FIDELITY
(registered trademark)
OTC
PORTFOLIO
ANNUAL REPORT
JULY 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 27 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 31 Notes to the financial statements.
REPORT OF INDEPENDENT 35 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 36
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 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 JULY 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
OTC 39.98% 126.83% 365.43%
OTC (incl. 3% sales charge) 35.78% 120.03% 351.47%
NASDAQ 38.64% 128.46% 232.31%
Average Mid-Cap Fund 30.64% 112.76% 288.51%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or ten years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns 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 reflects the performance of 89 mid-cap funds with
similar objectives tracked by Lipper Analytical Services over the past 12
months. 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 JULY 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
OTC 39.98% 17.80% 16.62%
OTC (incl. 3% sales charge) 35.78% 17.08% 16.27%
NASDAQ 38.64% 17.97% 12.76%
Average Mid-Cap Fund 30.64% 15.97% 14.05%
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 (093NASDAQ
07/31/85 9700.00 10000.00
08/31/85 9772.29 9881.18
09/30/85 9121.68 9304.32
10/31/85 9679.04 9709.58
11/30/85 10290.78 10420.19
12/31/85 10827.75 10784.63
01/31/86 11595.82 11144.41
02/28/86 12438.65 11933.02
03/31/86 13063.99 12436.52
04/30/86 13356.26 12718.64
05/31/86 13682.52 13281.56
06/30/86 13798.07 13459.13
07/31/86 12608.58 12326.00
08/31/86 13233.91 12707.36
09/30/86 11881.29 11638.95
10/31/86 12464.40 11974.18
11/30/86 12273.99 11887.22
12/31/86 12061.61 11577.88
01/31/87 13548.26 13012.71
02/28/87 14998.29 14105.02
03/31/87 14961.67 14273.62
04/30/87 14793.23 13867.37
05/31/87 14925.06 13825.22
06/30/87 15225.31 14095.06
07/31/87 15957.65 14435.59
08/31/87 16704.64 15100.73
09/30/87 16602.11 14746.26
10/31/87 11600.24 10730.53
11/30/87 10897.19 10128.45
12/31/87 12254.19 10968.50
01/31/88 12689.45 11439.48
02/29/88 13534.85 12179.30
03/31/88 13844.56 12434.53
04/30/88 14263.07 12586.88
05/31/88 14137.52 12291.81
06/30/88 15075.00 13099.01
07/31/88 15024.78 12855.72
08/31/88 14664.85 12497.93
09/30/88 15225.66 12868.33
10/31/88 15217.29 12694.08
11/30/88 14723.44 12328.65
12/31/88 15054.81 12658.24
01/31/89 16025.54 13319.39
02/28/89 15982.96 13266.62
03/31/89 16681.21 13499.62
04/30/89 17498.66 14190.65
05/31/89 18282.06 14808.66
06/30/89 18239.48 14447.54
07/31/89 19039.91 15063.23
08/31/89 19891.42 15577.35
09/30/89 20005.00 15696.51
10/31/89 19330.48 15122.64
11/30/89 19507.98 15137.91
12/31/89 19630.34 15095.75
01/31/90 18236.52 13800.99
02/28/90 18743.36 14133.56
03/31/90 19454.89 14455.84
04/30/90 18889.57 13942.38
05/31/90 20127.43 15233.50
06/30/90 20166.42 15343.69
07/31/90 19903.25 14545.45
08/31/90 18187.79 12652.59
09/30/90 17186.83 11434.50
10/31/90 16824.37 10947.59
11/30/90 17992.31 11917.42
12/31/90 18697.66 12407.98
01/31/91 20170.08 13747.55
02/28/91 21733.26 15037.01
03/31/91 22953.55 16007.83
04/30/91 22913.21 16088.15
05/31/91 24032.65 16798.10
06/30/91 22872.87 15796.08
07/31/91 24486.48 16663.02
08/31/91 25777.36 17447.64
09/30/91 25550.84 17487.47
10/31/91 26661.74 18021.84
11/30/91 25401.29 17388.56
12/31/91 27889.33 19460.98
01/31/92 29093.59 20585.15
02/29/92 29149.87 21025.26
03/31/92 28215.72 20039.50
04/30/92 27382.87 19206.74
05/31/92 27776.78 19426.80
06/30/92 27169.03 18706.23
07/31/92 27743.02 19278.10
08/31/92 27056.48 18690.30
09/30/92 27891.57 19359.09
10/31/92 28930.93 20085.96
11/30/92 30972.97 21664.51
12/31/92 32055.93 22468.39
01/31/93 32268.39 23111.95
02/28/93 31006.15 22263.27
03/31/93 32080.93 22905.84
04/30/93 31143.62 21952.94
05/31/93 31980.95 23251.02
06/30/93 32018.44 23364.53
07/31/93 32368.37 23389.43
08/31/93 32968.25 24655.32
09/30/93 33874.31 25317.14
10/31/93 34321.09 25864.12
11/30/93 33413.99 25038.67
12/31/93 34727.31 25782.47
01/31/94 35662.38 26568.09
02/28/94 35288.35 26303.56
03/31/94 33878.54 24675.89
04/30/94 32943.47 24356.60
05/31/94 32770.84 24401.41
06/30/94 31562.43 23431.25
07/31/94 32252.95 23968.93
08/31/94 33864.16 25411.40
09/30/94 33950.47 25367.25
10/31/94 34727.31 25805.37
11/30/94 33590.83 24903.58
12/31/94 33791.27 24958.01
01/31/95 33718.66 25065.55
02/28/95 35490.27 26344.39
03/31/95 36681.02 27123.70
04/30/95 38220.29 28012.21
05/31/95 39309.39 28695.94
06/30/95 42358.89 30981.78
07/31/95 45146.99 33230.77
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity OTC
Portfolio on July 31, 1985 and paid a 3% sales charge. As the chart shows,
by July 31, 1995, the value of your investment would have grown to $45,147
- - a 351.47% 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 $33,231 - a 232.31% 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
MARKET RECAP
Strong corporate earnings and a
favorable interest rate
environment helped the U.S.
stock market post strong returns
for the 12 months ended July 31,
1995. The Standard & Poor's
Composite Index of 500 Stocks
finished the 12-month period with a
total return of 26.11% - well
above its historical annual
average of roughly 12%. With
inflation posing little threat,
interest rates fell during the first
half of 1995. The Federal
Reserve Board cut the federal
funds rate - the rate banks
charge each other for overnight
loans - by 0.25% on July 6.
