FIDELITY
(registered trademark)
LOW-PRICED STOCK
FUND
ANNUAL REPORT
JULY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 39 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 43 Notes to the financial statements.
REPORT OF INDEPENDENT 53 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR
GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The first half of 1994 was an unsettling time for many investors. After
three years of a nearly perfect environment for stock market investing,
stock prices generally fell from February through June. Investors disagree
about whether this decline represents only a short-term correction or
signals the beginning of a longer bear market. One can collect statistics
to support either opinion, but of course, nobody knows for sure what will
happen to stock prices in the months ahead.
We do know, however, that market declines are a normal part of stock market
investing. We have historically seen corrections of 10% or more every two
years. That's why I thought this might be a good time to review three basic
investment principles that have proven helpful to successful stock market
investors in every market cycle.
First, take a long-term approach when investing in stocks and stock funds.
If you can afford to leave your money invested through the market's
inevitable ups and downs, you will greatly reduce your vulnerability to any
single decline. Over time, stock prices have gone up - and have
significantly outperformed other types of investments and stayed ahead of
inflation. But in the short-term, because of their volatility, stocks have
greater risk.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. 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 JULY 31, 1994 PAST 1 LIFE OF
YEAR FUND
Low-Priced Stock 13.67% 128.20%
Low-Priced Stock (incl. 3% sales charge) 10.26% 121.35%
Russell 2000 4.68% 60.26%
Average Mid-Cap Fund 3.33% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
December 27, 1989. For example, if you had invested $1,000 in a fund that
had a 5% return over the past year, you would have $1,050. You can compare
these figures to the performance of the Russell 2000 index - a broad
measure of small company stocks. You can also compare them to the average
mid-cap fund, which reflects the performance of over 79 mid-cap growth
funds tracked by Lipper Analytical Services. Both benchmarks include
reinvested dividends and capital gains, if any, and exclude the effects of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1994 PAST 1 LIFE OF
YEAR FUND
Low-Priced Stock 13.67% 19.66%
Low-Priced Stock (incl. 3% sales charge) 10.26% 18.87%
Russell 2000 4.68% 10.80%
Average Mid-Cap Fund 3.33% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Low-Priced Stock Russell 2000 Index (RS01)
12/27/89 9700.00 10000.00
12/31/89 9593.30 10183.51
01/31/90 9535.10 9293.82
02/28/90 9719.40 9582.38
03/31/90 9816.40 9955.08
04/30/90 9447.80 9630.04
05/31/90 10194.70 10311.66
06/30/90 10476.00 10332.56
07/31/90 10417.80 9878.09
08/31/90 9379.90 8562.52
09/30/90 8968.27 7804.83
10/31/90 8816.44 7328.36
11/30/90 9292.18 7887.14
12/31/90 9585.72 8200.08
01/31/91 10466.35 8941.65
02/28/91 11397.60 9938.77
03/31/91 12156.76 10638.35
04/30/91 12622.38 10611.58
05/31/91 12814.71 11117.39
06/30/91 12045.42 10469.50
07/31/91 12784.34 10836.89
08/31/91 13138.62 11238.01
09/30/91 13192.70 11326.01
10/31/91 13653.40 11625.57
11/30/91 13098.47 11087.87
12/31/91 14019.93 11975.73
01/31/92 15233.91 12946.08
02/29/92 16211.55 13323.74
03/31/92 15674.39 12872.75
04/30/92 15824.79 12421.76
05/31/92 15932.22 12586.94
06/30/92 15545.47 11991.68
07/31/92 16050.40 12408.75
08/31/92 16007.43 12058.59
09/30/92 16137.72 12336.88
10/31/92 16406.49 12729.02
11/30/92 17515.19 13703.05
12/31/92 18078.99 14180.43
01/31/93 18543.43 14660.38
02/28/93 18384.84 14321.78
03/31/93 18939.90 14786.51
04/30/93 18758.65 14380.63
05/31/93 19155.12 15016.96
06/30/93 19223.09 15110.64
07/31/93 19472.30 15319.27
08/31/93 20163.29 15981.08
09/30/93 20327.12 16432.07
10/31/93 21075.95 16855.01
11/30/93 20713.62 16300.25
12/31/93 21733.07 16857.57
01/31/94 22863.70 17386.11
02/28/94 22851.13 17323.23
03/31/94 21846.14 16408.60
04/30/94 22034.57 16506.13
05/31/94 21959.20 16320.79
06/30/94 21645.14 15766.59
07/31/94 22135.07 16025.63
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Low-Priced Stock Fund on December 27, 1989, when the fund began, and paid a
3% sales charge. As the chart shows, by July 31, 1994, the value of your
investment would have grown to $22,135 - a 121.35% increase on your initial
investment. For comparison, look at how the Russell 2000 did over the same
period. With dividends reinvested, the same $10,000 investment would have
grown to $16,026 - a 60.26% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
After generally falling through
much of 1994, U.S. stock prices
rebounded in July on the strength
of improving corporate earnings.
Rising interest rates caused the
stock market to stumble from
February through June. Stocks
largely took their cue from bonds,
which fell sharply due to
concerns that the strengthening
economy might trigger higher
inflation. Late in the period, a
weakening U.S. dollar put
additional downward pressure on
stocks. The Standard & Poor's
500 index had a total return of
5.16% for the 12 months ended
July 31, 1994, mainly due to
gains made in 1993. Cyclical
stocks - those whose prices
tend to move in tandem with the
economy - were among the
market leaders. These included
such sectors as chemicals,
metals and paper. Market
laggards included most
consumer nondurables -
especially retail, beverage and
drug companies. In addition,
rising interest rates hurt such
rate-sensitive sectors as
insurance and utilities. Aside from
Japanese stocks, which made
strong gains due to a
strengthening economy and yen,
most foreign markets suffered
corrections in 1994. However,
strong gains in 1993 helped drive
the Morgan Stanley EAFE
(Europe, Australia, Far East)
index to a 14.13% total return for
the 12 months ended July 31.
The Morgan Stanley Emerging
Markets Free Index was up
40.62%, again due to strong
performance in 1993.
An interview with Joel Tillinghast, Portfolio Manager of Fidelity
Low-Priced Stock Fund
Q. JOEL, HOW HAS THE FUND PERFORMED?
A. Very well. For the 12 months ended July 31, 1994, the fund had a total
return of 13.67%, beating the 3.33% total return for the average mid-cap
fund tracked by Lipper Analytical Services.
Q. WHAT WERE THE REASONS FOR THE POSITIVE PERFORMANCE?
A. The fund's largest sector was finance, 12.3% as of July 31.
Specifically, the fund's regional bank and thrift stocks did very well
because the move in Congress toward lifting regulations on interstate
banking has led to takeover speculation. Merger and takeover activity
sparked investor interest, which lifted stock prices. The fund had many
small investments in regional banks during the period - such as Metro
Bancshares and Dime Bank - which together were positive contributors to its
performance.
Q. WHICH OTHER STOCKS HELPED
THE FUND?
A. Although there were sharp drops in some parts of the technology sector
during the period, the fund benefited from its investments in certain
technology sub-sectors. Semiconductor manufacturers, for example, have done
very well during the period because of reduced competition from Japan -
partly because the yen has been very high - and because there has been
strong demand for personal computers and telecommunications equipment, both
of which require semiconductors. Lattice, a semiconductor manufacturer, is
making more complex chips that may increase the company's average selling
prices and the company's profit margins. Another semiconductor company,
Advanced Micro Devices, received a favorable legal ruling allowing it to
sell chips similar to Intel's successful 486 microchip. The stock's
valuation - its price compared to its earnings - has remained attractively
low, and the company's earnings are growing fast. After the technology
sector correction, I did find some attractive computer networking stocks,
such as Cisco Systems, which has shown strong earnings growth.
Q. WERE THERE ANY NOTABLE DISAPPOINTMENTS?
A. Two personal computer distribution companies come to mind: Inacom and
Future Now. Inacom acquired Sears' PC business, but didn't look closely at
Sears' contract with the U.S. government to supply it with a number of PCs
at an unprofitable price. Future Now has grown rapidly through acquisition,
but the cost of combining distribution facilities has been more substantial
than the company expected. I still hold both stocks because they're
addressing their problems, and if they do so successfully, their earnings
power should substantially increase.
Q. JOEL, DOES THE FUND USE DERIVATIVE INVESTMENTS, WHICH HAVE BEEN IN THE
NEWS A LOT LATELY?
A. The fund used two kinds during the period: first, a small stake in
forward foreign currency contracts - instruments that tie the value of an
investment in foreign stocks to the U.S. dollar; second, S&P Mid Cap 400
Index and S&P 500 index futures contracts, a substitute for stock
investments allowing the fund to gain exposure to the market while looking
for individual stocks to buy.
Q. AREN'T THESE INVESTMENTS RISKY?
A. Risk varies. The foreign currency contracts are intended to hedge the
fund's foreign investments against currency risk. They should reduce the
volatility of the investment's value. However, the cost of hedging can
reduce the fund's total return, especially when the value of the dollar
drops relative to other currencies, as it did during the period. The index
futures should be as risky as the portfolio of stocks that the index
represents, since the futures move up or down in tandem with the market.
They should reduce the risk of the fund failing to share in a market rally.
As of July 31, the fund owned none of these futures.
Q. WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Higher interest rates slow economic growth, producing slower profit
growth. Also, higher interest rates imply lower valuations for stocks.
That's because stock prices usually reflect future earnings estimates.
Future earnings, discounted back at higher interest rates, are worth less
than they would be if rates were to remain stable or fall. I am trying to
shift the fund's investments toward companies that can boost profit enough
to offset the reduced valuations. For example, cyclicals - stocks that rise
and fall in tandem with the economy - such as paper and machinery, and
steady growers - including some health care and technology shares - could
be attractive. Reductions are likely in groups that are negatively affected
by higher interest rates, such as some financial, housing and auto-related
stocks.
FUND FACTS
GOAL: to increase the value of
the fund's shares over the
long term by investing in
stocks of up-and-coming and
out-of-favor companies whose
prices are generally below
$25 a share
START DATE: December 27, 1989
SIZE: as of July 31, 1994,
more than $2.1 billion
MANAGER: Joel Tillinghast,
since December 1989;
assistant, Fidelity OTC
Portfolio, 1988-1989; stock
analyst for natural gas,
personal care product,
appliance, and tobacco
industries, 1986-1989; joined
Fidelity in 1986
(checkmark)
JOEL TILLINGHAST ON THE SMALL
STOCK ENVIRONMENT:
"Small stocks
under-performed larger
stocks during the first half of
1994. Small companies tend
to be under-capitalized and
more dependent on bank
borrowing, so rising interest
rates during the past six
months hurt them more. Small
companies also need a climate
of optimism to do very well,
and the rise in interest rates
has taken some of the bloom
off the rose there. Still, thanks
to a stronger economy,
earnings results for the stocks
in the fund have been
relatively good. The
percentage of companies in
the fund with positive
earnings surprises during the
past six months was probably
larger than it was the previous
six months."
(solid bullet) The fund's stake in cash
and short-term investments
grew to more than 20% during
the period, and was 16.3% on
July 31. From January 31 to
July 31, the number of stocks
within the fund was reduced
resulting in an increase
in cash.
(solid bullet) Foreign investments were
21.1% of the fund on July 31,
compared to 26.7% on
January 31.
(solid bullet) Two of the fund's top 10
stocks, Northumbrian Water
and Welsh Water- British
water utility companies
- -received favorable rate
treatment after a periodic
regulatory review.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JULY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Universal Health Services, Inc. 1.4 1.2
Class B
Welsh Water PLC Ord. 1.4 1.7
Northumbrian Water Group PLC 1.2 1.3
Ord.
Exar Corp. 0.8 0.6
National Health Laboratories, Inc. 0.8 1.2
Libbey, Inc. 0.7 0.7
Industrias Penoles SA 0.7 0.8
Castle Energy Corp. 0.7 0.4
Evered Bardon PLC 0.6 0.8
Astoria Financial Corp. 0.6 0.6
TOP FIVE INDUSTRIES AS OF JULY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE INDUSTRIES
6 MONTHS AGO
Finance 12.3 12.9
Technology 8.6 11.4
Basic Industries 7.9 7.0
Durables 6.4 7.2
Energy 6.3 6.8
ASSET ALLOCATION
AS OF JULY 31, 1994* AS OF JANUARY 31, 1994**
Row: 1, Col: 1, Value: 23.0
Row: 1, Col: 2, Value: 1.3
Row: 1, Col: 3, Value: 36.4
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 1, Value: 11.4
Row: 1, Col: 2, Value: 1.4
Row: 1, Col: 3, Value: 39.6
Row: 1, Col: 4, Value: 48.2
Stocks 76.7%
Bonds 0.3%
Short-term
investments 23.0%
FOREIGN
INVESTMENTS 21.1%
Stocks 88.2%
Bonds 0.4%
Short-term
investments 11.4%
FOREIGN
INVESTMENTS 26.7%
*
**
INVESTMENTS JULY 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 76.0%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.3%
AEROSPACE & DEFENSE - 0.2%
Allied Research Corp. (a)(c) 299,710 $ 1,442
Datron Systems, Inc. (Calif.) (a)(c) 247,200 2,039
3,481
DEFENSE ELECTRONICS - 0.1%
ARX, Inc. (a) 369,222 1,384
ESCO Electronics Corp. (trust receipt) (a) 8,100 68
Tech-Sym Corp. (a) 20,000 410
1,862
TOTAL AEROSPACE & DEFENSE 5,343
BASIC INDUSTRIES - 7.8%
CHEMICALS & PLASTICS - 2.4%
AEP Industries, Inc. 338,475 5,754
Aceto Corp. (c) 257,532 4,121
American Pacific Corp. (a) 182,500 1,962
Celanese Canada, Inc. 44,900 794
Cominco Fertilizer Ltd. 300,000 5,735
Cytec Industries, Inc. (a) 404,200 10,205
Indo Gulf Fertilizer and Chemicals GDR (e) 35,000 128
Kinark Corp. (a)(c) 306,300 1,436
Martin Color-Fi, Inc. (a) 78,000 644
OM Group, Inc. 100,000 1,975
Oil Dri Corporation of America 165,900 2,985
Potash Corp. of Saskatchewan 26,200 834
Potash Corp. of Saskatchewan (warrants) (a) 55,000 1,017
Ropak Corp. (a)(c) 267,500 1,806
Skrinet AB Class B Free shares 25,000 135
Spartech Corporation (a)(c) 773,800 3,288
Sudbury, Inc. (a) 385,000 2,647
Tessenderlo Chemie NV 22,575 7,412
52,878
IRON & STEEL - 1.9%
Ampco-Pittsburg Corp. 91,400 663
Bjolvefossen 25,000 344
Chubu Steel Plate Co. Ltd. 50,000 291
Cold Metal Products, Inc. (a)(c) 516,300 3,937
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - CONTINUED
Compania Siderurgica Nacional 41,970,000 $ 1,223
Friedman Industries, Inc. 164,865 680
Insteel Industries, Inc. 295,731 2,588
Intermetco Ltd. 339,800 1,716
Iscor Ltd. 553,159 482
Laclede Steel Co. (a) 64,000 928
Proler International Corp. (a) 172,100 1,484
Rautaruukki OY Class K (a) 400,000 3,755
Rautaruukki OY Class K (e) 200,000 1,878
Roanoke Electric Steel Corp. (c) 277,700 4,235
SSAB Svenskt Stal AB Free shares B 20,000 848
Samuel Manu-Tech, Inc. 125,000 1,803
Shaw Industries Ltd. Class A 50,000 460
Slater Industries Class B (a)(c) 454,900 3,076
Steel of West Virginia, Inc. (a)(c) 594,700 7,285
WHX Corp. 150,000 2,831
40,507
METALS & MINING - 1.3%
Acier Leroux, Inc. Class B (a) 50,000 173
Acier Leroux, Inc. Class B (a)(e) 200,000 693
Castle AM & Co. 156,500 3,560
De Beers Consolidated Mines Ltd. ADR 495,300 11,763
Lindberg Corp. 100,000 813
Outokumpu OY Class A (a) 183,000 3,352
Simsmetal Ltd. 155,625 764
Terra Mining AB (e) 290,000 6,723
27,841
PACKAGING & CONTAINERS - 0.5%
Alltrista Corp. (a) 20,200 379
Owens-Illinois, Inc. (a) 768,200 8,161
PCI Services, Inc. (a) 251,200 2,010
10,550
PAPER & FOREST PRODUCTS - 1.7%
Alliance Forest Products, Inc. (a) 143,900 1,843
Cascades, Inc. 18,100 93
Drypers Corp. (a) 119,300 1,163
Enso Gutzeit OY R Free shares 461,000 3,761
Groupe Forex, Inc. 125,000 1,386
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
International Forest Products Class A (a) 25,000 $ 252
Metsa Serla B 25,000 1,080
Norske Skog Industries Class B:
sponsored ADR AS (e) 100,000 2,513
AS (e) 75,000 1,900
Pacific Forest Products Ltd. (a) 25,000 248
Rayonier, Inc. 377,100 11,643
Repola OY 150,000 2,750
Rock Tenn Co. Class A 259,200 4,406
St. Laurent Paperboard, Inc. (e) 100,000 947
Sappi Ltd. 100,000 1,205
Specialty Paperboard, Inc. (a) 67,000 637
Timberwest Forest Ltd. (a) 40,000 372
Tufco Technologies, Inc. (a) 75,000 488
36,687
TOTAL BASIC INDUSTRIES 168,463
CONGLOMERATES - 0.6%
Figgie International Holdings, Inc. Class A 112,200 1,108
Medalist Industries, Inc. (a)(c) 221,100 1,714
Quixote Corp. (c) 518,400 10,886
13,708
CONSTRUCTION & REAL ESTATE - 5.8%
BUILDING MATERIALS - 3.0%
AMRE, Inc. (c) 903,500 3,501
Bettis Corp. (a) 263,350 1,251
CGC, Inc. 100,000 559
Cemex SA, Series B 50,000 384
Devcon International Corp. (a) 117,000 965
Domco Industries Ltd. 17,900 265
Drew Industries, Inc. (a)(c) 400,600 4,106
Elco Industries, Inc. (c) 403,700 6,358
Eljer Industries, Inc. (a)(c) 486,600 4,014
Evered Bardon PLC (a) 21,400,000 13,546
Hoganas AB Class B Free shares 100,000 1,327
Ibstock Johnsen PLC 1,000,000 1,181
Leslie Building Products 400,600 300
Mestek, Inc. (a) 78,800 788
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
BUILDING MATERIALS - CONTINUED
Patrick Industries, Inc. (c) 506,500 $ 4,938
Prudential Steel Ltd. 100,000 1,001
RB&W Corp. (a)(c) 561,200 3,087
Raytech Corp. (a)(c) 180,700 858
Richelieu Hardware Ltd. (a) 25,000 147
Shelter Components Corp. 208,125 2,628
Sico, Inc. (c) 267,200 1,928
Somerset Group, Inc. (a) 8,500 98
Swegon AB B Free shares (a) 25,000 103
Tecumseh Products Co. Class A 53,700 2,685
USG Corp. (a) 100,000 2,100
U.S. Intec, Inc. (a)(c) 296,900 1,744
Watsco, Inc.:
Class A (c) 256,700 4,236
Class B cv (c) 72,520 1,178
Yips Hang Cheung Holdings Ltd. 500,000 175
65,451
CONSTRUCTION - 2.1%
AAF Industries PLC 1,250,000 811
Abbey Ltd. 500,000 957
American Homestar Corp. (a) 50,000 419
Cavco Industries, Inc. (a)(c) 174,500 3,141
Engle Homes, Inc. 29,000 290
Higgs and Hill PLC 3,750,000 5,558
Jacobson & Widmark AB Fria (a) 200,000 1,726
Lovell (Y.J.) Holdings (a) 360,000 422
McAlpine (Alfred) Ord. 615,388 2,014
Miller Building Systems, Inc. (a)(c) 181,000 679
Monaco Coach Corp. (a) 50,000 725
Mowlem (John) & Co. PLC 4,961,182 7,430
Oriole Homes Corp. :
Class A 76,900 558
Class B (c) 270,000 1,958
Perini Corp. (a) 175,400 1,973
Schult Homes Corp. 74,700 990
Standard Pacific Corp. 93,500 795
Sundance Homes, Inc. (a) 55,000 220
Tay Homes PLC 2,266,666 5,600
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - CONTINUED
Turner Corp. (a) 201,700 $ 1,815
U.S. Home Corp. (a) 349,845 6,297
Volker Stevin NV 20,000 978
45,356
ENGINEERING - 0.1%
SNC Group, Inc. Class A 50,000 578
Simard Beaudry, Inc. 60,000 164
742
REAL ESTATE - 0.1%
Castle & Cooke Homes, Inc. (a) 102,300 1,036
Consolidated Carma Corp. Class A (a) 75,000 170
McLeod Russell Holdings PLC 400,000 692
Melcor Developments Ltd. 20,000 148
South Sea Development Co. 1,277,936 101
2,147
REAL ESTATE INVESTMENT TRUSTS - 0.5%
Banyan Short Term Income Trust (SBI) (a)(c) 653,200 1,306
Banyan Strategic Land Trust (SBI) (c) 991,750 4,153
First Union Real Estate Equity & Mortgage Investments 546,400 3,415
Home Properties of NY 75,000 1,435
Rockefeller Center Properties, Inc 144,400 812
11,121
TOTAL CONSTRUCTION & REAL ESTATE 124,817
DURABLES - 6.4%
AUTOS, TIRES, & ACCESSORIES - 2.7%
Appleyard Group 1,384,500 2,822
Autocam Corp. 84,950 1,402
Autoliv AB (a)(e) 117,000 3,044
Bestop, Inc. (a) 43,900 505
Budd Canada, Inc. 20,000 310
Cook (D.C.) Holdings PLC 405,800 282
Davenport Vernon 600,000 1,417
Deflectashield Corp. (a) 53,000 477
Douglas & Lomason Co. 33,000 611
Durakon Industries, Inc. (a)(c) 368,600 6,451
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Federal Screw Works (c) 102,500 $ 1,743
Forsheda AB B Free shares 50,000 779
Hahn Automotive Warehouse, Inc. (a) 91,700 1,421
Lund International Holdings, Inc. (a)(c) 375,000 6,468
Mercury Air Group (a)(c) 219,300 1,234
Monro Muffler Brake, Inc. (a) 141,960 2,484
Peugeot SA Ord. 35,000 5,502
Pirelli Tyre Holdings NV Ord. 19,300 174
Republic Automotive Parts, Inc. (a)(c) 256,700 4,555
Schwitzer, Inc. (a) 7,600 66
Supreme Industries, Inc.:
Class A (a) 105,900 609
Unit (1 Class A & 1 warrant) (a) 42,966 24
Travel Ports of America (a)(c) 339,000 826
Treadco, Inc. 97,000 1,358
Trico Products Corp. (a) 85,500 3,804
Uni Select, Inc. (c) 656,000 4,082
Valley Forge Corp. 75,700 1,353
Wynn's International, Inc. (c) 279,600 6,221
60,024
CONSUMER DURABLES - 1.1%
American Consumer Products Corp. (a)(c) 206,000 592
Finnveden Invest AB B Free shares 570,000 536
Forschner Group, Inc. (a) 204,800 2,304
Libbey, Inc. (c) 897,500 15,034
Mikasa, Inc. (a) 193,900 3,005
Syratech Corp. (a) 152,900 2,561
24,032
CONSUMER ELECTRONICS - 0.8%
Cambridge Soundworks, Inc. (a) 103,000 747
Fedders Corp. (a) 447,000 3,464
Harman International Industries, Inc. (a) 75,400 2,026
International Jensen, Inc. (a)(c) 567,000 5,387
Koss Corp. (a) 126,200 1,357
Polk Audio, Inc. (a)(c) 105,500 870
Toastmaster, Inc. (c) 581,800 3,927
17,778
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
HOME FURNISHINGS - 0.4%
BMTC Group, Inc. Class A (sub-vtg.) 125,000 $ 699
DMI Furniture, Inc. (a)(c) 215,000 457
Haverty Furniture Companies, Inc. 196,550 2,457
Huffman Koos, Inc. (a)(c) 371,500 2,507
Pulaski Furniture Corp. 100,100 1,802
Virco Manufacturing Corp. 14,400 122
8,044
TEXTILES & APPAREL - 1.4%
Cone Mills Corp. (a) 306,800 4,142
Concord Fabrics, Inc.:
Class A (a)(c) 203,700 1,731
Class B (a) 65,100 545
Decorator Industries, Inc. (c) 167,100 1,943
Fila Holding Spa sponsored ADR 73,300 1,154
Forstmann & Co., Inc. (a) 245,500 2,670
G-III Apparel Group Ltd. (a)(c) 479,120 1,617
Image Industries, Inc. (a) 34,700 334
McRae Industries, Inc. Class A 55,500 389
Nautica Enterprises, Inc. (a) 320,675 7,777
Nority International Group, Ltd. 2,500,000 225
Orbit Instrument Corp. (a) 116,500 335
Peerless Carpet Corp. (a) 100,000 346
Porter Chadburn PLC 5,000,000 2,393
Tandy Brands Accessories, Inc. (a) 142,425 2,670
Victoria Carpet Holdings PLC 50,000 116
Wolf (Howard B.), Inc. 48,200 313
Worldtex Corp. (a) 222,900 1,087
Yue Yuen Industrial Holdings Ltd. 1,000,000 235
30,022
TOTAL DURABLES 139,900
ENERGY - 6.1%
ENERGY SERVICES - 1.5%
Akita Drilling Ltd. Class A (non-vtg.) (a) 563,150 1,930
Aztec Manufacturing Co. (c) 560,000 2,730
Cliffs Drilling Co. (a)(c) 294,800 3,611
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Computalog Gearhart Ltd. (a) 325,000 $ 2,550
Dawson Geophysical Co. (a) 34,000 332
Dreco Energy Services Ltd. Class A (a) 237,100 2,015
Galveston Houston Co. 320,100 480
Greenway Holdings PLC 250,000 320
Key Energy Group, Inc. (a) 180,200 969
Marine Drilling Cos., Inc. (a) 156,000 829
Nabors Industries, Inc. (a) 535,800 3,684
Patterson Energy (warrants) (a) 15,000 8
Pe Ben Oilfield Services Ltd. (a) 175,000 379
Scientific Software Intercomp, Inc. (a)(c) 322,000 1,449
Serv-Tech, Inc. (a)(c) 317,000 2,535
Smalls Oilfield Services Corp. (a)(c) 164,000 759
Sundowner Offshore Services, Inc. (a) 48,000 642
Transocean Drilling AS (a) 500,000 3,220
Veritas Energy Service, Inc. 25,000 203
Wheatley TXT Corp. 293,500 4,274
32,919
OIL & GAS - 4.6%
Adams Resources and Energy, Inc. (a) 138,100 829
Alamco, Inc. (a)(c) 219,600 1,537
Ampolex Ltd. Ord. 400,000 1,269
Aran Energy (a) 17,315,100 8,822
Belden & Blake Corp. (a)(c) 434,500 5,431
Belden & Blake Corp. (a)(d) 105,000 1,313
British Borneo Petroleum 441,100 1,464
Brock Exploration Corp. (a)(c) 217,800 667
Canadian Pioneer 100,000 469
Castle Energy Corp. (a)(c) 1,121,450 14,159
Coho Resources, Inc. (a) 247,200 1,205
Columbus Energy Corp. (a)(c) 252,660 2,369
ConVest Energy Corp. (a)(c) 419,700 2,728
Cube Energy Corp. (a) 121,100 743
DEKALB Energy Corp. Class B (a) 168,000 2,646
Devran Petroleum Ltd. (a) 650,000 399
Discovery West Corp. (a) 125,000 442
ENEX Resources Corp. (c) 144,300 1,768
Edisto Resources Corp. (a) 394,800 3,109
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Edisto Resources Corp. (warrants) (a) 116,800 $ 277
Ensign Resource Service Group Ord. (a) 26,400 121
Foremost Industries, Inc. 247,500 1,339
Giant Industries, Inc. (a)(c) 1,174,000 8,952
Goal Petroleum Ord. 4,531,600 5,003
Hallwood Consolidated Resources Corp. 347,000 737
Hardy Oil & Gas PLC 2,370,000 5,306
Howell Corp. 87,700 1,041
Key Production Co., Inc. (a) 71,500 317
Maynard Oil Co. (a) 131,000 655
McFarland Energy, Inc. (a) 127,300 605
Nahama & Weagant Energy Co. (a) 102,000 191
Norcen Energy Resources Ltd. 700,000 7,953
Parker & Parsley Petroleum Co. 266,900 6,739
Petroleum Development Corp. (a)(c) 865,000 1,406
Prairie Oil Royalties Co. Ltd. (a) 158,100 1,126
Premier Consolidated Oilfields Ltd. Ord. (a) 4,000,000 1,668
Swift Energy Co. (a) 107,200 1,152
Tesoro Petroleum Corp. (a) 136,300 1,414
Williams Clayton Energy, Inc. (a) 246,700 1,665
99,036
TOTAL ENERGY 131,955
FINANCE - 12.2%
BANKS - 3.1%
BANCFIRST Corp. 122,200 2,016
Bank Atlantic Bancorp, Inc. 322,500 4,514
Bank of New York Co., Inc. (warrants) (a) 417,500 4,852
Bolig Og Naerings Banken 40,000 811
Bryn Mawr Bank Corp. 48,500 1,613
Chemical Banking Corp. 100,000 3,838
Colonial BancGroup, Inc. Class A 64,200 1,445
Community Bankshares, Inc. New Hampshire 40,000 580
Foreningsbanken AB Class A ord. (a) 1,650,000 3,507
Forstaedernes Bank (Reg.) (a) 25,000 410
GBC Bancorp (Calif.) (c) 479,000 6,466
Grant Street National Bank (a) 1,417,834 89
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Gronlandsbanken AS 15,900 $ 575
HUBCO, Inc. 103,980 2,236
MIDT Bank AS (a) 50,000 675
Nordlandsbanken AS 150,000 1,650
Okobank Class A (a) 153,500 1,503
Pocahontas Federal Saving and Loan Assn. (Ark) 52,000 598
Republic New York Corp. 85,000 3,910
SouthTrust Corporation 352,800 7,321
Spar Nord Holdings 19,350 653
Sparebanken More 25,000 387
Sparebanken Norway prime share ctfs. (a) 104,000 1,882
Sumitomo Bank California 44,900 1,066
Summit Bancorp, Inc. Washington (c) 169,200 1,818
Syds-Sonderjylland Holding 315,550 9,884
Vermont Financial Services Corp. 76,991 1,598
Zions Bancorporation 62,900 2,430
68,327
CLOSED END INVESTMENT COMPANY - 0.1%
Amagerbanken AS (a) 50,000 1,325
CREDIT & OTHER FINANCE - 0.5%
Central Mortgage Bancshares, Inc. 125,000 2,063
Intrum Justitia NV (Reg.) 685,000 941
Norgeskreditt 75,000 1,477
Rorviks Gruppen AB Class B Free shares 500,000 1,320
Student Loan Corp. 115,600 2,211
Surrey Metro Savings Credit Union (non-vtg.) (c) 300,000 2,596
10,608
FEDERAL SPONSORED CREDIT - 0.4%
Student Loan Marketing Association 225,000 7,847
INSURANCE - 3.4%
ARI Holdings, Inc. (a)(c) 170,900 726
American Indemnity Financial Corp. (c) 194,000 1,989
American Travellers Corp. (a) 445,000 6,453
Capitol American Financial Corp. 23,100 528
Commerce Group, Inc. 14,100 254
First American Financial Corp. (Calif.) 50,000 1,138
Gainsco, Inc. 356,782 3,077
Homeowners Group, Inc. (c) 347,500 825
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Kentucky Medical Insurance Co. Class A (a) 48,500 $ 376
London Insurance Group, Inc. 471,900 8,170
Lowndes Lambert Group Holdings PLC 60,000 363
Merchants Group, Inc. (c) 303,800 4,937
Meridian Insurance Group, Inc. 243,200 2,523
Mid South Insurance Co. (c) 258,100 2,904
RLI Corp. 126,000 2,882
Royale Insurance Co. Ltd. 450,000 1,737
Security-Connecticut Corp. 368,900 8,070
Stewart Information Services Corp. (c) 565,500 9,260
United Coasts Corp. (a) 220,000 990
United Insurance Companies, Inc. (a) 337,500 8,943
United Wisconsin Services, Inc. 210,400 6,338
Western National Corp. 85,200 1,310
73,793
SAVINGS & LOANS - 4.6%
Astoria Financial Corp. (a) 400,000 13,450
BFS Bankorp, Inc. (a) 57,960 1,362
Bankunited Financial Corp. Class A (c) 115,850 695
Boston Bancorp 9,000 305
CB Bancorp, Inc. (a)(c) 121,800 1,553
CF Bancorp, Inc. (a) 26,500 616
Calumet Bancorp, Inc. (a) 83,000 2,988
Cenit Bancorp, Inc. (c) 98,600 2,662
Charter One Financial Corp. 146,904 3,122
Circle Financial Corp. (c) 65,400 1,602
Citadel Holding Corp. (a) 26,268 151
Coastal Bank Savings Association (Houston) 20,000 335
Collective Bancorp, Inc. 63,300 1,274
Cooperative Bank Savings, Inc. (a)(c) 149,160 2,834
FCB Financial Corp. 45,000 658
Financial Security Corp. (a)(c) 83,300 1,479
FirstFed Michigan Corp. 54,300 1,317
First Federal Financial Svcs 41,562 769
First Federal Savings Bank of Puerto Rico (c) 594,362 10,402
First Southeast Financial Corp. 202,000 2,929
First State Financial Services, Inc. (c) 299,500 2,508
First Western Financial Corp. (a) 147,000 1,286
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - CONTINUED
GP Financial Corp. 525,000 $ 12,403
Independence Federal Savings Bank (c) 119,500 926
Iroquois Bancorp, Inc. 41,500 747
LF Bancorp, Inc. (a)(c) 43,000 774
Lakeview Savings Bank 96,600 1,630
Marion Capital Holdings, Inc. (c) 174,000 2,828
Maryland Federal Bancorp, Inc. 112,757 3,143
Metro Bancshares, Inc. (c) 339,825 7,816
NFS Financial Corp. (c) 173,000 3,222
North American Savings Bank FSB Grandview Mo. (a) 21,500 425
Ponce Federal Bank, FSB 199,000 1,592
Reliance BanCorp, Inc. (a) 177,700 2,421
Southern Missouri Bancorp, Inc. (a) 89,200 1,093
Suburban Bancorporation, Inc. 29,800 447
Third Financial Corp. (c) 68,000 1,224
Virginia First Financial Corp. 107,000 1,578
WFS BanCorp, Inc. (a) 74,300 1,077
Warren Bancorp, Inc. (a)(c) 243,500 2,009
99,652
SECURITIES INDUSTRY - 0.1%
First Albany Cos., Inc. 43,273 292
Marine Wendel SA 20,400 1,472
Marine Wendel SA (warrants) (a) 50,000 101
Stifel Financial Corp. 59,900 419
2,284
TOTAL FINANCE 263,836
HEALTH - 4.2%
DRUGS & PHARMACEUTICALS - 0.5%
Astra AB B Free Shares 50,000 1,063
Daewoong Pharmaceutical Corp. (a) 10,181 572
Igen, Inc. (a) 38,500 250
International Research & Development Corp. 68,000 179
Natures Sunshine Products, Inc. 350,900 4,912
North American Biologicals, Inc. (a) 363,461 2,226
Schering-Plough Corp. 30,300 1,943
11,145
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
Allied Healthcare Product, Inc. (a) 2,500 $ 38
American Medical Electronics, Inc. (a) 55,000 440
Bird Medical Technologies, Inc. (a)(c) 459,500 1,608
Boston Scientific Corp. (a) 42,800 583
Conmed Corp. (a) 25,000 331
HPSC, Inc. (a) 229,500 746
Healthdyne Technologies, Inc. (a) 50,000 588
Instrumentarium Class B 75,400 2,042
Lunar Corp. (a) 102,500 1,204
Medical Technology Systems, Inc. (a) 142,500 1,069
Mentor Corp. (a) 98,400 1,617
Minntech Corp. (a) 145,500 1,855
Model Imperial, Inc. (a) 25,000 156
Moore Medical Corp. (a) 98,700 1,505
PSICOR, Inc. (a) 66,500 599
Protocol Systems, Inc. (a) 131,300 952
St. Jude Medical, Inc. 30,500 968
Ultronics International Holdings 1,000,000 172
Utah Medical Products, Inc. 394,000 3,201
19,674
MEDICAL FACILITIES MANAGEMENT - 2.8%
American Homepatient, Inc. (a) 106,000 1,537
America Service Group, Inc. 10,000 48
Employee Benefit Plans, Inc. (a) 282,500 3,566
Homedco Group, Inc. (a) 88,800 2,620
Lincare Holdings, Inc. (a) 79,800 1,705
National Health Laboratories, Inc. 1,460,000 16,607
National Home Health Care Corp. (a) 87,500 241
Relife, Inc. 25,000 356
Rotech Medical Corp. (a) 35,000 665
Sierra Tucson Companies, Inc. (a) 325,000 975
Universal Health Services, Inc. Class B (a)(c) 1,117,100 31,000
Vivra, Inc. (a) 58,350 1,357
60,677
TOTAL HEALTH 91,496
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HOLDING COMPANIES - 0.7%
Brierley Investments Ltd. 18,445,652 $ 13,331
Catena AB Class A Free shares 100,000 966
First Pacific Co. Ltd. 1,570,277 925
Perry Group 150,000 463
Reko International Group, Inc. (e) 50,000 230
15,915
INDUSTRIAL MACHINERY & EQUIPMENT - 5.6%
ELECTRICAL EQUIPMENT - 1.2%
Arrow Automotive Industries, Inc. (a) 67,100 470
BMC Industries, Inc. (a)(c) 315,500 8,992
Charter Power Systems, Inc. 159,000 2,286
Expamet International Ord. 839,000 1,205
Oak Industries, Inc. (a) 61,200 1,476
Philips NV (warrants) (a) 400,000 5,353
Reunert Ltd. 25,000 77
Star Paging International Holdings Ltd. 516,000 168
Twentsche Kabel Holding NV 10,000 1,056
Vertex Communications Corp. (a)(c) 357,000 3,837
WPI Group, Inc. (a) 120,000 330
Whitecroft PLC 485,000 884
26,134
INDUSTRIAL MACHINERY & EQUIPMENT - 3.3%
Alamo Group, Inc. 31,600 442
Allied Products Corp. (a)(c) 533,400 7,401
Amtrol, Inc. 190,000 3,183
Arts Way Manufacturing Co., Inc. (a) 55,000 468
Astec Industries, Inc. (a) 232,900 3,261
CMI Corp. Oklahoma Class A (a) 329,800 2,350
CPAC, Inc. (c) 286,925 2,869
Champion Road Machinery Ltd. (e) 25,000 210
Core Industries, Inc. (c) 535,500 5,824
EDAC Technologies Corp. (a)(c) 372,300 372
