. (a) 219,100 3,506
Landstar System, Inc. (a) 162,100 5,430
Mark VII, Inc. (a) 160,900 2,011
TNT Freightways Corp. (a) 71,600 1,915
Werner Enterprises, Inc. 70,300 1,758
19,138
TOTAL TRANSPORTATION 47,240
UTILITIES - 4.5%
CELLULAR - 2.4%
A Plus Communications, Inc. (a) 122,000 1,662
Arch Communications Group, Inc. (a) 52,000 943
Cellular Communications, Inc. Series A (redeemable) (a) 156,400 7,859
Cellular Communications Puerto Rico, Inc. (a) 50,000 1,550
LIN Broadcasting Corp. 75,000 10,425
Paging Network, Inc. (a) 35,000 1,190
Qualcomm, Inc. (a) 155,000 4,108
Rogers Cantel Mobile Communications, Inc.
Class B (non-vtg.) (a) 33,800 916
Vanguard Cellular Systems, Inc. Class A (a) 226,800 5,726
34,379
TELEPHONE SERVICES - 2.1%
AT&T Corp. 50,000 2,494
Incomnet, Inc. (a) 15,000 135
LCI International, Inc. (a) 127,700 2,889
LDDS Communications, Inc. (a) 237,187 5,159
MCI Communications Corp. 832,400 15,295
MFS Communications, Inc. (a) 100,000 3,800
29,772
TOTAL UTILITIES 64,151
TOTAL COMMON STOCKS
(Cost $1,157,684) 1,249,696
CORPORATE BONDS - 0.3%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - 0.1%
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Argosy Gaming Co. 12%, 6/1/01 B3 $ 1,310 $ 1,225
NONCONVERTIBLE BONDS - 0.2%
UTILITIES - 0.2%
CELLULAR - 0.2%
Nextel Communications, Inc. 0%, 8/15/04 (d) B3 7,125 2,422
TOTAL CORPORATE BONDS
(Cost $4,764) 3,647
U.S. TREASURY OBLIGATIONS - 7.0%
U.S. Treasury Bill, yield at date of purchase
5.70%, 3/9/95 (Cost $99,438) 100,000 99,457
REPURCHASE AGREEMENTS - 4.6%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements,
(U.S. Treasury obligations) in a
joint trading account at 5.81%
dated 1/31/95 due 2/1/95 $ 64,734 64,724
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,326,610) $ 1,417,524
LEGEND
(a) Non-income producing.
(b) Affiliated company (see Note 6 of Notes to Financial Statements).
(c) Security exempt from registration under Rule144A 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 $2,081,000 or 0.1% of net
assets.
(d) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
INCOME TAX INFORMATION
At January 31, 1995, the aggregate cost of investment securities for income
tax purposes was $1,332,507,000. Net unrealized appreciation aggregated
$85,017,000, of which $157,821,000 related to appreciated investment
securities and $72,804,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS JANUARY 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 1,417,524
agreements of $64,724) (cost $1,326,610) -
See accompanying schedule
Cash 1
Receivable for investments sold 21,530
Receivable for fund shares sold 9,777
Dividends receivable 381
Interest receivable 26
Other receivables 977
TOTAL ASSETS 1,450,216
LIABILITIES
Payable for investments purchased $ 34,631
Payable for fund shares redeemed 14,338
Accrued management fee 520
Other payables and accrued expenses 526
TOTAL LIABILITIES 50,015
NET ASSETS $ 1,400,201
Net Assets consist of:
Paid in capital $ 1,323,163
Distributions in excess of net investment income (8,274)
Accumulated undistributed net realized gain (loss) on (5,602)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 90,914
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 60,292 shares outstanding $ 1,400,201
NET ASSET VALUE and redemption price per share $23.22
($1,400,201 (divided by) 60,292 shares)
Maximum offering price per share (100/97.00 of $23.22) $23.94
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 3,605
Dividends (including $67 received from affiliated issuers)
Interest 4,913
TOTAL INCOME 8,518
EXPENSES
Management fee $ 4,348
Basic fee
Performance adjustment (1,210)
Transfer agent fees 1,655
Accounting fees and expenses 275
Non-interested trustees' compensation 20
Custodian fees and expenses 28
Registration fees 56
Audit 47
Legal 5
Interest 3
Miscellaneous 18
TOTAL EXPENSES 5,245
NET INVESTMENT INCOME 3,273
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of $3,191 2,116
on sales of investment in affiliated issuers)
Foreign currency transactions (1) 2,115
Change in net unrealized appreciation (depreciation) on 53,533
investment securities
NET GAIN (LOSS) 55,648
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 58,921
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JANUARY JULY 31,
31, 1995 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 3,273 $ 6,204
Net investment income
Net realized gain (loss) 2,115 72,014
Change in net unrealized appreciation (depreciation) 53,533 (82,465)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 58,921 (4,247)
FROM OPERATIONS
Distributions to shareholders: (11,547) (6,136)
From net investment income
From net realized gain - (169,881)
TOTAL DISTRIBUTIONS (11,547) (176,017)
Share transactions 492,353 622,732
Net proceeds from sales of shares
Reinvestment of distributions 11,034 169,434
Cost of shares redeemed (380,419) (709,063)
Net increase (decrease) in net assets resulting from 122,968 83,103
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 170,342 (97,161)