Large-capitalization stocks led
the somewhat narrow market
rally. Technology companies -
whose goods and services
benefited from both corporate
and consumer demand - posted
the strongest earnings growth
and stock price gains. In
February, the Dow Jones
Industrial Average closed
above 4000 for the first time.
Returns from foreign markets
were varied, as investors brought
capital back to the U.S. The
Morgan Stanley Emerging
Markets Free Index was down
3.76% for the 12 months ended
July 31. The Morgan Stanley
EAFE (Europe, Australia, Far
East) Index returned 6.95% for the
year ended July 31. European
markets have fared well through
the first half of 1995 - after a
difficult year in 1994 - while the
Japanese market recently has
shown some signs of recovery
after struggling through much of
the year.
An interview with Abigail Johnson, Portfolio Manager of Fidelity
OTC Portfolio
Q. ABBY, HOW DID THE FUND DO?
A. During the 12 months ended July 31, 1995, the fund had a total return of
39.98%. By comparison, the NASDAQ Composite Index, the fund's benchmark,
returned 38.64% during the same period.
Q. WHAT DROVE THE FUND'S PERFORMANCE?
A. Quite simply, technology stocks. The fund had a 42.6% stake in
technology at the end of the period, and many of these stocks had very
strong returns. The story remains the same; corporations increasingly are
relying on technology to improve productivity, while consumers are strongly
embracing personal computers and related products. All of this has driven
powerful earnings growth for companies such as Oracle Systems, which
manufactures relational database software; Sun Microsystems, which makes
computer workstations; Altera, a semiconductor manufacturer; Applied
Materials, which makes semiconductor manufacturing equipment; and 3Com,
which makes routers, hubs and switches. However, by far, the top
contributors to the fund's performance were its two largest investments
during the period: Intel and Microsoft.
Q. . . . TWO BELLWETHER STOCKS FOR THE OVER-THE-COUNTER MARKET. BRING US UP
TO DATE ON BOTH OF THESE COMPANIES.
A. Intel has been a terrific stock - its price has more than doubled over
the past 12 months. Much of this was due to stronger-than-expected sales of
the company's flagship Pentium microprocessor, which has been widely
embraced by the PC industry. So far, no other company has come close to
developing a product to compete with the Pentium, and Intel already is
looking ahead to launching its next generation of computer chip later this
year. As for Microsoft, the stock's fortunes have ridden largely on the
anticipated success of its new PC software product - Windows 95. The
company remained on schedule for its August 24 launch of the product, and
investors - myself included - envision wide acceptance and strong sales of
this new easier-to-use software.
Q. ON THE FLIP SIDE, TECHNOLOGY STOCKS GENERALLY AREN'T AS CHEAP AS THEY
WERE 12 MONTHS AGO. WHAT ARE SOME OF THE RISKS OF INVESTING CLOSE TO HALF
OF THE FUND IN THIS SECTOR?
A. First, I would say that the technology sector has become an increasingly
larger portion of the NASDAQ index over the past several years, and,
relative to the index, the fund is only modestly overweighted in
technology. In addition, because of the preponderance of technology stocks
in the OTC market, I believe that many shareholders may be looking for a
significant exposure to this sector when they invest in the fund. That
said, technology stocks tend to place high on the risk/reward scale.
Historically, they have been volatile and have the potential for sudden
downward moves. However, by the same token, often they have large upside
potential. One footnote: I'm not wedded to this sector. If, at some point,
it appears that business prospects of these companies are deteriorating and
their stock valuations - prices relative to earnings - are no longer
attractive, I'll look to cut back the fund's investment.
Q. MOVING BEYOND TECHNOLOGY, WHICH OTHER SECTORS OR STOCKS PROVED
INTERESTING?
A. In the health care sector, some of the fund's biotechnology stocks
rebounded from depressed levels. Investors have separated out those
companies with viable products that have reached the final stages of
testing, such as Biogen and Sepracor, and rewarded them with higher stock
prices.
Q. WHICH INVESTMENTS DIDN'T WORK OUT AS YOU HAD HOPED?
A. By far, my biggest disappointment was U.S. HealthCare, a health
maintenance organization. I thought the company would be able to sustain
the prices of its services, but that wasn't the case. Many HMOs such as
U.S. HealthCare are being forced to cut prices in the race for subscriber
growth, because the biggest companies ultimately will have the most
leverage to negotiate with health care providers. Schuler Homes and Snapple
Beverage also come to mind as disappointments. Schuler is a homebuilder in
Hawaii that suffered from execution problems, while Snapple appeared to hit
a wall in terms of market penetration for its line of fruit drinks and iced
teas.
Q. LET'S TALK ABOUT THE NEXT SIX MONTHS. WHAT'S YOUR OUTLOOK?
A. The market has moved nearly straight up over the past six months. While
I'm certainly not pessimistic in my outlook, I think the chances of stocks
maintaining that momentum through the end of the year are pretty slim.
Therefore, I'm cognizant of preserving some of the gains the fund has made
thus far. I'll be looking for opportunities to trim back some of the
strongest performing stocks that have become expensive, and increase
positions in larger, more established companies that remain attractive.
FUND FACTS
GOAL: to increase the value
of the fund's shares over the
long term by investing mainly
in stocks traded on the
over-the-counter market
START DATE: December 31,
1984
SIZE: as of July 31, 1995,
more than $2.1 billion
MANAGER: Abigail Johnson,
since April 1994; manager,
Fidelity Dividend Growth
Fund, April 1993-April 1994;
Fidelity Select Developing
Communications Portfolio,
1991-1993; Fidelity Select
Telecommunications
Portfolio, 1991-1992; Fidelity
Select Industrial Equipment
Portfolio, 1988-1991; joined
Fidelity
in 1988
(checkmark)
ABIGAIL JOHNSON ON
THE CHANGING FACE OF
TECHNOLOGY STOCKS:
"Historically, technology
stocks have been very
cyclical in nature - tending to
move up and down with the
economy. But these stocks
have blown right through
what would have been the
boundaries of their cycle and
continued to rise with no signs
of slowing. That raises the
question, `Has technology
changed from a cyclical
industry to a growth industry?'
"It appears that maybe it has.
Everywhere you go these
days you see products with
more features. In addition to
personal computers, cars and
other commonplace
consumer goods are big
users of semiconductors and
integrated circuits. It's easy to
see why the demand for
technology products and
services is so huge. While it
appears that the industry has
sidestepped what might have
been a dip in its traditional
cycle, we'll have to wait and
see if this is truly a long-term
change in behavior."
(solid bullet) Eight of the fund's top 10
largest stock investments on
July 31, 1995, were
technology stocks.
