FIDELITY
(REGISTERED TRADEMARK)
BALANCED
FUND
SEMIANNUAL REPORT
JANUARY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 44 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 48 Footnotes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
No one wants to pay more taxes than they have to. But a recent survey of
500 U.S. households, conducted by Fidelity and Yankelovich Partners, showed
that few people took steps to reduce their taxes under the new tax laws
that went into effect last year. In fact, many people were not completely
aware of the changes until they filed their 1993 tax returns.
Whether or not you're someone whose tax bill increased as a result of these
changes, it may make sense to consider ways to keep more of what you earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center. We look forward to
talking with you.
Best regards,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Balanced 6.35% 19.85% 93.13% 139.56%
S&P 500(Registered trademark) 8.97% 12.88% 90.05% 147.15%
Lehman Brothers Aggregate Bond 3.47% 9.14% 70.49% n/a
Index
Average Balanced Fund 7.13% 11.91% 76.16% 112.03%
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 November 6, 1986. For comparison, you can look at
both the performance of the Standard & Poor's 500 Composite Stock Price
Index - a common proxy for the U.S. stock market - and the performance of
the Lehman Brothers Aggregate Bond Index, a broad measure of the bond
market. You can also look at the average balanced fund, which reflects the
performance of 138 balanced funds tracked by Lipper Analytical Services.
These benchmarks include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Balanced 19.85% 14.07% 12.82%
S&P 500 12.88% 13.70% 13.30%
Lehman Brothers Aggregate Bond Index 9.14% 11.26% n/a
Average Balanced Fund 11.91% 11.91% 10.88%
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
Balanced (304) Lehman Aggreg. Bond S&P 500
11/30/86 10000.00 10000.00 10000.00
12/31/86 9970.56 10037.00 9745.00
01/31/87 10490.67 10178.52 11057.65
02/28/87 10765.45 10248.75 11494.43
03/31/87 10942.82 10202.63 11826.62
04/30/87 10675.43 9923.08 11721.36
05/31/87 10625.92 9884.38 11823.34
06/30/87 10845.17 10020.79 12420.42
07/31/87 10995.11 10012.77 13050.13
08/31/87 11135.04 9959.70 13536.90
09/30/87 10945.73 9747.56 13240.44
10/31/87 10019.00 10094.57 10388.45
11/30/87 9864.55 10175.33 9532.44
12/31/87 10166.91 10313.71 10257.86
01/31/88 10648.06 10676.76 10689.72
02/29/88 10951.39 10803.81 11187.86
03/31/88 10854.98 10702.25 10842.15
04/30/88 10939.87 10644.46 10962.50
05/31/88 10982.31 10573.14 11057.87
06/30/88 11420.26 10827.96 11565.43
07/31/88 11355.68 10770.57 11521.48
08/31/88 11301.86 10798.57 11129.75
09/30/88 11572.03 11043.70 11603.88
10/31/88 11746.70 11251.32 11926.47
11/30/88 11637.53 11114.06 11755.92
12/31/88 11771.18 11126.28 11961.65
01/31/89 12172.85 11286.50 12837.24
02/28/89 12083.59 11205.24 12517.59
03/31/89 12217.64 11253.42 12809.25
04/30/89 12613.58 11488.62 13474.05
05/31/89 12896.40 11790.77 14019.75
06/30/89 13089.01 12150.39 13939.84
07/31/89 13604.78 12409.19 15198.61
08/31/89 13685.01 12225.53 15496.50
09/30/89 13695.74 12287.88 15432.96
10/31/89 13742.17 12590.16 15074.92
11/30/89 13951.09 12709.77 15382.45
12/31/89 14091.15 12744.09 15751.63
01/31/90 13570.63 12592.43 14694.69
02/28/90 13669.78 12632.73 14884.25
03/31/90 13781.31 12641.57 15278.69
04/30/90 13592.87 12525.27 14896.72
05/31/90 14045.13 12896.02 16349.15
06/30/90 14107.61 13103.64 16237.98
07/31/90 14145.81 13284.47 16186.01
08/31/90 13547.38 13106.46 14722.80
09/30/90 13326.06 13215.24 14005.80
10/31/90 13261.50 13383.08 13945.57
11/30/90 13726.36 13670.81 14846.46
12/31/90 14025.60 13884.08 15260.67
01/31/91 14606.16 14056.24 15926.04
02/28/91 15265.87 14175.72 17064.75
03/31/91 15557.86 14273.53 17477.72
04/30/91 15811.81 14427.69 17519.66
05/31/91 16319.72 14511.37 18276.51
06/30/91 16022.99 14504.11 17439.45
07/31/91 16442.51 14705.72 18252.13
08/31/91 16821.43 15023.36 18684.70
09/30/91 16964.59 15328.34 18372.67
10/31/91 17344.08 15498.48 18618.86
11/30/91 17034.87 15641.07 17868.52
12/31/91 17781.86 16105.61 19912.68
01/31/92 17781.86 15886.57 19542.31
02/29/92 18041.03 15989.83 19796.35
03/31/92 17926.02 15900.29 19410.33
04/30/92 18144.63 16014.77 19980.99
05/31/92 18479.83 16317.45 20078.90
06/30/92 18421.89 16542.63 19779.72
07/31/92 18864.37 16880.10 20588.71
08/31/92 18967.61 17050.59 20166.64
09/30/92 19098.83 17253.49 20404.61
10/31/92 19007.31 17024.02 20476.03
11/30/92 19053.07 17027.43 21174.26
12/31/92 19194.72 17298.16 21434.70
01/31/93 19616.41 17630.29 21614.75
02/28/93 20147.43 17938.82 21908.71
03/31/93 20789.93 18014.16 22370.99
04/30/93 21453.44 18140.26 21829.61
05/31/93 21800.99 18163.84 22414.64
06/30/93 21818.19 18492.61 22479.65
07/31/93 22105.69 18598.01 22389.73
08/31/93 22840.42 18923.48 23238.30
09/30/93 22637.37 18974.57 23059.36
10/31/93 22787.95 19044.78 23536.69
11/30/93 22386.40 18882.90 23313.09
12/31/93 22894.21 18984.87 23595.18
01/31/94 23509.74 19241.16 24397.42
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Balanced Fund on November 30, 1986, shortly after the fund started. As the
chart shows, by January 31, 1994, the value of your investment would have
grown to $23,510 - a 135.10% increase on your initial investment. For
comparison, look at how both the S&P 500 and Lehman Brothers Aggregate
Bond Index did over the same period. With dividends reinvested, the same
$10,000 investment in the S&P 500 would have grown to $24,397 - a
143.97% increase. If you'd put $10,000 in the bond index, it would have
grown to $19,241 - a 92.41% 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 Robert Haber, Portfolio Manager of Fidelity
Balanced Fund
Q. BOB, HOW DID THE FUND PERFORM?
A. The fund lost some steam in the second half of the year, returning 6.35%
for the six months ended January 31, 1994. That trailed the 7.13% total
return for the average balanced fund tracked by Lipper Analytical Services.
However, over the past 12 months, the fund returned 19.85%, ahead of the
average fund's return, which was 11.91%.
Q. WHY HAS PERFORMANCE LAGGED LATELY?
A. I would say the biggest reason is the fund's stake in energy. For a long
time, I've felt strongly about the prospects for natural gas companies in
the United States and Canada, and I still do. However, by early fall
investors had bid up the prices of these stocks to high levels. When oil
prices began dropping sharply, these stocks took a tumble. I reduced the
fund's stake in energy from 10.8% on September 30, to 9.3% by January 31,
but I couldn't sell quickly enough. However, once these stock prices came
down, I added to the fund's energy stake. Pennzoil - an oil company - and
ENSERCH - an oil and natural gas company - are now among the fund's five
largest stock investments. In addition, the fund's investment in Japan hurt
performance.
Q. WHAT HAPPENED TO JAPANESE STOCKS?
A. Early in 1993, falling interest rates, a strengthening yen, and
government spending aimed at stimulating economic growth fueled a very
strong rally in the Japanese market. But, by early September, political
instability began dragging the market back down, and it kept falling until
December. The fund only had a 7% stake in Japan at the end of July, which I
tried to reduce quickly. However, as it turned out, any investment there
was too much. When less than half of the fund's investments are in stocks,
even a small block of very poor performers can hurt.
Q. DON'T MOST BALANCED FUNDS HAVE A HIGHER PERCENTAGE OF STOCKS?
A. Yes, most have a mix that's roughly 60% stocks and 40% bonds. For almost
two years now, I've kept the fund's makeup about 40 to 45% stocks, 50%
bonds and 5 to 10% cash. That's because I've felt so strongly that U.S.
stocks are expensive, and overdue for a correction. I've used the fund's
high stake in bonds as a hedge against the chance of a slowdown in stocks.
As interest rates fell during most of the past two years, bonds performed
very well, which helped the fund. However, last fall, rates reversed and
went up again, causing bond prices to fall. And stocks continued to do
well, despite their high valuations - yardsticks like price-to-earnings and
dividend ratios. This emphasis on bonds is another reason performance
dipped late in the year.
Q. WHERE DID YOU FIND OPPORTUNITIES IN STOCKS?
A. As the U.S. economy improved, cyclical stocks - those that rise and fall
in tandem with the economy - have performed very well. I increased the
fund's stake in basic industries from 2.6% at the end of July to 9.5% by
the end of January. These included so-called deep cyclicals - like metals
and mining, aluminum, steel and paper - that supply materials for companies
that produce cyclical products purchased directly by consumers, like cars.
In fact, three of the fund's top five stocks on January 31 were paper
companies: Georgia-Pacific, Stone Container and Temple-Inland.
Q. ANY OTHER EXAMPLES?
A. Many industrial machinery and equipment cyclicals have helped the fund.
For example, the stock of farm equipment manufacturer Deere rose 29% over
the past six months. I also consider many technology stocks - 4.7% of the
fund on January 31 - to be cyclical in nature. As businesses work to
improve productivity in an improving economy, they often invest more
heavily in technology. Compaq Computer positioned itself as the leading
producer of personal computers in 1993; its stock was up 57% from the end
of July through the end of December.
Q. ON JANUARY 31, 39.8% OF THE FUND'S INVESTMENTS WERE OVERSEAS. WHERE DID
YOU FIND THE BEST PERFORMERS ON THE STOCK SIDE?
A. Mainly in Europe: places like France, Sweden and the Netherlands. As
Europe struggled to emerge from recession, falling interest rates boosted
stocks. Lower rates have improved the profit margins of banks and financial
companies; the stock of French bank Comp Par Reescompte (CPR) was up
roughly 50% during the period. Also, as the European economy has begun to
show signs of life, cyclicals have picked up steam. France's largest
industrial company, Alcotel, helped the fund immensely in the fall and
early winter.
Q. WHAT ABOUT BONDS?
A. Generally, foreign issues - about 20% of the fund's investments on
January 31 - outperformed their U.S. counterparts. Government bonds issued
by France especially, and by Denmark, made strong price gains as rates fell
in Europe. In Japan, a similar story. In addition, some of Argentina's
bonds have recently been upgraded to investment grade status, and I've
taken advantage of the opportunity. These bonds have performed well as
rates have dropped in Argentina, and I think there's room for rates to fall
further. I've hedged these overseas investments to protect against currency
risk.
Q. AND IN THE UNITED STATES?
A. Here at home, all of the fund's bonds are of investment grade quality
or better. These bonds performed well right through summer and into fall,
but when rates turned back up again on inflation fears in October, bonds
suffered. And they haven't done much since, as rates have moved within a
narrow range.
FUND FACTS
GOAL: to provide as much
income as possible consistent
with the preservation of capital
by investing in both stocks
and bonds
START DATE: November 6,
1986
SIZE: as of January 31,
1994, over $5.2 billion
MANAGER: Robert Haber,
since November 1986;
manager,
Fidelity Global Balanced
Fund, since February 1993;
manager, Fidelity Advisor
Income & Growth Fund,
since 1987
(checkmark)
BOB HABER ON HEALTH CARE:
"On January 31, the fund had
no investments in the
health-care sector. This is
unusual for a mutual fund,
given that health care makes
up more than 15% of the U.S.
economy. Broadly speaking,
I'm glad I stayed away from
this group over the past six
months; its performance
lagged the market. I'm still
unsure about what's going to
be the net result of
health-care reform, and that's
scared me away, somewhat.
Most of the large
pharmaceutical companies
aren't attractive to me yet.
Although their prices have
fallen, I fear there may be
more down side left. I
suppose I could have
invested in hospital
management companies,
some of which had good
years, but I would still prefer
to be more comfortable about
the future of health care in this
country."
(bullet) The fund's stake in financial
stocks decreased from 10.6%
at the end of July to 6.6% by
the end of January. Falling
interest rates had helped the
profit margins of banks, but,
by late summer, it appeared
rates were beginning to
bottom out. Also, the prices of
many of these stocks had
reached high levels. Much of
the financial sector looked
less attractive in the second
half of the year.
(bullet) On January 31, IBM was
the fund's eighth largest stock
investment. After a long
decline, "Big Blue's" stock
began to rise again in
October, which helped the
fund.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING SIX MONTHS?
A. I'm cautious. I still think U.S. stocks are incredibly expensive, and
I'll continue to look for opportunities overseas. Not until there's a
significant correction in the U.S. stock market - say, 10% or better - will
I tip the fund's balance of investments in favor of stocks. That said, I'm
not looking for big things out of the U.S. bond market. It appears interest
rates have bottomed out and may be on the way back up again. We'll be very
hard pressed to repeat the stellar performance of U.S. bonds during the
period leading up to last fall. So I'll continue to keep an eye out for
opportunities in foreign bond markets where rates
appear to have room to fall.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Pennzoil Co. 0.9 1.2
Temple-Inland, Inc. 0.9 0.0
ENSERCH Corp. 0.9 0.0
Stone Container Corp. 0.8 0.0
Georgia-Pacific Corp. 0.7 0.0
TOP FIVE BONDS AS OF JANUARY 31, 1994
(BY ISSUER, WITH MATURITIES MORE % OF FUND'S % OF FUND'S
THAN ONE YEAR) INVESTMENTS INVESTMENTS
IN THESE BONDS
6 MONTHS AGO
Canada Government (various 6.0 0.7
issues)
U.S. Treasury Obligations 4.6 5.8
French Government (various 2.3 3.2
issues)
Republic of South Africa 1.3 0.0
Thermo Electron (various issues) 0.9 0.0
TOP FIVE INDUSTRIES AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE INDUSTRIES
6 MONTHS AGO
Finance 14.9 20.6
Basic Industries 9.5 2.6
Energy 9.3 7.9
Utilities 5.2 4.0
Technology 4.7 3.6
ASSET ALLOCATION
AS OF JANUARY 31, 1994* AS OF JULY 31, 1993**
Row: 1, Col: 1, Value: 13.8
Row: 1, Col: 2, Value: 14.7
Row: 1, Col: 3, Value: 39.1
Row: 1, Col: 4, Value: 17.4
Row: 1, Col: 5, Value: 15.0
Row: 1, Col: 1, Value: 14.3
Row: 1, Col: 2, Value: 13.1
Row: 1, Col: 3, Value: 39.9
Row: 1, Col: 4, Value: 17.7
Row: 1, Col: 5, Value: 15.0
Stocks 32.4%
Bonds 39.1%
Convertible
securities 14.7%
Short-term invest-
ments and other 13.8%
Stocks 32.7%
Bonds 39.9%
Convertible
securities 13.1%
Short-term invest-
ments and other 14.3%
FOREIGN
INVESTMENTS 36.1%
FOREIGN
INVESTMENTS 39.8%
*
*
*
INVESTMENTS JANUARY 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
COMMON STOCKS - 30.8%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 8.9%
CHEMICALS & PLASTICS - 1.8%
Agricultural Minerals Co. LP 22,400 $ 655
Akzo NV Ord. 73,100 7,920
Cominco Fertilizer Ltd. (b) 526,100 10,292
First Mississippi Corp. 197,100 2,981
Freeport McMoRan Resource Partners LP (depositary units) 540,900 10,750
Georgia Gulf Corp. (b) 538,300 13,054
GEON 236,000 6,372
IMC Fertilizer Group, Inc. 471,000 20,547
Indo Gulf Fertilizer and Chemicals GDR (f) 85,000 417
Lucky Co. Ltd. (b) 320,000 5,861
Perez Companc Class B (b) 362,900 2,566
Terra Industries, Inc. (b) 1,764,900 14,340
Tessenderlo Chemie NV 13,200 3,375
Vigoro Corp. 72,500 2,284
101,414
IRON & STEEL - 0.1%
Carpenter Technology Corp. 1,000 62
Geneva Steel Class A (b) 21,900 430
LTV Corp. (b) 350,000 6,169
National Steel Corp. Class B (b) 1,000 17
6,678
METALS & MINING - 2.2%
Alcan Aluminium Ltd. 690,000 16,808
Brunswick Mining & Smelting Ltd. 55,400 380
Cominco Ltd. (b) 655,100 10,166
Draka Holding NV 275,200 5,807
Inco Ltd. 525,100 14,470
Noranda, Inc. 1,000 20
Outokumpu Oy Class A (b) 1,000 16
Pasminco Ltd. 1,513,100 2,200
QNI Ltd. 9,348,420 9,416
Rustenberg Platinum Holding Ltd. ADR 22,500 380
Sherritt Gordon Mines Ltd. (b) (d) 3,860,400 34,129
Trelleborg AB Class B Free shares (b) 1,420,700 16,865
Union Miniere SA (b)(g) 173,790 13,678
124,335
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PACKAGING & CONTAINERS - 0.2%
Vitro Sociedad Anonima sponsored ADR (b) 86,700 $ 2,027
Ord. (b) 1,174,100 9,151
11,178
PAPER & FOREST PRODUCTS - 4.6%
Abitibi Price, Inc. installment receipts (i) 88,100 414
Abitibi-Price Inc. 1,000 13
Bowater, Inc. 1,000 24
Canadian Pacific Forest Products Ltd. (b) 670,600 10,218
Canfor Corp. (b) 14,800 521
Chesapeake Corp. 430,700 10,983
Domtar Inc. (b) 2,783,000 17,014
Georgia-Pacific Corp. 553,100 41,621
International Forest Products Class A (b) 184,700 2,832
Longview Fibre Co. 925,600 20,016
Louisiana-Pacific Corp. 291,600 12,903
Pope & Talbot, Inc. 303,400 9,747
QUNO Corp. 125,600 2,457
Riverwood International Corp. 78,200 1,486
Slocan Forest Products Ltd. 118,200 2,946
Smurfit (Jeff) Group PLC (UK) 5,156,000 27,873
Stone Consolidated Corp. (b) 278,200 3,558
Stone Container Corp. (b) 2,545,700 42,004
Temple-Inland, Inc. 936,700 49,177
Willamette Industries, Inc. 42,400 2,438
258,245
TOTAL BASIC INDUSTRIES 501,850
CONGLOMERATES - 0.7%
United Technologies Corp. 585,900 39,475
CONSTRUCTION & REAL ESTATE - 0.6%
BUILDING MATERIALS - 0.2%
Keramik Holdings PC (b)(d) 16,150 9,761
Lafarge Corp. 1,000 25
9,786
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 0.1%
Bam Groep NV (b) (d) 116,550 $ 8,038
ENGINEERING - 0.1%
Daimei Telecom Engineering Co. 324,000 4,352
REAL ESTATE - 0.0%
Rouse Co. (The) 105,800 1,746
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Crown American Realty Trust (SBI) 97,700 1,392
Simon Properties Group, Inc. (REIT) (b) 423,000 10,364
11,756
TOTAL CONSTRUCTION & REAL ESTATE 35,678
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Asia Motors Co., Inc. (b) 204,000 3,938
Montupet SA 4,400 469
4,407
CONSUMER ELECTRONICS - 0.2%
Aktiebolaget Electrolux 172,700 7,959
Videocon International Ltd. GDR (b) 42,300 434
8,393
HOME FURNISHINGS - 0.0%
Kimball International, Inc. Class B 42,600 1,331
TEXTILES & APPAREL - 0.0%
Oshkosh B'Gosh, Inc. Class A 1,000 17
WEW Group PLC 797,500 763
780
TOTAL DURABLES 14,911
ENERGY - 5.5%
ENERGY SERVICES - 0.2%
Dresser Industries, Inc. 102,600 2,243
Halliburton Co. 1,000 32
Helmerich & Payne, Inc. 2,600 72
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Marine Drilling Cos., Inc. (b) 1,000 $ 6
Offshore Logistics, Inc. (b) 104,300 1,604
Rowan Companies, Inc. (b) 8,400 66
Tidewater, Inc. 1,000 21
Varco International, Inc. (b) 960,700 6,124
Weatherford International, Inc. (b) 364,200 3,505
13,673
OIL & GAS - 5.3%
Amerada Hess Corp. 516,300 25,041
Anadarko Petroleum Corp. 25,300 1,202
Anderson Exploration Ltd. (b) 3,500 88
Apache Corp. 1,000 25
Aran Energy (b) 11,600,000 4,542
Ashland Oil, Inc. 68,000 2,550
Astra Comp Argentina de Petroleum (Reg.) 374,100 1,034
Atlantic Richfield Co. 259,400 28,664
Basin Exploration, Inc. (b) 13,500 172
Box Energy Corp. Class B 710,000 9,053
Bridge Oil Ltd. (d) 23,977,500 10,375
British Borneo Petroleum 177,300 614
British Petroleum PLC ADR 502,000 34,262
Burlington Resources, Inc. 260,600 12,543
BP Prudhoe Bay Royalty Trust (UBI) 26,800 693
Cabot Oil & Gas Corp. Class A 76,900 1,701
Clyde Petroleum (b) 9,400,000 6,794
Cross Timbers Royalty Trust (trust unit) 121,600 1,657
Devon Energy Corp. 79,100 1,630
Elf Gabon 9,000 1,767
Encal Energy Ltd. (b) 1,419,400 4,219
Forcenergy AB 'B' Free shares 3,800 41
Inverness Petroleum Ltd. (b) 92,500 731
Kelley Oil & Gas Partners, Ltd. 164,800 2,184
Louis Dreyfus Natural Gas Corp. (b) 11,200 228
Louisiana Land & Exploration Co. 1,000 42
Mark Resources, Inc. (b)(d) 2,039,200 13,425
Mesa, Inc. (b) 783,400 5,484
Noble Affiliates, Inc. 700 19
Northstar Energy Corp. (b) 253,400 5,339
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Nuevo Energy Corporation (b) 80,900 $ 1,760
Numac Energy, Inc. 109,800 782
Oryx Energy Co. 1,000 18
Parker & Parsley Petroleum Co. 17,300 454
Pennzoil Co. 958,300 52,946
Plains Petroleum Co. 86,200 2,403
Poco Petroleums Ltd. (b) 2,053,300 16,222
Renaissance Energy Ltd. (b) 84,200 1,901
Rio Alto Exploration Ltd. (b) 493,100 3,246
Saga Petroleum 'B' 587,000 7,091
San Juan Basin Royalty Trust (UBI) 422,500 4,014
Santa Fe Energy Resources, Inc. 1,000 9
Sceptre Resources Ltd. (b) 299,200 3,091
Sun Company, Inc. 1,000 31
Tarragon Oil & Gas Ltd. (b) 200,500 2,451
USX-Marathon Group 833,000 15,411
Ulster Petroleums Ltd. (b) 730,700 2,199
Unocal Corp. 1,000 29
Wiser Oil Co. (The) 242,600 4,427
294,602
TOTAL ENERGY 308,277
FINANCE - 4.0%
BANKS - 1.6%
Banco Bilbao Vizcaya International Gibraltar Ltd.