NET ASSETS
Beginning of period 1,229,859 1,327,020
End of period (including overdistribution of net $ 1,400,201 $ 1,229,859
investment income of $8,274, for 1995)
OTHER INFORMATION
Shares
Sold 21,235 25,273
Issued in reinvestment of distributions 495 7,025
Redeemed (16,291) (28,688)
Net increase (decrease) 5,439 3,610
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JULY 31,
ENDED JANUARY
31, 1995
(UNAUDITED) 1994 1993 1992 1991 1990
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 22.42 $ 25.90 $ 24.65 $ 24.28 $ 20.42 $ 22.36
beginning of period
Income from Investment
Operations
Net investment .07 .12 .06 .08 .19 .51
income
Net realized and .94 (.08) 3.68 2.92 4.30 .47
unrealized gain
(loss)
Total from investment 1.01 .04 3.74 3.00 4.49 .98
operations
Less Distributions (.21) (.12) (.25) (.12) (.05) (.51)
From net investment
income
From net realized - (3.40) (2.24) (2.51) (.58) (2.41)
gain
Total distributions (.21) (3.52) (2.49) (2.63) (.63) (2.92)
Net asset value, end of $ 23.22 $ 22.42 $ 25.90 $ 24.65 $ 24.28 $ 20.42
period
TOTAL RETURN A, B 4.54% (.36) 16.67 13.30 23.03 4.53
% % % % %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,400 $ 1,230 $ 1,327 $ 1,037 $ 864 $ 697
(in millions)
Ratio of expenses to .79% C .88% 1.08 1.17 1.29 1.35
average net assets % % % %
Ratio of expenses to .79% C .89% 1.08 1.17 1.29 1.35
average net assets % % % %
before expense
reductions
Ratio of net investment .49% C .48% .53 .59 1.00 2.30
income to average net % % % %
assets
Portfolio turnover rate 58% C 222% 213 245 198 212
% % % %
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C ANNUALIZED
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1995 (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 of their purchase date are
valued at amortized cost or original cost plus accrued interest, both of
which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the 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 prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, currency gains and
losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. The effects
of changes in foreign currency exchange rates on investments in securities
are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, 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. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS.
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, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, non-taxable dividends and losses deferred due to
wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
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 SEC), the fund, along with other
affiliated entities of FMR, may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $577,286,000 and $337,166,000, 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 and is based on
the monthly average net assets of all the mutual funds advised
by FMR. The rates ranged from .2700% to .5200% for the period. In the event
that these rates were lower than the contractual rates in effect during
those periods, FMR voluntarily implemented the above rates, as they
resulted in the same or a lower management fee. The annual individual fund
fee rate is .35%. The basic fee is subject to a performance adjustment (up
to a maximum of (plus/minus) .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 .47% of average net assets after the performance adjustment.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the fund, received sales
charges of $141,678 on sales of shares of the fund.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
During the period August 1, 1994 to December 31, 1994, FSC received fees
based on the type, size, number of accounts and the number of transactions
made by shareholders. Effective January 1, 1995, the Board of Trustees
approved a revised transfer agent fee contract pursuant to which FSC
receives account fees and asset-based fees that vary according to account
size. FSC pays for typesetting, printing and mailing of all shareholder
reports, except proxy statements.
ACCOUNTING FEES. 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 $22,000 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 $13,978,000 and $10,424,000,
respectively. The weighted average interest rate was 5.19%.
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
PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
ATS Automation (a) $ - $ 1,205 $ - $ -
Cameron Ashley, Inc. (a) 45 - - 5,002
Commerce Bank - 1,952 - -
Conservative Savings Corp. - 713 8 -
Robinson Nugent, Inc. - - 27 2,714
Schnitzer Steel, Inc. Class A - 108 32 7,157
Telor Ophthalmic
Pharmaceutical Care, Inc. (a) - - - 438
TOTALS $ 45 $ 3,978 $ 67 $ 15,311
(a) Non-income producing.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Abigail P. Johnson, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
Mid-Cap Stock Fund
New Millennium(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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