(solid bullet) Together, Intel and
Microsoft made up more than
11% of the fund's investments
on July 31.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Intel Corp. 6.1 5.8
Microsoft Corp. 5.2 3.2
Sun Microsystems, Inc. 1.5 1.0
Oracle Systems Corp. 1.5 1.8
Apple Computer, Inc. 1.4 0.9
3Com Corp. 1.0 0.8
MCI Communications Corp. 0.9 1.1
Tele-Communications, Inc. Class 0.9 1.5
A
Symantec Corp. 0.9 0.7
Wang Laboratories, Inc. 0.9 0.5
TOP FIVE MARKET SECTORS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS IN THESE
MARKET SECTORS
6 MONTHS AGO
Technology 42.6 39.0
Health 8.3 9.6
Finance 8.0 7.8
Media & Leisure 6.1 7.4
Retail & Wholesale 5.3 4.1
ASSET ALLOCATION
AS OF JULY 31, 1995 * AS OF JANUARY 31, 1995 **
Row: 1, Col: 1, Value: 9.6
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 45.2
Row: 1, Col: 4, Value: 44.0
Row: 1, Col: 1, Value: 11.6
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 42.0
Row: 1, Col: 4, Value: 44.6
Stocks 90.2%
Bonds 0.2%
Short-term
investments 9.6%
FOREIGN
INVESTMENTS 4.3%
Stocks 88.1%
Bonds 0.3%
Short-term
investments 11.6%
FOREIGN
INVESTMENTS 4.8%
*
**
INVESTMENTS JULY 31, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.0%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.4%
AEROSPACE & DEFENSE - 0.1%
C A E Industries Ltd. 200,000 $ 1,338
Greenwich Air Services, Inc. (a) 48,100 523
1,861
DEFENSE ELECTRONICS - 0.3%
Trimble Navigation Ltd. (a) 163,300 5,552
TOTAL AEROSPACE & DEFENSE 7,413
BASIC INDUSTRIES - 1.9%
CHEMICALS & PLASTICS - 1.1%
Betz Laboratories, Inc. 85,800 3,872
First Mississippi Corp. 100,000 3,413
Fuller (H.B.) Co. 60,000 2,115
Nalco Chemical Co. 38,000 1,354
OM Group, Inc. 173,100 5,365
PT Tri Polyta Indonesia sponsored ADR (a) 41,000 943
Petrolite Corporation 43,300 1,223
Schulman (A.), Inc. 75,400 2,130
Triple S Plastics, Inc. (a) 60,300 724
Union Carbide Corp. 65,900 2,290
23,429
IRON & STEEL - 0.2%
Huntco, Inc. Class A 70,000 1,129
Schnitzer Steel, Inc. Class A 113,600 3,152
4,281
METALS & MINING - 0.2%
Oregon Metallurgical Corp. (a) 70,000 779
Still Watermining Co. (a) 100,000 2,500
3,279
PAPER & FOREST PRODUCTS - 0.4%
Jefferson Smurfit Corp. (a) 67,100 994
Riverside Forest Products 208,600 2,409
Willamette Industries, Inc. 86,900 5,311
8,714
TOTAL BASIC INDUSTRIES 39,703
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONGLOMERATES - 0.0%
Figgie International Holdings, Inc. Class A (a) 100,000 $ 1,013
CONSTRUCTION & REAL ESTATE - 1.7%
BUILDING MATERIALS - 0.4%
Cooper Cameron Corp. 21,480 481
Hoganas AB Class B Free shares 93,000 1,873
Tecumseh Products Co. Class A 100,500 4,799
Thermo Power Corp. (a) 100,200 1,741
8,894
CONSTRUCTION - 1.0%
Beazer Homes USA, Inc. (a) 130,000 2,113
Granite Construction, Inc. 90,000 2,059
Redman Industries (a) 138,800 3,297
Schuler Homes, Inc. (a) 317,800 3,653
Southern Energy Homes, Inc. (a) 146,500 2,527
Toll Brothers, Inc. (a) 180,000 2,948
U.S. Home Corp. (a) 200,000 4,700
21,297
REAL ESTATE - 0.1%
Price Enterprises, Inc. (a) 200,000 2,900
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Equity Inns, Inc. 200,000 2,150
RFS Hotel Investors, Inc. 105,000 1,509
3,659
TOTAL CONSTRUCTION & REAL ESTATE 36,750
DURABLES - 1.0%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Armor All Products Corp. 82,800 1,397
Jason, Inc. (a) 109,000 1,063
2,460
HOME FURNISHINGS - 0.2%
Bassett Furniture Industries, Inc. 5,000 125
Haverty Furniture Companies, Inc. 179,300 2,107
Ladd Furniture, Inc. 30,033 405
Stanley Furniture (a) 110,000 825
3,462
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - 0.7%
Dixie Yarns, Inc. 105,000 $ 683
Justin Industries, Inc. 381,000 4,024
Mohawk Industries, Inc. (a) 163,100 2,895
Nautica Enterprises, Inc. (a) 68,250 1,851
Westpoint Stevens, Inc. Class A (a) 293,000 6,263
15,716
TOTAL DURABLES 21,638
ENERGY - 0.7%
ENERGY SERVICES - 0.4%
Global Industries Ltd. (a) 117,400 2,347
Newpark Resources, Inc. (a) 115,000 2,070
Noble Drilling Corp. (a) 185,000 1,203
Offshore Logistics, Inc. (a) 154,950 2,034
Pride Petroleum Services, Inc. (a) 166,600 1,291
Tuboscope Vetco Corp. (a) 100,000 600
9,545
OIL & GAS - 0.3%
Chesapeake Energy Corp. (a) 80,000 1,830
Coda Energy, Inc. (a) 296,700 1,891
Crystal Oil Company 10,400 333
Flores & Rucks, Inc. (a) 100,000 1,200
TransTexas Gas Corp. (a) 50,000 744
5,998
TOTAL ENERGY 15,543
FINANCE - 8.0%
BANKS - 4.6%
Bank of New Hampshire Corp. 110,000 3,053
BanPonce Corp. 301,761 10,863
Boatmen's Bancshares, Inc. 187,100 6,806
CCB Financial Corp. 52,800 2,363
Central Fidelity Banks, Inc. 25,000 794
Commerce Bancorp, Inc. 100,000 2,100