sponsored ADR 160,000 4,600
CPR (Comp Par Reescompte) 320,780 31,601
Chase Manhattan Corp. (warrant) (b) 2,025 17
First Chicago Corp. 216,800 10,190
Kagoshima Bank Ltd. 610,000 4,153
Paribas SA (Cie Financiere) Class A (b) 89,300 8,206
Republic New York Corp. 153,000 7,784
Spar Nord Holding (b) (d) 254,900 9,777
Syds-Sonderjylland Holding (b) 222,400 6,943
Toho Bank Ord. 972,000 6,805
90,076
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CLOSED END INVESTMENT COMPANY - 0.5%
ASA Ltd. 1,000 $ 51
Korea Fund, Inc. (b) 489,100 12,289
Mexico Equity & Income Fund 57,000 1,397
Mexico Fund, Inc. (The) 112,000 4,396
Orange Free State Investments Ltd.
ADR 264,800 9,864
Ord. 47,400 1,715
29,712
CREDIT & OTHER FINANCE - 0.3%
Argentaria Corp. Bancaria de Espagna 167,500 7,962
Brierley Investments Ltd. 12,003,400 9,752
17,714
INSURANCE - 0.4%
Heath (CE) 918,600 6,031
Scor SA 180,970 18,750
24,781
SECURITIES INDUSTRY - 1.2%
Anglo American Gold Investment Co. Ltd. ADR 478,900 4,056
Daiwa Securities 2,513,000 41,382
Kokusai Securities 250,000 4,600
Nikko Securities 270,000 3,502
Nomura Securities Co. Ltd. 697,020 15,303
68,843
TOTAL FINANCE 231,126
HEALTH - 0.0%
DRUGS & PHARMACEUTICALS - 0.0%
Allergan, Inc. 55,200 1,283
INDUSTRIAL MACHINERY & EQUIPMENT - 1.3%
Bobst SA 2,100 2,639
Deere & Co. 1,000 81
Finning Ltd. 799,600 12,785
Kennametal, Inc. 36,991 1,956
Kone Corp. Class B Ord. 53,000 6,700
Parker-Hannifin Corp. 829,900 31,744
Tenneco, Inc. 206,600 11,880
Valmont Industries, Inc. 191,900 3,310
71,095
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 0.0%
LODGING & GAMING - 0.0%
Resort Hotels PLC 62,500 $ 38
NONDURABLES - 0.6%
FOODS - 0.2%
Conservera Campo Frio 97,400 5,332
Dean Foods Co. 73,300 2,382
Instituto de Developmento des Industriales Agriculturale 80,100 3,687
11,401
HOUSEHOLD PRODUCTS - 0.4%
Orkla AS
Class A Free shares 265,800 10,418
Class B (non-vtg.) 272,100 10,555
20,973
TOTAL NONDURABLES 32,374
PRECIOUS METALS - 1.0%
Anglo American Corp. of South Africa:
(Reg.) (b) 9,800 429
ADR 1,000 45
Buffelsfontein Gold Mining Co. Ltd.:
ADR 368,000 4,048
Ord. 39,000 428
Coeur d'Alene Mines Corp. 85,500 1,763
Driefontein Consolidated Ltd.:
ADR 1,122,700 13,893
Ord. 162,600 1,958
Echo Bay Mines Ltd. 1,000 13
Free State Cons Gold Mines:
Ord. 98,800 1,405
ADR 599,600 8,469
Kidston Gold Mines 520,300 1,000
Normandy Poseidon Ltd. 1,000 2
Poseidon Gold Ltd. 1,000 3
Vaal Reefs Exploration & Mining Co. Ltd.:
ADR 1,080,600 9,996
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
PRECIOUS METALS - CONTINUED
(Reg.) 13,900 $ 1,273
Western Deep Levels Ltd.:
ADR 300,300 10,886
Ord. 31,100 1,104
56,715
RETAIL & WHOLESALE - 0.8%
APPAREL STORES - 0.2%
MacIntosh Confectionary Works (b)(d) 391,800 12,503
GENERAL MERCHANDISE STORES - 0.6%
Casey's General Stores, Inc. (d) 593,100 14,828
Dayton Hudson Corp. 1,000 66
Marui Co., Ltd. 591,000 9,515
May Department Stores Co. (The) 1,000 40
Penney (J.C.) Co., Inc. 158,100 8,280
32,729
TOTAL RETAIL & WHOLESALE 45,232
SERVICES - 0.5%
PRINTING - 0.2%
Bowne & Co., Inc. 133,700 3,008
Wallace Computer Services, Inc. 181,200 6,025
9,033
SERVICES - 0.3%
Secom Co. Ltd. 239,000 15,765
TOTAL SERVICES 24,798
TECHNOLOGY - 3.8%
COMPUTER SERVICES & SOFTWARE - 0.6%
Getronics NV 805,800 20,322
Sligos 147,000 15,705
36,027
COMPUTERS & OFFICE EQUIPMENT - 2.4%
Amdahl Corp. 642,700 4,579
Comdisco, Inc. 182,200 4,304
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Cray Research, Inc. (b) 589,700 $ 18,502
Digital Link 7,000 98
International Business Machines Corp. 607,200 34,459
Merisel, Inc. (b) 168,800 3,102
Sun Microsystems, Inc. (b) 304,700 8,075
Tandem Computers, Inc. (b) 1,615,200 21,805
Xerox Corp. 149,800 14,699
109,623
ELECTRONIC INSTRUMENTS - 0.1%
Tektronix, Inc. 257,000 7,260
ELECTRONICS - 0.7%
Intel Corp. 192,900 12,587
Texas Instruments, Inc. 322,500 22,656
Wyle Laboratories 184,800 3,627
38,870
TOTAL TECHNOLOGY 191,780
TRANSPORTATION - 0.3%
SHIPPING - 0.3%
American President Companies, Ltd. 576,700 17,950
OMI Corp. (b) 185,000 1,364
19,314
TRUCKING & FREIGHT - 0.0%
Werner Enterprises, Inc. 67,200 1,982
TOTAL TRANSPORTATION 21,296
UTILITIES - 2.5%
ELECTRIC UTILITY - 0.6%
Atlantic Energy, Inc. (N.J.) 73,200 1,565
Centerior Energy Corp. 106,000 1,391
Entergy Corp. (New) 1,000 37
Houston Industries, Inc. 178,500 8,144
Iowa-Illinois Gas & Electric Co. 148,100 3,536
Korea Electric Power Corp. 499,500 19,311
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Niagara Mohawk Power Corp. 1,000 $ 20
Public Service Co. of New Mexico (b) 13,300 176
Union Electrica Fenosa 263,000 1,383
35,563
GAS - 1.9%
Coastal Corp. (The) 879,100 27,142
Columbia Gas System, Inc. (The) (b) 337,700 8,485
Consolidated Natural Gas Co. 399,300 18,368
Energen Corp. 2,800 65
Equitable Resources, Inc. 1,000 38
ENSERCH Corp. 2,634,600 47,752
Seagull Energy Corp. (b) 1,000 27
Southwestern Energy Co. 173,400 3,121
104,998
TOTAL UTILITIES 140,561
TOTAL COMMON STOCKS
(Cost $1,610,025) 1,716,489
PREFERRED STOCKS - 9.1%
CONVERTIBLE PREFERRED STOCKS - 7.5%
BASIC INDUSTRIES - 0.6%
CHEMICALS & PLASTICS - 0.0%
Olin Corp., Series A 1,000 48
METALS & MINING - 0.3%
Alumax, Inc., Series A, $4.00 333 40
Reynolds Metals Co. $3.31 308,600 16,973
17,013
PACKAGING & CONTAINERS - 0.3%
Kaiser Aluminum Corp. despositary shares
representing 1/10 shares Series A $.65 1,747,400 15,071
TOTAL BASIC INDUSTRIES 32,132
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.3%
REAL ESTATE - 0.3%
Amoy Properties Ltd. 5 1/2% (f)(g) 126,550 $ 15,439
DURABLES - 1.1%
AUTOS, TIRES, & ACCESSORIES - 1.1%
Chrysler Corp., Series A, $4.625 (f) 1,000 172
Federal Mogul Corp. $1.9375 (f)(g) 379,900 40,269
Ford Motor Co. (Del.), Series A, $4.20 (g) 188,800 21,122
61,563
ENERGY - 1.8%
ENERGY SERVICES - 0.1%
McDermott International, Inc. $2.875,
Series C (f) 132,600 5,967
OIL & GAS - 1.7%
Chieftain International Funding Corp. (convertible
pfd. into Chieftain International, Inc. common stock) 241,900 6,743
Unocal Corp. $3.50 (b)(f) 1,059,400 63,299
Occidental Petroleum Co. $3.00 540,000 26,798
96,840
TOTAL ENERGY 102,807
FINANCE - 1.6%
BANKS - 0.8%
Banc One Corp., Series C, $3.50 (g) 15,200 1,022
Bank of New York, 7.75% (g) 116,000 5,844
Barnett Banks, Inc., Series A, $4.50 (g) 92,500 8,186
Chemical Banking Corp. $5.00 (b)(f)(g) 115,700 9,285
First Commerce Corp. $1.80 (g) 20,365 703
Norwest Corp., Series B, $3.50 (g) 271,000 21,003
Union Planters Corp., Series E $2.00 90,700 3,197
49,240
CLOSED END INVESTMENT COMPANY - 0.2%
Jardine Strategic Holdings Ltd. 7.5 (g) 88,120 13,350
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.5%
Echo Bay Finance Corp. Series $1.75 430,500 $ 18,135
Equitable Co. $3 (g) 102,600 6,977
25,112
INSURANCE - 0.1%
Conseco, Inc., Series D, $3.25 (g) 66,900 3,947
TOTAL FINANCE 91,649
MEDIA & LEISURE - 0.7%
BROADCASTING - 0.7%
CBS, Inc. $10.00 Series B (g) 180,000 39,780
PRECIOUS METALS - 0.8%
Battle Gold Co. 39,700 2,521
Newmont Mining Corp. depositary shares
representing 1/2 share preferred $1.375 (f) 614,800 40,269
42,790
RETAIL & WHOLESALE - 0.3%
GROCERY STORES - 0.3%
Dairy Farm International Holdings 6 1/2% (b)(g) 116,190 15,511
Promodes 5 1/2%, 1/1/00 (b) 16,667 3,227
18,738
SERVICES - 0.2%
PRINTING - 0.2%
Alco Standard Corp., Series AA $2.30 (g) 135,200 9,532
TRANSPORTATION - 0.1%
TRUCKING & FREIGHT - 0.1%
TNT Ltd. 8% 2,572,000 4,744
UTILITIES - 0.0%
GAS - 0.0%
Enron Corp., Series J, $10.50 300 135
TOTAL CONVERTIBLE PREFERRED STOCKS 419,309
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - 1.6%
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
General Motors Corp., Series B, 9.125% 10,000 $ 281
ENERGY - 0.1%
OIL & GAS - 0.1%
Gulf Canada Resources Ltd. Series 1, adj. rate 1,269,204 3,966
Gulf Canada Resources Ltd. (b)(e) 10,596 32
3,998
FINANCE - 1.0%
BANKS - 0.9%
BankAmerica Corp.:
Series H, 9% 50,000 1,400
Series F, 9.625% 23,900 669
Chase Manhattan Corp.:
Series J, 9.08% 125,145 3,457
Series F adj. rate 108,100 5,446
Series I, 10.84% 78,162 2,462
Citicorp depositary shares representing 1/10
share Series 14, 9.08% 221,565 6,065
Citicorp., Series 9, 9.12% 12,000 309
Continental Bank Corp (h).:
Series 1, 7.40% 75,000 3,788
Series 2, 8.10% (b) 170,000 4,654
First Bank Systems, Inc., Series 1989 B adj. rate 11,700 607
First Chicago Corp.:
Series D 10% 56,700 1,503
Series C adj. rate 56,795 5,587
First Interstate Bancorp depositary shares
representing 1/8 share:
Series G, 9% 196,300 5,472
Series F, 7.60% 27,200 768
First Union Corp. Series 1990 adj. rate (b) 20,000 1,073
Fleet Financial Group, Inc. depositary shares
rep. 1/4 Series III 10.12% 4,025 118
Mellon Bank Corp, Series I, 9.60% 133,800 3,713
Shawmut National Corp. depositary shares
representing 1/10th share 9.30% 197,900 5,492
52,583
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - CONTINUED
SAVINGS & LOANS - 0.1%
Ahmanson (H.F.) & Co. depositary shares
representing 1/2 share B 9.6% 265,400 $ 7,398
TOTAL FINANCE 59,981
UTILITIES - 0.5%
ELECTRIC UTILITY - 0.5%
Cleveland Electric Illuminating Co. Series N $9.125 29,868 3,017
Georgia Power Co. Class A 1993 Series, 5.0%, (h) 90,000 2,329
Gulf States Utilities Co. $1.75 308,500 7,944
Long Island Lighting Co. $7.95 340,000 9,053
Louisiana Power & Light Co. 9.68% 14,025 389
Portland General Electric Co. 8.10% 10,000 1,020
Public Service Co. of New Hampshire Co., Series A 188,125 5,220
28,972
GAS - 0.0%
ENSERCH Corp., Series D, 7.40% (b)(h) 37,000 1,859
TELEPHONE SERVICES - 0.0%
Stet Societa Finanziaria Telefonica Spa 795,900 1,698
TOTAL UTILITIES 32,529
TOTAL NONCONVERTIBLE PREFERRED STOCKS 96,789
TOTAL PREFERRED STOCKS
(Cost $456,601) 516,098
CORPORATE BONDS - 20.5%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (A) (000S)
CONVERTIBLE BONDS - 7.2%
BASIC INDUSTRIES - 0.0%
PAPER & FOREST PRODUCTS - 0.0%
Canadian Pacific Forest
7 1/2%, 2/8/04 - $ 2,618 2,364
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.4%
CONSTRUCTION - 0.4%
Clayton Homes, Inc. 7 3/4%, 3/1/03 (g) Ba2 $ 6,773 $ 17,203
Nishimatsu #5 3.9%, 3/31/99 - JPY 333,000 3,766
20,969
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Bridgestone:
#15, 3.70%, 12/31/98 - JPY 335,000 3,791
#16, 3.80%, 12/31/99 - JPY 522,000 5,907
9,698
CONSUMER ELECTRONICS - 0.3%
Sony Corp. #3 1.4% 9/30/03 Aa JPY 396,803 13,314
Whirlpool Corp. liquid yield option note
0%, 5/14/11 (g) Baa1 3,680 1,808
15,122
TOTAL DURABLES 24,820
ENERGY - 1.2%
INDEPENDENT POWER - 0.9%
Thermo Electron Corp. (g):
6 3/4%, 2/15/01 (f) Ba2 1,302, 2,448
euro 6 3/4%, 2/15/01 Ba 4,620 8,732
sr. deb. 4 5/8%, 8/1/97 Ba1 25,938 38,388
49,568
OIL & GAS - 0.3%
Horsham Corp. 3.25%, 12/10/18 - 16,913 16,575
TOTAL ENERGY 66,143
FINANCE - 1.3%
BANKS - 0.3%
Bank of New York Co., Inc. 7 1/2%, 8/15/01 Baa 1,280 1,952
West One Bancorp 7 3/4%, 6/30/06 (g) Baa1 10,073 15,714
17,666
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.6%
Bank of Tokyo 6.1%, 3/31/97 (g) Aa JPY 222,000 $ 3,298
Brierley Investments Ltd. 9%, 6/30/98 - 17,977 13,585
Investor AB 8%, 6/01/01 (g) - SEK 77,570 14,330
31,213
INSURANCE - 0.2%
Cincinnati Financial Corp. 5 1/2%, 5/1/02 (g) A2 9,216 11,843
SECURITIES INDUSTRY - 0.2%
CTII Overseas Finance 4 1/4%, 11/18/98 (f) - 910 915
Kokusai Securities:
#5 1.8%, 10/8/99 - JPY 132,000 1,172
#7 1.7%, 10/9/97 - JPY 109,000 997
News Cayman Investment Ltd. euro 5.125%,
3/15/99 A1 710 439
PIV Investment Co. 4.5%, 12/1/00 4.5%
12/01/0 (f) - 1,700 1,679
South Carolina National Corp. euro 6.5%,
5/15/01 (g) A1 2,020 3,626
8,828
TOTAL FINANCE 69,550
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
ELECTRICAL EQUIPMENT - 0.5%
Sensormatic Electronics Corp. 7%, 5/15/01 (g) Ba2 13,044 27,719
POLLUTION CONTROL - 0.0%
Browning-Ferris Industries, Inc.