Econosto NV (a) 50,000 666
Enerflex Systems Ltd. 45,000 609
FSI International, Inc. (a)(c) 518,400 6,868
Gasonics International Corp. (a) 146,500 1,612
Gehl Co. (a) 276,900 1,904
Haden Maclellan Holdings PLC Ord. 435,250 524
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
IWP International 50,000 $ 262
Imo Industries, Inc. (a) 39,000 463
JLG Industries, Inc. 109,400 3,884
K-Tron International, Inc. (a) 133,500 1,302
Kverneland Gruppen AS 112,738 1,550
Lincoln Foodservice Products, Inc. (a)(c) 329,600 4,985
Park-Ohio Industries, Inc. (a) 103,700 1,452
Powerscreen International PLC 50,000 230
Rule Industries, Inc. (a) 66,000 825
Salem Corp. 31,850 438
SkyJack, Inc. (a) 102,200 424
SkyJack, Inc. (e) 300,000 1,244
Speizman Industries, Inc. (a)(c) 252,500 1,831
Summa Industries 73,750 387
Svedala 115,000 2,444
Valmet Corp. Ord. (a) 100,000 1,920
Varlen Corp. 213,350 4,160
Wedco Technology, Inc. (a) 74,450 893
Welbilt Corporation (a) 216,600 5,090
72,347
POLLUTION CONTROL - 1.1%
American Ecology Corp. 170,400 1,534
Chempower, Inc. (a)(c) 689,600 2,500
Ecology & Environment, Inc. Class A 44,310 493
GZA GeoEnvironmental Technologies, Inc. (a) 143,300 788
Horsehead Resource Development, Inc. 197,500 741
International Recovery Corp. (c) 371,900 5,160
MFRI, Inc. (a)(c) 327,000 2,370
NSC Corp. 165,500 476
OI Corp. (a) 49,700 230
Sani Gestion, Inc. 87,400 233
Sevenson Environmental Services, Inc. (a) 99,300 1,763
TRC Companies, Inc. (a) 217,300 2,092
Tanknology Environmental, Inc. (a) 495,000 1,733
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - CONTINUED
WSA Waste Services, Inc. (a) 25,800 $ 332
Weston (Roy F.), Inc. Class A (c) 392,700 2,502
22,947
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 121,428
MEDIA & LEISURE - 3.1%
BROADCASTING - 0.7%
Canwest Global System Corp. (sub-vtg.) 131,500 2,798
Cogeco Cable, Inc. 50,000 392
Cogeco, Inc. 227,100 1,638
Emmis Broadcasting Corp. Class A (a) 25,000 356
Multimedia, Inc. (a) 103,000 3,117
New World Communications Group, Inc.:
Class A (a) 248,723 3,202
Class B 242,242 3,119
Premier Choix Tvec, Inc. Class A 171,400 1,097
Prime Television Ltd. 202,581 213
Radiomutuel, Inc. Class A 51,000 164
16,096
ENTERTAINMENT - 0.1%
Airtour PLC 60,000 435
Owners Abroad Group 100,000 154
S-K-I Ltd. 44,000 539
United Video, Inc. (a) 63,500 382
1,510
LEISURE DURABLES & TOYS - 0.6%
Baldwin Piano & Organ Co. (a)(c) 193,800 2,519
Bollinger Industrials, Inc. (a) 90,000 810
Coachmen Industries, Inc. 292,500 3,766
Coast Distribution System (a)(c) 243,200 1,824
Escalade, Inc. (a) 81,075 568
Hong Kong Toy Centre 1,000,000 98
Rawlings Sporting Goods, Inc. (a) 25,000 281
Varsity Spirit Corp. (a) 136,700 2,119
11,985
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 0.5%
Friendly Hotels PLC 226,666 $ 584
Hamilton Island Ltd. 1,000,000 606
Resort Hotels PLC 1,690,200 1,057
Sands Regent (The) 93,572 1,076
Sholodge, Inc. (a) 30,500 629
Showboat, Inc. 344,000 5,376
Sun International (Bophuthatswana) Ltd. 25,000 183
Supertel Hospitality, Inc. (a) 50,000 675
10,186
PUBLISHING - 0.2%
American Educational Products, Inc. (a)(c) 208,000 494
Artistic Greetings, Inc. 255,000 1,339
Clinton Cards PLC 244,900 359
Perskor Groep Beperk 70,500 641
Roto Smeets De Boer NV 24,500 526
Sadlier (William H.), Inc. 10,000 45
Telegraaf 5,000 484
3,888
RESTAURANTS - 1.0%
ARK Restaurants Corp. (a)(c) 225,100 1,519
Benihana National Corp. Class A (a)(c) 590,000 701
Consolidated Products, Inc. (a)(c) 557,755 5,507
Daka International, Inc. (a)(c) 300,000 4,163
Ground Round Restaurants, Inc. (a)(c) 610,400 3,891
M Corp, Inc. 323,500 1,750
Ryan's Family Steak Houses, Inc. (a) 50,000 316
Shoney's, Inc. (a) 175,800 2,483
Sportscene Restaurants, Inc. Class A 7,000 27
Uno Restaurant Corp. (a) 206,800 2,223
22,580
TOTAL MEDIA & LEISURE 66,245
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - 1.3%
AGRICULTURE - 0.1%
Bibby & Sons PLC 400,000 $ 352
Delta & Pine Land Co. 19,700 349
Kanthal AB Class B Free shares 180,000 2,179
2,880
FOODS - 0.6%
Cagle's, Inc. Class A 5,200 133
Doskocil Cos., Inc. (a) 290,600 2,397
GoodMark Foods, Inc. 78,900 1,889
Imperial Holly Corp. 107,700 942
J & J Snack Foods Corp. (a) 45,000 568
Raision Magariini OY 51,000 411
Raision Tehtaat OY V Free shares 20,200 1,889
Sonton Food Industry Co. Ltd. 500 8
Stokeley USA, Inc. (a) 175,000 2,056
TCBY Enterprises, Inc. 280,100 1,576
11,869
HOUSEHOLD PRODUCTS - 0.5%
Allou Health & Beauty Corp. Class A (a) 104,300 887
Aloette Cosmetics, Inc. 58,500 161
DEP Corp.:
Class A (a) 91,500 252
Class B (a) 11,000 32
Jean Philippe Fragrances, Inc. (a) 45,000 473
MEM Co. (a) 37,400 150
Oriflame International SA 423,700 1,720
Paragon Trade Brands, Inc. (a) 200,900 4,846
Safeskin Corp. (a) 182,900 3,154
11,675
TOBACCO - 0.1%
UST, Inc. 25,000 722
WD & HO Wills Holdings Ltd. 603,000 1,681
2,403
TOTAL NONDURABLES 28,827
PRECIOUS METALS - 1.1%
Coolgardie Gold 1,000,000 251
Equity Silver Mines Ltd. Class A 1,000,000 592
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
PRECIOUS METALS - CONTINUED
GoldCorp, Inc. Class A (a) 800,000 $ 4,472
Industrias Penoles SA 5,400,000 14,717
Miramar Mining Corp. 75,000 304
Miramar Mining Corp., Series A (warrants) (a) 50,000 76
Richmont Mines, Inc. (a) 382,700 1,173
St. Barbara Mines Ltd. (a) 754,400 1,082
Wheaton River Minerals (a) 250,000 442
23,109
RETAIL & WHOLESALE - 2.7%
APPAREL STORES - 0.6%
Baker (J.), Inc. 128,300 2,438
Chateau Stores of Canada Ltd. Class A 142,900 1,211
Claire's Stores, Inc. 33,100 410
Dress Barn, Inc. (a) 340,000 2,975
Nasan Industrial Co. (a) 5,000 212
One Price Clothing Stores, Inc. (a) 429,700 6,015
Pantorama Industries, Inc. (a) 75,000 74
13,335
DRUG STORES - 0.2%
Medicine Shoppe International, Inc 206,000 4,841
GENERAL MERCHANDISE STORES - 0.9%
Algonquin Mercantile Corp. 52,200 113
Bradlees, Inc. 51,500 766
Caldor Corp. (a) 128,600 3,746
Casey's General Stores, Inc. 359,900 4,409
Dairy Mart Convernience Stores, Inc. Class B (a) 31,500 134
National Convenience Stores (a) 322,200 3,544
T&S Stores PLC 600,000 1,575
Uni Marts, Inc. 110,700 609
Value City Department Stores, Inc. (a) 67,700 922
Venture Stores, Inc. 75,000 1,388
WEW Group PLC 3,960,480 2,201
19,407
GROCERY STORES - 0.2%
Low (William) Ord. 300,000 1,505
Riser Foods, Inc. Class A (a) 304,400 2,055
3,560
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS- 0.8%
Best Products, Inc. (a) 105,000 $ 801
Brookstone, Inc. (a) 111,300 1,363
Celebrity, Inc. (a) 54,500 204
Circuit City Stores, Inc. 50,000 1,094
Finish Line, Inc. Class A (a)(c) 257,600 2,255
Little Switzerland, Inc. (a) 116,500 728
Luria (L.) & Son, Inc. (a) 230,000 1,811
Natural Wonders, Inc. (a) 45,000 197
Partridge Fine Arts PLC 350,000 486
Reeds Jewelers, Inc. (a) 83,050 851
Rex Stores Corp. (a) 101,000 1,679
Sound Advice, Inc. (a)(c) 370,900 2,226
Sun Television & Appliances, Inc. 76,000 741
Zale Corp. (a) 205,000 1,844
16,280
TRADING COMPANIES - 0.0%
Li & Fung Ltd. 1,379,400 902
TOTAL RETAIL & WHOLESALE 58,325
SERVICES - 2.8%
ADVERTISING - 0.1%
American List Corp. 75,580 1,379
CMG Information Services, Inc. (a) 80,000 680
2,059
LEASING & RENTAL - 0.1%
COMCOA, Inc. (a) 92,400 1,270
Gowrings PLC 175,000 195
Sydney Aquarium Ltd. 250,000 481
1,946
PRINTING - 1.1%
Cadmus Communications Corp. 294,500 5,227
City Investing Co. Liquidating Trust (a) 25,000 16
Devon Group, Inc. (a)(c) 670,600 13,412
Paris Business Forms, Inc. (a)(c) 215,500 485
Pubco Corp. (a)(c) 150,000 750
Skybox International, Inc. (a) 343,300 3,991
23,881
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - 1.5%
Adam & Harvey Group PLC Ord. 50,000 $ 328
Adia Services, Inc. 61,300 2,023
American Business Information, Inc. 5,000 70
Amresco, Inc. (c) 676,000 5,745
Borg Warner Securities Corp. (a) 60,300 678
Children's Discovery Center Class A (a) 100,000 1,375
Concord Career Colleges, Inc. (a) 130,000 17
First Service Corp. (special warrants) (a) 100,000 360
Goldfarb Class A. (a) 50,000 631
Harlyn Products, Inc. (a) 111,675 530
Health Care Services Group, Inc. (a) 100,000 1,225
Lawyers Title Corp. 227,000 2,838
Marietta Corp. (a) 169,000 1,563
Norrell Corp. (GA) 16,000 228
Oroamerica, Inc. (a) 298,900 2,167
Pages, Inc. (Ohio) 50,000 359
Plasti Line, Inc. (a) 74,100 519
Programming & Systems, Inc. (c) 313,300 3
RCO Holdings PLC 39,400 186
Right Management Consultants, Inc. (a)(c) 259,000 5,310
Scandiaconsult AB Free shares 100,000 683
Seattle FilmWorks, Inc. (a)(c) 302,200 4,457
TRO Learning, Inc. (a) 12,200 92
Thomas Group (a) 17,400 209
31,596
TOTAL SERVICES 59,482
TECHNOLOGY - 8.6%
COMMUNICATIONS EQUIPMENT - 0.9%
Circuit Systems, Inc. (a)(c) 507,500 2,918
Cisco Systems, Inc. 75,000 1,575
Code-Alarm, Inc. (a) 45,000 450
Communications Systems, Inc. 34,500 380
Dialogoc Corp. (a) 25,000 300
Digital Systems International, Inc. (a)(c) 670,900 2,684
Keptel, Inc. (a)(c) 416,500 6,924
Lannet Data Communications Ltd. (a) 100,000 825
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT - CONTINUED
MB Communications, Inc. 112,700 $ 1,155
Microlog Corp. (a)(c) 214,600 201
Napco Security Systems, Inc. (a)(c) 229,500 861
Xircom, Inc. 20,000 320
Zoom Telephonics, Inc. (a) 54,500 422
19,015
COMPUTER SERVICES & SOFTWARE - 2.5%
AutoInfo, Inc. (a)(c) 601,500 1,805
Brandon Systems Corp. 85,500 1,293
Broadway & Seymour, Inc. (a) 31,400 424
CompuCom Systems, Inc. (a) 302,500 832
Computer Data Systems, Inc. (c) 529,200 6,880
Computer Horizons Corp. (a) 265,675 2,989
EIS International, Inc. (a) 177,500 1,753
Educational Insights, Inc. (a) 26,000 208
Enator Information System AB B Free shares (a) 181,800 784
Enea Data AB B Free shares 122,700 1,122
Getronics NV 253,841 6,666
Government Technology Services, Inc. (a)(c) 666,500 7,748
Group 1 Software, Inc. (a) 128,100 929
Hartco Enterprises, Inc. 386,200 1,881
Inacom Corp. (a)(c) 545,900 4,435
Integrated Systems, Inc. (a) 20,000 225
Intera Information Technologies Corp. Class A (a) 100,000 379
Merkantildata 37,500 217
SPSS, Inc. (a) 20,000 175
Skrivervik Data 73,000 972
Software Spectrum, Inc. (a)(c) 242,300 3,210
Sterling Software, Inc. (a) 184,900 5,547
Triconex Corp. (a) 206,570 3,253
53,727
COMPUTERS & OFFICE EQUIPMENT - 2.2%
Black Arrow Group 1,161,000 717
CSP, Inc. (a) 66,800 635
Computer Automation, Inc. (a)(c) 100,000 1
Cray Research, Inc. (a) 126,000 2,583
Dataflex Corp. (a)(c) 271,500 2,138
Future Now, Inc. (a)(c) 656,000 5,412
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Interface Systems, Inc. (c) 321,000 $ 1,424
Interphase Corp. (a)(c) 414,800 2,592
Micronics Computers, Inc. (a)(c) 954,600 3,937
P & P PLC 800,000 914
PenTech International, Inc. (a) 445,300 2,560
Printronix, Inc. (a)(c) 217,000 2,984
Quantum Corp. (a) 250,000 4,094
Rexon, Inc. (a)(c) 640,200 3,441
Robec, Inc. (a) 216,500 352
SBE, Inc. (a)(c) 146,100 1,096
Scribona AB B free shares 100,000 515
Seagate Technology (a) 348,000 9,266
Semi-tech Microelectronics 500,000 932
Sequoia Systems, Inc. 160,000 740
Syquest Technology, Inc. (a) 89,700 841
Trident Microsystems, Inc. (a) 57,000 314
47,488
ELECTRONIC INSTRUMENTS - 0.8%
ASECO Corp. (a) 36,000 243
Aetrium, Inc. (a) 160,600 1,526
BTU International, Inc. (a)(c) 532,200 1,464
Cohu, Inc. (c) 404,100 7,021
Cubic Corp. 75,300 1,393
DSP Technology, Inc. (a)(c) 168,600 569
Electro Scientific Industries, Inc. (a) 139,900 1,250
Megatest Corp. (a) 215,100 3,576
Milltronics Ltd. (a) 25,000 230
Reliability, Inc. 25,000 100
17,372
ELECTRONICS - 2.2%
Advance Circuits, Inc. (a) 293,100 2,821
Advanced Micro Devices, Inc. (a) 318,000 8,586
Allgon AB B Free shares 60,000 757
Bel Fuse, Inc. (a)(c) 368,400 2,256
Benefon Oy 1,000 346
Bergman & Beving AB B Free shares 37,500 652
Cascade Communications Corp. 5,500 83
Dallas Semiconductor Corp. (a) 100,000 1,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Exar Corp. (a)(c) 576,600 $ 17,587
Finvest B 357,500 494
Finvest OY Free shares B (warrants) (a) 65,000 24
LSI Logic Corp. of Canada (a) 50,000 119
Lattice Semiconductor Corp. (a) 238,900 4,420
Merix Corporation (a) 110,000 1,141
NView Corp. (a) 215,000 1,317
Proxima Corp. 45,000 602
Siliconix, Inc. (a) 35,800 277
Standard Microsystems Corp. (a) 105,000 1,575
Sterling Electronics Corp. (a) 266,000 2,959
Supertex, Inc. (a) 35,000 144
Varitronix International Ltd. 500,000 712
Video Display Corp. (a)(c) 229,500 631
49,003
PHOTOGRAPHIC EQUIPMENT - 0.0%
Photo Me International PLC 25,000 89
TOTAL TECHNOLOGY 186,694
TRANSPORTATION - 1.9%
AIR TRANSPORTATION - 0.2%
CHC Helicopter Corp. `A' 85,000 537
Great Lakes Aviation (a) 41,200 268
Helikopter Services 293,710 4,570
5,375
RAILROADS - 0.2%
Algoma Central Corp. (a) 46,200 583
Portec, Inc. (a)(c) 232,300 3,369
3,952
SHIPPING - 0.3%
ETAC Sales Ltd. (a) 215,000 68
Global Ocean Carriers Ltd. (c) 266,000 632
Maritrans, Inc. (a) 500,300 2,439
Sea Containers Ltd. 171,700 2,812
5,951
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - 1.2%
Anuhco, Inc. (a) 351,800 $ 2,682
Arkansas Best Corp. 599,600 7,270
Arnold Industries, Inc. 172,500 3,213
Cannon Express, Inc.:
Class A (a) 146,700 1,724
Class B (a)(c) 225,600 2,087
Intertrans Corp. 417,600 5,585
Marten Transport Ltd. (a) 156,400 2,737
OTR Express, Inc. (a) 40,000 305
25,603
TOTAL TRANSPORTATION 40,881
UTILITIES - 4.8%
ELECTRIC UTILITY - 1.4%
Central Maine Power Co. 385,700 4,532
Northern Ireland Electric PLC 2,000,000 11,086
Seeboard PLC 1,800,000 9,783
South Western Electricity PLC 500,000 4,925
30,326
GAS - 0.3%
Allegheny & Western Energy Corp. (a)(c) 410,800 3,544
Aquila Gas Pipeline Corp. 120,000 1,155
Atco Ltd. 150,000 1,515
Southwestern Energy Co. 38,700 653
6,867
TELEPHONE SERVICES - 0.3%
Davel Communications Group, Inc. (a) 207,300 1,918
Koninklijke PTT Nederland (e) 132,200 3,717
Telebras PN (Pfd. Reg.) 9,800,000 459
6,094
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
WATER - 2.8%
Northumbrian Water Group PLC Ord. 2,600,146 $ 25,372
Southern Water PLC Ord. 675,000 6,107
Welsh Water PLC Ord. 3,050,000 29,221
60,700
TOTAL UTILITIES 103,987
TOTAL COMMON STOCKS
(Cost $1,465,114) 1,644,411
PREFERRED STOCKS - 0.7%
CONVERTIBLE PREFERRED STOCKS - 0.5%
ENERGY - 0.2%
OIL & GAS - 0.2%
Gerrity Oil&Gas Corp. $1.50 230,000 3,536
Patrick Peteroleum Co. (a) 80,200 702
4,238
HOLDING COMPANIES - 0.1%
Trafalgar House PLC 6% 1,333,332 2,203
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
AGCO Corp., depositary shares representing 1/10
pfd. $1.625 31,000 1,852
SERVICES - 0.1%
Automated Security Holdings 6% 2,013,000 1,865
TOTAL CONVERTIBLE PREFERRED STOCKS 10,158
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.1%
Trilon Financial Corp.:
Class 1, Series A 87,100 $ 849
Class 2, Series 3 125,000 1,240
2,089
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Nokia 25,000 2,409
MEDIA & LEISURE - 0.0%
RESTAURANTS - 0.0%
Sportscene Restaurants, Inc. $0.18 1,798 2
TOTAL NONCONVERTIBLE PREFERRED STOCKS 4,500
TOTAL PREFERRED STOCKS
(Cost $14,036) 14,658
CORPORATE BONDS - 0.3%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B) (000S)
CONVERTIBLE BONDS - 0.3%
BASIC INDUSTRIES - 0.1%
PAPER & FOREST PRODUCTS - 0.1%
St. Laurent Paperboard, Inc. 8%, 6/15/04 (e) - $ 1,350 1,052
CONGLOMERATES - 0.1%
Brascan Ltd. 7%, 10/15/02 - 3,000 2,153
ENERGY - 0.0%
OIL & GAS - 0.0%
Swift Energy Co. 6 1/2%, 6/30/03 - CAD 900 889
HOLDING COMPANIES - 0.0%
Brierley Investements Ltd. 9%, 6/30/98 - NZD 625 452
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Park Ohio Industrials, Inc. 7 1/4%, 6/15/04 (d) - $ 2,000 $ 2,000
MEDIA & LEISURE - 0.0%
RESTAURANTS - 0.0%
Consolidated Products, Inc. 10%, 11/30/02 - 135 419
TOTAL CONVERTIBLE BONDS 6,965
NONCONVERTIBLE BONDS - 0.0%
TECHNOLOGY - 0.0%
ELECTRONICS - 0.0%
Finvest OY 5 1/2%, 5/30/97 - FIM 325 62
TOTAL CORPORATE BONDS
(Cost $6,307) 7,027
U.S. TREASURY OBLIGATIONS - 6.7%
U.S. Treasury Bill, yield at time of purchase
4.23%, 9/29/94 (Cost $144,056) - 145,000 144,056
REPURCHASE AGREEMENTS - 16.3%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 4.23% dated
7/29/94 due 8/1/94 $ 353,338 353,213
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,982,726) $ 2,163,365
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE VALUE GAIN/(LOSS)
CONTRACTS TO SELL
19,666 GBP 9/7/94 $ 30,323 $ (726)
(Receivable amount $29,597)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.4%
CURRENCY ABBREVIATIONS
GBP - British pound
CAD - Canadian dollar
FIM - Finnish markka
NZD - New Zealand dollar
LEGEND
(a) Non-income producing.
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Affiliated company (see Note 5 of Notes to Financial Statements).