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Dauphin Deposit Corp. 39,900 $ 1,067
Deposit Guaranty Corp. 25,000 975
Fifth Third Bancorp 270,300 15,406
First American Corp. 76,217 2,972
First Commerce Bancshares, Inc. 115,600 1,965
First Commerce Bancshares, Inc. Class B 445,900 6,020
First Commerce Corp. 50,530 1,541
First Security Corp. 25,000 694
Fleet Financial Group, Inc. 100,000 3,563
HUBCO, Inc. 32,470 576
Hancock Holding Co. 50,000 1,600
Liberty Bancorporation, Inc. 69,700 2,440
Meridian Bancorp, Inc. 102,391 3,942
Northern Trust Corp. 167,850 6,693
Peoples Heritage Financial Group, Inc. 150,000 2,794
Regions Financial Corp. 98,200 3,781
Southern National Corp. 112,311 2,695
Trans Financial Bancorp, Inc. 60,000 945
Union Bank of San Francisco 32,000 1,412
Union Planters Corp. 20,549 583
West One Bancorp 30,000 1,103
Whitney Holding Corp. 57,000 1,724
Zions Bancorporation 132,200 7,073
97,543
CREDIT & OTHER FINANCE - 0.2%
Greenpoint Financial Corp. 105,500 2,545
IBS Financial Corp. 100,000 1,463
Jayhawk Acceptance Corp. 3,000 30
4,038
INSURANCE - 1.3%
Allied Group, Inc. 148,500 4,492
Berkley (W.R.) Corp. 105,360 4,043
Commerce Group, Inc. 104,100 1,887
HealthCare COMPARE Corp. (a) 116,700 3,968
Mid Ocean Ltd. 60,000 1,995
NAC Re Corp. 78,400 2,881
SAFECO Corp. 146,300 8,559
27,825
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - 1.7%
Astoria Financial Corp. (a) 68,100 $ 2,554
Charter One Financial Corp. 272,900 7,061
Collective Bancorp, Inc. 182,800 4,136
Commercial Federal Corp. (a) 158,700 5,019
First Financial Corp. of Wisconsin 100,000 1,775
Glendale Federal Bank Federal Savings Bank (a) 100,000 1,375
Long Island Bancorp, Inc. 150,000 3,130
Quaker City Bancorp (a) 97,600 1,232
Springfield Institution for Savings (a) 64,000 896
Standard Financial, Inc. (a) 50,000 669
WFS BanCorp, Inc. 35,000 683
Washington Federal, Inc. 120,000 2,610
Washington Mutual, Inc. 164,000 3,916
35,056
SECURITIES INDUSTRY - 0.2%
Eaton Vance Corp. 50,000 1,550
Quick & Reilly Group, Inc. (The) 50,000 1,925
3,475
TOTAL FINANCE 167,937
HEALTH - 8.3%
DRUGS & PHARMACEUTICALS - 3.8%
Amgen, Inc. (a) 209,200 17,808
Amylin Pharmaceuticals, Inc. (a) 200,000 1,475
Biochem Pharmaceuticals, Inc. (a) 26,900 666
Biogen, Inc. (a) 189,800 8,731
Cell Genesys, Inc. (a) 191,000 1,146
Centocor, Inc. (a) 101,500 1,294
Cygnus Therapeutics Systems (a) 114,800 1,593
Dura Pharmaceuticals, Inc. (a) 225,000 5,794
Genetics Institute, Inc. depositary share (a) 60,000 2,265
Genzyme Corp. 120,000 5,910
Genzyme Corp.-Tissue Repair (a) 30,000 345
Immunex Corp. (a) 99,100 1,387
Inhale Therapeutic Systems (a) 100,000 800
IVAX Corp. 128,546 3,101
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Natures Sunshine Products, Inc. 73,200 $ 1,373
Protein Design Labs, Inc. (a) 135,600 2,170
Sepracor, Inc. (a) 610,900 9,087
Sigma Aldrich Corp. 140,000 7,035
Somatix Therapy Corp. (a) 238,900 1,433
Telor Ophthalmic Pharmaceuticals, Inc. (a)(b) 500,000 1,000
Univax Biologics, Inc. (a) 41,300 299
Vertex Pharmaceuticals, Inc. (a) 120,900 2,040
Watson Pharmaceuticals, Inc. (a) 116,500 4,194
80,946
MEDICAL EQUIPMENT & SUPPLIES - 2.8%
ATS Medical, Inc. (a) 100,000 900
ADAC Laboratories 150,000 2,006
Advanced Technology Laboratories, Inc. (a) 142,200 2,453
American Medical Electronics, Inc. (a) 150,000 1,463
Baxter International, Inc. 126,600 4,716
Benson Eyecare Corp. (a) 100,000 850
Biomet, Inc. (a) 105,000 1,601
Circon Corp. (a) 99,700 2,031
Isolyser, Inc. (a) 100,000 3,575
Medisense, Inc. (a) 300,100 6,940
Nellcor, Inc. (a) 201,300 10,568
St. Jude Medical, Inc. 73,500 4,024
Spacelabs Medical, Inc. (a) 100,000 2,494
Thermo Cardiosystems, Inc. (a) 200,000 7,700
U.S. Surgical Corp. 50,000 1,200
Utah Medical Products, Inc. (a) 122,000 1,861
Vital Signs, Inc. 191,400 3,792
58,174
MEDICAL FACILITIES MANAGEMENT - 1.7%
Advantage Health Corp. (a) 100,600 3,043
Apria Healthcare Group, Inc. (a) 143,280 4,657
Coventry Corp. (a) 100,000 1,600
FHP International Corp. (a) 100,000 2,625
Health Management, Inc. (a) 100,000 1,363
Lincare Holdings, Inc. (a) 160,940 5,591
Maxicare Health Plans, Inc. (a) 242,000 3,857
Oxford Health Plans, Inc. (a) 50,900 2,628
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
Renal Treatment Centers, Inc. (a) 100,000 $ 2,575
Rotech Medical Corp. (a) 60,000 1,755
U.S. Healthcare, Inc. 224,700 7,106
36,800
TOTAL HEALTH 175,920
HOLDING COMPANIES - 0.1%
Nolato AB Class B Free shares 296,500 2,556
INDUSTRIAL MACHINERY & EQUIPMENT - 3.6%
ELECTRICAL EQUIPMENT - 1.0%
Adtran, Inc. (a) 112,000 4,116
American Power Conversion Corp. (a) 75,000 1,406
California Microwave Corp. (a) 100,000 2,600