6 3/4%, 7/18/05 A3 1,000 1,000
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 28,719
MEDIA & LEISURE - 1.4%
BROADCASTING - 0.1%
Carlton Communications 7.5%, 8/14/07 (g) A3 1,050 2,467
ENTERTAINMENT - 0.8%
Carnival Cruise Lines, Inc. 4 1/2%, 7/1/97 (g) Baa2 27,653 42,447
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.2%
Hasbro Corp. 6%, 11/15/98 (g) A3 $ 1,448 $ 1,781
Mattel, Inc. 8%, 3/15/01 (g) Ba1 4,900 8,575
10,356
PUBLISHING - 0.2%
Daily Mail General Trust PLC 8 3/4%,
9/27/05 (g) - GBP 4,960 12,660
RESTAURANTS - 0.1%
Wendy's International, Inc. 7%, 4/1/06 (g) Baa3 4,721 7,365
TOTAL MEDIA & LEISURE 75,295
NONDURABLES - 0.0%
FOODS - 0.0%
Sysco Corp. liquid yield option 0%, 10/12/04 (g) A2 3,750 2,534
RETAIL & WHOLESALE - 0.7%
RETAIL & WHOLESALE, MISC - 0.7%
Home Depot, Inc. 4 1/2%, 2/15/97 (g) A1 6,550 7,664
Lowe's Companies, Inc. conv. 3%, 7/22/03 (g) Baa1 23,781 30,024
37,688
SERVICES - 0.5%
ADVERTISING - 0.5%
Omnicom Group euro 6 1/2%, 7/27/04 (g) Baa3 EC 16,000 28,280
TECHNOLOGY - 0.4%
COMMUNICATIONS EQUIPMENT - 0.2%
Ericsson (LM) 4.25%, 6/30/00 (g) A2 SEC 58,019 9,944
ELECTRONICS - 0.1%
Motorola, Inc. liquid yield option 0%,
9/07/09 (g) A1 5,870 5,283
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Canon, Inc. 1.3%, 12/19/08 A JPY 537,000 5,566
TOTAL TECHNOLOGY 20,793
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - 0.0%
SHIPPING - 0.0%
Peninsular & Oriental Steam
4 3/4%, 6/17/02 A3 $ 295 $ 593
UTILITIES - 0.4%
CELLULAR - 0.2%
Century Telephone Enterprises, Inc.
6%, 2/1/07 (f)(g) Baa3 8,540 10,333
TELEPHONE SERVICES - 0.2%
Softe SA 4 1/4%, 7/30/98 - ITL 14,855,000 10,643
TOTAL UTILITIES 20,976
TOTAL CONVERTIBLE BONDS 398,724
NONCONVERTIBLE BONDS - 13.3%
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.2%
Sunbelt (Cemex) Enterprises 8 1/2%, 5/4/95 (e) - 7,750 7,983
Westinghouse Credit Corp.:
8.93%, 6/22/99 Ba1 2,000 2,194
8.98%, 6/26/99 Ba1 2,000 2,183
8.85%, 7/26/99 Ba1 1,300 1,428
13,788
CONSTRUCTION - 0.1%
Empresas ICA Sociedad Controladora SA de
CV 9 3/4%, 2/11/98 (f) - 4,750 5,273
TOTAL CONSTRUCTION & REAL ESTATE 19,061
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Grupo Dina (Consorcio G) 10 1/2%,
11/18/97 (f) - $ 5,000 $ 5,538
Grupo Imsa SA de CV euro 8 3/4%, 7/7/98 (f) - 3,750 3,867
9,405
CONSUMER ELECTRONICS - 0.1%
Black & Decker Corp. 7 1/2%, 4/1/03 Ba1 4,000 4,120
TOTAL DURABLES 13,525
ENERGY - 0.7%
ENERGY SERVICES - 0.4%
McDermott International, Inc. 10 1/4%, 6/1/95 Baa3 8,400 8,939
Petroliam Nasional Berhad yankee
6 7/8%, 7/1/03 (f) A2 11,250 11,585
20,524
OIL & GAS - 0.3%
Petro Canada, Inc. 9 3/8%, 6/24/97 - 8,500 7,074
McDermott 7.95%, 7/7/97 Baa3 5,000 5,322
PDV America, Inc.:
7 1/4%, 8/1/98 Baa3 2,000 2,050
7 3/4%, 8/1/00 Baa3 3,300 3,424
17,870
TOTAL ENERGY 38,394
FINANCE - 7.0%
ASSET BACKED SECURITIES - 0.3%
Capital Auto Receivables Asset Trust:
5.85%, 1/15/98 Aaa 4,500 4,573
Chase Manhattan Credit Card Master Trust,
7.65%, 11/15/98 Aaa 7,331 7,643
Standard Credit Card Master Trust I,
participation Certificate, 5 1/2%, 9/7/98 Aaa 2,800 2,824
15,040
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - 4.6%
African Development Bank 7 3/4%, 12/15/01 Aa1 $ 3,000 $ 3,320
American Residential Mortgage Corp.
6.09%, 12/15/98 Baa3 2,000 2,000
Banco Nacional de Mexico SA
9 1/8%, 4/6/00 (f) - 2,500, 2,750
Bancomer SA:
9%, 6/1/00 (f) - 6,500 7,085
eurobonds 8%, 7/7/98 (f) - 7,500 7,856
Bancomer SNC euro 8%, 7/7/98 Ba2 6,000 6,285
Bank of Boston Corp.:
euro 6.2%, 9/12/00 (h) Baa1 2,000 1,998
10.3%, 9/1/00 Baa2 5,000 5,438
6 7/8%, 7/15/03 Baa2 3,000 3,085
6.625%, 2/1/04 Baa2 5,000 5,053
Central Fidelity Banks, Inc. 8.15%, 11/15/02 Baa2 9,700 10,825
Citicorp:
euro 5%, 10/25/05 Baa2 11,500 11,500
8 1/2%, 2/11/97 Baa2 9,700 10,604
Continental Bank Mortgage Corp. 9 7/8%,
6/15/96 Baa3 2,000 2,219
Continential Bank, N.A. Chicago 12 1/2%, 4/1/01 Baa3 6,600 8,967
Corporacion Andina De Fomento yankee bonds
7 1/4%, 4/30/98 (f) - 5,900 6,003
Crestar Financial Corp. 8 1/4%, 7/15/02 Baa2 8,000 8,990
Financiera Energetica Nacional 6 5/8%,
12/13/96 (f) - 9,000 9,045
First of America Bank Corp. 8.5%, 2/1/04 Baa1 2,000 2,298
First Bank System, Inc. euro 6.9%, 11/30/10 (h) Baa1 2,000 2,000
First Hawaiian Bank secured 6.93%,
12/1/03 (f) A1 6,000 6,136
First Interstate Bancorp:
10 7/8%, 4/15/01 Baa1 4,000 5,115
9 1/8%, 2/1/04 Baa1 4,600 5,515
First National Bank of Boston 8 3/8%, 12/15/02 Baa1 8,000 9,072
First USA Bank Wilmington DE 5.75%, 1/15/99 Baa3 6,000 6,001
Fleet Financial Group, Inc. 8 1/8%, 7/01/04 Baa1 10,000 11,257
HSBC Finance Nederland BV 7.40%,
4/15/03 (f) Baa1 10,000 10,655
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Integra Financial Corp. 8 1/2%, 5/15/02 Baa2 $ 6,500 $ 7,306
Korea Development Bank:
6 1/4%, 5/1/00 A1 4,150 4,188
7.90%, 2/1/02 A1 4,000 4,340
9.4%, 8/1/01 A1 2,000 2,382
MBNA American Bank, N.A. 7 1/4%, 9/15/02 A3 4,888 5,190
Mercantile Bancorporation, Inc. 7 5/8%,
10/15/02 Baa1 6,000 6,521
Midland American Capital Corp. gtd.
12 3/4%, 11/15/03 A2 1,965 2,521
Provident Bank 7 1/8%, 3/15/03 Baa3 6,125 6,385
Shawmut Corp. 8 1/8%, 2/1/97 Baa1 12,000 12,989
Siam Commercial Bank TCD 7.25% 11/29/96 - THB 100,000 3,938
Siam Commercial Bank Co. Ltd. 7%,11/29/95 - THB 100,000 3,934
Signet Banking Corp. 9 5/8%, 6/01/99 Baa2 2,460 2,873
Thai Military Bank, Ltd. 8%, 10/28/96 - THB 100,000 3,981
UJB Financial Corp. 8 5/8%, 12/10/02 Baa3 10,175 11,648
Zions Bancorporation 8 5/8%, 10/15/02 BBB- 5,000 5,703
254,971
CREDIT & OTHER FINANCE - 1.1%
Ford Credit Auto Loan Master Trust 7 3/8%,
4/15/99 Aaa 9,000 9,651
General Motors Acceptance Corp.
5.875%, 1/12/99 Baa1 10,000 10,013
Greyhound Financial Corp.:
6.95%, 1/28/98 Baa2 1,250 1,314
9 1/8%, 2/27/02 Baa2 5,000 5,857
Industrial Finance Corp. Thailand 7 1/2%,
12/2/98 - THB 100,000 3,941
Leucadia National Corp. 6%, 3/10/96 Ba2 6,860 4,664
Margaretten Financial Corp. 6 3/4%, 6/15/00 Baa3 10,000 10,267
Railcar Trust, 7 3/4%, 6/1/04 Aaa 13,804 15,236
60,943
INSURANCE - 0.3%
Metropolitan Life Insurance Co.:
6.3%, 11/1/03 (f) Aa3 10,000 10,019
6.4%, 12/15/03 (f) Aa2 8,000 8,086
18,105
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
SAVINGS & LOANS - 0.7%
Ahmanson (H.F.) & Co.:
9.875%, 11/15/99 Baa3 $ 8,620 $ 10,255
8 1/4%, 10/01/02 Baa2 340 380
Great Western Financial Corp. 8.6% 2/1/02 Baa2 9,850 11,241
Home Savings of America 6%, 11/1/00 Baa1 6,000 5,951
Household Bank FSB Newport Beach California:
6 1/2%, 7/15/03 A3 5,000 5,056
8.45%, 12/10/02 A3 6,250 7,173
40,056
TOTAL FINANCE 389,115
HEALTH - 0.2%
DRUGS & PHARMACEUTICALS - 0.1%
Scherer (R.P.) International Corp.
6.75%, 2/1/04 Ba1 3,500 3,494
MEDICAL FACILITIES MANAGEMENT - 0.1%
National Medical Enterprises, Inc. 7%,
4/1/94 Baa3 5,000 4,997
TOTAL HEALTH 8,491
MEDIA & LEISURE - 0.7%
BROADCASTING - 0.2%
Telecommunications, Inc.:
6.58%, 2/15/05 Baa3 4,000 4,211
7.13%, 2/02/98 Baa3 6,000 6,349
Time Warner, Inc. 6.05%, 7/1/95 (f) Ba1 2,000 2,035
12,595
LEISURE DURABLES & TOYS - 0.1%
Mattel, Inc. 6 7/8%, 8/1/97 Baa2 3,000 3,135
PUBLISHING - 0.4%
News America Holdings, Inc. 8 5/8%, 2/1/03 Ba1 12,000 13,251
Time Warner Entertainment Co. LP
9 5/8%, 5/1/02 Baa3 8,000 9,532
22,783
TOTAL MEDIA & LEISURE 38,513
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - 0.3%
BEVERAGES - 0.1%
Grupo Embotellador de Mexico SA de CV
10 3/4%, 11/19/97 (f) - $ 2,480 $ 2,802
TOBACCO - 0.2%
Empresas La Moderna SA 10 1/4%,
11/12/97 (f) - 3,600 3,969
RJR Nabisco, Inc.:
10 1/2%, 4/15/98 Baa3 7,000 7,936
9 1/4%, 5/1/95 Baa3 1,500 1,568
13,473
TOTAL NONDURABLES 16,275
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.0%
The Limited, Inc. 7 1/2%, 3/15/23 A1 1,000 1,010
GENERAL MERCHANDISE STORES - 0.1%
Controladora Comercial Mexicana SA
de CV euro 8 3/4%, 4/21/98 - 1,800 1,906
El Puerto de Liverpool SA de CV:
7 1/4%, 10/19/96 (f) - 3,250 3,303
7 1/4%, 10/19/96 Euro - 1,000 1,016
6,225
GROCERY STORES - 0.1%
American Stores Co. 9 1/8%, 4/1/02 Baa3 7,000 8,199
TOTAL RETAIL & WHOLESALE 15,434
TECHNOLOGY - 0.5%
COMPUTERS & OFFICE EQUIPMENT - 0.3%
Comdisco, Inc.:
8.95%, 5/15/95 Baa2 3,000 3,161
9 3/4%, 1/15/97 Baa2 3,500 3,877
9.3%, 6/27/00 Baa2 3,750 4,313
11,351
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONICS - 0.2%
9.45%, 6/8/00 Baa2 $ 6,000 $ 6,945
Grupo Condumex SA de CV:
6 1/4%, 7/27/96 (f) - 750 748
6 1/4%, 7/27/96 - 750 748
7 3/8% 7/27/98 (f) - 2,000 2,018
Matsushita EL 2.7%, 5/31/20 - JPY 600,000 6,845
10,359
TOTAL TECHNOLOGY 28,655
TRANSPORTATION - 1.3%
AIR TRANSPORTATION - 1.1%
AMR Corp. 9 1/2%, 7/15/98 Baa3 4,000 4,450
Delta Air, Inc. Del Pass thru Trust
9.875%, 4/30/08 Baa3 4,768 4,995
Southwest Airlines Co. 8 3/4%, 10/15/03 Baa1 2,000 2,312
Transnet Ltd. (ELFI IV):
2.4%, 4/1/94 - ZAR 136,800 19,631
4 1/2%, 4/1/94 - ZAR 89,370 27,365
58,753
TRUCKING & FREIGHT - 0.2%
Airborne Freight Corp. 8 7/8%, 12/15/02 Baa3 4,000 4,588
Consolidated Freightways, Inc.:
8.83%, 12/15/94 Baa3 2,000 2,072
9 1/8%, 8/15/99 Baa3 4,230 4,694
11,354
TOTAL TRANSPORTATION 70,107
UTILITIES - 1.8%
ELECTRIC UTILITY - 1.2%
British Columbia Hydro & Power Authority gtd.