(d) 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:
SECURITY ACQUISITION ACQUISITION DATE COST
Belden &
Blake Corp. 12/8/92 $ 788,000
Park Ohio
Industrials, Inc.
7 1/4%, 6/15/04 6/6/94 2,000,000
(e) 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 $24,279,000 or 1.1% of net
assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 78.9%
United Kingdom 7.6
Canada 4.3
Sweden 1.4
Finland 1.3
Others (individually less than 1%) 6.5
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1994, the aggregate cost of investment securities for income
tax purposes was $1,983,090,000. Net unrealized appreciation aggregated
$180,275,000, of which $320,764,000 related to appreciated investment
securities and $140,489,000 related to depreciated investment securities.
The fund hereby designates $30,908,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JULY 31, 1994
ASSETS
Investment in securities, at value (including repurchase $ 2,163,365
agreements of $353,213) (cost $1,982,726) (Notes 1
and 2) - See accompanying schedule
Receivable for investments sold 28,024
Receivable for fund shares sold 5,427
Dividends receivable 3,345
Interest receivable 78
Other receivables 79
TOTAL ASSETS 2,200,318
LIABILITIES
Payable for investments purchased $ 27,150
Unrealized depreciation on foreign currency contracts 726
(Note 2)
Payable for fund shares redeemed 3,629
Accrued management fee 1,456
Other payables and accrued expenses 792
TOTAL LIABILITIES 33,753
NET ASSETS $ 2,166,565
Net Assets consist of (Note 1):
Paid in capital $ 1,751,762
Undistributed net investment income 5,052
Accumulated undistributed net realized gain (loss) on 229,785
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 179,966
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 122,960 shares outstanding $ 2,166,565
NET ASSET VALUE and redemption price per share $17.62
($2,166,565 (divided by) 122,960 shares)
Maximum offering price per share (100/97.00 of $17.62) $18.16
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1994
INVESTMENT INCOME $ 23,785
Dividends (including $2,100 received from affiliated
issuers) (Note 5)
Interest 10,437
TOTAL INCOME 34,222
EXPENSES
Management fee (Note 4) 13,869
Basic fee
Performance adjustment 2,553
Transfer agent fees (Note 4) 5,590
Redemption fees (39)
Accounting fees and expenses (Note 4) 759
Non-interested trustees' compensation 13
Custodian fees and expenses 592
Registration fees 93
Audit 49
Legal 16
Interest (Note 6) 1
Reports to shareholders 191
Miscellaneous 90
Total expenses before reductions 23,777
Expense reductions (Note 7) (170) 23,607
NET INVESTMENT INCOME 10,615
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:
Investment securities (including realized gain (loss) of 301,865
$24,316 on sales of investments in affiliated issuers)
Foreign currency transactions (106)
Futures contracts (156) 301,603
Change in net unrealized appreciation (depreciation) on:
Investment securities (54,727)
Assets and liabilities in foreign currencies (673) (55,400)
NET GAIN (LOSS) 246,203
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 256,818
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ 10,615 $ 20,421
Net investment income
Net realized gain (loss) 301,603 169,509
Change in net unrealized appreciation (depreciation) (55,400) 173,681
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 256,818 363,611
FROM OPERATIONS
Distributions to shareholders: (18,316) (8,044)
From net investment income
From net realized gain (185,598) (52,753)
TOTAL DISTRIBUTIONS (203,914) (60,797)
Share transactions 562,786 1,992,575
Net proceeds from sales of shares
Reinvestment of distributions 200,318 59,933
Cost of shares redeemed (766,243) (1,167,948)
Redemption fees (Note 1) 449 743
Net increase (decrease) in net assets resulting from (2,690) 885,303
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 50,214 1,188,117
NET ASSETS
Beginning of period 2,116,351 928,234
End of period (including undistributed net investment $ 2,166,565 $ 2,116,351
income of $5,052 and $18,918, respectively)
OTHER INFORMATION
Shares
Sold 32,038 127,402
Issued in reinvestment of distributions 11,968 4,052
Redeemed (44,188) (70,445)
Net increase (decrease) (182) 61,009
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31, DECEMBER 27,
1989
(COMMENCEMENT
OF
OPERATIONS) TO
JULY 31,
1994 1993 1992 1991 1990
SELECTED PER-SHARE
DATA
Net asset value, $ 17.19 $ 14.94 $ 12.63 $ 10.74 $ 10.00
beginning of period
Income from Investment
Operations
Net investment income .06 .15 .11 .17 E .12
Net realized and 2.15 2.88 2.93 2.09 .60
unrealized gain
(loss)
Total from investment 2.21 3.03 3.04 2.26 .72
operations
Less Distributions
From net investment (.16) (.10) (.15) (.14) -
income
From net realized gain (1.62) (.69) (.60) (.26) -
Total distributions (1.78) (.79) (.75) (.40) -
Redemption fees added .00 .01 .02 .03 .02
to paid in capital
Net asset value, end of $ 17.62 $ 17.19 $ 14.94 $ 12.63 $ 10.74
period
TOTAL RETURN B, C 13.67% 21.32% 25.55% 22.72% 7.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,167 $ 2,116 $ 928 $ 256 $ 116
(in millions)
Ratio of expenses to 1.13% 1.12% 1.20% 1.36% 1.92%A
average net assets D
Ratio of expenses to 1.14% 1.12% 1.20% 1.36% 1.92%A
average net assets
before expense
reductions D
Ratio of net investment .51% 1.00% 1.27% 2.14% 3.77%A
income to average net
assets
Portfolio turnover rate 54% 47% 82% 84% 126%A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D SEE NOTE7 OF NOTES TO FINANCIAL STATEMENTS.
E NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.02 PER SHARE.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Low-Priced Stock 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 prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Effective August 1, 1993, the fund adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts ,
disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on securities transactions, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received. Further, as permitted under the SOP, the
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the
effects of changes in market prices of those securities, but are included
with the net realized and unrealized gain or loss on investment in
securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
as the fund is informed of the ex-dividend date. Interest income, which
includes accretion of original issue discount, is accrued as earned.
Investment income is recorded net of foreign taxes withheld where recovery
of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions and losses deferred due to wash sales. The
fund also utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for income
tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
REDEMPTION FEES. Shares held in the fund less than 90 days are subject to a
redemption fee equal to 1.50% of the proceeds of the redeemed shares. A
portion of the fee is accounted for as a reduction of transfer agent
expenses. This portion of the redemption fee is used to offset the
transaction costs and other expenses that short-term trading imposes on the
fund and its shareholders. The remainder of the redemption fee is accounted
for as an addition 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 $8,242,000, a decrease in undistributed
net investment income of $1,921,000 and a decrease in accumulated net
realized gain on investments of $6,321,000.
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, as reflected in the schedule of
investments under the caption "Forward Foreign Currency Contracts",
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 any realized gain (loss) is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible for
determining that the value of these underlying securities remains at least
equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of FMR, may transfer uninvested cash balances into one or more
joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
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
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures and options
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
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
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.
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 $3,313,000 or 0.2% of net assets.
3. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $969,201,000 and $1,381,140,000, respectively, of which U.S.
government and government agency obligations sales aggregated $7,933,000.
The market value of futures contracts opened and closed amounted to
$25,062,000 and $24,906,000, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .30% to .52% for the period from August 1, 1993 to
October 31, 1993 and .285% to .520% for the period from November 1, 1993 to
July 31, 1994. In the event that these rates were lower than the
contractual rates in effect during those periods, FMR voluntarily
implemented the above rates, as they resulted in the same or a lower
management fee. The annual individual fund fee rate is .35%. The basic fee
is subject to a performance adjustment (up to a maximum of (plus/minus)
.20%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .79% of average net
assets after the performance adjustment.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2700% to .5200%. Effective August 1, 1994, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the fund, received sales
charges of $3,127,000 on sales of shares of the fund.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives fees based on the type, size,
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES - CONTINUED
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 FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $358,000 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 PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
AEP Industries, Inc. $ 529 $ 41 $ - $ -
AMRE, Inc. - 4,277 61 3,501
ARI Holdings, Inc. (a) 69 - - 726
ARK Restaurants Corp. (a) - 16 - 1,519
Abington Savings Bank (Mass.) (a) 153 875 - -
Aceto Corp. - 2,610 41 4,121
Advance Circuits, Inc. (a) 164 1,388 - -
Alamco, Inc. (a) 39 - - 1,537
Allegheny & Western Energy
Corp. (a) - 1,083 - 3,544
Allied Products Corp. (a) 420 376 - 7,401
Allied Research Corp. (a) 414 - - 1,442
American Consumers Products,
Corp. (a) - 47 - 592
American Educational Products,
Inc. (a) 449 - - 494
American Indemnity Financial Corp. 744 - 17 1,989
Amresco, Inc. 1,600 - - 5,745
Andover BanCorp, Inc. (Del.) - 1,209 12 -
AutoInfo, Inc. (a) 937 10 - 1,805
Aztec Manufacturing Co. 1,377 - 8 2,730
BFS Bankorp, Inc. (a) - 648 - -
BMC Industries, Inc. (a) 118 831 - 8,992
BTU International, Inc. (a) - 31 - 1,464
Baldwin Piano & Organ Co. (a) - 1,022 - 2,519
Bankunited Financial Corp. Class A 80 - 3 695
Banyan Short Term Income Trust
(SBI) (a) 443 - - 1,306
Banyan Strategic Land Trust (SBI) 969 - 298 4,153
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Bel Fuse, Inc. (a) $ - $ 337 $ - $ 2,256
Belden & Blake Corp. (a) 1,099 - - 5,431
Benihana National Corp.
Class A (a) - - - 701
Benihana National Corp. (a) - 363 - -
Bird Medical Technologies, Inc. (a) - - - 1,608
Braintree Savings Bank (Mass.) - 350 6 -
Brock Exploration Corp. (a) 74 - - 667
Bush Industries, Inc. Class A - 1,070 - -
CB Bancorp, Inc. (a) 582 - - 1,553
CPAC, Inc. 362 - - 2,869
CSP, Inc. (a) - 818 - -
Cadmus Communications Corp. 35 79 - -
Calumet Bancorp, Inc. (a) 314 1,194 - -
Cannon Express, Inc. Class B (a) 902 - - 2,087
Castle Energy Corp. (a) 6,174 - - 14,159
Cavco Industries, Inc. (a) - 34 - 3,141
Cenit Bancorp, Inc. - 304 22 2,662
Champion Parts, Inc. (a) - 1,145 - -
Chempower, Inc. (a) 105 - - 2,500
Circle Financial Corp. - - 16 1,602
Citadel Holding Corp. (a) 365 5,026 - -
Circuit Systems, Inc. (a) 427 122 - 2,918
Cliffs Drilling Co. (a) 416 - - 3,611
Coast Distribution System (a) 4 - - 1,824
Cohu, Inc. 2,108 359 45 7,021
Cold Metal Products, Inc. (a) 2,741 - - 3,937
Columbus Energy Corp. (a) 852 - - 2,369
Computer Automation, Inc. (a) - - - 1
Computer Data Systems, Inc. - 107 27 6,880
Concord Fabrics, Inc. Class A (a) - - - 1,731
Consolidated Products, Inc. (a) - 53 - 5,507
ConVest Energy Corp. (a) - - - 2,728
Cooperative Bank Savings, Inc. (a) - 96 - 2,834
Core Industries, Inc. 180 - 32 5,824
DMI Furniture, Inc. (a) - 197 - 457
DS Banco, Inc. - 421 - -
DSP Technology, Inc. (a) - - - 569
Daka International, Inc. (a) 374 473 - 4,163
Dataflex Corp. (a) 739 254 - 2,138
Datron Systems, Inc. (Calif.)(a) 1,082 - - 2,039
Datametrics Corp. (a) - 89 - -
Decorator Industries, Inc. 646 - 16 1,943
Devon Group, Inc. (a) 75 41 - 13,412
Digital Systems International,
Inc. (a) 36 757 - 2,684
Drew Industries, Inc. (a) 460 872 - 4,106
Durakon Industries, Inc. (a) 776 638 - 6,451
EDAC Technologies Corp. (a) - - - 372
ENEX Resources Corp. - - 14 1,768
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Eagle Financial Corp. $ - $ 311 $ - $ -
Elco Industries, Inc. 2,051 - 96 6,358
Eljer Industries, Inc. (a) 764 - - 4,014
Exar Corp. (a) 700 - - 17,587
FFE Financial - 388 - -
FSI International, Inc. (a) 975 99 - 6,868
Federal Savings Bank -
New Britain (CT) - 441 - -
Federal Screw Works 140 - 21 1,743
Financial Security Corp. (a) - 1,255 - 1,479
Finish Line, Inc. Class A (a) 625 - - 2,255
First Federal Savings Bank
of Puerto Rico 1,575 440 - 10,402
First Federal Savings & Loan
(Conn.) - 50 5 -
First Southeast Financial Corp. 1,648 475 - -
First State Financial Services, Inc. 144 146 29 2,508
Future Now, Inc. (a) 768 714 - 5,412
GBC Bancorp (Calif.) 452 - 74 6,466
G-III Apparel Group Ltd. (a) 70 797 - 1,617
Giant Industries, Inc. (a) 2,274 825 - 8,952
Global Ocean Carriers Ltd. 12 30 13 632
Government Technology
Services, Inc. (a) 991 - - 7,748
Ground Round Restaurants,
Inc. (a) - 78 - 3,891
HF Financial Corp. 67 1,662 14 -
HPSC, Inc. - 16 - -
Haven Bancorp, Inc. 187 2,823 - -
Homeowners Group, Inc. 83 - - 825
Huffman Koos, Inc. (a) 81 76 - 2,507
Inacom Corp. (a) - 2,723 - 4,435
Independence Federal Savings
Bank 485 - 24 926
Independent Bank Corp. (Mass.) - 250 - -
Interface Systems, Inc. 302 221 34 1,424
International Jenson, Inc. (a) 485 258 - 5,387
International Recovery Corp. 2,474 600 19 5,160
Interphase Corp. (a) - 242 - 2,592
Intertrans Corp. - 53 - -
K-tron International, Inc. - 48 - -
Kankakee Bancorp, Inc. - 743 - -
Keptel, Inc. (a) - 128 - 6,924
Kinark Corp. (a) 10 - - 1,436
Koss Corp. (a) 1,334 559 - -
LF Bancorp, Inc. (a) 38 - - 774
Libbey, Inc. 178 1,138 135 15,034
Lincoln Foodservice Products,
Inc. (a) - - - 4,985
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Lund International Holdings,
Inc. (a) $ 808 $ 185 $ - $ 6,468
MFRI, Inc. (a) 419 21 - 2,370
MSB Bancorp, Inc. - 473 - -
Marietta Corp. (a) - 536 - -
Marion Capital Holdings, Inc. - 374 98 2,828
Mark Controls Corp. - 1,650 - -
Maryland Federal Bancorp, Inc. - 1,241 92 -
Medalist Industries, Inc. (a) 329 2,103 - 1,714
Merchants Group, Inc. - 8 61 4,937
Mercury Air Group (a) 487 - - 1,234
Metro Bancshares, Inc. - 565 262 7,816
Microlog Corp. (a) 354 555 - 201
Micronics Computers, Inc. - 269 - 3,937
Mid South Insurance Co. 352 102 54 2,904
Miller Building Systems, Inc. (a) 69 - - 679
NAI Technologies, Inc. - 532 - -
NFS Financial Corp. - 369 88 3,222
Napco Security Systems, Inc. (a) 60 - - 861
Nematron Corp. (a) - 189 - -
O'Brien Energy Systems, Inc.
Class A - 664 - -
Oriole Homes Corp. Class B 7 - 47 1,958
Paris Business Forms, Inc. (a) - 83 - 485
Patrick Industries, Inc. 1,658 43 - 4,938
Petroleum Development Corp. (a) 133 125 - 1,406
Plains Spirit Financial Corp. - 1,176 - -
Polk Audio, Inc. (a) - 21 - 870
Printronix, Inc. (a) - 286 - 2,984
Programming & Systems, Inc. - 394 - 3
Progressive Bank, Inc. 315 194 12 -
Portec, Inc. (a) 295 - - 3,369
Pubco Corp. (a) - - - 750
Quixote Corp. 439 563 - 10,886
RB&W Corp. (a) 1,548 124 - 3,087
Raytech Corp. (a) 79 - - 858
Republic Automotive Parts,
Inc. (a) - 241 - 4,555
Rexon, Inc. (a) - 360 - 3,441
Right Management Consultants,
Inc. (a) 1,473 26 - 5,310
Roanoke Electric Steel Corp. 1,403 951 76 4,235
Robec, Inc. (a) - 419 - -
Ropak Corp. (a) - 307 - 1,806
SBE, Inc. (a) - 522 - 1,096
Scientific Software Intercomp,
Inc. (a) 113 382 - 1,449
Seattle FilmWorks, Inc. (a) - 398 - 4,457
Serv-Tech, Inc. (a) - - - 2,535
Sico, Inc. - - - 1,928
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Slater Industries Class B (a) $ 871 $ - $ - $ 3,076
Smalls Oilfield Services Corp. (a) - - - 759
Software Spectrum, Inc. (a) 628 - - 3,210
Sound Advice, Inc. (a) - - - 2,226
Span-America Medical Systems,
Inc. - 781 7 -
Spartech Corp. (a) 346 - - 3,288
Speizman Industries, Inc. (a) 1,311 - - 1,831
Steel of West Virginia, Inc. (a) 1,443 - - 7,285
Sterling Electronics Corp. (a) - 357 - -
Stewart Information Services Corp. 548 - 54 9,260
Suburban Bancorporation, Inc. 853 902 15 -
Summit Bancorp, Inc. Washington - - 12 1,818
Sunrise Bancorp 2,265 2,124 - -
Surrey Metro Savings Credit Union
(non-vtg.) 43 - - 2,596
Third Financial Corp. 81 - 14 1,224
Toastmaster, Inc. - 165 23 3,927
Transtechnology Corp. 460 590 23 -
Travel Ports of America (a) 251 - - 826
UF Bancorp, Inc. - 1,023 - -
US Intec, Inc. (a) - - - 1,744
Uni Select 1,503 353 - 4,082
Universal Health Services,
Inc. Class B (a) 2,213 1,600 - 31,000
Valley Forge Corp. - 19 - -
Vertex Communications Corp. (a) - 1,128 - 3,837
Video Display Corp. (a) - - - 631
WPI Group, Inc. (a) 150 357 - -
Warren Bancorp, Inc. (a) 470 76 - 2,009
Watsco, Inc. Class A 37 309 48 4,236
Watsco, Inc. Class B 41 24 13 1,178
West Massachusetts Bancshares,
Inc. - - 19 -
Weston (Roy F.), Inc. Class A - 671 - 2,502
Windmere - 555 - -
Wise Stores, Inc. Class A
(sub-vtg.) (a) - 394 - -
Wynn's International, Inc. 11 - - 6,221
Total $ 72,212 $ 75,131 $ 2,100 $ 525,482
(a) Non-income producing.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balance during the period for which
the loan was outstanding amounted to $5,129,000 . The weighted average
interest rate was 3.87%.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$170,000 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of Fidelity
Low-Priced Stock Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Puritan Trust: Fidelity Low-Priced Stock Fund, including the
schedule of portfolio investments, as of July 31, 1994, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the four years in the period then ended
and for the period December 27, 1989 (commencement of operations) to July
31, 1990. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1994 by correspondence with the custodian
and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Puritan Trust:Fidelity Low-Priced Stock Fund as of July 31,
1994, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the four years in the period then ended
and for the period December 27, 1989 (commencement of operations) to July
31, 1990, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 2, 1994
DISTRIBUTIONS
The Board of Trustees of Fidelity Low-Priced Stock Fund voted to pay on
September 6, 1994, to shareholders of record at the opening of business on
September 2, 1994, a distribution of $1.59 derived from capital gains
realized from sales of portfolio securities and a dividend of $.03 from net
investment income.
4.0% of the dividends distributed during the fiscal year was derived from
interest on U.S. government securities which is generally exempt from state
income tax.
10% of the dividends distributed during the fiscal year qualifies for the
dividends-received deductions for corporate shareholders.
The fund will notify shareholders in January 1995 of these percentages for
use in preparing 1994 income tax returns.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)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.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Management & Research
U.K. Inc. (FMR U.K.)
London, England
Fidelity Management & Research
Far East Inc. (FMR Far East)
Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Joel Tillinghast, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY GROWTH FUNDS
Blue Chip Growth Fund
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FIDELITY
(REGISTERED TRADEMARK)
BALANCED
FUND
ANNUAL REPORT
JULY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 39 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 43 Notes to the financial statements.