Glenayre Technologies, Inc. 153,900 9,619
Spectrum Control, Inc. (a) 250,000 719
Telular Corp. (a) 100,000 1,750
VWR Corp. 71,800 700
20,910
INDUSTRIAL MACHINERY & EQUIPMENT - 1.8%
BWIP Holdings, Inc. Class A 440,000 8,360
Brenco, Inc. 108,000 1,080
Duriron Co., Inc. 330,000 8,414
Enerflex Systems Ltd. 118,100 1,385
Goulds Pumps, Inc. 219,300 4,825
Greenfield Industries, Inc. 148,200 4,335
Ionics, Inc. (a) 60,000 2,288
NN Ball & Roller, Inc. 232,150 4,585
Park Ohio Industries, Inc. (a) 161,063 2,416
37,688
POLLUTION CONTROL - 0.8%
Continental Waste Industries, Inc. (a) 71,900 953
Safety Kleen Corp. 100,000 1,563
TETRA Technologies, Inc. (a) 100,000 1,200
United Waste Systems, Inc. (a) 70,200 2,650
WMX Technologies, Inc. 375,000 11,718
18,084
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 76,682
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 6.1%
BROADCASTING - 2.8%
ACS Enterprises, Inc. (a) 99,400 $ 1,814
American Telecasting, Inc. (a) 123,100 1,508
Citicasters, Inc. (a) 150,000 4,988
Evergreen Media Corp. Class A (a) 54,200 1,789
Heftel Broadcasting Corp. Class A (a) 100,000 1,875
Infinity Broadcasting Corp. (a) 91,950 3,402
Lin Television Corp. (a) 37,500 1,416
People's Choice TV Corp. (a) 65,100 1,611
Sinclair Broadcast Group, Inc. Class A (a) 3,000 92
TCA Cable TV, Inc. 185,000 5,504
Tele-Communications, Inc. Class A (a) 788,600 19,713
Telewest Communications PLC (a) 1,449,000 3,630
Valuevision International, Inc. (a) 116,100 682
Viacom, Inc. (a):
Class A 100,000 5,088
Class B (non-vtg.) 100,000 5,075
58,187
ENTERTAINMENT - 0.6%
American Classic Voyages Co. 146,800 1,707
Casino America, Inc. (a) 150,000 2,231
Livent, Inc. (a) 280,300 3,159
Players International, Inc. (a) 208,950 4,571
11,668
LEISURE DURABLES & TOYS - 0.2%
Arctco, Inc. 358,350 4,166
LODGING & GAMING - 0.3%
Harrah's Entertainment, Inc. 50,000 1,344
International Game Technology Corp. 100,000 1,450
President Casinos, Inc. (a) 104,100 423
Promus Hotel Corp. (a) 25,000 616
Showboat, Inc. 100,000 2,162
Station Casinos, Inc. (a) 46,700 870
6,865
PUBLISHING - 0.2%
News Corp. Ltd. ADR 100,000 2,363
Scholastic Corp. (a) 40,000 2,630
4,993
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 2.0%
Apple South, Inc. 170,000 $ 3,634
Applebee's International, Inc. 26,700 754
Bertucci's, Inc. (a) 118,800 757
Buffets, Inc. (a) 165,000 2,331
Cheesecake Factory, Inc. (a) 87,500 2,341
Cracker Barrel Old Country Store, Inc. 100,000 2,100
IHOP Corp. (a) 125,300 3,602
Landry's Seafood Restaurants, Inc. (a) 47,200 882
Longhorn Steaks, Inc. (a) 172,600 2,869
O Charleys, Inc. 50,000 681
Outback Steakhouse, Inc. (a) 301,800 10,525
Papa John's International, Inc. (a) 50,000 2,075
Starbucks Corp. (a) 225,000 8,409
Taco Cabana, Inc. (a) 85,000 531
41,491
TOTAL MEDIA & LEISURE 127,370
NONDURABLES - 0.9%
AGRICULTURE - 0.4%
Delta & Pine Land Co. 126,200 3,770
Kanthal AB Class B Free shares 225,200 4,170
7,940
BEVERAGES - 0.1%
LVMH 8,250 1,551
FOODS - 0.3%
Flagstar Companies, Inc. (a) 175,000 984
Tyson Foods, Inc. 274,600 6,814
7,798
HOUSEHOLD PRODUCTS - 0.1%
Helen of Troy Corp. (a) 54,600 1,146
TOTAL NONDURABLES 18,435
PRECIOUS METALS - 0.0%
Firstmiss Gold, Inc. (a) 50,000 1,050
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 5.3%
APPAREL STORES - 0.9%
Baby Superstore, Inc. (a) 130,000 $ 6,208
Baker (J.), Inc. 170,000 1,668
Cato Corp. Class A 200,000 1,575
Gymboree Corp. (a) 170,000 5,248
Ross Stores, Inc. 135,400 1,650
Sportmart, Inc. Class A (non-vtg) (a) 63,300 459
Urban Outfitters, Inc. (a) 97,300 2,068
18,876
GENERAL MERCHANDISE STORES - 1.3%
Bradlees, Inc. 131,000 229
Casey's General Stores, Inc. 242,500 4,880
Dollar Tree Stores (a) 114,000 3,449
Freds, Inc. Class A 228,200 2,282
K Mart Corp. 100,000 1,575
Lechters, Inc. (a) 100,000 1,331
Michaels Stores, Inc. (a) 110,000 2,613
Price/Costco, Inc. (a) 297,400 5,335
Proffitts, Inc. (a) 150,000 5,137
Younkers, Inc. (a) 50,000 900
27,731
GROCERY STORES - 0.8%
Food Lion, Inc.:
Class A 300,000 1,725
Class B 115,000 661
Quality Food Centers, Inc. 39,257 1,040
Richfood Holdings, Inc. Class A 265,000 6,160
Stop & Shop Companies, Inc. (a) 150,000 4,088
Vons Companies, Inc. (a) 152,700 3,398
Whole Foods Market, Inc. (a) 50,000 763
17,835
RETAIL & WHOLESALE, MISCELLANEOUS - 2.3%
Bed Bath & Beyond, Inc. (a) 240,600 7,459
Cameron Ashley, Inc. (a) 278,000 3,684
Corporate Express (a) 57,000 1,446
Futures Shops Ltd. (a) 211,400 2,828
Global Directmail Corp. (a) 17,000 425
Good Guys, Inc. (a) 155,800 2,064
Hechinger Co. Class A 100,000 663
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Micro Warehouse, Inc. (a) 114,300 $ 5,572