15%, 4/15/11 Aa1 725 915
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Comision Federal De Electricidad euro 8%,
8/4/97 - $ 2,130 $ 2,237
ESKOM 11%, 6/1/08 - ZAR 51,600 10,532
Gulf States Utilities Co.:
9.72%, 7/1/98 Baa3 10,690 11,925
1st mortgage 6 3/4%,10/1/98 Baa2 1,000 1,012
Hydro-Quebec euro 9 1/4%, 7/31/02 (h) - 5,140 5,140
Long Island Lighting Co.:
8.75%, 5/1/96 Baa3 8,908 9,603
7.3%, 7/15/99 Baa2 9,850 10,258
Public Service Co. of New Hampshire 1st mtg.,
Series B, 9.17%, 5/15/98 Baa3 13,900 15,203
66,825
GAS - 0.3%
Southwest Gas Corp.:
9 3/4%,6/15/02 Ba1 10,700 12,355
9 3/8%, 2/1/17 Ba1 4,000 4,225
16,580
TELEPHONE SERVICES - 0.3%
Compania de Telefonos de Chile Yankee
bonds 4.5%, 1/15/03 Baa3 8,984 14,509
TOTAL UTILITIES 97,914
TOTAL NONCONVERTIBLE BONDS 735,484
TOTAL CORPORATE BONDS
(Cost $1,090,803) 1,134,208
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 7.0%
U.S. TREASURY OBLIGATIONS - 4.6%
6%, 12/31/97 Aaa 28,000 29,251
7 7/8%, 11/15/99 Aaa 1,400 1,589
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
U.S. TREASURY OBLIGATIONS - CONTINUED
9 7/8%, 11/15/15 Aaa $ 35,000 $ 49,492
8 1/8%, 8/15/19 Aaa 65,000 78,944
8%, 11/15/21 Aaa 81,500 98,450
257,726
U.S. GOVERNMENT OBLIGATIONS - 2.4%
Agency for International Development (guaranteed
by U.S. government):
5.25%, 9/15/00 Aaa 27,350 27,008
5.75%, 3/15/00 Aaa 4,500 4,579
Financing Corporation:
0%, 2/8/97 Aaa 2,820 2,453
10.70%, 10/6/17 Aaa 11,210 16,521
9.80%, 11/30/17 Aaa 3,100 4,242
9.40%, 2/ 8/18 Aaa 5,350 7,079
9.80%, 4/6/18 Aaa 6,700 9,183
9.65%, 11/2/18 Aaa 9,185 12,460
8.60%, 9/26/19 Aaa 9,160 11,290
Government Treasury Certificates:
9 1/4%, 11/15/01 Aaa 8,000 9,405
8%, 5/15/98 Aaa 9,501 10,207
9.4%, 5/15/02 Aaa 4,218 4,992
Tennessee Valley Authority 8 1/4%, 11/15/96 Aaa 15,600 17,057
136,476
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $387,027) 394,202
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 4.6%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.2%
6.50% 1/15/08 to 1/15/09 Aaa 9,900 10,138
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 1.8%
6%, 10/15/23 to 12/15/23 Aaa 10,059 9,821
6 1/2%, 10/15/08 to 1/15/24 Aaa 34,482 34,948
7%, 3/15/23 to 11/15/23 Aaa 6,219 6,377
7 1/2%, 1/15/07 to 12/15/08 Aaa 16,857 17,579
8%, 5/15/02 to 9/15/17 Aaa 3,299 3,463
9%, 8/15/01 to 8/15/07 Aaa 25,249 26,938
99,126
U. S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.6%
6.50% 12/15/23 Aaa $ 4,946 $ 4,964
7.00% 2/15/22 to 11/15/23 Aaa 37,673 38,746
7.50% 1/15/23 to 6/15/23 Aaa 20,013 20,932
8.00% 1/15/17 to 9/15/22 Aaa 12,518 13,239
8.50% 2/15/17 to 8/15/23 Aaa 12,487 13,268
9.00% 10/15/08 to 10/15/17 Aaa 33,804 36,320
10.00% 5/15/16 2/15/19 Aaa 14,855 16,418
143,887
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $251,122) 253,151
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.0%
MBNA Trust 9 1/2%, 10/25/20 (CMO)
(Cost $676) 654 663
FOREIGN GOVERNMENT OBLIGATIONS - 14.2%
FOREIGN GOVERNMENT SECURITIES - 14.2%
Argentinian Republic BOCON:
3.9775%, 4/1/01 - ARP 25,341 20,540
3.9775%, 9/1/02 - ARP 16,578 12,580
3.9775%, 4/1/07 - ARP 12,244 8,864
Canadian Government Treasury Bills:
0%,10/6/94 Aaa CAD 58,000 42,548
0%, 8/25/94 Aaa CAD 30,000 22,101
0%, 9/8/94 Aaa CAD 30,000 22,071
0%, 10/20/94 Aaa CAD 235,000 172,108
7 1/2%, 7/1/97 Aaa CAD 16,030 12,998
7 1/2%, 12/1/03 Aaa CAD 8,000 6,518
9 3/4%, 12/01/01 Aaa CAD 11,800 10,872
11.75%,2/1/03 Aaa CAD 28,200 28,973
Manitoba Province 14 3/4%, 3/15/97 A1 CAD 3,000 3,034
Ontario Province 7 3/8%, 1/27/03 Aa2 CAD 5,000 5,406
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
FOREIGN GOVERNMENT SECURITIES - CONTINUED
Victorian Public Authorities Finance Agency
8 1/4%, 1/15/02 A1 $ 8,000 $ 9,150
Danish Government Bullet:
7%, 12/15/04 Aa1 DKK 195,500 31,308
8%, 5/15/03 Aa1 DKK 225,300 38,090
9%, 11/15/00 Aa1 DKK 126,000 22,066
French Government OAT:
6 3/4%, 10/25/03 Aaa FRF 36,000 6,592
8 1/2%, 11/25/02 Aaa FRF 15,000, 3,050
8 1/2%, 4/25/03 Aaa FRF 330,600 67,260
8 1/2%, 4/25/23 Aaa FRF 241,600 52,896
Kingdom of Sweden 10 3/4%, 1/23/97 Aaa SEK 192,300 27,330
Malaysian Government Treasury Bills 0%:
4/1/94 - MYR 2,750 985
5/11/94 - MYR 6,000 2,144
Mexican Adjustabanos 4.1%, 12/15/94 - MYR 9,200 3,660
New Zealand Government:
10%, 7/15/97 Aa3 NZD 14,320 9,403
8%, 4/15/04 Aa3 NZD 41,000 27,534
Republic of South Africa 12%, 2/28/05 - ZAR 340,740 74,962
United Kingdom:
Great Britain & Northern Ireland
12%, 11/20/98 Aaa GBP 13,750 25,895
Treasury Bond, 9 3/4%, 8/27/02 Aaa GBP 11,700 21,555
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $747,196) 792,493
OTHER SECURITIES - 1.7%
COLLATERALIZED NOTES - 0.7%
Wilton Investments Ltd. sr. notes (collateralized
by Mexican govt. and U.S. govt. securities):
Series B, 0%, 3/4/94 (e) 17,410 17,333
Series C, 0%, 6/3/94 (e) 23,670 23,246
40,579
INDEXED SECURITIES - 1.0%
AIG Matched Funding Corp. note 4.465%:
9/14/94 (IFRN) (coupon inversely indexed
to HELIBOR and principal indexed to value
of 2-year Finnish securities, both multiplied
by 6) 4,100 4,649
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
INDEXED SECURITIES - CONTINUED
9/16/94 (IFRN) (coupon inversely indexed
to HELIBOR and principal indexed to value
of 2-year Finnish securities, both multiplied
by 6) $ 1,400 $ 1,537
Bankers Trust Company note:
3.4%, 3/23/94 (inversely indexed to 1-year
FIM swap rate, multiplied by 10) 3,900 5,373
14.4375%, 7/15/94(indexed to CSK denom.
CEZ a.s. bond 16 1/2%, 6/25/98) 1,200 1,230
4.2075%, 8/31/94 (IFRN) (coupon inversely
indexed to HELIBOR and principal indexed to
value of 2-year Finnish securities, both
multiplied by 6) 1,200 1,364
4.2075%, 9/2/94 (IFRN) (coupon inversely
indexed to HELIBOR and principal indexed
to value of 3-year Finnish securities, both
multiplied by 4) 1,300 1,444
Citibank Nassau 0%, 7/6/94 (IFRN) (coupon
inversely indexed to CAD Banker's Acceptance
rate and principal indexed to value of 1-year
Canadian securities, both multiplied by 10) 1,600 1,744
Finnish Export Credit note:
3.625%, 4/19/94 (inversely indexed to 1-year
FIM HELIBOR rate, multiplied by 10) 1,600 2,174
3.5625%, 4/19/94 (inversely indexed to 1-year
FIM HELIBOR rate, multiplied by 10) 3,900 5,335
3.5625%, 4/19/94 (inversely indexed to 1-year
FIM HELIBOR rate, multiplied by 10) 2,400 3,276
ITT Corp. 3.66%, 6/27/94 (inversely indexed
to 1-year SEK swap rate, multiplied by 10) 8,000 8,487
Merck & Co., Inc. note 3.78%, 1/25/95
(inversely indexed to 2-year SEK swap
rate, multiplied by 10) 3,900 4,486
Merrill Lynch & Co., Inc. Japan Index equity
participation securities 0%,1/31/00 11,540 11,915
Morgan Guaranty Trust Co. cert. of dep. 0%:
6/6/94 (indexed to $482 par of Westport
Investments Ltd. sr. notes, collateralized by
Mexican govt. securities, per $100 par) 1,076 1,040
8/22/94 (indexed to $481 par of Westport
Investments Ltd. sr. notes, collateralized by
Mexican govt. securities, per $100 par) 250 243
54,297
TOTAL OTHER SECURITIES
(Cost $89,005) 94,876
COMMERCIAL PAPER - 3.8%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
Banca Serfin SA 0%:
7/5/94 MXN 65,820 $ 20,181
7/7/94 MXN 19,720 6,043
7/28/94 MXN 32,828 9,994
Banco Nacional De Mexico SA 0%,
12/8/94 MXN 88,800 26,032
Bank Negara Malaysia 0%:
5/11/94 MYR 10,000 3,543
6/8/94 MYR 21,700 7,655
9/7/94 MYR 22,000 7,668
Grupo Embotellador de Mexico SA de CV
0%, 4/20/94 (f) 3,950 3,899
Indonesian Bank Cert. (SBI) 0%:
1/13/95 IDR 5,000,000 2,163
5/13/94 IDR 3,000,000 1,387
5/19/94 IDR 10,900,000 5,008
4/28/94 IDR 5,000,000 2,310
Malayan Banking BHD 5.53%, 4/7/94 MYR 30,000 10,856
Nacional Financiera SNC 0%:
3/30/94 MXN 3,196 1,010
4/14/94 MXN 31,974 10,059
5/12/94 MXN 97,500 30,403
5/19/94 MXN 89,595 27,877
6/2/94 MXN 33,147 10,268
7/25/96 MXN 60,811 15,248
Public Bank of Malaysia 0%, 4/18/94 MYR 30,000 10,754
TOTAL COMMERCIAL PAPER
(Cost $213,994) 212,358
REPURCHASE AGREEMENT - 8.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.19% dated
1/31/94 due 2/1/94 $461,154 461,113
TOTAL INVESTMENTS - 100%
(Cost $5,307,562) $ 5,575,651
FUTURES CONTRACTS
AMOUNT IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
2,068 Nikkei 225 Contracts March 1994 $ 212,332 $ 18,500
452 Midcap 400Stock Index Contracts March 1994 41,460 966
19,466
THE VALUE OF FUTURES CONTRACTS PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 4.6%
SELL
127 U.S. Treasury Bond Contracts March 1994 14,879 (204)
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.3%
$ 19,262
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
49,221 NLG 2/2/94 $ 25,333 $ 130
65,200 FIM 2/2/94 to 5/2/94 11,825 48
692,738 FRF 3/15/94 to 4/28/94 117,570 1,107
2,728,688 JPY 3/15/94 to 4/25/94 25,160 160
TOTAL CONTRACTS TO BUY
(Payable amount $178,443) $ 179,888 $ 1,445
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 3.2%
CONTRACTS TO SELL
2,095,540 BEF 2/3/94 to 2/24/94 $ 58,567 $ (370)
54,607 GBP 2/7/94 to 4/28/94 81,841 (774)
65,561 CAD 3/7/94 49,342 (318)
640,596 DKK 2/7/94 to 4/28/94 94,831 (305)
98,441 NLG 2/2/94 to 5/2/94 50,408 1,614
130,399 FIM 2/1/94 to 5/4/94 23,605 (702)
1,932,072 FRF 3/15/94 to 4/25/94 326,579 (1,463)
5,628 DEM 2/28/94 to 7/18/94 3,223 (21)
6,083,082 JPY 2/28/94 to 4/25/94 56,073 (1,116)
127,634 NOK 4/25/94 17,060 (80)
1,358,139 ESP 4/27/94 9,568 (201)
356,595 SEK 2/7/94 45,232 (1,491)
39,500 CHF 2/22/94 to 3/7/94 27,099 (847)
TOTAL CONTRACTS TO SELL
(Receivable amount $837,354) $ 843,428 $ (6,074)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 15.1%
SECURITIES SOLD SHORT
NUMBER OF SHARES ISSUER VALUE
(000S)
151,300 Alco Standard Corp. $ 8,794
9,152,500 Amoy Properties Ltd. 14,576
24,150 Banc One Corp. 906
139,600 Bank of New York Co., Inc. 7,870
214,000 Bank of Tokyo Ltd. 3,307
173,400 Barnett Banks, Inc. 7,326
124,300 CBS, Inc. 38,036
75,300 Carlton Communications PLC ADR 2,268
797,200 Carnival Cruise Lines, Inc. Class A 39,461
336,655 Century Telephone Enterprises, Inc. 9,174
220,600 Chemical Banking Corp. 8,714
187,100 Cincinnati Financial Corp. 10,899
674,250 Clayton Homes, Inc. 17,109
110,100 Compania de Telefona de Chile sponsored ADR 13,941
52,300 Conseco 3,288
7,248,000 Dairy Farm International Holdings Ltd. 12,951
209,300 Equitable Companies, Inc. 6,227
193,155 Ericsson (L.M.) Telephone Co. Class B ADR 8,789
1,054,350 Federal-Mogul Corp. 38,088
23,625 First Commerce Corp. 617
307,900 Ford Motor Company 20,629
49,300 Hasbro, Inc. 1,664
168,800 Home Depot, Inc. 6,583
503,500 Investor AB free shares 13,041
2,841,900 Jardine Strategic Holdings Ltd. 12,511
454,400 Lowe's Co., Inc. 27,718
381,750 Mattel, Inc. 8,685
53,540 Motorola, Inc. 5,274
743,000 Norwest Corp. 19,597
570,663 Omnicom Group, Inc. 27,962
136,500 Reuter Holdings PLC ADR Class B 12,268
831,375 Sensormatic Electronics Corp. 27,539
84,900 Sysco Corp. 2,314
1,060,700 Thermo Electron Corp. 45,478
113,100 Union Planters Corp. 2,785
104,410 Wachovia Corp. 3,641
SECURITIES SOLD SHORT - CONTINUED
NUMBER OF SHARES ISSUER VALUE
(000S)
179 Telekom Malaysia BHD $ 1
388,200 Wendy's International, Inc. 6,648
541,400 West One Bancorp 14,821
26,600 Whirlpool Corp. 1,799
TOTAL SECURITIES SOLD SHORT
(Total proceeds $460,910) $ 513,299
THE VALUE OF SECURITIES SOLD SHORT AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 9.2%
CURRENCY TYPE ABBREVIATIONS
ARP - Argentinean peso
BEF - Belgian franc
GBP - British pound
CAD - Canadian dollar
DKK - Danish krone
FIM - Finnish markka
FRF - French franc
DEM - German Deutsche mark
IDR - Indonesian rupiah
ITL - Italian lira
JPY - Japanese yen
MYR - Malaysian ringgit
MXN - Mexican peso
NZD - New Zealand dollar
NOK - Norwegian krone
ZAR - South African rand
ESP - Spanish peseta
SEK - Swedish krona
CHF - Swiss franc
THB - Thai baht
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. Non-income producing
3. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
4. Affiliated company (see Note 5 of Notes to Financial Statements).
5. 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
(000S)
Gulf Canada
Resources Ltd. 11/93 $ 26
Sunbelt (Cemex)
Enterprises 8.5%,
5/4/95 9/93 7,750
Wilton Investments Ltd.
sr. notes (collateralized
by Mexican govt. and
U.S. govt. securities):
Series B, 0%, 3/4/94 3/93 16,755
Series C, 0%, 6/3/94 3/93 22,332
6. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $303,164,000 or 5.7% of net
assets.
7. A portion of the security is pledged to cover margin requirements on
open short sale transactions (see Note 2 of Notes to Financial Statements).
At the period end the value of securities pledged amounted to $489,361,000.
8. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
9. Market value reflects the payment of the first installment. Additional
equal payments of $441,000 are payable in January and October of 1995.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 21.6% AAA, AA, A 21.5%
Baa 9.1% BBB 11.0%
Ba 2.8% BB 0.7%
B 0.0% B 0.0%
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 6.7%.