REPORT OF INDEPENDENT 49 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR
GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The first half of 1994 was an unsettling time for many investors. For
example, after three years of a nearly perfect environment for stock market
investing, stock prices generally fell from February through June. Bond
prices have fallen as well. Investors disagree about whether these declines
represent only a short-term correction or signal the beginning of a longer
bear market. One can collect statistics to support either opinion, but of
course, nobody knows for sure what will happen in the months ahead.
We do know, however, that market declines are a normal part of investing.
We have historically seen corrections of 10% or more every two years.
That's why I thought this might be a good time to review three basic
investment principles that have proven helpful to successful investors in
every market cycle.
First, take a long-term approach when investing. If you can afford to leave
your money invested through the inevitable ups and downs of financial
markets, you will greatly reduce your vulnerability to any single decline.
Over time, for example, stock prices have gone up - and have significantly
outperformed other types of investments and stayed ahead of inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. 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 JULY 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Balanced 0.37% 63.08% 126.09%
S&P 500(registered trademark) 5.16% 54.91% 138.51%
Lehman Brothers Aggregate Bond Index 0.09% 50.02% n/a
Average Balanced Fund 2.33% 48.94% 103.09%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on November 6, 1986. For example, if you had invested $1,000 in a
fund that had a 5% return over the past year, you would have $1,050. 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 159 balanced funds tracked by Lipper
Analytical Services. These benchmarks include reinvested dividends and
capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Balanced 0.37% 10.28% 11.11%
S&P 500 5.16% 9.15% 11.89%
Lehman Brothers Aggregate Bond Index 0.09% 8.45% n/a
Average Balanced Fund 2.33% 8.24% 9.53%
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 Standard Aggregate Bond Index (SH01)
11/30/86 10000.00 10000.00 10000.00
12/31/86 9970.56 9745.00 10037.00
01/31/87 10490.67 11057.65 10178.52
02/28/87 10765.45 11494.43 10248.75
03/31/87 10942.82 11826.62 10202.63
04/30/87 10675.43 11721.36 9923.08
05/31/87 10625.92 11823.34 9884.38
06/30/87 10845.17 12420.42 10020.79
07/31/87 10995.11 13050.13 10012.77
08/31/87 11135.04 13536.90 9959.70
09/30/87 10945.73 13240.44 9747.56
10/31/87 10019.00 10388.45 10094.57
11/30/87 9864.55 9532.44 10175.33
12/31/87 10166.91 10257.86 10313.71
01/31/88 10648.06 10689.72 10676.76
02/29/88 10951.39 11187.86 10803.81
03/31/88 10854.98 10842.15 10702.25
04/30/88 10939.87 10962.50 10644.46
05/31/88 10982.31 11057.87 10573.14
06/30/88 11420.26 11565.43 10827.96
07/31/88 11355.68 11521.48 10770.57
08/31/88 11301.86 11129.75 10798.57
09/30/88 11572.03 11603.88 11043.70
10/31/88 11746.70 11926.47 11251.32
11/30/88 11637.53 11755.92 11114.06
12/31/88 11771.18 11961.65 11126.28
01/31/89 12172.85 12837.24 11286.50
02/28/89 12083.59 12517.59 11205.24
03/31/89 12217.64 12809.25 11253.42
04/30/89 12613.58 13474.05 11488.62
05/31/89 12896.40 14019.75 11790.77
06/30/89 13089.01 13939.84 12150.39
07/31/89 13604.78 15198.61 12409.19
08/31/89 13685.01 15496.50 12225.53
09/30/89 13695.74 15432.96 12287.88
10/31/89 13742.17 15074.92 12590.16
11/30/89 13951.09 15382.45 12709.77
12/31/89 14091.15 15751.63 12744.09
01/31/90 13570.63 14694.69 12592.43
02/28/90 13669.78 14884.25 12632.73
03/31/90 13781.31 15278.69 12641.57
04/30/90 13592.87 14896.72 12525.27
05/31/90 14045.13 16349.15 12896.02
06/30/90 14107.61 16237.98 13103.64
07/31/90 14145.81 16186.01 13284.47
08/31/90 13547.38 14722.80 13106.46
09/30/90 13326.06 14005.80 13215.24
10/31/90 13261.50 13945.57 13383.08
11/30/90 13726.36 14846.46 13670.81
12/31/90 14025.60 15260.67 13884.08
01/31/91 14606.16 15926.04 14056.24
02/28/91 15265.87 17064.75 14175.72
03/31/91 15557.86 17477.72 14273.53
04/30/91 15811.81 17519.66 14427.69
05/31/91 16319.72 18276.51 14511.37
06/30/91 16022.99 17439.45 14504.11
07/31/91 16442.51 18252.13 14705.72
08/31/91 16821.43 18684.70 15023.36
09/30/91 16964.59 18372.67 15328.34
10/31/91 17344.08 18618.86 15498.48
11/30/91 17034.87 17868.52 15641.07
12/31/91 17781.86 19912.68 16105.61
01/31/92 17781.86 19542.31 15886.57
02/29/92 18041.03 19796.35 15989.83
03/31/92 17926.02 19410.33 15900.29
04/30/92 18144.63 19980.99 16014.77
05/31/92 18479.83 20078.90 16317.45
06/30/92 18421.89 19779.72 16542.63
07/31/92 18864.37 20588.71 16880.10
08/31/92 18967.61 20166.64 17050.59
09/30/92 19098.83 20404.61 17253.49
10/31/92 19007.31 20476.03 17024.02
11/30/92 19053.07 21174.26 17027.43
12/31/92 19194.72 21434.70 17298.16
01/31/93 19616.41 21614.75 17630.29
02/28/93 20147.43 21908.71 17938.82
03/31/93 20789.93 22370.99 18014.16
04/30/93 21453.44 21829.61 18140.26
05/31/93 21800.99 22414.64 18163.84
06/30/93 21818.19 22479.65 18492.61
07/31/93 22105.69 22389.73 18598.01
08/31/93 22824.45 23238.30 18923.48
09/30/93 22604.65 23059.36 18974.57
10/31/93 22788.70 23536.69 19044.78
11/30/93 22387.14 23313.09 18882.90
12/31/93 22894.96 23595.18 18984.87
01/31/94 23510.51 24397.42 19241.16
02/28/94 23100.14 23736.25 18906.37
03/31/94 22152.02 22701.35 18439.38
04/30/94 21962.10 22991.92 18291.86
05/31/94 21996.63 23368.99 18290.03
06/30/94 21769.73 22796.45 18249.80
07/29/94 22187.04 23544.18 18612.97
$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 July 31, 1994, the value of your investment would have
grown to $22,187 - a 121.87% 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 $23,544 - a 135.44% increase.
If you'd put $10,000 in the bond index, it would have grown to $18,613 - an
86.13% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks or bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Rising interest rates and inflation
concerns in the U.S. triggered
sell-offs in many stock and bond
markets worldwide in 1994.
Yields rose - and prices fell -
on virtually all types of
fixed-income investments, after
strong performance in most
global bond markets in 1993. The
Lehman Brothers Aggregate
Bond Index - a broad measure
of taxable bonds in the U.S.
market - had a total return of
0.09% for the 12 months ended
July 31, 1994. The Salomon
Brothers World Government
Bond Index - a proxy of bond
market performance in
developed nations including the
U.S. - rose 5.72% during the
same 12 months. Emerging
market bonds in countries such
as Brazil and Argentina were hit
especially hard in 1994. The J.P.
Morgan Emerging Markets Bond
Index fell 3.45%. U.S. stocks
largely took their cue from bonds
through the first half of 1994. The
Standard & Poor's Composite
Index of 500 Stocks had a total
return of 5.16% for the 12 months
ended July 31, but was
essentially flat from January
through July. Aside from
Japanese stocks, which made
strong gains due to a stronger
economy and yen, most foreign
markets suffered corrections in
1994. However, strong
performance in 1993 helped the
Morgan Stanley EAFE (Europe,
Australia, Far East) index return
14.13% and the Morgan Stanley
Emerging Markets Free Index
return 40.62% during the period.
An interview with Robert Haber, Portfolio Manager of Fidelity
Balanced Fund
Q. BOB, HOW DID THE FUND PERFORM?
A. For the 12 months ended July 31, 1994, the fund had a total return of
0.37%. That lagged the average balanced fund, which returned 2.33% during
the same period, according to Lipper Analytical Services.
Q. BOTH STOCKS AND BONDS HAVE PERFORMED POORLY OVER THE PAST SIX MONTHS . .
.
A. That's true, but bonds have fared worse, and that's the key to why the
fund trailed the average. Last fall, I wasn't very optimistic about stocks
or bonds in the United States. Interest rates had fallen - and bond prices
had risen - during most of the previous two years. I felt that bonds were
expensive and overbought. But stocks scared me more. Valuations - prices
compared to other measures such as earnings - were at historical highs. I
knew that rising interest rates would hurt bonds, but I felt that stocks
could get hit worse. While most balanced funds maintain a neutral mix of
roughly 60% stocks and 40% bonds, I had essentially reversed those numbers.
As it turned out, when the Federal Reserve Board raised U.S. short-term
interest rates from February through May, bond investors worldwide reacted
much more severely than stock investors, and the fund suffered accordingly.
In addition, some of the fund's overseas bond investments were pretty
aggressive, and performed worse than domestic bonds.
Q. WHAT WAS THE STORY BEHIND THOSE FOREIGN BONDS?
A. Over the past six months, I've kept roughly 30% to 45% of the fund's
bond investments overseas. Most were in Europe, but I also kept a small
stake in emerging markets such as Argentina and Mexico. The European bonds
- - mainly those in France - were aggressive investments because they had
longer durations than most of the fund's U.S. bonds. Duration measures a
bond's sensitivity to changes in interest rates. I made these investments
because the underlying economic conditions in these countries were - and in
many cases still are - more favorable for bonds than those in the U.S. But
all of that didn't matter. The sell-off that began in the U.S. was
magnified overseas - especially in the emerging markets.
Q. OVER THE PAST SIX MONTHS, YOU'VE KEPT THE FUND'S FOREIGN INVESTMENTS -
STOCKS AND BONDS - HEDGED WITH DERIVATIVE INSTRUMENTS KNOWN AS FORWARD
FOREIGN CURRENCY CONTRACTS. DID THEY HAVE AN IMPACT ON PERFORMANCE?
A. Yes, the fund would have performed better had we not tried to hedge
foreign investments. I used forward foreign currency contracts to reduce
the fund's exposure to foreign currency risk - the chance that movements in
a country's currency will negatively affect the fund's investments there.
These contracts effectively tie the value of the fund's foreign investments
to the U.S. dollar. However, if the dollar moves downward relative to the
local currency - as it has done recently - the fund is out the cost of the
contracts. Fortunately, many of the fund's foreign stocks performed
strongly even after hedging costs.
Q. WHERE DID THE FUND FIND ITS STRONGEST STOCKS?
A. Mostly in Japan, where the fund maintained roughly a 7% to 10% stake
over much of the past six months. Big-name Japanese exporters such as
Hitachi, Sony and TDK benefited from effective cost cutting and a pick-up
in business. In addition, increased trading in the Japanese securities
markets has lifted the stocks of brokerage firms such as Nomura and Daiwa.
Lately, I've cut back somewhat on the fund's investments in Japan. These
stocks have shot up quickly, and I'm concerned that the yen appears overdue
to weaken against the U.S. dollar. That could hurt the future profitability
of Japanese companies.
Q. WHAT ABOUT U.S. STOCKS?
A. The best performers came from the basic industries sector - 11.7% of the
fund on July 31. The strengthening economy has boosted the demand for - and
the prices of - several commodities. Chemical companies such as Georgia
Gulf and Methanex and paper companies such as Stone Container have helped
the fund immensely over the past six months.
Q. LET'S TALK ABOUT THE FUTURE. WHAT'S AHEAD FOR THE FUND?
A. I plan on maintaining the fund's emphasis on bonds over stocks. Because
yields have risen - and prices fallen - so substantially in the U.S. and
overseas, bonds now offer better value than stocks. However, despite the
recent interest-rate hikes, the U.S. economy is still rolling along at a
pretty good clip. That raises concerns about inflation. As for stocks, the
stronger U.S. economy has boosted company earnings. But stock valuations -
although lower than they were six months ago - are still not all that
attractive, and dividend yields remain low. I think the course of interest
rates will be the key to performance of both stocks and bonds in the months
ahead.
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 July 31, 1994,
more than $5.3 billion
MANAGER: Robert Haber,
since November 1986;
manager, Fidelity Global
Balanced Fund, since
February 1993; manager,
Fidelity Advisor Income &
Growth Fund, since 1987;
joined Fidelity in 1985
(checkmark)
BOB HABER ON HIS OUTLOOK FOR
STOCKS VS. BONDS:
"Stocks and bonds offer
differing characteristics right
now. The worldwide sell-off in
bonds has created excellent
value in both the United
States and many foreign
countries. However, market
fundamentals - the
underlying economic factors,
such as inflation, that affect
bond prices - raise some
doubts. Though we haven't
seen any tangible signs of
inflation yet, these worries
could dampen a potential
bond market rally.
"On the stock side,
fundamentals are in good
shape. Economic growth in
the U.S., and to a lesser
extent in Europe and Japan,
has done wonders for
corporate profits. However,
worldwide stock valuations
are still not as attractive as
those of bonds."
(solid bullet) In addition to forward
foreign currency contracts,
the fund had a small stake in
derivative instruments known
as structured notes over the
past year. These investments
are like customized bonds,
and were linked to short-term
interest rates in Europe. The
structured notes were
designed to be very
interest-rate sensitive, which
made them behave more like
longer-maturity bonds. They
benefited from drops in
European short-term rates in
1993, and although the fund
sold out of most of these by
the end of the year, the small
stake that remained was hurt
in 1994 when rates rose. The
fund also had a small position
in futures contracts.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Methanex Corp. 1.2 -
Unocal Corp. $3.50 1.2 1.1
Stone Container Corp. 1.0 0.8
Temple-Inland, Inc. 1.0 0.9
Pennzoil Co. 0.9 0.9
TOP FIVE BONDS AS OF JULY 31, 1994
(BY ISSUER, WITH MATURITIES MORE % OF FUND'S % OF FUND'S
THAN ONE YEAR) INVESTMENTS INVESTMENTS
IN THESE BONDS
6 MONTHS AGO
U.S. Treasury Obligations 11.5 4.6
French Government (various issues) 10.1 2.3
Canadian Government (various 3.5 6.0
issues)
Government National Mortgage
Association (various issues) 1.6 2.6
Italian Government (various issues) 1.9 -
TOP FIVE INDUSTRIES AS OF JULY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE INDUSTRIES
6 MONTHS AGO
Finance 13.2 14.9
Basic Industries 11.7 9.5
Energy 8.2 9.3
Utilities 5.3 5.2
Technology 4.5 4.7
ASSET ALLOCATION
AS OF JULY 31, 1994* AS OF JANUARY 31, 1994**
Row: 1, Col: 1, Value: 6.5
Row: 1, Col: 2, Value: 15.3
Row: 1, Col: 3, Value: 47.4
Row: 1, Col: 4, Value: 30.8
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: 32.4
Stocks 30.8%
Bonds 47.5%
Convertible
securities 15.3%
Short-term and other
investments 6.4%
Stocks 32.4%
Bonds 39.1%
Convertible
securities 14.7%
Short-term and other
investments 13.8%
FOREIGN
INVESTMENTS 39.8%
FOREIGN
INVESTMENTS 39.2%
*
*
*
INVESTMENTS JULY 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 28.3%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 9.7%
CHEMICALS & PLASTICS - 3.6%
Agricultural Minerals Co. LP 48,400 $ 1,325
Cominco Fertilizer Ltd. 529,600 10,124
First Mississippi Corp. 396,600 6,098
Freeport McMoRan Resource Partners LP (depositary units) 568,200 9,588
IMC Fertilizer Group, Inc. (a) 482,600 18,821
Methanex Corp. (a) 4,390,200 64,131
Olin Corp. 293,700 16,227
Terra Industries, Inc. 2,980,700 20,120
Tessenderlo Chemie NV 37,575 12,337
Vigoro Corp. 484,700 15,753
Wellman, Inc. 526,700 15,143
Yizheng Chemical Fibre Co. Class H (a) 4,984,000 1,529
191,196
IRON & STEEL - 0.0%
Carpenter Technology Corp. 1,000 60
METALS & MINING - 0.7%
Alcan Aluminum Ltd. 1,000 24
Noranda, Inc. 1,000 18
Rustenberg Platinum Holding Ltd. ADR 1,000 22
Sherritt Gordon Mines Ltd. (a) 4,163,200 37,165
Trelleborg Class B Free shares (a) 1,000 13
Union Miniere SA 1,000 78
37,320
PAPER & FOREST PRODUCTS - 5.4%
Aracruz Celulose SA ADR (a) 1,097,600 12,348
Avenor, Inc. (a) 670,600 10,401
Chesapeake Corp. 817,000 23,080
Domtar Inc. (a) 3,041,200 15,631
Federal Paper Board Co., Inc. 440,500 11,012
Georgia-Pacific Corp. 56,900 3,670
Jefferson Smurfit Corp. (a) 505,000 9,027
Longview Fibre Co. 1,248,800 25,132
Mayr Melnhof Karton AG 136,100 7,357
QUNO Corp. (a) 302,200 5,177
QUNO Corp. (f) 26,500 454
Scott Paper Co. 71,000 4,100
Smurfit (Jefferson) Group PLC 8,017,200 43,511
St. Laurent Paperboard, Inc. (a) 91,100 863
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
St. Laurent Paperboard, Inc. (f) 354,700 $ 3,360