Rex Stores Corp. (a) 70,800 1,168
Sodak Gaming, Inc. (a) 135,000 2,464
Spiegel, Inc. Class A 191,200 2,390
Sun Television & Appliances, Inc. 200,000 1,438
Sunglass Hut International, Inc. (a) 102,500 4,151
Viking Office Products, Inc. (a) 120,000 4,230
Wickes Lumber Co. (a) 97,800 1,320
Williams-Sonoma, Inc. (a) 225,000 4,725
Zale Corp. (a) 100,000 1,425
47,452
TOTAL RETAIL & WHOLESALE 111,894
SERVICES - 1.4%
LEASING & RENTAL - 0.7%
Danka Business Systems PLC sponsored ADR 15,000 448
Hollywood Entertainment Corp. (a) 306,600 8,585
Movie Gallery, Inc. (a) 120,400 4,605
13,638
PRINTING - 0.1%
Valassis Communications, Inc. (a) 150,000 2,138
SERVICES - 0.6%
Borg Warner Security Corp. (a) 383,200 3,353
ThermoLase Corp. (a) 220,000 4,648
U.S. Delivery Systems, Inc. (a) 100,000 3,100
Zebra Technologies Corp. Class A (a) 32,500 2,039
13,140
TOTAL SERVICES 28,916
TECHNOLOGY - 42.4%
COMMUNICATIONS EQUIPMENT - 6.5%
ADC Telecommunications, Inc. (a) 215,000 8,331
Active Voice Corp. (a) 100,800 2,911
Brite Voice Systems, Inc. (a) 120,600 2,683
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT - CONTINUED
Broadband Technologies, Inc. (a) 50,000 $ 1,275
Centigram Communications Corp. (a) 150,000 2,288
Cisco Systems, Inc. (a) 239,400 13,347
Coherent Communications Systems Corp. (a) 37,200 744
DSC Communications Corp. (a) 180,500 9,702
DSP Communications, Inc. (a) 100,000 2,525
Dialogic Corp. (a) 138,300 3,423
Digital Systems International, Inc. (a) 283,700 3,085
Dynatech Corp. (a) 289,000 5,925
Ericsson (L.M.) Telephone Co. Class B ADR 882,400 16,435
General Instrument Corp. (a) 67,600 2,493
InterVoice, Inc. (a) 150,000 3,375
Network Equipment Technologies (a) 70,000 2,118
Network General Corp. (a) 76,600 2,604
Nokia Corp. AB sponsored ADR 120,000 7,890
Northern Telecom Ltd. 100,000 3,785
Octel Communications Corp. (a) 260,000 10,043
Telco Systems, Inc. (a) 150,000 1,931
3Com Corp. (a) 279,800 20,720
U.S. Robotics Corp. 61,651 8,970
136,603
COMPUTER SERVICES & SOFTWARE - 16.5%
Adobe Systems, Inc. 100,000 6,175
America Online, Inc. (a) 50,000 2,756
American Business Information, Inc. (a) 125,000 3,859
American Management Systems, Inc. (a) 50,000 1,256
BDM International, Inc. (a) 1,600 39
Bisys Group, Inc. (The) (a) 181,075 4,346
Black Box Corp. (a) 307,500 4,651
Boole & Babbage, Inc. (a) 90,300 2,732
Broderbund Software, Inc. (a) 34,200 2,462
Cerner Corp. (a) 50,000 3,081
Cognos, Inc. (a) 53,400 1,649
CompUSA, Inc. (a) 519,900 18,002
Datastream Systems, Inc. (a) 15,000 450
Dendrite International Corp. (a) 2,000 33
Frame Technology Corp. (a) 122,000 3,828
General Magic, Inc. (a) 98,200 1,645
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
HBO & Co. 170,000 $ 9,393
Hummingbird Communications Ltd. (a) 100,000 3,372
Informix Corp. (a) 418,000 12,383
Integrated Systems, Inc. (a) 27,300 741
Intelligent Electronics, Inc. 100,000 1,350
Intersolv, Inc. (a) 44,300 1,102
Legato Systems, Inc. (a) 1,000 27
McAfee Associates, Inc. (a) 180,700 6,867
Medic Computer Systems, Inc. (a) 110,000 4,895
Mentor Graphics Corp. (a) 100,000 1,850
Mercury Interactive Group Corp. (a) 175,300 4,383
Microsoft Corp. (a) 1,213,200 109,791
MicroAge, Inc. (a) 100,500 1,319
Novell, Inc. (a) 901,100 16,332
Oracle Systems Corp. (a) 747,350 31,295
Parametric Technology Corp. (a) 104,980 5,905
Peoplesoft, Inc. (a) 57,000 4,076
Platinum Technology, Inc. (a) 67,500 1,671
Policy Management Systems Corp. (a) 100,000 5,363
Reuters Holdings PLC ADR Class B 100,000 5,038
SPSS, Inc. (a) 136,200 2,349
Santa Cruz Operation, Inc. (a) 74,700 495
Seer Technologies, Inc. (a) 1,500 32
Shared Medical Systems Corp. 50,000 2,081
Sierra On-Line, Inc. (a) 232,000 8,468
Softdesk, Inc. (a) 171,700 4,443
Softkey International, Inc. (a) 200,000 8,675
Spectrum Holobyte, Inc. (a) 94,200 1,666
Stratacom, Inc. (a) 60,000 3,255
SunGard Data Systems, Inc. (a) 285,200 8,271
Sybase, Inc. (a) 48,000 1,572
Symantec Corp. (a) 699,800 19,070
Systems & Computer Technology Corp. (a) 100,000 2,675
347,169
COMPUTERS & OFFICE EQUIPMENT - 8.3%
AST Research, Inc. (a) 690,000 10,609
ADAPTEC, Inc. (a) 142,500 6,092
Apple Computer, Inc. 668,200 30,069
Bay Networks, Inc. (a) 170,000 7,629
Canon, Inc. 500,000 9,053
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Comverse Technology, Inc. (a) 229,000 $ 4,208
Discreet Logic, Inc. (a) 2,000 84
Encad, Inc. (a) 185,000 4,903
Filenet Corp. (a) 289,900 12,719
Gateway 2000, Inc. (a) 194,600 5,619
Hutchinson Technology, Inc. 100,000 8,000
Itron, Inc. (a) 125,000 2,875
Maxtor Corp. (a) 165,000 701
Merisel, Inc. (a) 165,000 1,114
Micom Communication Corp. (a) 72,533 607