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 60.2%
Canada 10.1
Mexico 4.6
France 3.8
South Africa 3.6
Japan 2.2
United Kingdom 2.0
Denmark 1.9
Sweden 1.4
New Zealand 1.1
Malaysia .1.0
Netherlands 1.0
Others (individually less than 1%) 7.1
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1994, the aggregate cost of investment securities for income
tax purposes was $5,307,858,000. Net unrealized appreciation aggregated
$267,793,000, of which $337,400,000 related to appreciated investment
securities and $69,607,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JANUARY 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 5,575,651
agreements of $461,113) (cost $5,307,562) (Notes 1 and 2)
- - - See accompanying schedule
Securities sold short, at value (proceeds received $460,910) (513,299) $ 5,062,352
(Note 2)
Long foreign currency contracts held, at value (cost $178,443) 179,888
(Note 2)
Short foreign currency contracts (Note 2) (843,428)
Contracts held, at value
Receivable for contracts held 837,354 (6,074)
Restricted cash on securities sold short (Note 2) 460,910
Receivable for investments sold 166,647
Net receivable for closed foreign currency contracts 77
Receivable for fund shares sold 36,838
Dividends receivable 2,410
Interest receivable 46,304
Receivable for daily variation on futures contracts 10,674
Other receivables 29
TOTAL ASSETS 5,960,055
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES
Payable to custodian bank $ 143
Payable for foreign currency contracts held 178,443
(Notes 1 and 2)
Payable for investments purchased 464,451
Payable for fund shares redeemed 15,278
Accrued management fee 2,195
Other payables and accrued expenses 4,634
TOTAL LIABILITIES 665,144
NET ASSETS $ 5,294,911
Net Assets consist of (Note 1):
Paid in capital $ 5,009,752
Distributions in excess of net investment income (Note 1) (801)
Accumulated undistributed net realized gain (loss) on 55,627
investments
Net unrealized appreciation (depreciation) on investments 230,333
NET ASSETS, for 385,055 shares outstanding $ 5,294,911
NET ASSET VALUE, offering price and redemption price per $13.75
share ($5,294,911 (divided by) 385,055 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 20,889
Dividends (including $48 received from affiliated issuers
(Note 5)
Interest 85,031
TOTAL INCOME 105,920
EXPENSES
Management fee (Note 4) $ 11,481
Transfer agent fees (Note 4) 6,419
Accounting fees and expenses (Note 4) 388
Non-interested trustees' compensation 13
Custodian fees and expenses 667
Registration fees 582
Audit 42
Legal 16
Dividends on securities sold short 1,637
Miscellaneous 25
Total expenses before reductions 21,270
Expense reductions (Note 6) (217) 21,053
NET INVESTMENT INCOME 84,867
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:
Investment securities (including realized gain (loss) of 113,298
$(231) on sales of investments in affiliated issuers)
Foreign currency contracts 576
Futures contracts (7,588) 106,286
Change in net unrealized appreciation (depreciation) on:
Investment securities 130,176
Foreign currency contracts (20,215)
Futures contracts 19,341
Short sales (45,278) 84,024
NET GAIN (LOSS) 190,310
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 275,177
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JULY 31, 1993
JANUARY 31, 1994
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 84,867 $ 109,215
Net investment income
Net realized gain (loss) on investments 106,286 157,545
Change in net unrealized appreciation (depreciation) 84,024 101,148
on
investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 275,177 367,908
FROM OPERATIONS
Distributions to shareholders: (92,868) (105,629)
From net investment income
From net realized gain (189,741) (42,133)
TOTAL DISTRIBUTIONS (282,609) (147,762)
Share transactions 2,251,215 2,584,255
Net proceeds from sales of shares
Reinvestment of distributions from: 88,253 100,853
Net investment income
Net realized gain 183,302 40,941
Cost of shares redeemed (819,813) (712,828)
Net increase (decrease) in net assets resulting from 1,702,957 2,013,221
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,695,525 2,233,367
NET ASSETS
Beginning of period 3,599,386 1,366,019
End of period (including undistributed net investment $ 5,294,911 $ 3,599,386
income of $(801) and $14,016, respectively)
OTHER INFORMATION
Shares
Sold 165,208 196,763
Issued in reinvestment of distributions from: 6,569 7,830
Net investment income
Net realized gain 13,506 3,288
Redeemed (60,349) (54,597)
Net increase (decrease) 124,934 153,284
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS
ENDED
JANUARY 31,
1994 YEARS ENDED JULY 31,
(UNAUDITED) 1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, $ 13.84 $ 12.79 $ 12.15 $ 11.11 $ 11.87 $ 10.55
beginning of period
Income from
Investment
Operations
Net investment .27 .62 .62 .65 .71 .97(diamond)
income
Net realized and .58 1.45 1.07 1.07 (.25) 1.03
unrealized gain
(loss) on
investments
Total from investment .85 2.07 1.69 1.72 .46 2.00
operations
Less Distributions
From net investment (.30) (.66) (.60) (.68) (1.00) (.68)
income
From net realized gain (.64) (.36) (.45) - (.22) -
Total distributions (.94) (1.02) (1.05) (.68) (1.22) (.68)
Net asset value, end of $ 13.75 $ 13.84 $ 12.79 $ 12.15 $ 11.11 $ 11.87
period
TOTAL RETURN (dagger) 6.35% 17.18% 14.73% 16.24% 3.98% 19.81%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 5,295 $ 3,599 $ 1,366 $ 458 $ 268 $ 146
period (in millions)
Ratio of expenses to .95%*(double dagger) .93% .96% .98% .97% 1.13%
average net assets
Ratio of expenses to .96%*(double dagger) .93% .96% .98% .97% 1.13%
average net assets
before expense
reductions
Ratio of net investment 3.84%* 5.07% 5.68% 5.93% 6.74% 8.90%
income to average (diamond)
net assets
Portfolio turnover rate 175%* 162% 242% 238% 223% 168%
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED AND WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIOD SHOWN.
(double dagger) SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS
(diamond) NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.23 PER SHARE.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Balanced Fund (the fund) is a fund of Fidelity Puritan Trust (the
trust) and is authorized to issue an unlimited number of shares. The trust
is registered under the Investment Company Act of 1940, as amended (the
1940 Act), as an open-end management investment company organized as a
Massachusetts business trust. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
are valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
mortgage-backed securities, futures and options transactions, foreign
currency transactions, market discounts, partnerships, non-taxable
dividends and losses deferred due to wash sales and futures and options.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective August 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of July 31, 1993 have been reclassified to reflect
an increase in paid in capital of $6,711,000, a decrease in undistributed
net investment income of $6,816,000, and an increase in accumulated net
realized gain on investments of $105,000.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY
CONTRACTS. The fund may enter into forward foreign currency contracts.
These contracts involve market risk in excess of the amount reflected in
the fund's Statement of Assets and Liabilities. The face or contract amount
in U.S. dollars reflects the total exposure the fund has in that particular
currency contract. The U.S. dollar value of forward foreign currency
contracts is determined using forward currency exchange rates supplied by a
quotation service. Losses may arise due to changes in the value of the
foreign currency or if the counterparty does not perform under the
contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission(the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
may receive compensation for interest forgone in a delayed delivery
transaction. The fund identifies securities as segregated in its custodial
records with a value at least equal to the amount of the purchase
commitment.
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.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
secondary market for the instruments, or due to the inability of
counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
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 $48,594,000 or 0.9% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $4,581,579,000 and $3,484,839,000 respectively, of which U.S.
government and government agency obligations aggregated $1,336,511,000 and
$790,007,000, respectively.
The market value of futures contracts opened and closed amounted to
$633,956,000 and $427,481,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.31% to.52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .20%.
For the period, the management fee was equivalent to an annualized rate of
.52% of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,518,000 for the period.
5. 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
Bam Groep NV (a) $ 1,079 $ - $ - $ 8,038
Bridge Oil Ltd. (a) - - - 10,375
Casey's General Stores 816 789 48 14,828
Kemraik Holdings PC (a) 1,883 - - 9,761
Mark Resources, Inc. (a) 2,783 1,533 - 13,425
Macintosh Confectionary Works (a) 816 - - 12,503
Sherritt Gordon Mines, Inc. (a) 15,640 - - 34,129
Spar Nord Holding (a) 1,890 - - 9,777
TOTALS $ 24,907 $ 2,322 $ 48 $ 112,836
(a) NON-INCOME PRODUCING
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
$217,000, under this arrangement.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)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. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
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
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Robert Haber, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Market Index Fund
Puritan Fund
Real Estate Investment Portfolio
Utilities Income Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(registered trademark)
GLOBAL BALANCED
FUND
SEMIANNUAL REPORT
JANUARY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The managers' review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 36 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 41 Footnotes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
No one wants to pay more taxes than they have to. But a recent survey of
500 U.S. households, conducted by Fidelity and Yankelovich Partners, showed
that few people took steps to reduce their taxes under the new tax laws
that went into effect last year. In fact, many people were not completely
aware of the changes until they filed their 1993 tax returns.
Whether or not you're someone whose tax bill increased as a result of these
changes, it may make sense to consider ways to keep more of what you earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center. We look forward to
talking with you.
Best regards,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 6 LIFE OF
MONTHS FUND
Global Balanced 19.50% 44.17%
Morgan Stanley World Index 11.11% 30.16%
Salomon Brothers World Government Bond Index 5.02% 12.22%
Average Global Flexible Portfolio Fund 14.10% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, or since the fund started on
February 1, 1993. For comparison, you can look at both the performance of
the Morgan Stanley World Index - a common proxy for stocks across the world
- - - and the performance of the Salomon Brothers World Government Bond Index,
a broad measure of government bonds across the world. You can also look at
the average global flexible fund, which reflects the performance of 21
global flexible portfolio funds tracked by Lipper Analytical Services.
These benchmarks include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIOD ENDED JANUARY 31, 1994 LIFE OF
FUND
Global Balanced 44.17%
Morgan Stanley World Index 30.16%
Salomon Brothers World Government Bond Index 12.22%
Average Global Flexible Portfolio Fund n/a
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year. Since the fund is one day short of a year old, the return
is an annualized number.
$10,000 OVER LIFE OF FUND
Global Balanced MS World Index SB World Gov't Bond
02/01/93 10000.00 10000.00 10000.00
02/28/93 10490.00 10233.90 10197.00
03/31/93 11161.12 10824.22 10354.03
04/30/93 11752.77 11322.89 10572.50
05/31/93 11983.41 11580.84 10678.23
06/30/93 11853.13 11480.71 10655.80
07/31/93 12064.61 11714.25 10685.64
08/31/93 12759.49 12248.33 11007.28
09/30/93 12696.03 12019.10 11138.27
10/31/93 13268.93 12347.41 11119.33
11/30/93 13115.48 11646.04 11040.38
12/31/93 13738.72 12213.06 11134.23
01/31/94 14417.31 13015.73 11222.00
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Global Balanced Fund on February 1, 1993, when the fund started. As the
chart shows, by January 31, 1994, the value of your investment would have
grown to $14,417 - a 44.17% increase on your initial investment. For
comparison, look at how both the Morgan Stanley World Index and Salomon
Brothers World Government Bond Index did over the same period. With
dividends reinvested, the same $10,000 investment in the Morgan Stanley
World Index would have grown to $13,016 - a 30.16% increase. If you had put
$10,000 in the Salomon Brothers World Government Bond Index, it would have
grown to $11,222 - a 12.22% 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 Bob Haber,
Portfolio Manager of Fidelity Global Balanced Fund
Q. BOB, HOW DID THE FUND PERFORM?
A. Very well. Over the past six months, the fund had a total return of
19.50%. That beat the average global flexible portfolio fund tracked by
Lipper Analytical Services, which returned 14.10% during the same period.
The fund also topped the 11.11% return of the Morgan Stanley World Index
and the 5.02% return of the Salomon Brothers World Government Bond Index.
Q. WHAT BOOSTED PERFORMANCE?
A. Over the past six months, the fund's stocks have generally outperformed
its bonds. Fortunately, the fund had its heaviest concentration - 36.6% on
January 31 - in stocks. It also helped to have a lower percentage of the
fund's investments in U.S. and Japanese stocks than the Morgan Stanley
index. U.S. stocks did well, but not nearly as well as most other world
markets. Japanese stocks rallied in the first half of the year, but a
prolonged recession and political instability dragged the market down
sharply through December. I sold most of the fund's stake in Japan in late
summer, and began buying again in January when these stocks had better
valuations - prices compared to other measures like earnings. It turned
out, during the last half of 1993 and through January, I found many of the
fund's best performers in Europe.
Q. WHY EUROPE?
A. The European economy is struggling to emerge from a recession, much the
same way the United States was in 1992. Many European governments have
begun to try to stimulate economic growth by lowering interest rates. As
happened in the U.S., falling rates have boosted European stocks. I went in
with a "bottoms up" approach, which simply meant I invested on a
stock-by-stock basis rather than betting heavily on a given sector or
country. I focused on companies that had worked hard to restructure and cut
costs during the worst of times. I especially looked for those with low
stock valuations and good business prospects. These companies were poised
to take off when rates fell and stocks picked up.
Q. CAN YOU GIVE US SOME EXAMPLES?
A. Sure. Although there were many strong performers, three companies come
to mind. MacIntosh Confectionary Works is a retailer and Samas-Groep is an
office supply company; both are based in the Netherlands. Kverneland is a
manufacturer of farm machinery in Norway. Their industries couldn't be more
different, but these companies shared the attributes I just discussed. They
also had in common very impressive stock returns.
Q. DID ANY THEMES EMERGE?
A. Yes. Although I picked the stocks one by one, European cyclicals - those
stocks that rise and fall in tandem with the economy - emerged as a group
that helped the fund immensely. The last stock I mentioned, Kverneland, is
an example. Also, Bucher Holding, a Swiss farm equipment manufacturer and
Rautaruukki, a Finnish steel company, performed well. In addition, falling
interest rates helped the profit margins of European banks and financial
institutions. The stock of French banker/broker Comp Par Reescompte (CPR)
is up about 50% over the past six months, and I think it has even more
potential. In contrast, I've cut way back on the fund's financial stocks in
the United States. As U.S. rates leveled out last fall, many investors in
this sector took profits. These stocks looked much less attractive in the
second half of 1993.
Q. WHERE DID YOU FIND OPPORTUNITIES IN BONDS?
A. Again, I leaned heavily on Europe, where falling interest rates pushed
up bond prices. I concentrated on government bonds with longer maturities -
which had the strongest price gains when rates dropped -mainly in France
and Denmark. That said, the fund also benefited from declines in short-term
interest rates in Europe. I bought securitized notes, which are issues that
are designed to capitalize on downward movements in short-term rates. In
addition, I looked for bonds in emerging markets.
Q. WHAT DID YOU FIND?
A. The two most attractive emerging market countries were Argentina and
Mexico. I bought mostly dollar-denominated bonds. These issues did well as
long-term rates fell in the United States, because their performance is
tied to those rates. Also, the credit quality - the issuer's ability to
meet both interest and principal payments - of government bonds issued by
both Argentina and Mexico was upgraded recently. This pushed up the prices
on these bonds.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. They're in no way related, but I had two big regrets over the past six
months. First, I held on to our natural gas stocks, particularly those in
Canada, far too long. As oil prices plummeted this fall, so did many energy
stocks. Investors had bid up the prices of natural gas stocks to very high
levels, and they corrected sharply. I've since reduced the fund's stake in
energy, but definitely didn't get out in time. Second, the fund's
performance, though good, would have been better had I invested in some of
the Far East markets. Six months ago, I thought stocks in Hong Kong were
way overpriced, so I stayed away. Well, they just kept going up right
through the end of the year; the Hong Kong market returned 117% in 1993, in
U.S. dollars.
Q. WHAT'S AHEAD FOR THE FUND?
A. I see a much more difficult investing environment, with fewer options.
Interest rates in the U.S. look like they've bottomed out, and I think the
bulk of the rate drop in Europe may be behind us. That would mean there
isn't much room for bond prices to move up, and interest-rate sensitive
stocks may have seen their best gains. So many world stock markets had such
outstanding performance in 1993, you have to wonder how much more is left
in them. Take, for example, Switzerland, where stocks were up roughly 50%
last year. How many years has the Swiss market returned 50%? My guess would
be not many. That said, I still believe the stocks and bonds I've chosen
for the fund have potential. For example, I invested pretty heavily in
Japan in January, and the Japanese market has begun to rally. Also, I'll
continue to look for value-oriented cyclical stocks whose performance may
be tied to improving economies around the world.
FUND FACTS
GOAL: to provide as much
income as possible while
preserving capital, by
investing in stocks and bonds
from around the world
START DATE: February 1, 1993
SIZE: as of January 31,
1994, over $465 million
MANAGER: Robert Haber,
since February 1993;
manager,
Fidelity Balanced Fund, since
June 1988; and Fidelity
Advisor Income &
Growth Fund, since January
1987
(checkmark)
BOB HABER ON THE SHIFTING
MARKETPLACE:
"Some stock market cycles take
years to play out. In 1993, we
saw the culmination of a
movement away from consumer
non-durable stocks. Many of the
traditional big-name consumer
product companies could no
longer raise prices. It happened
because consumers showed
they were no longer willing to
pay full price for much of
anything, and flocked to generic,
off-brands.
"After a successful run in the
80's and early 90's, I see the
market shifting away from
consumer companies and
toward producer businesses.
Many of these are cyclical
companies that have benefited
from a better economy, part of
what I would call basic heartland
industries: iron and steel, metals
and mining, paper and forest
products, and industrial
manufacturing. These are the
companies I think will be able to
raise prices over the next few
years. They'll be a major
investing theme for the fund."
(bullet) On January 31, the fund had
a 1.6% stake in Japanese
stocks and an additional stake
in Japanese futures contracts
equal in size to 8.6% of the
fund's total investments. These
instruments allow the fund to
participate in broad market
moves, until specific stocks
can be found to replace them.