Stone Consolidated Corp. (a) 974,100 11,594
Stone Container Corp. (a) 3,160,600 52,150
Temple-Inland, Inc. 997,000 50,972
289,839
TOTAL BASIC INDUSTRIES 518,415
CONGLOMERATES - 0.2%
FLS Industries (Smidth) Class B 98,800 8,798
CONSTRUCTION & REAL ESTATE - 0.4%
CONSTRUCTION - 0.1%
Bam Groep NV 105,606 6,295
ENGINEERING - 0.0%
Maculan Holding AG Ord. 21,700 2,156
REAL ESTATE INVESTMENT TRUSTS - 0.3%
CBL & Associates Properties 81,400 1,638
Crown American Realty Trust (SBI) 97,700 1,392
LTC Properties, Inc. 506,700 7,220
Liberty Property Trust (SBI) 140,000 2,748
12,998
TOTAL CONSTRUCTION & REAL ESTATE 21,449
DURABLES - 1.9%
AUTOS, TIRES, & ACCESSORIES - 1.0%
Continental Gummi-Werke AG 176,000 29,852
Pacific Dunlop 2,821,900 9,412
Pirelli Tyre Holdings NV:
Ord. 947,866 8,528
(warrants) (a) 236,966 340
Tokai Rika Denki Co., Ltd. 362,000 3,732
Zexel Corp. 257,000 1,713
53,577
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.4%
Aktiebolaget Electrolux 5,800 $ 282
Matsushita Electric Industrial Co. Ltd. 1,231,000 20,209
20,491
TEXTILES & APPAREL - 0.5%
Nisshinbo Industries 866,000 9,709
Toyobo Co. 3,742,000 17,343
27,052
TOTAL DURABLES 101,120
ENERGY - 4.1%
ENERGY SERVICES - 0.3%
Helmerich & Payne, Inc. 1,600 45
McDermott International, Inc. 378,800 9,517
Weatherford International, Inc. (a) 614,600 7,759
17,321
OIL & GAS - 3.8%
Amerada Hess Corp. 577,100 30,009
Apache Corp. 1,000 26
Atlantic Richfield Co. 1,000 108
Box Energy Corp. Class B (a) 710,000 6,923
British Petroleum PLC ADR 355,700 27,033
Coastal Corp. (The) 472,900 14,837
Elf Gabon 56,525 11,237
Kelley Oil & Gas Partners, Ltd. 24,600 206
Mark Resources, Inc. (a) 1,416,900 9,710
Mesa, Inc. (a) 646,900 3,477
Norsk Hydro AS:
ADR 161,600 5,959
Ord. 232,000 8,598
Nuevo Energy Corporation (a) 800 16
Pennzoil Co. 930,700 46,884
Poco Petroleums Ltd. (a) 2,375,800 16,067
Renaissance Energy Ltd. (a) 84,200 1,792
Rio Alto Exploration Ltd. (a) 510,100 3,220
Saga Petroleum AS B 248,000 2,962
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
San Juan Basin Royalty Trust (UBI) 422,500 $ 3,538
Sceptre Resources Ltd. (a) 728,000 6,958
199,560
TOTAL ENERGY 216,881
FINANCE - 1.6%
BANKS - 1.0%
Bank of Boston Corp. 307,200 8,102
CPR (Comp Par Reescompte) 328,380 26,015
Comerica, Inc. 1,800 54
Depfa Bank (Deut Pfandbrief) 11,100 5,554
Shawmut National Corp. (warrants) (a) 190 1
Spar Nord Holdings 254,900 8,599
Spar Nord Holdings (New) 84,966 2,866
51,191
SECURITIES INDUSTRY - 0.6%
Daiwa Securities 950,000 15,215
Kokusai Securities 360,000 6,523
Nomura Securities Ltd. 495,000 10,950
32,688
TOTAL FINANCE 83,879
HEALTH - 0.4%
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Becton, Dickinson & Co. 514,300 21,665
HOLDING COMPANIES - 0.1%
Brierley Investments Ltd. 8,286,800 5,989
INDUSTRIAL MACHINERY & EQUIPMENT - 0.6%
ELECTRICAL EQUIPMENT - 0.6%
Hitachi Cable Ltd. 1,505,000 13,438
Hitachi Koki Co., Ord. 540,000 5,459
Omron Corp. 723,000 12,303
31,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Wakita & Co. Ltd. 107,000 $ 2,174
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 33,374
MEDIA & LEISURE - 0.0%
LODGING & GAMING - 0.0%
Resort Hotels PLC 62,500 39
NONDURABLES - 0.6%
BEVERAGES - 0.3%
Seagram Co. Ltd. 505,000 15,573
FOODS - 0.3%
Goodman Fielder Ltd. Ord. 15,779,300 16,688
TOTAL NONDURABLES 32,261
PRECIOUS METALS - 1.1%
Buffelsfontein Gold Mining Co. Ltd.:
ADR 368,000 3,634
Ord. 39,000 386
Coeur d'Alene Mines Corp. 29,500 520
Free State Consolidated Gold Mines:
ADR 764,028 10,279
Ord. 213,914 2,877
Hecla Mining Co. (a) 461,500 4,673
Homestake Mining Co. 1,000 19
Vaal Reefs Exploration & Mining Co. Ltd.:
ADR 1,451,800 12,522
(Reg.) 3,600 314
Western Deep Levels Ltd.:
ADR 394,400 16,417
Ord. 117,300 4,897
56,538
RETAIL & WHOLESALE - 0.9%
GENERAL MERCHANDISE STORES - 0.7%
Casey's General Stores, Inc. 443,700 5,435
Dayton Hudson Corp. 197,400 16,286
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Marui Co., Ltd. 658,000 $ 12,383
Matsuzakaya Co., Ltd. 100 1
May Department Stores Co. (The) 1,000 40
Sears, Roebuck & Co. 120,500 5,694
39,839
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Uny Co., Ltd. 548,000 9,380
TOTAL RETAIL & WHOLESALE 49,219
SERVICES - 0.4%
ADVERTISING - 0.0%
Omnicom Group, Inc. 765 39
PRINTING - 0.2%
Toppan Printing Co. Ltd. 647,000 9,650
SERVICES - 0.2%
BET Public Ltd. Co. Ord. 5,552,600 9,773
Prosegur Comp Securidad SA (Reg.) 85,200 1,857
11,630
TOTAL SERVICES 21,319
TECHNOLOGY - 3.7%
COMPUTERS & OFFICE EQUIPMENT - 1.5%
Fujitsu Ltd. 783,000 8,230
International Business Machines Corp. 623,700 38,513
Tandem Computers, Inc. (a) 2,258,300 31,052
77,795
ELECTRONIC INSTRUMENTS - 0.4%
Tektronix, Inc. 605,000 18,982
ELECTRONICS - 1.8%
Hitachi Ltd. 1,335,000 12,896
Hitachi Maxell Ltd. 594,000 11,238
Intel Corp. 106,700 6,322
Nitto Denko Corp. 920,000 14,643
TDK Corp. 417,000 17,865
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Taiyo Yuden Co. Ltd. 80,000 $ 921
Texas Instruments, Inc. 421,300 33,125
97,010
TOTAL TECHNOLOGY 193,787
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.3%
KLM Royal Dutch Airlines:
Ord. (a) 314,800 9,719
(Reg.) (a) 259,700 8,051
17,770
UTILITIES - 2.3%
ELECTRIC UTILITY - 1.5%
Atlantic Energy, Inc. 73,200 1,391
Centerior Energy Corp. 1,236,800 12,522
Fuji Electric Co., Ltd. 1,266,000 7,312
Houston Industries, Inc. 178,500 6,270
Illinova Corp. 778,100 16,243
Iowa-Illinois Gas & Electric Co. 148,100 3,277
Northeast Utilities 521,100 12,181
Orange & Rockland Utilities, Inc. 45,900 1,400
Public Service Co. of New Mexico (a) 47,600 577
Rochester Gas & Electric Corp. 432,400 9,945
United Illuminating Co. 152,700 5,154
76,272
GAS - 0.5%
Consolidated Natural Gas Co. 298,000 11,547
ENSERCH Corp. 960,100 15,122
26,669
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 0.3%
Koninklijke PPT Nederland 299,300 $ 8,415
Koninklijke PPT Nederland (f) 327,900 9,219
17,634
TOTAL UTILITIES 120,575
TOTAL COMMON STOCKS
(Cost $1,460,234) 1,503,078
PREFERRED STOCKS - 10.5%
CONVERTIBLE PREFERRED STOCKS - 8.0%
BASIC INDUSTRIES - 1.5%
IRON & STEEL - 0.0%
Armco, Inc., Class A $3.625 35,400 1,850
METALS & MINING - 0.7%
Alumax, Inc., Series A, $4.00 117,233 15,856
Magma Copper Series D $2.80 (g) 31,600 2,015
Reynolds Metals Co. $3.31 359,600 18,519
36,390
PACKAGING & CONTAINERS - 0.5%
Kaiser Aluminum Corp.:
$0.96 890,400 9,794
depositary shares representing 1/10 share Series A, $0.65 2,031,800
17,016
26,810
PAPER & FOREST PRODUCTS - 0.3%
Bowater, Inc. depositary shares representing 1/4 share
Series B 408,500 10,213
Federal Paper Board, Inc. $2.875 82,800 4,140
14,353
TOTAL BASIC INDUSTRIES 79,403
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.2%
REAL ESTATE - 0.2%
Amoy Properties Ltd. 5 1/2% (f)(g) 103,350 $ 10,283
DURABLES - 1.1%
AUTOS, TIRES, & ACCESSORIES - 1.1%
Federal Mogul Corp. $1.9375 (f)(g) 475,600 39,950
Ford Motor Co. (Del.), Series A, $4.20 (g) 188,800 19,635
59,585
ENERGY - 1.8%
ENERGY SERVICES - 0.0%
Noble Drilling Corp. exchangeable $2.25 28,630 1,131
OIL & GAS - 1.8%
Occidental Petroleum Co. $3.00 651,500 28,992
Unocal Corp. $3.50 (f) 1,144,000 63,206
92,198
TOTAL ENERGY 93,329
FINANCE - 1.7%
BANKS - 1.3%
Banc One Corp., Series C, $3.50 (g) 15,200 923
Bank of New York 7.75% (g) 116,000 6,757
Barnett Banks, Inc., Series A, $4.50 (g) 92,500 8,001
Citicorp $5.375 (f)(g) 223,100 25,657
First Commerce Corp. $1.80 (g) 20,365 672
Norwest Corp., Series B, $3.50 (g) 312,200 22,791
Union Planters Corp., Series E, $2.00 (g) 90,700 2,993
67,794
CREDIT & OTHER FINANCE - 0.4%
Echo Bay Finance Corp. Series A, $1.75 462,500 17,459
Equitable Companies, Inc. $3.00 (f)(g) 51,400 2,660
20,119
INSURANCE - 0.0%
Conseco, Inc., Series D, $3.25 (g) 33,500 1,621
TOTAL FINANCE 89,534
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
HOLDING COMPANIES - 0.2%
Jardine Strategic Holdings Ltd. 7 1/2% (g) 74,120 $ 9,302
PRECIOUS METALS - 0.7%
Battle Mountain Gold $3.50 219,300 13,816
Newmont Mining Corp. depositary shares representing
1/2 share preferred $1.375 (f) 413,300 23,971
37,787
RETAIL & WHOLESALE - 0.2%
GROCERY STORES - 0.2%
Dairy Farm International Holdings 6 1/2% (g) 116,190 12,258
SERVICES - 0.4%
PRINTING - 0.4%
Alco Standard Corp., Series AA, $2.30 (g) 309,900 21,848
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.2%
AMR Corp. $3.00 (f) 253,500 10,837
TOTAL CONVERTIBLE PREFERRED STOCKS 424,166
NONCONVERTIBLE PREFERRED STOCKS - 2.5%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Freeport McMoran Copper & Gold Series D 306,300 6,432
CONSTRUCTION & REAL ESTATE - 0.1%
ENGINEERING - 0.1%
MaCulan Holding Ord. 29,300 3,003
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd. (a)(e) 10,596 28
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - 1.8%
BANKS - 1.5%
Bank United Texas, Series A, $10.12 340,000 $ 8,925
BankAmerica Corp.:
Series F, 9.625% 41,800 1,118
Series H, 9% 154,440 4,054
Chase Manhattan Corp.:
Series I, 10.84% 78,162 2,345
Series J, 9.08% 201,445 5,238
Citicorp depositary shares representing 1/10 share
Series 14, 9.08% 258,115 6,711
Citicorp., Series 9, 9.12% 53,600 1,353
Continental Bank Corp.:
Series 1, 7.40% 131,300 6,647
Series 2, 8.20% 403,080 11,085
First Chicago Corp., Series C, adj. rate 56,795 5,481
First Interstate Bancorp depostary shares representing
1/8 share:
Series F, 9.20% 27,200 724
Series G, 9% 196,300 5,153
First Nationwide 11 1/2% 91,000 9,168
First Union Corp. Series 1990, 7.80% 26,000 1,375
Fleet Financial Group, Inc. depositary shares representing
1/4 share, Series III, 10.12% 19,325 556
Mellon Bank Corp., Series I, 9.60% 156,550 4,168
Shawmut National Corp. depositary shares representing
1/10 share 9.30% 311,900 8,187
82,288
CREDIT & OTHER FINANCE - 0.1%
Household International, Inc. depositary shares
representing 1/4 share, Series 89-A, 9 1/2% 144,000 3,816
SAVINGS & LOANS - 0.2%
Ahmanson (H.F.) & Co. depositary shares representing
1/2 share Series B, 9.60% 313,500 8,386
TOTAL FINANCE 94,490
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - 0.5%
ELECTRIC UTILITY - 0.5%
Cleveland Electric Illuminating Co., Series N $0.125 22,698 $ 2,222
Georgia Power Co. Class A, 1993 Series, 6.20% 90,000 2,272
Gulf States Utilities Co. $1.75 308,500 7,211
Long Island Lighting Co. $7.95 340,000 8,032
Louisiana Power & Light Co. 9.68% 16,225 422
Portland General Electric Co. 8.10% 6,000 609
Public Service Co. of New Hampshire, Series A 188,125 4,844
25,612
TOTAL NONCONVERTIBLE PREFERRED STOCKS 129,565
TOTAL PREFERRED STOCKS
(Cost $563,530) 553,731
CORPORATE BONDS - 19.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) (B) AMOUNT (000S) (C)
CONVERTIBLE BONDS - 7.3%
BASIC INDUSTRIES - 0.4%
IRON & STEEL - 0.3%
Hoogovens En Staalfabrieken NV 4 1/2%,
4/11/01 - NLG 25,810 16,473
PAPER & FOREST PRODUCTS - 0.1%
Avenor, Inc. 7 1/2%, 2/8/04 - CAD 2,618 2,304
Cascades, Inc., 7 1/4%, 8/19/03 - CAD 4,360 4,026
6,330
TOTAL BASIC INDUSTRIES 22,803
DURABLES - 0.7%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Amoco CDA Petroleum Co. exchangeable,
7 3/8%, 9/1/13 Aa3 8,750 10,587
Pacific Dunlop Ltd. 6 3/4%, 7/2/97 - 900 941
11,528
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.5%
Sony Corp. 1.40%, 9/30/03 Aa3 JPY 2,083,000 $ 24,083
Whirlpool Corp. liquid yield option notes
0%, 5/14/11 (g) Baa1 3,680 1,359
25,442
TOTAL DURABLES 36,970
ENERGY - 1.7%
INDEPENDENT POWER - 1.4%
Thermo Electron Corp. (g):
4 5/8%, 8/1/97 (f) Ba1 47,771 63,058
6 3/4%, 2/15/01 (f) Ba2 1,302 2,280
euro 6 3/4%, 2/15/01 Ba2 4,620 8,039
73,377
OIL & GAS - 0.3%
Horsham Corp. 3 1/4%, 12/10/18 Ba2 17,303 14,102
TOTAL ENERGY 87,479
FINANCE - 0.9%
BANKS - 0.4%
Bank of New York Co., Inc.
7 1/2%, 8/15/01 (g) Baa1 1,280 2,067
South Carolina National Corp. euro
6 1/2%, 5/15/01 (g) A1 2,020 3,444
West One Bancorp 7 3/4%, 6/30/06 (g) Baa1 10,073 17,023
22,534
CREDIT & OTHER FINANCE - 0.3%
Bank of Tokyo 6.10%, 3/31/97 (g) Aa2 JPY 222,000 3,356
Investor AB 8%, 6/1/01 (g) - SEK 73,570 11,892
15,248
INSURANCE - 0.2%
Cincinnati Financial Corp. 5 1/2%, 5/1/02 (g) A2 9,216 11,290
TOTAL FINANCE 49,072
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
HEALTH - 0.0%
MEDICAL FACILITIES MANAGEMENT - 0.0%
Hillhaven Corp. 7 3/4%, 11/1/02 (g) B3 $ 910 $ 1,119
HOLDING COMPANIES - 0.2%
Brierley Investments Ltd. 9%, 6/30/98 - NZD 17,978 12,992
MEDIA & LEISURE - 1.6%
BROADCASTING - 0.0%
Carlton Communications 7 1/2%, 8/14/07 (g) A3 GBP 1,050 2,213
ENTERTAINMENT - 1.1%
Carnival Cruise Lines, Inc. 4 1/2%, 7/1/97 (g) Baa1 40,371 57,932
PUBLISHING - 0.3%
Daily Mail General Trust PLC
8 3/4%, 9/27/05 (g) - GBP 5,970 14,195
RESTAURANTS - 0.2%
Wendy's International, Inc. 7%, 4/1/06 (g) Baa3 9,055 12,405
TOTAL MEDIA & LEISURE 86,745
NONDURABLES - 0.0%
FOODS - 0.0%
Sysco Corp. liquid yield option notes
0%, 10/12/04 (g) A2 3,750 2,166
RETAIL & WHOLESALE - 0.8%
MISCELLANEOUS - 0.8%
Home Depot, Inc. 4 1/2%, 2/15/97 (g) A1 6,550 7,336
Loew's Companies, Inc. 3%, 7/22/03 (g) Baa1 23,781 32,818
40,154
TECHNOLOGY - 0.4%
COMMUNICATIONS EQUIPMENT - 0.2%
Er icsson (LM) 4 1/4% 6/30/00 (g) A2 SEK 68,324 12,760
ELECTRONICS - 0.2%
Motorola, Inc. liquid yield option notes
0%, 9/7/09 (g) A1 5,870 5,698
Nitto Denko Corp. 3.9%, 3/30/01 - JPY 516,000 6,663
12,361
TOTAL TECHNOLOGY 25,121
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
UTILITIES - 0.6%
CELLULAR - 0.1%
Century Telephone Enterprises, Inc. 6%,
2/1/07 (f)(g) Baa1 $ 2,954 $ 3,183
TELEPHONE SERVICES - 0.5%
Softe SA 4 1/4%, 7/30/98 (j) - ITL 33,945 25,898
TOTAL UTILITIES 29,081
TOTAL CONVERTIBLE BONDS 393,702
NONCONVERTIBLE BONDS - 11.9%
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.2%
Sunbelt (Cemex) Enterprises 8 1/2%, 5/4/95 (e) - 7,750 7,634
Westinghouse Credit Corp.:
8.93%, 6/22/99 Ba1 2,000 2,064
8.98%, 6/26/99 Ba1 2,000 2,063
8.85%, 7/26/99 Ba1 1,300 1,339
13,100
CONSTRUCTION - 0.1%
Empresas ICA Sociedad Controladora
SA de CV 9 3/4%, 2/11/98 (f) - 4,750 4,798
TOTAL CONSTRUCTION & REAL ESTATE 17,898
DURABLES - 0.2%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Grupo Dina (Consorcio G) 10 1/2%,
11/18/97 (f) - 5,000 4,925
Grupo Imsa SA de CV euro 8 3/4%,
7/7/98 (f) - 3,750 3,619
8,544
ENERGY - 0.6%
ENERGY SERVICES - 0.4%
McDermott International, Inc.
10 1/4%, 6/1/95 Baa3 8,400 8,651
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Petroliam Nasional Berhad yankee
6 7/8%, 7/1/03 (f) A2 $ 11,250 $ 10,515
19,166
OIL & GAS - 0.2%
McDermott, Inc. 7.95%, 7/7/97 Baa3 5,000 5,048
Petro Canada, Inc. 9 3/8%, 6/24/97 - CAD 8,500 6,160
11,208
TOTAL ENERGY 30,374
FINANCE - 7.2%
ASSET-BACKED SECURITIES - 0.4%
Capital Auto Receivables Asset Trust,
5.85%, 1/15/98 Aaa 3,280 3,248
Chase Manhattan Credit Card Master Trust,
7.65%, 11/15/98 Aaa 7,331 7,464
Ford Credit Auto Loan Master Trust
7 3/8%, 4/15/99 Aaa 9,000 9,153
Standard Credit Card Master Trust I,
participation certificates 5 1/2%, 9/7/98 A2 2,800 2,688
22,553
BANKS - 4.5%
African Development Bank 7 3/4%,
12/15/01 Aa1 3,000 3,019
Banco Nacional de Mexico SA 9 1/8%,
4/6/00 (f) - 2,500 2,500
Bancomer SA 9%, 6/1/00 (f) - 10,500 10,211
Bancomer SA eurobonds 8%, 7/7/98 (f) Ba2 3,500 3,404
Bancomer SNC euro 8%, 7/7/98 - 6,000 5,835
Bank of Boston Corp.:
10.30%, 9/1/00 Baa2 5,000 5,221
5%, 2/28/01 (d) Baa2 3,500 3,421
6 7/8%, 7/15/03 Baa2 3,000 2,800
6 5/8%, 2/1/04 Baa2 5,000 4,543
Central Fidelity Banks, Inc. 8.15%, 11/15/02 Baa2 9,700 9,912
Chase Manhattan Corp. euro 5%, 5/31/00 (d) Baa2 3,500 3,411
Citicorp euro (d):
5 1/4%, 7/10/97 Baa3 1,000 991
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
5%, 1/30/98 A3 $ 2,000 $ 1,990
5%, 10/25/05 Baa2 16,500 15,737
Continental Bank Mortgage Corp. 9 7/8%,
6/15/96 Baa3 2,000 2,121
Continental Bank NA Chicago 12 1/2%,
4/1/01 Baa3 6,600 8,190
Corporacion Andina De Fomento yankee
7 1/4%, 4/30/98 (f) - 5,900 5,679
Crestar Financial Corp. 8 1/4%, 7/15/02 Baa1 8,000 8,240
Financiera Energetica Nacional 6 5/8%,
12/13/96 (f) - 20,000 19,325
First of America Bank Corp. 8 1/2%, 2/1/04 A3 2,000 2,065
First Bank System, Inc. euro 5 1/4%,
11/30/10 (d) Baa1 2,000 1,960
First Hawaiian Bank secured 6.93%,
12/1/03 (f) A1 9,000 8,318
First Interstate Bancorp:
10 7/8%, 4/15/01 Baa1 4,000 4,673
9 1/8%, 2/1/04 Baa1 4,600 4,954
First National Bank of Boston 8 3/8%,
12/15/02 Baa1 8,000 8,200
First USA Bank Wilmington DE 5 3/4%,
1/15/99 Baa3 6,000 5,633
Fleet Financial Group, Inc. 8 1/8%, 7/1/04 A3 10,000 10,183
HSBC Finance Nederland B.V. 7.40%,
4/15/03 (f) A3 10,000 9,700
Integra Financial Corp. 8 1/2%, 5/15/02 Baa2 6,500 6,695
Korea Development Bank:
6 1/4%, 5/1/00 A1 4,150 3,846
9.40%, 8/1/01 A1 2,000 2,158
Marine Midland 5 1/4%, 12/31/09 (d) Baa1 3,450 3,390
Mercantile Bancorporation, Inc. 7 5/8%,
10/15/02 Baa1 5,000 4,925
Midland American Capital Corp. gtd.