Norand Corp. (a) 126,300 5,936
PSC, Inc. (a) 150,000 2,100
Plannar Systems, Inc. (a) 100,000 2,100
Radius, Inc. (a) 250,000 2,438
Silicon Graphics, Inc. (a) 60,500 2,541
Sun Microsystems, Inc. (a) 664,500 31,979
Tech Data Corp. (a) 355,500 4,888
Wang Laboratories, Inc. (a) 1,000,100 18,752
175,016
ELECTRONIC INSTRUMENTS - 1.4%
Analogic Corp. 168,500 3,202
Applied Materials, Inc. (a) 92,800 9,603
KLA Instruments Corp. (a) 57,900 5,023
Sensonor AS (a) 200,000 1,628
Silicon Valley Group, Inc. (a) 180,000 8,393
Wandel & Goltermann Technologies, Inc. (a) 140,000 1,575
29,424
ELECTRONICS - 9.7%
Advanced Micro Devices, Inc. 53,500 1,745
Allgon AB Class B Free shares 200,000 4,777
Altera Corp. (a) 231,200 12,933
C-Cube Microsystems, Inc. (a) 225,000 7,875
Cascade Communications Corp. (a) 15,000 761
DH Technology, Inc. (a) 77,500 2,093
Information Storage Devices (a) 62,100 1,568
Intel Corp. 1,992,800 129,532
Kemet Corp. (a) 35,000 2,266
Linear Technology Corp. 124,300 9,633
MEMC Electronic Materials, Inc. (a) 9,000 271
Maxim Integrated Products, Inc. (a) 125,200 7,402
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Microchip Technology, Inc. (a) 32,650 $ 1,257
Micron Technology, Inc. 30,000 1,882
Molex, Inc. 168,750 7,172
OnTrak Systems, Inc. (a) 1,500 44
Paradigm Technology, Inc. (a) 1,100 33
Robinson Nugent, Inc. (b) 281,500 2,604
Sanmina Corp. (a) 8,700 418
Sierra Semiconductor Corp. (a) 45,000 2,003
Smartflex Systems 5,000 60
Tencor Instruments (a) 52,800 2,323
VLSI Technology, Inc. (a) 100,000 2,963
Xilinx, Inc. (a) 11,200 1,343
Zilog, Inc. (a) 26,300 1,210
204,168
TOTAL TECHNOLOGY 892,380
TRANSPORTATION - 4.1%
AIR TRANSPORTATION - 2.1%
AMR Corp. (a) 37,100 2,783
Delta Air Lines, Inc. 100,000 7,925
Mesa Airlines, Inc. (a) 25,300 275
Northwest Airlines Corp. Class A (a) 405,000 15,542
SkyWest, Inc. 220,000 4,455
ValuJet Airlines (a) 384,200 11,862
42,842
RAILROADS - 0.7%
Wisconsin Central Transportation Corp. (a) 235,600 14,960
TRUCKING & FREIGHT - 1.3%
Air Express International Corp. 37,900 952
Arkansas Best Corp. 45,600 564
Arnold Industries, Inc. 102,500 1,871
Builders Transport, Inc. (a) 181,200 2,265
Hunt (J.B.) Transport Services Inc. 164,000 2,829
Landair Services, Inc. (a) 219,100 3,396
Landstar System, Inc. (a) 152,100 4,563
Mark VII, Inc. (a) 160,900 2,836
Roadway Services, Inc. 58,000 2,929
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - CONTINUED
TNT Freightways Corp. 219,300 $ 4,825
Werner Enterprises, Inc. 40,000 790
27,820
TOTAL TRANSPORTATION 85,622
UTILITIES - 4.1%
CELLULAR - 1.5%
A Plus Communications, Inc. (a) 122,000 1,617
Arch Communications Group, Inc. (a) 52,000 1,385
Cellular Communications, Inc. Series A (redeemable) (a) 146,400 7,610
Cellular Communications Puerto Rico, Inc. (a) 50,000 1,550
International Cabletel, Inc. (a) 81,900 2,795
Mobile Telecommunications Technologies, Inc. (a) 128,600 3,971
Mobilemedia Corp. (a) 8,000 202
Nextel Communications, Inc. Class A (a) 50,000 969
Paging Network, Inc. (a) 35,000 1,383
Palmer Wireless, Inc. (a) 153,400 3,183
QUALCOMM, Inc. (a) 80,000 3,420
Rogers Cantel Mobile Communications, Inc.
Class B (non-vtg.) (a) 33,800 790
Vanguard Cellular Systems, Inc. Class A (a) 146,700 3,888
32,763
TELEPHONE SERVICES - 2.6%
ALC Communications Corp. (a) 50,000 2,644
Incomnet, Inc. (a) 100,000 2,175
LCI International, Inc. (a) 127,700 4,374
MCI Communications Corp. 832,400 19,977
MFS Communications, Inc. (a) 165,000 6,188
U.S. Long Distance Corp. (a) 399,200 6,836
WorldCom, Inc. (a) 411,087 12,281
54,475
TOTAL UTILITIES 87,238
TOTAL COMMON STOCKS
(Cost $1,369,623) 1,898,060
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - 0.2%
COMPUTER SERVICES & SOFTWARE - 0.2%
SAP AG (Cost $2,047) 2,500 $ 4,049
NONCONVERTIBLE BONDS - 0.2%
MOODY'S PRINCIPAL
RATINGS AMOUNT (000S)
(UNAUDITED)
UTILITIES - 0.2%
CELLULAR - 0.2%
Nextel Communications, Inc. 0%,
8/15/04 (c) (Cost $3,516) B3 $ 7,125 3,732
REPURCHASE AGREEMENTS - 9.6%
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 5.82%
dated 7/31/95 due 8/1/95 $ 202,015 201,982
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,577,168) $ 2,107,823
LEGEND
1. Non-income producing
2. Affiliated company (see Note 7 of Notes to Financial Statements).
3. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
INCOME TAX INFORMATION
At July 31, 1995, the aggregate cost of investment securities for income
tax purposes was $1,581,434,000. Net unrealized appreciation aggregated
$526,389,000, of which $569,480,000 related to appreciated investment
securities and $43,091,000 related to depreciated investment securities.