(bullet) 59.6% of the fund was
invested outside the United
States on January 31, down
from 69.9% six months ago.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
NBM-Amstelland NV 0.8 0.0
(Netherlands)
Sherritt Gordon Mines Ltd. 0.8 0.0
(Canada)
MacIntosh Confectionary Works
(Netherlands) 0.8 0.9
Gurit Hererlin AG (Switzerland) 0.8 0.0
Kverneland Gruppen AS
(Norway) 0.7 0.8
TOP FIVE BONDS AS OF JANUARY 31, 1994
(BY ISSUER, WITH MATURITIES MORE THAN % OF FUND'S % OF FUND'S
ONE YEAR) INVESTMENTS INVESTMENTS
6 MONTHS AGO
Argentina Republic (various issues) 11.1 6.9
Mexican Government (various 3.3 0.8
issues)
Danish Government (various 2.8 3.0
issues)
Brazilian Government (various 2.8 1.0
issues)
U.S. Treasury Note 5 3/4%, 1.9 0.0
8/15/03
TOP FIVE COUNTRIES AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
United States of America 27.2 18.2
Argentina 11.4 7.8
Canada 6.3 1.8
Mexico 5.1 11.5
France 4.1 6.0
ASSET ALLOCATION
AS OF JANUARY 31, 1994* AS OF JULY 31, 1993**
Row: 1, Col: 1, Value: 16.0
Row: 1, Col: 2, Value: 13.1
Row: 1, Col: 3, Value: 34.3
Row: 1, Col: 4, Value: 36.6
Stocks 45.2%
Bonds 29.3%
Convertible
securities 9.1%
Other securities
& short-term
investments 16.4%
Stocks 36.6%
Bonds 34.3%
Convertible
securities 13.1%
Other securities
& short-term
investments 16.0%
Row: 1, Col: 1, Value: 16.4
Row: 1, Col: 2, Value: 9.1
Row: 1, Col: 3, Value: 29.3
Row: 1, Col: 4, Value: 45.2
* FOREIGN
INVESTMENTS 59.6%
** FOREIGN
INVESTMENTS 69.9%
INVESTMENTS JANUARY 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 36.4%
SHARES VALUE (NOTE 1)
(000S)
ARGENTINA - 0.2%
Astra Comp Argentina de Petroleum 122,000 $ 338,672
Perez Companc Class B (b) 63,400 457,093
795,765
AUSTRALIA - 1.0%
Bridge Oil Ltd. 4,060,000 1,756,762
FAI Insurance Ltd. Ord. 1,782,000 1,706,329
Kidston Gold Mines 28,900 55,556
Parbury Ltd. (b) 1,636,000 696,298
Pasminco Ltd. 102,800 149,489
QNI Ltd. 809,880 815,776
Sons of Gwalia 1,000 6,675
5,186,885
AUSTRIA - 0.6%
Austria Fund, Inc. 82,000 922,500
Austria Mikro Systems International (b)(e) 40,500 2,136,198
3,058,698
BELGIUM - 0.3%
Tessenderlo Chemie NV 2,200 562,570
Union Miniere SA (b) 12,550 987,719
1,550,289
CANADA - 4.5%
Abitibi-Price Inc. 1,000 12,697
Abitibi Price, Inc. Inst. rpts. 6,400 30,097
Alcan Aluminium Ltd. 70,000 1,705,165
Brunswick Mining & Smelting Ltd. 6,700 46,001
Canadian Natural Resources Ltd. (b) 65,000 959,802
Canadian Pacific Forest Products Ltd. (b) 51,600 786,201
Canfor Corp. (b) 900 31,658
Cascades, Inc. 430,400 2,671,682
Chateau Stores of Canada Ltd.Class A (b) 23,200 209,473
Cominco Fertilizer Ltd. (b) 53,000 1,036,831
Cominco Ltd. (b) 61,300 951,290
Czar Resources Ltd. (b) 541,500 884,125
Domtar, Inc. (b) 216,200 1,321,715
Donohue, Inc. 1,000 19,093
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CANADA - CONTINUED
Dreco Energy Services Ltd. Class A (b) 400 $ 4,400
Encal Energy Ltd. (b) 109,100 324,251
Finning Ltd. 64,100 1,024,886
Glamis Gold Ltd. 3,450 24,660
Inco Ltd. 44,900 1,237,322
International Forest Products Class A (b) 12,500 191,631
Inverness Petroleum Ltd. (b) 8,000 63,203
Jordan Petroleum Ltd. Class A (b) 45,000 317,426
Mark Resources, Inc. (b) 74,400 489,824
Noranda, Inc. 1,000 20,033
Northstar Energy Corp. (b) 27,300 575,148
Numac Energy, Inc. 14,600 103,987
Petromet Resources Ltd. Ord. (b) 124,000 676,422
Poco Petroleums Ltd. (b) 119,900 947,256
QUNO Corp. 7,900 154,547
Renaissance Energy Ltd. (b) 9,200 207,667
Rio Alto Exploration Ltd. (b) 41,000 269,930
Sceptre Resources Ltd. (b) 29,300 302,711
Sherritt Gordon Mines Ltd. (b) 463,400 4,096,873
Slocan Forest Products Ltd. 9,300 231,792
Summit Resources Ltd. 65,000 440,164
Tarragon Oil & Gas Ltd. (b) 15,200 185,847
Ulster Petroleums Ltd. (b) 52,700 158,610
Weldwood Canada Ltd. 5,000 86,058
22,800,478
DENMARK - 0.3%
Spar Nord Holding (b) 20,800 797,794
Syds-Sonderjylland Holding (b) 27,300 852,294
1,650,088
FINLAND - 0.4%
Kone Corp. Class B Ord. 14,400 1,820,470
Outokumpu Oy Class A (b) 1,000 15,762
1,836,232
FRANCE - 2.1%
Arbel SA 6,710 661,904
CPR (Comp Par Reescompte) 11,050 1,088,659
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FRANCE - CONTINUED
de Dietrich et CIE 3,900 $ 1,520,917
Elf Gabon 6,950 1,364,620
ICBT Groupe SA (b) 12,000 756,382
Inst. de Devel des. Ind. Agr. 3,150 144,994
Michel Thierry SA 5,098 606,132
Montupet SA 12,770 1,362,133
Paribas SA (Cie Financiere) Class A (b) 12,700 1,166,998
Scor SA 10,300 1,067,176
Sligos 12,000 1,282,038
11,021,953
GERMANY - 0.0%
Wanderer Werke AG 1,373 250,780
HONG KONG - 0.2%
Wah Kwong Shipping Holdings Ltd. 401,000 768,428
HUNGARY - 0.0%
Pick Szeged sponsored GDS (rights) (b)(e) 1,000 95,000
INDIA - 0.0%
Indian Rayon & Industrial GDR (e) 3,100 75,950
Indo Gulf Fertilizer and Chemicals GDR (e) 7,000 34,300
Videocon International Ltd. GDR (b) 6,000 61,500
171,750
IRELAND - 0.5%
Aran Energy (b) 742,700 290,782
Smurfit (Jeff) Group PLC (U.K.) 414,600 2,239,323
2,530,105
JAPAN - 1.6%
Daiwa Securities 133,000 2,190,156
Kagoshima Bank Ltd. 4,000 27,231
Marui Co. Ltd. 54,000 869,365
Nomura Securities Co. Ltd. 65,000 1,388,445
Secom Co. Ltd. 49,000 3,232,107
Shinetsu Chemical Y50 30,000 524,379
Taisei Rotec Corp. 1,000 10,396
Takasago Thermal Engineering Co. 1,000 14,351
Toho Bank Ord. 16,000 112,015
8,368,445
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
KOREA (SOUTH) - 0.5%
Korea Fund, Inc. (b) 37,600 $ 944,700
Korea Equity Fund (b) 50,000 749,400
Korean Investment Fund, Inc. (b) 43,000 704,125
2,398,225
MEXICO - 0.2%
Mexico Equity & Income Fund 25,000 612,500
Mexico Fund, Inc. (The) 10,000 392,500
1,005,000
NETHERLANDS - 3.6%
Akzo NV Ord. 12,000 1,300,118
Bam Groep NV 31,600 2,179,423
Draka Holding NV 16,600 350,301
Frans Maas Groep NV (Koninkji) 100 2,857
Getronics NV 63,700 1,606,516
MacIntosh Confectionary Works (b) 126,500 4,036,749
NBM-Amstelland NV 491,200 4,146,214
Samas-Groep NV 45,500 1,365,304
Twentsche Kabel Holding NV 20,450 2,399,815
Vredestein NV 93,800 796,593
18,183,890
NEW ZEALAND - 0.7%
Air New Zealand Ltd. Class B 347,000 1,025,170
Brierley Investments Ltd. 3,165,059 2,571,452
3,596,622
NORWAY - 1.6%
Kverneland Gruppen AS (b) 375,400 3,476,835
Norsk Forsvarsteknologi AS 3,700 69,530
Orkla AS:
Class B (non-vtg.) 20,300 787,471
Class A Free shares 74,400 2,916,061
Saga Petroleum Class B 48,300 582,873
Veidekke AS 5,500 162,415
7,995,185
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SOUTH AFRICA - 0.8%
Anglo American Corp. of South Africa Ltd. 500 $ 21,882
Anglo American Corp. of South Africa Ltd. ADR (b) 1,000 44,500
Anglo American Gold Investment Co. Ltd. ADR 17,400 147,356
Buffelsfontein Gold Mining Co. Ltd.:
ADR 22,700 249,700
Ord. 500 5,483
Driefontein Consolidated Ltd.:
ADR 40,100 496,238
Ord. 6,000 72,244
East Rand Proprietary Mines 400,000 565,292
East Rand Proprietary Mines Ltd. ADR 650,000 877,500
Free State Consolidated Gold Mines Ltd.:
ADR 6,200 87,575
Ord. 7,000 99,559
Orange Free State Investments Ltd.
ADR 10,400 387,400
Ord. 2,100 75,975
Vaal Reefs Exploration & Mining Co. Ltd.:
ADR 15,600 144,300
(Reg.) 500 44,895
Western Deep Levels Ltd.:
ADR 14,800 536,500
Ord. 2,100 74,551
3,930,950
SPAIN - 1.0%
Argentaria Corp. Bancaria de Esp 36,000 1,711,288
Construcciones Y Aux de Ferr (b) 26,200 1,550,252
Hullas Del Coto Cortes SA 51,200 1,193,162
Interclisa/Carrier (Bearer) 59,500 461,629
Prosegur Comp Securidad SA (Reg.) 11,000 212,769
Union Electrica Fenosa 43,200 227,247
5,356,347
SWEDEN - 0.5%
Aktiebolaget Electrolux 9,000 414,789
Forcenergy AB 'B' Free shares 33,000 356,132
Getinge Class B (b) 15,000 455,163
Trelleborg AB Class B Free shares (b) 106,300 1,261,894
2,487,978
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SWITZERLAND - 1.4%
Bobst SA 100 $ 125,687
Gurit Hererlin AG 2,000 3,914,835
Keramik Holdings PC (b) 4,250 2,568,681
Reisebuero Kuoni 325 446,429
7,055,632
UNITED KINGDOM - 1.5%
British Borneo Petroleum 123,100 426,352
British Petroleum PLC ADR 32,300 2,204,475
Canning (W) PLC 90,000 250,724
Clinton Cards PLC 401,000 983,699
Clyde Petroleum (b) 270,000 195,159
Cook (D.C.) Holdings PLC 1,444,200 869,899
Excalibur Group PLC 1,300,000 900,497
Heath International Holdings (CE) 188,300 1,236,286
Resort Hotels PLC 570,000 347,626
Whitecroft PLC (b) 35,000 55,340
7,470,057
UNITED STATES OF AMERICA - 12.9%
Agricultural Minerals Co. LP 1,500 43,875
Allergan, Inc. 2,800 65,079
Amdahl Corp. 51,500 366,938
Amerada Hess Corp. 38,400 1,862,400
American President Companies Ltd. 30,300 943,088
Anadarko Petroleum Corp. 2,100 99,750
Ashland Oil, Inc. 4,000 150,000
Atlantic Richfield Co. 19,100 2,110,550
BP Prudhoe Bay Royalty Trust (UBI) 2,200 56,925
Basin Exploration, Inc. (b) 1,000 12,750
Bearings, Inc. 3,700 119,788
Bowater, Inc. 1,000 24,000
Brandon Systems Corp. 2,100 27,300
Burlington Resources, Inc. 28,600 1,376,375
CMG Information Services 125,000 1,000,000
Cabot Oil & Gas Corp. Class A 5,700 126,113
Cadmus Communications Corp. 22,200 310,800
Casey's General Stores, Inc. 5,900 147,500
Centerior Energy Corp. 16,000 210,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED STATES OF AMERICA - CONTINUED
Chart House Enterprises, Inc. (b) 28,300 $ 346,675
Chesapeake Corp. 35,300 900,150
Chiles Offshore Corp. (b) 45,800 234,725
Coastal Corp. (The) 44,500 1,373,938
Coda Energy, Inc. 50,000 281,250
Columbia Gas System, Inc. (The) (b) 19,700 494,963
Comdisco, Inc. 11,400 269,325
Consolidated Freightways, Inc. (b) 19,900 517,400
Consolidated Natural Gas Co. 2,100 96,600
Cray Research, Inc. (b) 24,400 765,550
Curaflex Health Services, Inc. (b) 59,100 317,663
Dean Foods Co. 4,700 152,750
Devon Energy Corp. 12,500 257,587
Digital LinkCorp. 500 7,000
Dresser Industries, Inc. 14,700 321,413
ENSERCH Corp. 29,600 536,500
Elco Industries, Inc. 2,200 46,750
Energy Ventures, Inc. (b) 50,000 730,000
Fabri-Centers of America, Inc. (b) 35,800 626,500
First Chicago Corp. 20,200 949,400
First Mississippi Corp. 10,500 158,813
Freeport McMoRan Resource Partners LP (depositary units) 34,900 693,638
GEON 22,200 599,400
Galey & Lord, Inc. (b) 10,800 176,019
Gaylord Container Corp. Class A (b) 300 2,025
Geneva Steel Class A (b) 60,300 1,183,388
Georgia Gulf Corp. (b) 40,100 972,425
Georgia-Pacific Corp. 33,900 2,550,975
Healthinfusion, Inc. (b) 40,200 276,375
Hornbeck Offshore Services, Inc. (b) 12,000 195,216
Hugoton Energy Corp. 5,000 60,000
IMC Fertilizer Group, Inc. 28,000 1,221,500
Inland Steel Industries, Inc. (b) 15,300 537,413
Input/Output, Inc. (b) 29,400 841,575
Intel Corp. 10,500 685,125
International Business Machines Corporation 28,900 1,640,075
Key Production Co., Inc. (b) 44,100 132,300
Kimball International, Inc. Class B 500 15,625
LTV Corp. (b) 20,000 352,500
Lillian Vernon Corp. 6,400 109,600
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED STATES OF AMERICA - CONTINUED
Longview Fibre Co. 60,000 $ 1,297,500
Louis Dreyfus Natural Gas Corp. (b) 5,400 110,700
Lousiana Land & Exploration Co. 1,000 41,625
Louisiana-Pacific Corp. 15,600 690,300
Luria (L.) & Son, Inc. (b) 61,900 851,125
Marine Drilling Cos., Inc. (b) 1,000 5,500
Maxxim Medical, Inc. 18,100 325,800
May Department Stores Co. (The) 1,000 39,500
Medisys, Inc. 1,000 3,469
Mesa, Inc. (b) 21,800 152,600
National Steel Corp. Class B (b) 50,300 855,100
O'Charleys, Inc. (b) 18,000 265,500
Oceaneering International, Inc. (b) 23,300 319,792
Offshore Logistics, Inc. (b) 7,100 109,163
One Price Clothing Stores, Inc. (b) 3,200 58,000
Oryx Energy Co. 1,000 18,000
Oshkosh B'Gosh, Inc. Class A 1,000 17,000
Parker & Parsley Petroleum Co. 1,700 44,625
Parker-Hannifin Corp. 11,400 436,050
Penney (J.C.) Co., Inc. 6,200 324,725
Pennzoil Co. 20,500 1,132,625
Petroleum Helicopters, Inc. (non-vtg.) (b) 28,100 323,150
Plains Petroleum Co. 6,100 170,038
Pope & Talbot, Inc. 13,600 436,900
Prima Energy Corp. (b) 16,000 256,000
Proler International Corp. (b) 150,100 2,176,450
Public Service Co. of New Mexico (b) 1,000 13,250
Redman Industries (b) 3,900 96,525
Republic New York Corp. 6,300 320,513
Rouse Co. (The) 13,900 229,350
Rowan Companies, Inc. (b) 17,300 136,238
San Juan Basin Royalty Trust (UBI) 14,900 141,550
Santa Fe Energy Resources, Inc. 1,000 9,250
Schnitzer Steel, Inc. Class A 35,000 1,085,000
Service Fracturing Co. (b) 48,800 207,400
Simon Properties Group, Inc. (b) 28,000 686,000
Southwestern Energy Co. 23,200 417,600
Sun Microsystems, Inc. (b) 31,000 821,500
Swift Energy Co. (b) 42,000 435,750
TETRA Technologies, Inc. (b) 181,000 1,402,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED STATES OF AMERICA - CONTINUED
Tandem Computers, Inc. (b) 23,000 $ 310,500
Tektronix, Inc. 13,400 378,550
Temple-Inland, Inc. 60,000 3,150,000
Tenneco, Inc. 11,200 644,000
Terra Industries, Inc. (b) 124,000 1,007,500
Texas Instruments, Inc. 22,200 1,559,550
Thor Industries, Inc. 15,800 408,825
Tidewater, Inc. 49,000 1,041,250
UNC, Inc. (b) 16,300 167,075
U.S. Can Corp. (b) 11,600 185,600
USX-Marathon Group 67,000 1,239,500
United Technologies Corp. 28,200 1,899,975
Uno Restaurant Corp. (b) 11,800 101,775
Unocal Corp. 5,000 146,875
VMX, Inc. (b) 376,500 1,882,500
Valmont Industries, Inc. 71,400 1,231,650
Varco International, Inc. (b) 28,600 182,325
Vigoro Corp. 4,100 129,150
Wainoco Oil Corp. (b) 250,000 1,187,500
Wallace Computer Services, Inc. 10,000 332,500
Weatherford International, Inc. (b) 9,300 89,513