12 3/4%, 11/15/03 A1 2,660 3,140
Provident Bank 7 1/8%, 3/15/03 Baa2 6,125 5,791
Shawmut Corp. 8 1/8%, 2/1/97 Baa1 12,000 12,361
Signet Banking Corp.:
5 1/4%, 4/15/98 (d) Baa1 3,750 3,727
9 5/8%, 6/1/99 Baa1 3,469 3,757
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
UJB Financial Corp. 8 5/8%, 12/10/02 Baa3 $ 10,175 $ 10,614
Zions Bancorporation 8 5/8%, 10/15/02 - 5,000 5,185
237,825
CREDIT & OTHER FINANCE - 1.0%
American Residential Mortgage Corp.
6.09%, 12/15/98 Baa3 2,000 1,898
General Motors Acceptance Corp.:
7%, 6/2/97 Baa1 8,000 8,001
6 3/4%, 2/25/98 Baa1 5,000 4,928
5 7/8%, 1/12/99 Baa1 10,000 9,413
Greyhound Financial Corp.:
6.95%, 1/28/98 Baa2 1,250 1,241
9 1/8%, 2/27/02 Baa2 5,000 5,333
Margaretten Financial Corp. 6 3/4%, 6/15/00 A2 2,260 2,180
Treuhandanstalt 7 1/8%, 1/29/03 Aaa DEM 32,500 20,676
53,670
INSURANCE - 0.6%
Metropolitan Life Insurance Co. 6.30%,
11/1/03 (f) Aa3 11,000 9,838
Nationwide Mutual Insurance Co. 6 1/2%,
2/15/04 (f) Aa3 5,000 4,450
New York Life Insurance Co. 6.40%,
12/15/03 (f) Aa2 9,000 8,156
0hio National Life Insurance Co. 8 7/8%,
7/15/04 (f) A3 4,750 4,836
Protective Life Corp. 7.95%, 7/1/04 A3 2,000 2,002
29,282
SAVINGS & LOANS - 0.7%
Ahmanson (H.F.) & Co. 8 1/4%, 10/01/02 Baa2 340 348
Great Western Financial Corp.:
6 3/8%, 7/1/00 Baa2 2,740 2,587
8.60%, 2/1/02 Baa2 9,850 10,242
Home Savings of America 6%, 11/1/00 Baa1 14,500 13,300
Household Bank FSB Newport Beach California:
8.45%, 12/10/02 A3 6,250 6,484
6 1/2%, 7/15/03 A3 5,000 4,530
37,491
TOTAL FINANCE 380,821
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 0.1%
DRUGS & PHARMACEUTICALS - 0.1%
Scherer (R.P.) International Corp.
6 3/4%, 2/1/04 Ba1 $ 3,500 $ 3,106
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Westinghouse 9.13%, 6/20/01 Ba1 5,000 5,174
POLLUTION CONTROL - 0.0%
Browning-Ferris Industries, Inc. 6 3/4%,
7/18/05 A3 1,000 950
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 6,124
MEDIA & LEISURE - 0.5%
BROADCASTING - 0.2%
Telecommunications, Inc.:
7.13%, 2/2/98 Baa3 6,000 5,952
6.58%, 2/15/05 Baa3 4,000 3,802
Time Warner, Inc. 6.05%, 7/1/95 (f) Ba1 2,000 1,994
11,748
PUBLISHING - 0.3%
News America Holdings, Inc. 8 5/8%, 2/1/03 Ba1 14,000 14,136
TOTAL MEDIA & LEISURE 25,884
NONDURABLES - 0.1%
BEVERAGES - 0.0%
Grupo Embotellador de Mexico SA de CV
10 3/4%, 11/19/97 (f) Ba2 2,480 2,604
TOBACCO - 0.1%
Empresas La Moderna SA 10 1/4%,
11/12/97 (f) - 5,600 5,684
RJR Nabisco, Inc. 9 1/4%, 5/1/95 Baa3 1,500 1,526
7,210
TOTAL NONDURABLES 9,814
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.0%
The Limited, Inc. 7 1/2%, 3/15/23 A1 $ 1,000 $ 903
GENERAL MERCHANDISE STORES - 0.2%
Controladora Comercial Mexicana SA de CV
euro 8 3/4%, 4/21/98 - 1,800 1,744
El Puerto de Liverpool SA de CV 7 1/4%,
10/19/96 (f) - 6,750 6,539
8,283
TOTAL RETAIL & WHOLESALE 9,186
TECHNOLOGY - 0.4%
COMPUTERS & OFFICE EQUIPMENT - 0.3%
Comdisco, Inc.:
8.95%, 5/15/95 Baa2 3,000 3,065
9 3/4%, 1/15/97 Baa2 4,500 4,779
7.82%, 2/5/97 Baa2 2,000 2,033
9.45%, 6/8/00 Baa2 6,000 6,471
9.30%, 6/27/00 Baa2 3,750 4,060
20,408
ELECTRONICS - 0.1%
Grupo Condumex SA de CV:
6 1/4%, 7/27/96 (f) - 750 716
6 1/4%, 7/27/96 - 750 716
7 3/8%, 7/27/98 (f) - 2,000 1,869
3,301
TOTAL TECHNOLOGY 23,709
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.2%
AMR Corp. 9 1/2%, 7/15/98 Baa3 4,000 4,164
Delta Air, Inc. Del Pass thru
Trust 9 7/8%, 4/30/08 Baa3 4,742 4,704
8,868
TRUCKING & FREIGHT - 0.1%
Consolidated Freightways, Inc.:
8.83%, 12/15/94 Baa3 2,000 2,007
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - CONTINUED
9 1/8%, 8/15/99 Baa3 $ 4,230 $ 4,365
6,372
TOTAL TRANSPORTATION 15,240
UTILITIES - 1.9%
ELECTRIC UTILITY - 1.2%
British Columbia Hydro & Power Authority
gtd. 15%, 4/15/11 Aa1 725 859
Comision Federal De Electricidad euro
8%, 8/4/97 - 2,130 2,087
CEZ AS 16 1/2%, 6/25/98 - CSK 35,730 1,384
Gulf States Utilities Co.:
9.72%, 7/1/98 Baa3 10,690 11,290
1st mtg. 6 3/4%, 10/1/98 Baa2 1,000 962
Hydro-Quebec euro 5 1/8%, 7/31/02 (d) - 5,140 4,947
Long Island Lighting Co.:
8 3/4%, 5/1/96 Baa3 10,908 11,220
7.30%, 7/15/99 Ba1 13,000 12,037
Public Service Co. of New Hampshire
1st mtg. 9.17%, 5/15/94 Baa3 16,900 17,217
United Illuminating Co. 9.76%, 1/2/06 Baa3 4,491 4,727
66,730
GAS - 0.3%
Southwest Gas Corp.:
9 3/4%, 6/15/02 Ba1 10,700 11,399
9 3/8%, 2/1/17 Ba1 4,000 4,140
15,539
TELEPHONE SERVICES - 0.4%
Compania de Telefonos de Chile yankee
4 1/2%, 1/15/03 (g) Baa2 17,294 18,980
TOTAL UTILITIES 101,249
TOTAL NONCONVERTIBLE BONDS 631,949
TOTAL CORPORATE BONDS
(Cost $1,058,696) 1,025,651
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 13.4%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
U.S. TREASURY OBLIGATIONS - 11.5%
U.S. Treasury Bill 0%, 12/8/94 Aaa $ 6,300 $ 6,199
U.S. Treasury Bonds:
9 7/8%, 11/15/15 Aaa 35,000 43,876
8 1/8%, 8/15/19 Aaa 236,585 253,330
U.S. Treasury Notes:
5 1/2%, 4/30/96 Aaa 66,000 65,577
7 1/4%, 11/15/96 Aaa 8,600 8,807
8 3/4%, 10/15/97 Aaa 28,000 29,868
5 1/8%, 3/31/98 Aaa 43,000 41,105
9 1/4%, 8/15/98 Aaa 45,650 49,922
7 7/8%, 11/15/99 Aaa 1,400 1,469
8 3/4%, 8/15/00 Aaa 12,625 13,813
6 3/8%, 8/15/02 Aaa 1,000 960
6 1/4%, 2/15/03 Aaa 102,030 96,642
611,568
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.9%
Agency for International Development
(guaranteed by U.S. government):
5 3/4%, 3/15/00 Aaa 4,500 4,237
5 1/4%, 9/15/00 Aaa 24,025 21,855
Federal National Mortgage Association
6.80%, 1/10/03 Aaa 5,825 5,610
Financing Corporation:
0%, 2/8/97 Aaa 2,820 2,407
10.70%, 10/6/17 Aaa 11,210 14,689
9.80%, 11/30/17 Aaa 7,100 8,631
9.40%, 2/8/18 Aaa 1,000 1,174
9.80%, 4/6/18 Aaa 6,700 8,155
9.65%, 11/2/18 Aaa 6,000 7,213
Government Trust Certificates:
8%, 5/15/98 Aaa 8,453 8,730
9 1/4%, 11/15/01 Aaa 2,600 2,837
9.40%, 5/15/02 Aaa 4,218 4,621
Tennessee Valley Authority 6 7/8%,
12/15/43 Aaa 10,000 8,533
98,692
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $727,967) 710,260
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 3.0%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 1.4%
7%, 11/15/22 to 6/15/24 Aaa $ 30,875 $ 29,311
7 1/2%, 11/15/07 to 4/15/08 Aaa 4,393 4,369
8%, 6/15/09 to 9/15/17 Aaa 2,862 2,900
9%, 8/15/01 to 8/15/07 Aaa 35,330 36,876
73,456
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.6%
7%, 2/15/22 to 11/15/23 Aaa 36,985 34,775
7 1/2%, 1/15/23 to 6/15/23 Aaa 18,860 18,318
8%, 1/15/17 to 8/15/23 Aaa 11,186 11,152
8 1/2%, 8/15/06 to 5/15/23 Aaa 10,069 10,287
9%, 10/15/08 to 7/15/17 Aaa 8,264 8,626
83,158
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES
(Cost $161,869) 156,614
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.0%
MBNA Trust 9 1/2%, 10/25/20
(Cost $387) Aaa 374 373
FOREIGN GOVERNMENT OBLIGATIONS (I) - 19.2%
Argentina Republic BOCON (d):
3 1/4%, 4/1/01 - ARP 60,699 32,760
3 1/4%, 9/1/02 - ARP 60,257 27,446
3 1/4%, 4/1/07 - ARP 26,621 10,880
Canadian Government treasury bills:
9 3/4%, 10/1/97 Aaa CAD 14,700 10,936
9 3/4%, 12/1/01 Aaa CAD 11,800 8,806
11 3/4%, 2/1/03 Aaa CAD 28,200 23,333
6 1/2%, 6/1/04 Aaa CAD 147,000 87,908
8%, 6/1/23 Aa CAD 91,500 57,359
Danish Government Bullet:
9%, 11/15/00 Aa1 DKK 126,000 21,354
8%, 5/15/03 Aa1 DKK 79,300 12,758
FOREIGN GOVERNMENT OBLIGATIONS (I) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
FOREIGN GOVERNMENT SECURITIES - CONTINUED
French Government OAT:
8 1/2%, 11/25/02 Aaa FRF 15,000 $ 2,999
6 3/4%, 10/25/03 Aaa FRF 36,000 6,422
8 1/2%, 11/25/03 Aaa FRF 330,600 65,845
8 1/2%, 10/25/19 Aaa FRF 70,000 13,851
8 1/2%, 4/25/23 Aaa FRF 2,252,900 446,497
Indonesian treasury bills 0%, 1/13/95 - IDR 5,000,000 2,176
Italian Government treasury bonds (j):
11%, 6/1/96 - ITL 13,000 8,276
10%, 8/1/96 - ITL 39,000 24,519
9%, 10/1/96 - ITL 31,400 19,341
11%, 6/1/03 - ITL 77,600 48,179
Mexican Adjustabonos 4.10%, 12/14/94 (h) - MXN 9,200 3,406
New Zealand Government:
10%, 3/15/97 Aaa NZD 16,700 11,217
10%, 7/15/97 Aaa NZD 14,320 9,082
8%, 4/15/04 Aaa NZD 82,800 49,625
Territory of Victoria Public Authorities Finance
Agency, Australia 8 1/4%, 1/15/02 A1 8,000 8,320
United Kingdom, Great Britain & Northern
Ireland 12%, 11/20/98 Aaa GBP 5,950 10,347
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $1,080,851) 1,023,642
MUNICIPAL OBLIGATIONS - 0.0%
Louisiana Pub. Facs. Auth. Rev. 9.95%, 6/1/96
(Cost $2,115) A3 2,000 2,107
OTHER SECURITIES - 0.6%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (C) (000S)
COLLATERALIZED NOTES - 0.2%
Ridgefield Investments Ltd. sr. notes 0%, 2/2/95
(collateralized by Mexican Government
securities) (f) 15,073 12,939
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (C) (000S)
INDEXED SECURITIES - 0.4%
Citibank Nassau cert. of dep. 5.05%, 12/21/94
(inversely indexed to 3-year LIBOR rate,
multiplied by 12) $ 12,892 $ 13,013
Merrill Lynch & Co. Inc. Japan Index equity
participation securities 0%, 1/31/00 8,000 7,630
Morgan Guaranty Trust Co. cert. of dep. 0%,
8/22/94 (indexed to $481 par of Westport
Investments, Ltd. sr. notes, collateralized by
Mexican govt. securities, per $100 par) 250 249
20,892
TOTAL OTHER SECURITIES
(Cost $35,743) 33,831
CERTIFICATES OF DEPOSIT - 0.2%
Siam Commercial Bank Co. Ltd.:
7%, 11/29/95 THB 100,000 3,851
7 1/4%, 11/29/96 THB 100,000 3,811
Thai Military Bank, Ltd. 8%, 10/28/96 THB 100,000 3,810
TOTAL CERTIFICATES OF DEPOSIT
(Cost $11,935) 11,472
COMMERCIAL PAPER - 0.3%
Bank Negara Malaysia 0%, 9/7/94 MYR 22,000 8,448
Grupo Embotellador de Mexico SA de CV
0%, 8/10/94 (e) 3,000 2,994
Nacional Financiera SNC 0%, 7/23/96 MXN 22,000 4,860
TOTAL COMMERCIAL PAPER
(Cost $17,239) 16,302
REPURCHASE AGREEMENT - 5.3%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 4.23% dated
7/29/94 due 8/1/94 $ 282,564 282,464
PURCHASED OPTIONS - 0.0%
AMOUNTS IN THOUSANDS EXPIRATION DATE/ UNDERLYING FACE VALUE
STRIKE PRICE AMOUNT AT VALUE (NOTE 1)
Call Option on CAD Aug. 94/1.40 $ 69,684 $ 93
Call Option on CAD Sep. 94/1.41 54,722 102
Call Option on JPY Aug. 94/96 98,000 31
TOTAL PURCHASED OPTIONS
(Cost $1,659) 226
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $5,404,689) $ 5,319,751
FUTURES CONTRACTS
DOLLAR AMOUNTS IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
890 S&P 500 Contracts Sep. 94 $ 204,211 $ 4,974
859 U.S. Treasury Bond Contracts Sep. 94 90,007 136
$ 5,110
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 5.5%
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
49,319 CHF 8/25/94 $ 36,807 $ 1,407
12,837 CAD 9/7/94 9,248 (13)
5,421 DEM 8/1/94 to 10/7/94 3,423 (66)
65,355 DKK 8/11/94 10,494 371
338,690 FRF 8/24/94 to 9/15/94 62,561 1,161
12,599 GBP 8/19/94 19,439 39
15,610,089 JPY 8/1/94 to 9/29/94 156,637 (1,263)
122,250 NLG 8/2/94 68,741 1,416
TOTAL CONTRACTS TO BUY
(Payable amount $364,298) $ 367,350 3,052
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 6.9%
FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
107,707 CHF 8/25/94 $ 80,384 $ (2,717)
12,837 CAD 9/7/94 9,248 (18)
62,918 DEM 8/1/94 to 10/7/94 39,724 368
309,948 DKK 8/11/94 to 10/28/94 49,660 (522)
2,759,966 FRF 8/24/94 to 10/20/94 509,611 (3,979)
29,449 GBP 8/19/94 to 10/11/94 45,417 (880)
43,426,185 JPY 8/1/94 to 11/1/94 436,268 (9,442)
204,264 NLG 8/2/94 to 11/2/94 114,691 (2,504)
50,247 NZD 9/23/94 30,167 (474)
TOTAL CONTRACTS TO SELL
(Receivable amount $1,295,002) $ 1,315,170 (20,168)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 24.7%
$ (17,116)
SECURITIES SOLD SHORT
NUMBER OF SHARES ISSUER VALUE
(000S)
346,200 Alco Standard Corp. $ 21,075
7,913,000 Amoy Properties Ltd. 10,090
26,565 Banc One Corp. 886
279,200 Bank of New York Co., Inc. 8,830
214,000 Bank of Tokyo Ltd. 3,320
173,400 Barnett Banks, Inc. 7,759
75,300 Carlton Communications PLC ADR 2,071
1,159,300 Carnival Cruise Lines, Inc. Class A 54,777
116,600 Century Telephone Enterprises, Inc. 3,032
187,100 Cincinnati Financial Corp. 9,963
611,200 Citicorp 25,212
211,700 Compania de Telefona de Chile sponsored ADR 17,015
26,100 Conseco 1,354
7,877,000 Dairy Farm International Holdings Ltd. 11,013
104,800 Equitable Companies, Inc. 2,293
227,455 Ericsson (L.M.) Telephone Co. Class B ADR 12,396
1,319,950 Federal-Mogul Corp. 36,629
23,625 First Commerce Corp. 644
615,800 Ford Motor Company 19,552
54,100 Hillhaven Corp. 974
SECURITIES SOLD SHORT - CONTINUED
NUMBER OF SHARES ISSUER VALUE
(000S)
168,800 Home Depot, Inc. $ 6,921
477,500 Investor AB free shares 11,009
2,384,900 Jardine Strategic Holdings Ltd. 8,891
909,400 Lowe's Co., Inc. 32,738
108,700 Magma Copper Co. 1,821
107,080 Motorola, Inc. 5,675
855,900 Norwest Corp. 22,360
328,600 Reuter Holdings PLC ADR Class B 14,171
84,900 Sysco Corp. 2,006
179 Telekom Malaysia BHD 1
1,738,700 Thermo Electron Corp. 69,331
113,100 Union Planters Corp. 2,870
104,410 Wachovia Corp. 3,406
735,500 Wendy's International, Inc. 11,308
541,400 West One Bancorp. 16,919
26,600 Whirlpool Corp. 1,353
TOTAL SECURITIES SOLD SHORT
(Total proceeds $455,777) $ 459,665
THE VALUE OF SECURITIES SOLD SHORT AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 8.6%
CURRENCY ABBREVIATIONS
ARP - Argentinean peso
GBP - British pound
CAD - Canadian dollar
CSK - Czech koruna
DKK - Danish krone
NLG - Dutch guilder
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
SEK - Swedish krona
CHF - Swiss franc
THB - Thai baht
LEGEND
(f) Non-income producing
(g) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(h) Principal amount is stated in United States dollars unless otherwise
noted.
(i) The coupon rate shown on floating or adjust- able rate securities
represents the rate at period end.
(j) 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
Grupo Embotellador
de Mexico SA de
CV 0%, 8/10/94 5/5/94 $ 2,994,000
Gulf Canada
Resources Ltd. 10/15/93 $ 28,000
Sunbelt (Cemex)
Enterprises
8 1/2%, 5/4/95 2/12/93 $ 7,521,000
(k) 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 $400,737,000 or 7.4% of net
assets.
(l) Security pledged to cover margin requirements on open short sale
transactions (see Note 2 of Notes to Financial Statements). At the period
end the value of securities pledged amounted to $481,979,000.
(m) Principal amount shown is original face amount and does not reflect the
inflation adjustments.
(n) Most foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
(o) Principal amount in millions.