The fund hereby designates $6,241,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER SHARE AMOUNTS) JULY 31, 1995
ASSETS
Investment in securities, at value (including repurchase $ 2,107,823
agreements of $201,982) (cost $1,577,168) - See
accompanying schedule
Cash 1
Receivable for investments sold 10,887
Receivable for fund shares sold 13,986
Dividends receivable 368
Other receivables 1,100
TOTAL ASSETS 2,134,165
LIABILITIES
Payable for investments purchased $ 14,752
Payable for fund shares redeemed 7,887
Accrued management fee 894
Other payables and accrued expenses 554
TOTAL LIABILITIES 24,087
NET ASSETS $ 2,110,078
Net Assets consist of:
Paid in capital $ 1,533,045
Accumulated undistributed net realized gain (loss) on 46,379
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 530,654
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 67,863 shares outstanding $ 2,110,078
NET ASSET VALUE and redemption price per share $31.09
($2,110,078 (divided by) 67,863 shares)
Maximum offering price per share (100/97.00 of $31.09) $32.05
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1995
INVESTMENT INCOME $ 7,969
Dividends (including $92 received from affiliated issuers)
Interest 9,476
TOTAL INCOME 17,445
EXPENSES
Management fee $ 10,041
Basic fee
Performance adjustment (2,430)
Transfer agent fees 3,711
Accounting fees and expenses 606
Non-interested trustees' compensation 24
Custodian fees and expenses 68
Registration fees 131
Audit 77
Legal 8
Interest 3
Reports to shareholders 4
Miscellaneous 12
Total expenses before reductions 12,255
Expense reductions (20) 12,235
NET INVESTMENT INCOME 5,210
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of $1,587 60,332
on sales of investments in affiliated issuers)
Foreign currency transactions (121) 60,211
Change in net unrealized appreciation (depreciation) on:
Investment securities 493,274
Assets and liabilities in foreign currencies (1) 493,273
NET GAIN (LOSS) 553,484
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 558,694
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 5,210 $ 6,204
Net investment income
Net realized gain (loss) 60,211 72,014
Change in net unrealized appreciation (depreciation) 493,273 (82,465)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 558,694 (4,247)
FROM OPERATIONS
Distributions to shareholders (5,090) (6,136)
From net investment income
From net realized gain (6,456) (169,881)
TOTAL DISTRIBUTIONS (11,546) (176,017)
Share transactions 1,283,245 622,732
Net proceeds from sales of shares
Reinvestment of distributions 11,034 169,434
Cost of shares redeemed (961,208) (709,063)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 333,071 83,103
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 880,219 (97,161)
NET ASSETS
Beginning of period 1,229,859 1,327,020
End of period. $ 2,110,078 $ 1,229,859
OTHER INFORMATION
Shares
Sold 50,478 25,273
Issued in reinvestment of distributions 495 7,025
Redeemed (37,963) (28,688)
Net increase (decrease) 13,010 3,610
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31,
1995 1994 C 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, beginning $ 22.42 $ 25.90 $ 24.65 $ 24.28 $ 20.42
of period
Income from Investment
Operations
Net investment income .09 .12 .06 .08 .19
Net realized and unrealized 8.79 (.08) 3.68 2.92 4.30
gain (loss)
Total from investment operations 8.88 .04 3.74 3.00 4.49
Less Distributions (.09) (.12) (.25) (.12) (.05)
From net investment income
From net realized gain (.12) (3.40) (2.24) (2.51) (.58)
Total distributions (.21) (3.52) (2.49) (2.63) (.63)
Net asset value, end of period $ 31.09 $ 22.42 $ 25.90 $ 24.65 $ 24.28
TOTAL RETURN A, B 39.98% (.36) 16.67% 13.30% 23.03%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,110 $ 1,230 $ 1,327 $ 1,037 $ 864
(in millions)
Ratio of expenses to average .81% .88% 1.08% 1.17% 1.29%
net assets
Ratio of expenses to average .82% .89% 1.08% 1.17% 1.29%
net assets before expense
reductions
Ratio of net investment income .35% .48% .53% .59% 1.00%
to average net assets
Portfolio turnover rate 62% 222% 213% 245% 198%
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 EFFECTIVE AUGUST 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION,
DISCLOSURE, AND FINANCIAL STATEMENT PRESENTION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A
RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1995
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.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially 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.
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 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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Accumulated undistributed net realized gain
(loss) on investments and foreign currency transactions may include
temporary book and tax basis differences that 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.
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 Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. The fund's investment adviser, FMR, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,233,145,000 and $838,755,000, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 36-month period (the most recent plus the
previous 35 months). For the period, the management fee was equivalent to
an annual rate of .51% of average net assets after the performance
adjustment.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the fund, received sales
charges of $480,000 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 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 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 $102,000 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 $7,109,000 and $6,949,000,
respectively. The weighted average interest rate was 5.17%.
6. 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
$20,000 under this arrangement.
7. 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 during the period 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 $ - $ 1,205 $ - $ -
Cameron Ashley, Inc. (a) 45 - - -
Commerce Bank - 1,952 - -
Conservative Savings Corp. - 713 8 -
Robinson Nugent, Inc. - 188 36 2,604
Schnitzer Steel, Inc. Class A - 5,584 48 -
Telor Ophthalmic
Pharmaceutical Care, Inc. (a) - - - 1,000
TOTALS $ 45 $ 9,642 $ 92 $ 3,604
(a) Non-income producing.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Securities Fund and the Shareholders of
Fidelity OTC Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Securities Fund: Fidelity OTC Portfolio, including the schedule of
portfolio investments, as of July 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Securities Fund: Fidelity OTC Portfolio as of July 31, 1995,
the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 1,1995
DISTRIBUTIONS
A total of 34.32% of the dividends distributed during the fiscal year was
derived from interest on U.S. government securities which is generally
exempt from state income tax.
A total of 56% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders.
The fund will notify shareholders in January 1996 of these percentages for
use in preparing 1995 income tax returns.
SUPPLEMENT TO
FIDELITY OTC PORTFOLIO
ANNUAL REPORT
DATED JULY 31, 1995
The following information replaces similar information found in the
"Performance" section beginning on page 4.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
OTC 39.98% 126.83% 365.43%
OTC (incl. 3% sales charge) 35.78% 120.03% 351.47%
NASDAQ 40.25% 143.25% 282.56%
Average Mid-Cap Fund 30.64% 112.76% 288.51%
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
OTC 39.98% 17.80% 16.62%
OTC (incl. 3% sales charge) 35.78% 17.08% 16.27%
NASDAQ 40.25% 19.46% 14.36%
Average Mid-Cap Fund 30.64% 15.97% 14.05%
$10,000 OVER 10 YEARS
$45,147
$38,256
'95
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity OTC
Portfolio on July 31, 1985 and paid a 3% sales charge. As the chart shows,
by July 31, 1995, the value of your investment would have grown to $45,147
- - a 351.47% 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 $38,256 - a 282.56% increase.
The following information replaces similar information found in the "Fund
Talk" section beginning on page 6.
Q. ABBY, HOW DID THE FUND DO?
A. During the 12 months ended July 31, 1995, the fund had a total return of
39.98%. By comparison, the NASDAQ Composite Index, the fund's benchmark,
returned 40.25% during the same period.
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
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export Fund
Fidelity Fifty
Growth Company Fund
Large Cap Stock 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