Werner Enterprises, Inc. 2,800 82,600
Wheatley TXT Corp. 30,900 363,075
Willamette Industries, Inc. 2,200 126,500
Wiser Oil Co. (The) 4,100 74,825
Wyle Laboratories 18,900 370,913
Xerox Corp. 6,500 637,813
66,079,109
TOTAL COMMON STOCKS
(Cost $163,498,099) 185,643,891
PREFERRED STOCKS - 4.7%
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - 4.5%
AUSTRALIA - 0.0%
TNT Ltd. 8% 112,000 $ 206,563
BERMUDA - 0.2%
Jardine Strategic Holdings Ltd. cumulative 7 1/2% (g) 6,150 931,725
FRANCE - 0.0%
Promodes 5 1/2% (b) 720 139,414
HONG KONG - 0.5%
Amoy Properties Ltd. 5 1/2% (e)(g) 11,700 1,427,400
Dairy Farm International Holdings Ltd. 6 1/2% (b)(g) 8,120 1,084,020
2,511,420
UNITED STATES OF AMERICA - 3.8%
Alco Standard Corp. Series AA, $2.30 (g) 11,100 782,550
Banc One Corp. Series C $3.50 (g) 200 13,450
Bank of New York Co., Inc. 7.75% (g) 9,000 453,375
Barnett Banks, Inc. Series A, $4.50 (g) 1,000 88,500
Battle Gold Co. 2,900 184,150
Chemical Banking Corp. $5.00 (b)(e)(g) 6,700 537,675
Chiles Offshore Corp. $1.50 (b) 7,540 182,845
Echo Bay Finance Corp. Series A, $1.75 23,100 973,088
Equitable Co. $3.00 (g) 17,800 1,210,400
Federal Mogul Corp. $1.9375 (e)(g) 32,300 3,423,800
First Commerce Corp. $1.80 (g) 700 24,150
Ford Motor Co. Series A, $4.20 (g) 14,100 1,577,438
Gensia Pharmaceuticals, Inc. $3.75 (e)(g) 3,300 181,500
Grant Geophysical, Inc. (b) 14,000 136,500
Ico, Inc. $1.6875 24,000 588,000
Kaiser Aluminum Corp. despositary shares
representing 1/10 pfd. Series A, $0.65 99,100 854,738
Newmont Mining Corp. depositary shares
representing 1/2 pfd. $1.375 (e) 34,000 2,227,000
Noble Drilling Corp. $2.25 exch. (b) 11,000 473,000
Norwest Corp. Series B, $3.50 (g) 5,850 453,375
Reynolds Metals Co. $3.31 18,400 1,012,000
Occidental Petroleum Co. $3.00 50,000 2,481,250
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
UNITED STATES OF AMERICA - CONTINUED
Union Planters Corp. Series E, $2.00 (g) 9,100 $ 320,775
Unocal Corp. $3.50 (b)(e) 20,700 1,236,825
19,416,384
TOTAL CONVERTIBLE PREFERRED STOCKS 23,205,506
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
CANADA - 0.1%
Gulf Canada Resources Ltd. (b) (i) 279 837
Gulf Canada Resources Ltd. Series 1, adj. rate 105,221 328,816
329,653
ITALY - 0.1%
SIP (Societa Ital Per L'Eser) Spa Di Risp Ord. 195,000 429,007
Stet Societa Finanziaria Telefonica Spa 100,000 226,761
655,768
TOTAL NONCONVERTIBLE PREFERRED STOCKS 985,421
TOTAL PREFERRED STOCKS
(Cost $23,088,630) 24,190,927
CORPORATE BONDS - 11.1%
MOODY'S RATINGS (D) PRINCIPAL
(UNAUDITED) AMOUNT (A)
CONVERTIBLE BONDS - 8.6%
CANADA - 1.0%
Canadian Pacific 7 1/2%, 2/8/04 - CAD 218,000 196,832
Domtar, Inc. 8%, 3/18/03 - CAD 480,000 516,459
Horsham Corp. 3 1/4%, 12/10/18 - 728,000 713,440
Repap Enterprises Corp.:
8 1/2%, 8/1/97 - 200,000 180,000
9%, 6/30/98 - CAD 1,700,000 1,023,287
Stone Consolidated Corp. 8%, 12/31/03 - CAD 2,460,000 2,406,230
5,036,248
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
GRAND CAYMAN - 0.0%
PIV Invt. 4 1/2%, 12/1/00 (e) - $ 240,000 $ 237,000
JAPAN - 0.7%
Bridgestone:
3.7%, 12/31/98 - JPY 29,000,000 329,628
3.8%, 12/31/99 - JPY 43,000,000 487,195
Canon, Inc. 1.3%, 12/19/08 A JPY 47,000,000 487,189
Kokusai Securities:
1.7%, 10/9/97 - JPY 7,000,000 64,367
1.8%, 10/8/99 - JPY 4,000,000 35,510
Matsushi A 2.7%, 5/31/12 - JPY 53,000,000 603,667
Nishimatsu 3.9%, 3/31/99 - JPY 21,000,000 237,519
Sony Corp. 1.4%, 9/30/03 (c) Aa3 JPY 109,000 1,216,497
3,461,572
LUXEMBOURG - 0.3%
Softe SA euro 4 1/4%, 7/30/98 (c) - ITL 2,250,000 1,611,987
NEW ZEALAND - 0.1%
Brierley Investments Ltd. 9%, 6/30/98 - NZD 707,300 534,464
SWEDEN - 0.3%
Ericsson (L.M.) 4 1/4%, 6/30/00 (g) A2 SEK 4,804,000 823,407
Investor AB 8%, 6/1/01 (g) - SEK 5,350,000 988,313
1,811,720
UNITED KINGDOM - 0.2%
Carlton Communications 7 1/2%, 8/14/07 (g) A2 GBP 85,000 199,676
Daily Mail General Trust PLC 8 3/4%,
9/27/05 (g) - GBP 310,000 791,249
990,925
UNITED STATES OF AMERICA - 6.0%
Arrow Electronics, Inc. 5 3/4%, 10/15/02 (g) Ba3 341,000 477,400
Aspect Telecommunication Corp. 5%,
10/15/03 (e)(g) B3 492,000 600,240
Bank of New York Co., Inc. 7 1/2%, 8/15/01 Baa1 20,000 30,500
Box Energy Corp. 8 1/4%, 12/1/02 B3 910,000 1,233,050
Carnival Cruise Lines, Inc. 4 1/2%, 7/1/97 (g) Baa2 1,999,000 3,068,465
Cellular Communications
Puerto Rico, Inc. 8 1/4%, 8/1/00 (g) Caa 709,000 1,254,930
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
UNITED STATES OF AMERICA - CONTINUED
Century Telephone Enterprises, Inc. 6%,
2/1/07 (e)(g) Baa3 $ 108,000 $ 130,680
Cincinnati Financial Corp. 5 1/2%, 5/1/02 (g) A2 521,000 669,485
Clayton Homes, Inc. 7 3/4%, 3/1/03 (g) Ba2 60,000 152,400
Coeur D'Alene Mines Corp. Idaho 7%, 11/30/02 B2 540,000 766,800
Comcast Corp. 7%, 2/27/01 (g) B1 80,000 133,600
Delta Air Lines, Inc. 3.23%, 6/15/03 Ba3 2,210,000 1,834,300
Dibrell Brothers, Inc. 7 3/4%, 9/30/06 (g) B1 13,000 17,680
General Instrument Corp. 5%, 6/15/00 (g) B1 986,000 1,373,005
Hasbro Corp. 6%, 11/15/98 (g) A3 32,000 39,360
Homestake Mining Co. 5 1/2%, 6/23/00 (e) Ba3 40,000 48,000
Horizon Healthcare Corp. 6 3/4%, 2/1/02 (g) B3 140,000 259,700
Lowe's Companies, Inc. 3%, 7/22/03 (g) Baa1 1,925,000 2,430,312
Mark IV Industries, Inc. 6 1/4%, 2/15/07 (g) B1 1,138,000 1,615,960
Mattel, Inc. 8%, 3/15/01 (g) Ba1 90,000 157,500
News America Holdings, Inc. gtd. exch.
0%, 3/31/02 (g) Ba3 120,000 104,400
Office Depot , Inc. liquid yield option notes 0%,
12/11/07 (g) Ba2 669,000 501,750
Omnicom Group, Inc. euro 6 1/2%, 7/27/04 (g) Baa3 700,000 1,237,250
Orbital Sciences Corp. 6 3/4%, 3/1/03 (g) Caa 284,000 404,700
Owens-Corning Fiberglas Corp. 8%,
12/31/05 (e)(g) Ba1 1,178,000 1,802,340
Riverwood International Corp. 6 3/4%, 9/15/03 - 760,000 934,800
Sensormatic Electronics Corp. 7%, 5/15/01 (g) Ba2 161,000 342,125
Solectron Corp. liquid yield option notes 0%,
5/15/12 (g) B1 140,000 78,400
South Carolina National Corp. euro 6 1/2%,
5/15/01 (g) A1 200,000 359,000
Sports and Recreation 4 1/4%, 11/1/00 (g) B2 97,000 109,125
Stone Container Corp. 8 7/8%, 7/15/00 (e) B2 1,982,000 3,300,030
Sysco Corp. liquid yield option notes 0%,
10/12/04 (g) A2 150,000 101,344
TPI Enterprises, Inc. gtd. 8 1/4%, 7/15/02 (g) B3 730,000 1,142,450
Thermo Electron Corp.:
4 5/8%, 8/1/97 (e)(g) Ba1 1,590,000 2,353,200
6 3/4%, 2/15/01 (e) Ba2 91,000 171,080
euro 6 3/4%, 2/15/01 Ba2 10,000 18,900
Unisys Corp. 8 1/4%, 8/1/00 (g) B2 85,000 117,300
Wendy's International, Inc. 7%, 4/1/06 (g) Baa3 360,000 561,600
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
UNITED STATES OF AMERICA - CONTINUED
West One Bancorp 7 3/4%, 6/30/06 (g) Baa1 $ 292,000 $ 455,520
Whirlpool Corp. liquid yield option notes 0%,
5/14/11 (g) Baa1 60,000 29,475
30,418,156
TOTAL CONVERTIBLE BONDS 44,102,072
NONCONVERTIBLE BONDS - 2.5%
ARGENTINA - 0.1%
Alpargatas SA euro 9%, 3/15/98 - 540,000 507,600
AUSTRALIA - 0.2%
FAI Financial Services Corp. 5 5/8%, 4/3/98 - CHF 1,000,000 604,396
TNT Finance Ltd.:
5%, 8/19/95 - CHF 100,000 64,560
4 7/8%, 2/4/98 - CHF 200,000 123,626
792,582
AUSTRIA - 0.0%
Ansett Transportation Industries Ltd.
5 3/8%, 1/27/95 - CHF 50,000 32,109
CANADA - 0.4%
Mark Resources, Inc. 8%, 11/30/04 B1 CAD 2,140,000 1,618,223
Ontario Hydro euro 9%, 6/24/02 Aa2 600,000 521,425
2,139,648
CHILE - 0.2%
Compania de Telefonos de Chile yankee bonds
4 1/2%, 1/15/03 (g) Baa3 726,000 1,172,490
FRANCE - 0.1%
Credit Local De France 8 7/8%, 6/10/02 Aaa FRF 3,000,000 607,643
MEXICO - 1.3%
Bancomer SA 9%, 6/1/00 (e) - 1,000,000 1,090,000
Controladors Commercial Mexicana SA de CV:
euro 8 3/4%, 4/21/98 - 110,000 116,462
8 3/4%, 4/21/98 (e) - 250,000 264,688
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEXICO - CONTINUED
Desc (Soc De Fomento Indust) euro 11%,
12/15/97 - $ 100,000 $ 113,750
First Mexican Acceptance Corp. euro 10 3/4%,
9/15/96 - 500,000 522,170
Grupo Dina (Consorcio G):
euro 10 1/2%, 11/18/97 - 200,000 221,500
10 1/2%, 11/18/97 (e) - 100,000 110,750
Grupo Embotellador de Mexico euro 10 3/4%,
11/19/97 Ba2 200,000 226,000
Hylsa de CV 11%, 2/23/98 (e) - 700,000 764,750
ICA euro 9 3/4%, 2/11/98 - 131,000 145,410
Offshore Mexican Bond Ltd. secured 0%,
7/20/94 (e) - 1,000,000 1,380,000
Third Mexican Acceptance Corp. coll. notes gtd.
by Grupo Sidek SA and Grupo Situr SA
10 1/2%, 3/15/98 (e) - 750,000 784,260
Tribasa Tol Road Trust 10 1/2%, 12/1/11 (e) - 800,000 848,000
6,587,740
SOUTH AFRICA - 0.2%
ESKOM 11%, 6/1/08 - ZAR 1,800,000 367,396
Transnet Ltd. (ELFI IV) 4 1/2%, 4/1/94 - ZAR 1,420,000 434,804
802,200
TOTAL NONCONVERTIBLE BONDS 12,642,012
TOTAL CORPORATE BONDS
(Cost $51,569,095) 56,744,084
GOVERNMENT OBLIGATIONS - 31.8%
ARGENTINA - 11.1%
Argentina Republic BOCON:
0.40%, 4/1/01 - ARP 5,599,269 4,538,350
3 1/4%, 4/1/01 B1 7,324,250 6,344,136
3.1875%, 9/1/02 - 11,577,236 9,539,816
3.1875%, 4/1/07 B1 1,684,448 1,308,816
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
ARGENTINA - CONTINUED
Argentina Republic BOCON Peso (f):
3.9775%, 9/1/02 - ARP 3,671,661 $ 2,786,182
3.9775%, 4/1/07 - ARP 8,408,086 6,087,031
Argentina Republic BOTE 2.058806%,
4/1/96 (f) - 700,000 436,330
Argentina Republic Brady:
euro 4%, 3/31/23 B1 17,500,000 12,271,875
4%, 3/31/23 (e) - 250,000 175,312
euro 4 1/4%, 3/31/23 B1 1,000,000 870,000
Argentina Republic (f):
euro 4.1875%, 3/31/05 - 13,500,000 11,896,875
4.1875%, 3/31/05 - 250,000 220,312
56,475,035
BRAZIL - 2.8%
Siderurgica Brasileiras SA inflation indexed
6%, 8/15/99 - BRC 3,545,700 550,550
Brazilian Federative Republic IDU euro 8 3/4%,
1/1/01 B2 16,087,500 13,835,250
14,385,800
CANADA - 0.3%
Canadian Government 9 3/4%, 6/1/21 Aaa CAD 550,000 545,634
Quebec Province 7 1/2%, 12/1/03 A1 CAD 1,000,000 778,752
1,324,386
DENMARK - 2.8%
Danish Government Bullet:
9%, 11/15/98 Aa1 DKK 2,700,000 461,443
9%, 11/15/00 Aa1 DKK 12,000,000 2,101,523
8%, 5/15/03 Aa1 DKK 24,200,000 4,091,286
7%, 12/15/04 Aa1 DKK 49,000,000 7,846,933
14,501,185
FRANCE - 1.9%
French Government OAT:
8 1/2%, 4/25/03 Aaa FRF 12,300,000 2,502,410
6 3/4%, 10/25/03 Aaa FRF 16,500,000 3,021,147
5 1/2%, 4/25/04 Aaa FRF 11,900,000 1,993,945
8 1/2%, 4/25/23 Aaa FRF 9,500,000 2,079,915
9,597,417
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
GERMANY - 0.6%
German Government 6 1/2%, 7/15/03 - DEM 5,000,000 $ 3,025,140
IRELAND - 0.1%
Irish Government 9%, 7/15/01 Aa3 IEP 400,000 677,626
ITALY - 1.7%
Italian Government 11%, 6/1/03 (c) Aa3 ITL 9,500,000 6,416,012
Italian Republic of BTPS 9%, 10/1/98 (c) Aa3 ITL 4,000,000 2,444,995
8,861,007
MEXICO - 3.4%
Mexican Bondes 10.91%, 9/22/94 (f) - MXN 1,500,000 483,232
Mexican Government Brady:
6 1/4%, 12/31/19 Ba3 3,500,000 2,891,875
6 1/4%, 12/31/19 Ba3 10,000,000 8,262,500
6.63%, 12/31/19 Ba2 FRF 36,000,000 4,952,866
Mexican Government Cetes 0%, 4/21/94 - MXN 1,780,000 559,814
Mexican Value Recovery (rights) - 13,000,000 130
17,150,417
MOROCCO - 0.3%
Morocco Trust 4 1/2%, 1/3/09 (e)(f) - 2,000,000 1,667,500
NETHERLANDS - 1.4%
Netherland Government 7 1/2%, 1/15/23 AAA DKK 11,500,000 6,935,277
NEW ZEALAND - 1.1%
New Zealand Government 8%, 4/15/04 Aa NZD 8,000,000 5,372,562
NIGERIA - 0.5%
Nigeria Brady 5 1/2%, 11/15/20 - 4,500,000 2,683,126
SOUTH AFRICA - 0.1%
South African Government 12%, 2/28/05 - ZAR 2,720,000 598,393
SPAIN - 0.1%
Spanish Government 10.30%, 6/15/02 Aa2 ESP 90,000,000 738,342
SWEDEN - 0.1%
Swedish Government 10 3/4%, 1/23/97 Aa2 CHF 3,700,000 525,842
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
TRINIDAD & TOBEGO - 0.0%
Trinidad & Tobego 9 3/4%, 11/3/00 - $ 154,000 $ 159,004
UNITED KINGDOM - 1.1%
United Kingdom Treasury Bond, 9 3/4%,
8/27/02 Aaa GBP 3,000,000 5,526,940
UNITED STATES OF AMERICA - 2.3%
U.S. Treasury Bills, yield at maturity, 2.82%-3.10%,
2/10/94-3/10/94 (h) 1,730,000 1,725,778
U.S. Treasury Notes 5 3/4%, 8/15/03 (h) Aaa 9,700,000 9,766,639
11,492,417
VENEZUELA - 0.1%
Venezuelan Republic (warrants) (b) - 1,008,750 10
Venezuelan Republic yankee 9%, 5/27/96 - 375,000 381,094
381,104
TOTAL GOVERNMENT OBLIGATIONS
(Cost $157,234,170) 162,078,520
OTHER SECURITIES - 2.6%
INDEXED SECURITIES - 2.2%
UNITED STATES OF AMERICA - 2.2%
AIG Matched Funding Corp. note 2.8805%,
9/23/94 (coupon inversely indexed to
HELIBOR and principal indexed to value
of 2-year Finnish securities, both
multiplied by 6) (j) 300,000 332,100
Bankers Trust Company note:
14.4375%, 7/15/94 (indexed to CSK
denom. CEZ a.s. bond 16 1/2%, 6/25/98) 300,000 307,410
3.4375%, 7/26/94 (inversely indexed
to 1-year ITL swap rate, multiplied by 10) 200,000 216,120
4.2075%, 8/31/94 (coupon inversely
indexed to HELIBOR and principal
indexed to value of 2-year
Finnish securities, both multiplied by 6) (j) 100,000 113,650
OTHER SECURITIES - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
INDEXED SECURITIES - CONTINUED
UNITED STATES OF AMERICA - CONTINUED
Bankers Trust Company note: - continued
5 1/4%, 1/19/95 (coupon inversely indexed
to GBP LIBOR and principal indexed to value
of 2-year United Kingdom securities, both
multiplied by 10) (j) $ 1,500,000 $ 1,538,550
0%, 1/24/95 (coupon inversely indexed to
ITL LIBOR and principal indexed to
value of 2-year Italian securities,
both multiplied by 8) (j) 2,000,000 1,927,000
0%,1/31/95 (coupon inversely indexed to
STIBOR and principal indexed to value of
2-year Swedish securities, both multiplied
by 9) (j) 1,200,000 1,215,480
Bayerische Landesbank cert. of dep.
6.2675%, 1/27/95 (coupon inversely indexed
to HELIBOR and principal indexed to value
of 2-year Finnish securities, both multiplied
by 8) (j) 2,000,000 1,938,000
Citibank Nassau (j):
0%, 8/31/94 (coupon inversely indexed to CAD
Banker's Acceptance rate and principal indexed
to value of 1-year Canadian securities, both
multiplied by 11) 1,000,000 1,211,200
0%, 1/31/95 (coupon inversely
indexed to STIBOR and principal indexed to
2-year Swedish securities, both multiplied by 9) 800,000 809,680
ITT Corp. 3.66%, 6/27/94 (inversely indexed to
1-year SEK swap rate, multiplied by 10) 700,000 742,630
Merck & Co., Inc. note 3.78%,1/25/95 (inversely
indexed to2-year SEK swap rate, multiplied
by 10) 100,000 115,020
Merrill Lynch & Co., Inc. Japan Index equity
participation securities 0%, 1/31/00 950,000 980,875
11,447,715
PURCHASED BANK DEBT - 0.4%
ECUADOR - 0.4%
Republic of Ecuador - loan participation thru
Kidder Peabody Emerging Markets, Inc. 3,000,000 1,950,000
TOTAL OTHER SECURITIES
(Cost $12,939,010) 13,397,715
COMMERCIAL PAPER- 0.2%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
MEXICO - 0.2%
Bancomer SNC 0%, 2/3/94 (Cost $1,032,289) - MXN 3,231,881 $ 1,039,822
REPURCHASE AGREEMENTS - 13.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.19%
dated 1/31/94 due 2/1/94 $ 67,272,960 67,267,000
PURCHASED OPTIONS - 0.0%
EXPIRATION DATE/
STRIKE PRICE
Put Option on JPY March 1994
(Cost $79,179) 109.5 JPY/USD 74,980
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $476,707,472) $ 510,436,939
WRITTEN OPTIONS
EXPIRATION DATE/ UNDERLYING FACE UNREALIZED
STRIKE PRICE AMOUNT AT VALUE GAIN/(LOSS)
Call Option on JPY July 1994
(Premium received $73,053) 106.5 JPY/USD $ 74,103 $ (1,050)
THE VALUE OF WRITTEN CALL OPTIONS AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.0%
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
427 Nikkei 225 Futures Contracts March, 1994 $ 43,842,225 $ 3,600,459
21 S&P 500 Futures Contracts March, 1994 5,057,850 23,315
28 S&P 400 Midcap Futures Contracts March, 1994 2,568,300 93,220
44 U.S. Treasury Bond Contracts March, 1994 5,154,875 (21,246)
TOTAL PURCHASES FUTURES CONTRACTS $ 56,623,250 $ 3,695,748
THE VALUE OF FUTURES CONTRACTS PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 11.1%
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
3,726,720 CAD 2/4/94 $ 2,804,022 $ (20,284)
7,484,050 CHF 2/1/94 to 2/16/94 5,140,121 79,561
13,736,500 DKK 2/10/94 2,042,068 (2,815)
272,300,000 ESP 2/2/94 1,943,677 7,666
29,497,500 FRF 2/2/94 5,010,150 43,076
4,941,100,000 IDR 5/3/94 to 5/8/94 2,304,966 13,113
232,252,907 JPY 2/10/94 2,134,404 35,607
1,285,750 MYR 3/18/94 463,332 (36,668)
8,192,400 SEK 2/1/94 1,040,107 3,488
TOTAL CONTRACTS TO BUY
(Payable amount $22,760,103) $ 22,882,847 $ 122,744
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 4.5%
CONTRACTS TO SELL
614,101,978 BEF 2/4/94 to 5/23/94 22,258,365 (256,136)
19,185,390 CAD 2/4/94 to 2/7/94 14,433,751 98,918
17,400,618 CHF 2/1/94 to 3/23/94 12,014,080 (306,711)
5,770,660 DEM 7/18/94 to 4/25/94 3,305,605 (21,477)
80,119,194 DKK 2/7/94 to 2/10/94 11,903,643 (186,105)
917,024,260 ESP 2/2/94 to 5/3/94 6,487,248 27,395
17,078,201 FIM 2/4/94 to 3/23/94 3,095,702 (156,385)
FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL - CONTINUED
277,888,853 FRF 2/2/94 to 4/29/94 $ 46,906,781 $ (252,190)
4,991,819 GBP 3/23/94 to 3/29/94 7,490,750 (68,833)
453,836 IEP 4/29/94 652,408 (5,601)
16,180,942,650 ITL 2/4/94 to 5/3/94 9,341,124 34,068
507,102,907 JPY 2/10/94 to 4/25/94 4,668,630 (20,119)
13,508,542 NLG 4/21/94 to 4/25/94 6,920,173 (51,590)
28,559,868 SEK 2/1/94 to 3/31/94 3,609,666 (62,213)
TOTAL CONTRACTS TO SELL
(Receivable amount $151,860,947) $ 153,087,926 $ (1,226,979)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 30.0%
SECURITIES SOLD SHORT
NUMBER OF SHARES ISSUER VALUE
12,300 Alco Standard Corp. $ 713,937
892,000 Amoy Properties Ltd. 1,420,584
10,200 Arrow Electronics, Inc. 437,325
12,600 Aspect Telecommunications Corp. 519,750
250 Banc One Corp. 9,375
8,800 Bank of New York Co., Inc. 496,100
1,800 Barnett Banks, Inc. 76,050
5,900 Carlton Communications PLC ADR 177,738
54,300 Carnival Cruise Lines, Inc. Class A 2,687,850
48,800 Cellular Communications Puerto Rico, Inc. 1,175,100
4,250 Century Telephone Enterprises, Inc. 115,812
12,600 Chemical Banking Corp. 497,700
10,500 Cincinnati Financial Corp. 611,625
5,900 Clayton Homes, Inc. 149,712
4,300 Comcast, Inc. Class A 136,525
8,700 Compania de Telephonica Chile sponsored ADR 1,101,637
549,900 Dairy Farm International Holdings Ltd. 982,562
600 Dibrell Brothers, Inc. 15,750
36,100 Equitable Co. 1,073,975
15,879 Ericsson (L.M.) Telephone Co. Class B ADR 722,495
89,700 Federal Mogul Corp. 3,240,412
750 First Commerce Corp. 19,594
SECURITIES SOLD SHORT - CONTINUED
NUMBER OF SHARES ISSUER VALUE
22,900 Ford Motor Co. $ 1,534,300
20,100 General Instrument Corp. 1,180,875
5,900 Gensia Pharmaceuticals, Inc. 149,713
1,000 Hasbro Corp. 33,750
11,600 Horizon Healthcare Corp. 255,200
34,300 Investor AB Free B shares 888,387
202,800 Jardine Strategic Holdings Ltd. 892,779
36,800 Lowe's Companies, Inc. 2,244,800
75,000 Mark IV Industries, Inc. 1,546,875
7,000 Mattel, Inc. 159,250
1,800 News Corp. Ltd. ADR 103,950
15,800 Norwest Corp. 416,725
13,000 Office Depot, Inc. 472,875
24,642 Omnicom Group, Inc. 1,207,458
19,700 Orbital Sciences Corp. 374,300
39,269 Owens-Corning Fiberglas Corp. 1,772,014
8,400 Reuter Holdings PLC ADR Class B 754,950
10,050 Sensormatic Electronics Corp. 332,906
2,900 Solectron Corp. 83,013
2,500 Sports and Recreation 98,125
3,400 Sysco Corp. 92,650
111,400 TPI Enterprises, Inc. 1,044,375
52,800 Thermo Electron Corp. 2,263,125
11,300 Union Planters Corp. 278,263
8,300 Unisys Corp. 109,975
10,365 Wachovia Corp. 361,479
24,400 Wendy's International, Inc. 417,850
15,400 West One Bancorp 421,575
400 Whirlpool Corp. 27,050
TOTAL SECURITIES SOLD SHORT
(Total proceeds $33,377,499) $ 35,900,195
THE VALUE OF SECURITIES SOLD SHORT AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 7.0%
CURRENCY TYPE ABBREVIATIONS
ARP - Argentinean peso
BEF - Belgian franc
BRC - Brazilian cruzeiro
GBP - British pound
CAD - Canadian dollar
DKK - Danish krone
NLG - Dutch guilder
FIM - Finnish markka
FRF - French franc
DEM - German Deutsche mark
IDR - Indonesian rupiah
IEP - Irish pound
ITL - Italian lira
JPY - Japanese yen
MYR - Malaysian ringgit
MXN - Mexican peso
NZD - New Zealand dollar
ZAR - South African rand
ESP - Spanish peseta
SEK - Swedish krona
CHF - Swiss franc
LEGEND
7. Principal amount is stated in United States dollars unless otherwise
noted.
8. Non-income producing
9. Principal amount in thousands.
10. Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
11. 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 $27,103,478 or 5.8% of net
assets.
12. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
13. The security was pledged to cover margin requirements on open short
sale transactions (see Note 2 of Notes to Financial Statements). At the
period end the value of securities pledged amounted to $38,565,964.
14. A portion of the securities was pledged to cover margin requirements
for futures contracts. At the period end, the value of securities pledged
amounted to $1,929,918.
15. 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 $693
16. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 13.6% AAA, AA, A 13.1%Baa 1.8% BBB 2.4%Ba 4.9% BB 5.5%B 8.9% B
2.2%Caa 0.3% CCC 0.5%Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government. The percentage not rated by
either S&P or Moody's amounted to 11.2% including long-term debt
categorized as other securities.
INCOME TAX INFORMATION
At January 31, 1994, the aggregate cost of investment securities for income
tax purposes was $476,573,835. Net unrealized appreciation aggregated
$33,863,104, of which $41,778,596 related to appreciated investment
securities and $7,915,492 related to depreciated investment securities.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities (Unaudited)
Basic Industries - 12.3%
Chemicals and Plastics 2.5%
Iron and Steel 1.5
Metals and Mining 2.9
Paper and Forest Products 5.4
Conglomerates 0.8
Construction and Real Estate - 3.0%
Building Materials 1.2
Construction 1.4
Real Estate 0.3
Real Estate Investment Trusts 0.1
Durables - 2.6%
Autos, Tires, and Accessories 1.7
Consumer Electronics 0.4
Home Furnishings 0.3
Textiles and Apparel 0.2
Energy - 8.1%
Energy Services 1.3
Independent Power 0.5
Oil and Gas 6.3
Finance - 7.6%
Banks 2.7
Closed End Investment Company 0.8
Credit and Other Finance 2.3
Insurance 0.9
Security Industry 0.9
Government Obligations - 31.8%
Foreign Government 29.5
U.S. Government 2.3
Health - 0.3%
Medical Equipment and Supplies 0.1
Medical Facilities and Equipment 0.2
Industrial Machinery and Equipment - 2.6%
Electrical Equipment 0.5
Industrial Machinery and Equipment 1.8
Pollution Control 0.3
Money Market Instruments 2.8
Media and Leisure - 2.0%
Entertainment 0.9%
Leisure Durables and Toys 0.2
Lodging and Gaming 0.2
Publishing 0.4
Restaurants 0.3
Nondurables - 1.0%
Beverages 0.1
Foods 0.1
Tobacco 0.8
Precious Metals 1.4
Retail and Wholesale - 2.3%
Apparel Stores 0.8
General Merchandise Stores 0.4
Grocery 0.2
Retail, Miscellaneous 0.9
Services - 1.6%
Advertising 0.4
Printing 0.3
Services 0.9
Repurchase Agreements 13.2
Technology - 3.6%
Communications Equipment 1.0
Computer Services and Software 0.6
Computers and Office Equipment 0.9
Electronics 0.9
Electronics Instruments 0.2
Transportation - 1.5%
Air Transportation 1.0
Shipping 0.4
Trucking and Freight 0.1
Utilities - 1.5%
Cellular 0.3
Electric Utility 0.2
Gas 0.6
Telephone Service 0.4
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 510,436,939
agreements of $67,267,000) (cost $476,707,472)
(Notes 1 and 2) - See accompanying schedule
Securities sold short, at value (proceeds received (35,900,195) $ 474,536,744
$33,377,499) (Note 2)
Long foreign currency contracts held, at value (cost 22,882,847
$22,760,103) (Note 2)
Short foreign currency contracts (Note 2) (153,087,926)
Contracts held, at value
Receivable for contracts held 151,860,947 (1,226,979)
Restricted cash on securities sold short (Note 2) 33,377,499
Receivable for investments sold 27,739,270
Receivable for fund shares sold 13,836,386
Dividends receivable 154,731
Interest receivable 3,425,742
Receivable for daily variation on futures contracts 2,172,415
Other receivables 167,053
TOTAL ASSETS 577,065,708
</TABLE>
JANUARY 31, 1994 (UNAUDITED)
LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
Payable to custodian bank $ 1,998,898
Payable for foreign currency contracts held (Note 2) 22,760,103
Payable for investments purchased 65,843,685
Net payable for closed foreign currency contracts 45,301
Payable for fund shares redeemed 20,057,170
Accrued management fee 260,104
Written options, at value (premium received $73,053) 74,103
Other payables and accrued expenses 454,965
TOTAL LIABILITIES 111,494,329
NET ASSETS $ 465,571,379
Net Assets consist of (Note 1):
Paid in capital $ 425,890,142
Distributions in excess of net investment income (58,322)
Accumulated undistributed net realized gain (loss) on 5,942,325
investments
Net unrealized appreciation (depreciation) on:
Investment securities 33,729,467
Foreign currency contracts (1,104,235)
Futures contracts 3,695,748
Written options (1,050)
Short sales (2,522,696)
NET ASSETS, for 33,715,468 shares outstanding $ 465,571,379
NET ASSET VALUE, offering price and redemption price per $13.81
share ($465,571,379 (divided by) 33,715,468 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 858,229
Dividends
Interest 3,859,870
TOTAL INCOME 4,718,099
EXPENSES
Management fee (Note 4) $ 952,923
Transfer agent fees (Note 4) 536,903
Accounting fees and expenses (Note 4) 68,825
Non-interested trustees' compensation 414
Custodian fees and expenses 143,693
Registration fees 114,342
Audit 27,117
Legal 469
Interest (Note 5) 32,229
Dividends on securities sold short 109,558
Miscellaneous 442
Total expenses before reductions 1,986,915
Expense reductions (Note 6) (5,878) 1,981,037
NET INVESTMENT INCOME 2,737,062
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:
Investment securities 9,734,188
Foreign currency contracts (724,023)
Futures contracts (50,002)
Written options 10,500 8,970,663
Change in net unrealized appreciation (depreciation) on:
Investment securities 33,032,413
Foreign currency contracts (1,709,245)
Futures contracts 3,695,748
Written options (1,050)
Short sales (2,460,351) 32,557,515
NET GAIN (LOSS) 41,528,178
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 44,265,240
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS FEBRUARY 1, 1993
ENDED JANUARY (COMMENCEMENT
31, OF OPERATIONS) TO
1994 JULY 31, 1993
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 2,737,062 $ 719,089
Net investment income
Net realized gain (loss) on investments 8,970,663 2,424,404
Change in net unrealized appreciation (depreciation) 32,557,515 1,239,719
on
investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 44,265,240 4,383,212
FROM OPERATIONS
Distributions to shareholders: (3,252,941) (257,569)
From net investment income
From net realized gain (5,017,674) -
TOTAL DISTRIBUTIONS (8,270,615) (257,569)
Share transactions 514,830,984 106,408,972
Net proceeds from sales of shares
Reinvestment of distributions from: 3,121,779 247,400
Net investment income
Net realized gain 4,868,694 -
Cost of shares redeemed (177,402,189) (26,624,529)
Net increase (decrease) in net assets resulting from 345,419,268 80,031,843
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 381,413,893 84,157,486
NET ASSETS
Beginning of period 84,157,486 -
End of period (including under (over) distribution of net $ 465,571,379 $ 84,157,486
investment income of $(58,322) and $461,520,
respectively)
OTHER INFORMATION
Shares
Sold 39,853,851 9,266,816
Issued in reinvestment of distributions from: 246,055 21,384
Net investment income
Net realized gain 384,307 -
Redeemed (13,791,769) (2,265,176)
Net increase (decrease) 26,692,444 7,023,024
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS FEBRUARY 1, 1993
ENDED JANUARY (COMMENCEMENT
31, 1994 OF OPERATIONS) TO
(UNAUDITED)
JULY 31, 1993
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.98 $ 10.00
Income from Investment Operations
Net investment income .10 .15
Net realized and unrealized gain (loss) on investments 2.19 1.91
Total from investment operations 2.29 2.06
Less Distributions
From net investment income (.17) (.08)
From net realized gain (.29) -
Total distributions (.46) (.08)
Net asset value, end of period $ 13.81 $ 11.98
TOTAL RETURN (dagger) 19.50% 20.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 465,571 $ 84,157
Ratio of expenses to average net assets 1.60%* 2.12%*
Ratio of net investment income to average net assets 2.21%* 4.02%*
Portfolio turnover rate 140%* 172%*
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994 (Unaudited)
17. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Global Balanced Fund (the fund) is a fund of Fidelity Puritan
Trust (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
are valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS.
Distributions are recorded on the ex-
dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures and options transactions, foreign currency transactions, market
discount, partnerships, and losses deferred due to wash sales, futures and
options, and excise tax regulations. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part of
the dividends paid deduction for income tax purposes. Permanent book and
tax basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
18. OPERATING POLICIES
FORWARD FOREIGN CURRENCY
CONTRACTS. The fund may enter into forward foreign currency contracts.
These contracts involve market risk in excess of the amount reflected in
the fund's Statement of Assets and Liabilities. The face or contract amount
in U.S. dollars reflects the total exposure the fund has in that particular
currency contract. The U.S. dollar value of forward foreign currency
contracts is determined using forward currency exchange rates supplied by a
quotation service. Losses may arise due to changes in the value of the
foreign currency or if the counterparty does not perform under the
contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission , the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
2. OPERATING POLICIES -
CONTINUED
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.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
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 $837 or 0% of net assets.
19. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $495,318,696 and $179,350,573, respectively.
The market value of futures contracts opened and closed amounted to
$110,966,113 and $57,323,022 respectively.
20. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.30% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .45%.
For the period, the management fee was equivalent to an annualized rate of
.77% of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with affiliates of FMR. In addition, one of the sub-advisers,
Fidelity International Investment Advisors (FIIA), entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the sub-advisory
arrangements, FMR may receive investment advice and research services and
may grant the sub-advisers investment management authority to buy and sell
securities. FMR pays its sub-
advisers either a portion of its management fee or a fee based on costs
incurred for these services. FIIA pays FIIAL U.K. a fee based on costs
incurred for either service.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $115,609 for the period.
21. 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 $14,293,000 and $8,160,625,
respectively. The weighted average interest rate was 3.55%.
22. 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
$5,878 under this arrangement.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
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
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
Fidelity Investments Japan Ltd.
Fidelity International Investment
Advisors
Fidelity International Investment
Advisors (U.K.) Limited
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Market Index Fund
Puritan Fund
Real Estate Investment Portfolio
Utilities Income Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