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 36.4% AAA, AA, A 34.0%
Baa 8.5% BBB 10.4%
Ba 2.9% BB 1.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
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 6.9% including long-term debt categorized
as other securities. FMR has determined that unrated debt securities that
are lower quality account for 3.8% of the total value of investment in
securities.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 60.8%
France 10.8
Canada 8.1
Japan 4.9
Mexico 1.8
New Zealand 1.7
Argentina 1.3
Netherlands 1.3
United Kingdom 1.2
Germany 1.1
Denmark 1.0
South Africa 1.0
Others (individually less than 1%) 5.0
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1994, the aggregate cost of investment securities for income
tax purposes was $5,420,237,000. Net unrealized depreciation aggregated
$100,486,000, of which $167,670,000 related to appreciated investment
securities and $268,156,000 related to depreciated investment securities.
The fund hereby designates $63,962,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER SHARE AMOUNTS) JULY 31, 1994
ASSETS
Investment in securities, at value (including repurchase $ 5,319,751
agreements of $282,464) (cost $5,404,689)
(Notes 1 and 2) - See accompanying schedule
Securities sold short, at value (proceeds received $455,777) (459,665) $ 4,860,086
(Note 2)
Restricted cash on securities sold short (Note 2) 455,777
Cash 6,825
Receivable for investments sold 141,531
Unrealized appreciation on foreign currency contracts (Note 2) 9,178
Receivable for closed foreign currency contracts 17
Receivable for fund shares sold 16,302
Dividends receivable 5,036
Interest receivable 60,336
Receivable for daily variation on futures contracts 1,806
Other receivables 2,090
TOTAL ASSETS 5,558,984
LIABILITIES
Payable for investments purchased 113,789
Unrealized depreciation on foreign currency contracts 26,294
Payable for closed foreign currency contracts (Note 2) 2,946
Payable for fund shares redeemed 14,383
Accrued management fee 2,323
Other payables and accrued expenses 9,154
TOTAL LIABILITIES 168,889
NET ASSETS $ 5,390,095
Net Assets consist of (Note 1):
Paid in capital $ 5,499,098
Undistributed net investment income 10,547
Accumulated undistributed net realized gain (loss) on (22,078)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on investments and (97,472)
assets and liabilities in foreign currencies
NET ASSETS, for 422,477 shares outstanding $ 5,390,095
NET ASSET VALUE, offering price and redemption price per share $12.76
($5,390,095 (divided by) 422,477 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1994
INVESTMENT INCOME $ 55,499
Dividends
Interest (including security lending fees of $50) (Note 5) 191,239
TOTAL INCOME 246,738
EXPENSES
Management fee (Note 4) $ 25,346
Transfer agent fees (Note 4) 13,466
Accounting and security lending fees (Note 4) 780
Non-interested trustees' compensation 28
Custodian fees and expenses 2,076
Registration fees 885
Audit 84
Legal 28
Interest (Notes 6 and 7) 192
Reports to shareholders 637
Dividends on securities sold short 5,897
Miscellaneous 39
TOTAL EXPENSES BEFORE REDUCTIONS 49,458
EXPENSE REDUCTIONS (NOTE 8) (585) 48,873
NET INVESTMENT INCOME 197,865
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1 AND 2)
Net realized gain (loss) on:
Investment securities 61,370
Foreign currency transactions (75,168)
Futures contracts 28,215
Short sales (3,712) 10,705
Change in net unrealized appreciation (depreciation) on:
Investment securities (221,417)
Futures contracts 5,189
Short sales 3,223
Assets and liabilities in foreign currencies (30,776) (243,781)
NET GAIN (LOSS) (233,076)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ (35,211)
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ 197,865 $ 109,215
Net investment income
Net realized gain (loss) 10,705 157,545
Change in net unrealized appreciation (depreciation) (243,781) 101,148
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (35,211) 367,908
FROM OPERATIONS
Distributions to shareholders: (88,138) (105,629)
From net investment income
From net realized gain (157,422) (42,133)
In excess of net realized gain (127,230) -
TOTAL DISTRIBUTIONS (372,790) (147,762)
Share transactions 3,990,023 2,584,255
Net proceeds from sales of shares
Reinvestment of distributions 357,197 141,794
Cost of shares redeemed (2,148,510) (712,828)
Net increase (decrease) in net assets resulting from 2,198,710 2,013,221
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,790,709 2,233,367
NET ASSETS
Beginning of period 3,599,386 1,366,019
END OF PERIOD (including undistributed net investment $ 5,390,095 $ 3,599,386
income of $10,547 and $14,016, respectively)
OTHER INFORMATION
Shares
Sold 298,399 196,763
Issued in reinvestment of distributions 26,645 11,118
Redeemed (162,688) (54,597)
Net increase (decrease) 162,356 153,284
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31,
1994 1993 1992 1991 1990
SELECTED PER-SHARE DATA
Net asset value, beginning $ 13.84 $ 12.79 $ 12.15 $ 11.11 $ 11.87
of period
Income from Investment
Operations
Net investment income .25C .62 .62 .65 .71
Net realized and unrealized (.17) 1.45 1.07 1.07 (.25)
gain (loss)
Total from investment .08 2.07 1.69 1.72 .46
operations
Less Distributions
From net investment (.25)C (.66) (.60) (.68) (1.00)
income
From net realized gain (.50)C (.36) (.45) - (.22)
In excess of net realized (.41) - - - -
gain
Total distributions (1.16) (1.02) (1.05) (.68) (1.22)
Net asset value, end of $ 12.76 $ 13.84 $ 12.79 $ 12.15 $ 11.11
period
TOTAL RETURN A .37% 17.18% 14.73% 16.24% 3.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,390 $ 3,599 $ 1,366 $ 458 $ 268
(in millions)
Ratio of expenses to average 1.01% .93% .96% .98% .97%
net assets B
Ratio of expenses to average 1.02% .93% .96% .98% .97%
net assets before expense
reductions B
Ratio of net investment 4.09% 5.07% 5.68% 5.93% 6.74%
income to average net
assets
Portfolio turnover rate 157% 162% 242% 238% 223%
</TABLE>
A THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
B SEE NOTE 8 OF NOTES TO FINANCIAL STATEMENTS.
C THE AMOUNT SHOWN REFLECTS CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1994
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 prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Effective August 1, 1993, the fund adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts and foreign
currency options, disposition of foreign currencies, currency gains and
losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. Further, as
permitted under the SOP, the effects of changes in foreign currency
exchange rates on investments in securities are not segregated in the
Statement of Operations from the effects of changes in market prices of
those securities, but are included with the net realized and unrealized
gain or loss on investment in securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
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 discount, partnerships, non-taxable dividends
and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect net investment income per share disclosed. Undistributed net
investment income may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
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 1, 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, as
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
reflected in the schedule of investments under the caption "Forward Foreign
Currency Contracts," 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 any realized gain (loss) is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible for
determining that the value of these underlying securities remains at least
equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of FMR, may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
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.
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures and options
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 $10,656,000 or 0.2% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $9,356,735,000 and $7,499,666,000, respectively, of which U.S.
government and government agency obligations aggregated $3,668,980,000 and
$2,464,686,000, respectively.
The market value of futures contracts opened and closed amounted to
$2,520,033,000 and $2,249,998,000, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .30% to .52% for the period from August 1, 1993 to
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
October 31, 1993 and .285% to .520%
for the period from November 1, 1993
to July 31, 1994. In the event that these rates were lower than the
contractual rates in effect during those periods, FMR voluntarily
implemented the above rates, as they resulted in the same or a lower
management fee. The annual individual fund fee rate is .20%. For the
period, the management fee was equivalent to an annual rate of .52% of
average net assets.
The Board of Trustees has approved a new group fee rate schedule with rates
ranging from .27% to .52%. Effective August 1, 1994, FMR has voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
TRANSFER AGENT FEES. 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 AND SECURITY LENDING FEES. FSC maintains the fund's accounting
records and administers the security lending program. The security lending
fee is based on the number and duration of lending transactions. The
accounting fee is based on the level of average net assets for the month
plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $2,458,000 for the period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, there were no
loans outstanding.
6. INTERFUND LENDING
PROGRAM.
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $52,103,000 and $37,576,000,
respectively. The weighted average interest rate was 3.97%. Interest
expense includes $33,000 paid under the interfund lending program.
7. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
7. BANK BORROWINGS - CONTINUED
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 $85,265,000 and $48,764,000, respectively. The weighted average
interest rate was 4.04%. Interest expense includes $159,000 paid under the
bank borrowing program.
8. 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
$585,000 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of Fidelity
Balanced Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Puritan Trust: Fidelity Balanced Fund, including the schedule of
portfolio investments, as of July 31, 1994, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1994 by correspondence with the custodian
and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Puritan Trust: Fidelity Balanced Fund as of July 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 2, 1994
A total of 8.0% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
A total of 8.0% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders.
The fund will notify shareholders in January 1995 of the applicable
percentage for use in preparing 1994 income tax returns.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)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
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Robert Haber, Vice President
William J. Hayes, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'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
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Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
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(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(registered trademark)
GLOBAL BALANCED
FUND
ANNUAL REPORT
JULY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 29 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 33 Notes to the financial statements.
REPORT OF INDEPENDENT 39 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR
GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The first half of 1994 was an unsettling time for many investors. For
example, after three years of a nearly perfect environment for stock market
investing, stock prices generally fell from February through June. Bond
prices have fallen as well. Investors disagree about whether these declines
represent only a short-term correction or signal the beginning of a longer
bear market. One can collect statistics to support either opinion, but of
course, nobody knows for sure what will happen in the months ahead.
We do know, however, that market declines are a normal part of investing.
We have historically seen corrections of 10% or more every two years.
That's why I thought this might be a good time to review three basic
investment principles that have proven helpful to successful investors in
every market cycle.
First, take a long-term approach when investing. If you can afford to leave
your money invested through the inevitable ups and downs of financial
markets, you will greatly reduce your vulnerability to any single decline.
Over time, for example, stock prices have gone up - and have significantly
outperformed other types of investments and stayed ahead of inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. 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 JULY 31, 1994 PAST 1 LIFE OF
YEAR FUND
Global Balanced 4.58% 26.17%
Morgan Stanley World Index 10.07% 28.94%
Salomon Brothers World Government Bond Index 5.72% 12.98%
Average Global Flexible Fund 7.02% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
February 1, 1993. For example, if you had invested $1,000 in a fund that
had a 5% return over the past year, you would have $1,050. 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 27 global flexible portfolio funds
tracked by Lipper Analytical Services. These benchmarks include reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1994 PAST 1 LIFE OF
YEAR FUND
Global Balanced 4.58% 16.81%
Morgan Stanley World Index 10.07% 18.52%
Salomon Brothers World Government Bond Index 5.72% 8.50%
Average Global Flexible Fund 7.02% 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.
$10,000 OVER LIFE OF FUND
Fidelity Global Balanced Fund Morgan Stanley World Index World
Government Bond Index
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
11223.30
02/28/94 13895.32 12844.42
11150.35
03/31/94 12974.09 12287.79
11134.74
04/30/94 12795.93 12664.77
11146.99
05/31/94 13005.53 12694.48
11048.89
06/30/94 12385.09 12656.32
11208.00
07/31/94 12616.59 12894.04
11297.66
$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 July 31, 1994, the value of your investment would have
grown to $12,617 - a 26.17% 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 $12,894 - a 28.94% increase. If you had put
$10,000 in the Salomon Brothers World Government Bond Index, it would have
grown to $11,298 - a 12.98% 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
MARKET RECAP
Rising interest rates and inflation
concerns in the U.S. triggered
sell-offs in many stock and bond
markets worldwide in 1994.
Yields rose - and prices fell -
on virtually all types of
fixed-income investments, after
strong performance in most
global bond markets in 1993. The
Lehman Brothers Aggregate
Bond Index - a broad measure
of taxable bonds in the U.S.
market - had a total return of
0.09% for the 12 months ended
July 31, 1994. The Salomon
Brothers World Government
Bond Index - a proxy of bond
market performance in
developed nations including the
U.S. - rose 5.72% during the
same period. Emerging market
bonds in countries such as Brazil
and Argentina were hit especially
hard in 1994. The J.P. Morgan
Emerging Markets Bond Index
fell 3.45%. U.S. stocks largely
took their cue from bonds through
the first half of 1994. The
Standard & Poor's Composite
Index of 500 Stocks had a total
return of 5.16% for the 12 months
ended July 31, but was
essentially flat from January
through July. Aside from
Japanese stocks, which made
strong gains due to a stronger
economy and yen, most foreign
markets suffered corrections in
1994. However, strong
performance in 1993 helped the
Morgan Stanley EAFE (Europe,
Australia, Far East) index return
14.13% and the Morgan Stanley
Emerging Markets Free Index
return 40.62% during the period.
An interview with Robert Haber, Portfolio Manager of Fidelity Global
Balanced Fund
Q. BOB, WHAT ARE THE FUND'S LATEST PERFORMANCE NUMBERS?
A. The fund had a total return of 4.58% for the 12 months ended July 31,
1994. That trailed the average global flexible fund, which returned 7.02%
during the same period, according to Lipper Analytical Services. The fund
also lagged the Morgan Stanley World Index, which returned 10.07%, and the
Salomon Brothers World Government Bond Index, which rose 5.72%.
Q. SOUNDS LIKE THE FUND HAS SUFFERED RECENTLY, AS GLOBAL STOCK AND BOND
MARKETS HAVE GENERALLY FALLEN . . .
A. It has, but there's more to the story. Actually, the fund's stock
investments- which include common and preferred stocks and total about 44%
of the fund - have performed quite well. It was the bond side that
accounted for much of the drop in the fund's share price over the past six
months. Broadly speaking, most of the world's bond markets experienced
severe sell-offs when the Federal Reserve Board raised short-term interest
rates in the United States from February though May. But the fund suffered
disproportionately. That's because many aggressive bond investments that
had performed very well in 1993 hurt the fund in 1994.
Q. WHAT WERE SOME EXAMPLES?
A. In January, about 20% of the fund was invested in emerging market bonds.
The fund had investments in a variety of these countries - including
Argentina, Brazil and Mexico, as well as smaller amounts in markets such as
Ecuador and Panama. Underlying economic conditions in many of these places
appeared favorable for bonds - and in many cases still do. But the
worldwide sell-off that began in February was magnified in emerging
markets. Some of these bonds lost more than 30% of their value in just a
few weeks. This happened, in part, because many investors were in these
markets on borrowed money, and had to sell when prices began to go down,
thus exacerbating the drop.
Q. THE FUND ALSO INVESTED IN EUROPEAN GOVERNMENT BONDS. HOW DID THEY
PERFORM?
A. Just about all bond markets were down, and Europe was no exception. For
example, the fund had about a 4% stake in French government bonds in
January. They had long durations, as did most of the fund's European bonds.
That made them especially sensitive to changes in interest rates. Although
France's economic recovery is well behind that of the United States, rates
shot up anyway, and these bonds suffered. Rising rates in Europe also hurt
a small investment the fund had in indexed securities, or structured notes.
Q. DERIVATIVES HAVE BEEN IN THE NEWS A LOT LATELY. ARE THESE STRUCTURED
NOTES DERIVATIVES?
A. They are. Structured notes are like customized bonds. The fund's
structured notes were very interest-rate sensitive - in that they were
designed to behave much like longer-maturity bonds. These instruments were
constructed in a way that tied their value to short-term interest rates in
Europe. They did very well when rates fell in 1993, but overstayed their
welcome in 1994. When rates reversed, they negatively affected the fund's
total return. I sold most of my investment, and by July these securities
made up less than 1% of the fund.
Q. IN ADDITION, YOU HEDGED THE FUND'S FOREIGN INVESTMENTS WITH DERIVATIVES
KNOWN AS FORWARD FOREIGN CURRENCY CONTRACTS. DID THEY HAVE AN IMPACT ON
PERFORMANCE?
A. Yes, the fund would have performed better had I not tried to hedge
foreign investments. I've been using forward foreign currency contracts
since the fund began in order to reduce its exposure to foreign currency
risk - the chance that movements in a country's currency will negatively
affect the fund's investments there. These contracts effectively tie the
value of the fund's foreign investments to the U.S. dollar. However, if the
dollar moves downward - as it has done recently - the fund is out the cost
of the contracts. Thus, the hedging of foreign bonds hurt the fund during
the first half of the year. Fortunately, strong performance on the stock
side helped to offset some of those losses.
Q. WHERE DID YOU FIND THE BEST
OPPORTUNITIES IN STOCKS?
A. Mostly in Japan - 7.2% of the fund on July 31. Japan's big-name
exporters - companies such as Hitachi, Matshushita, Sony and TDK -
benefited from effective cost cutting and a pick-up in business. In
addition, the stocks of Japanese brokerage firms such as Nomura and Daiwa
rose on the strength of increased trading volumes in Japan's securities
markets. I've recently reduced the fund's stake in Japan, however. The
prices of these stocks rose quickly during the first six months of 1994.
Also, I'm concerned that the yen is overdue to weaken against the U.S.
dollar, which could hurt the future profitability of Japanese companies.
Q. HOW ABOUT EUROPE AND THE UNITED STATES?
A. Over the past year, I shifted some of the fund's European investments
out of financial stocks - which had a solid upward run - and into cyclical
stocks - those whose prices tend to move up and down with the economy. Many
of these cyclicals have performed very well recently in advance of expected
economic recoveries in Europe. They include Norwegian farm machinery
manufacturer Kverneland, Continental Tire of Germany, and Veba - a German
chemicals and utility company. In North America, strengthening U.S. and
Canadian economies also boosted cyclicals - especially commodities stocks.
Chemical companies such as Georgia Gulf and Methanex; paper companies such
as Stone Container; and Canadian fertilizer companies Sherritt and Cominco
have made positive contributions to the fund recently. Therein lies much of
the frustration of the past six months: the fund's stocks have done quite
well, I just didn't own enough of them.
Q. HAVE YOU MADE CHANGES TO THE FUND'S BOND INVESTMENTS?
A. Several changes, especially to the fund's emerging market bonds. I've
consolidated investments in these countries into a 17.9% stake in Argentine
government bonds and a small amount of dollar-denominated, investment-grade
bonds in Mexico. The Argentine bonds present an exciting opportunity.
Yields have risen - and prices fallen - so dramatically that these bonds
are very attractively valued. I have visited Argentine government and
company officials. Based on these visits, I believe that the country's
economic policies are working. Argentina's economy is growing and inflation
is extremely low. Also, I've altered, and in some cases reduced, the fund's
forward foreign currency contracts used to hedge stock and bond investments
overseas.
Q. LET'S TALK ABOUT YOUR OUTLOOK.
HOW DO YOU SEE THE NEXT SIX MONTHS SHAPING UP?
A. Although I plan to keep the fund's asset mix at roughly 60% stocks and
convertibles, and 40% bonds, I'm more optimistic about the bond side. The
global correction this year has created excellent value in most countries.
For example, Canadian government bonds are now yielding 9%, and the country
has no problem with inflation. In fact, I believe that interest rates have
risen so much globally, that stock investors may question their strategy.
They may ask themselves, "should I own a government bond yielding 8% or 9%,
or a low-yielding common stock?" I'm afraid bonds could be enticing enough
in many places to rob stock markets of yield seeking investors. On the up
side for stocks, strengthening economies in the U.S. - and to a lesser
extent in Europe and Japan - have boosted corporate profits. That could
bode well for stocks, provided interest rates stabilize.
FUND FACTS
GOAL: to provide as much
income as possible, while
preserving capital and
increasing the value of the
fund's shares, by investing in
stocks and bonds from
around the world
START DATE: February 1, 1993
SIZE: as of July 31, 1994,
more than $313 million
MANAGER: Robert Haber,
since February 1993;
manager,
Fidelity Balanced Fund, since
June 1988; and Fidelity
Advisor Income & Growth
Fund, since January 1987;
joined Fidelity in 1985
(checkmark)
BOB HABER ON RISK TIED TO
GLOBAL INVESTING:
"Perhaps the biggest risk
global investors face is that the
world appears to be entering a
period of synchronous growth.
Of course, there may be
slumps and downturns along
the way, but if you look out a
couple of years, it's possible
the economies of the United
States, Europe and Japan will
all be clicking on eight cylinders
at the same time. That would
present problems for financial
markets. Economic growth can
trigger inflation which, in turn,
can send interest rates higher.
This year has given us a painful
lesson in what inflation worries
can do to bond markets, and
what rising interest rates can
mean for stocks."
(solid bullet) In addition to forward
foreign currency contracts,
the fund uses options to
hedge the fund's investments
against currency risk. Also,
the fund has used futures in
various world markets. These
instruments mirror the
performance of the market to
which they are tied, and allow
the fund to take part in market
moves until specific
investments are found to
replace them.
DISTRIBUTIONS
4% of the dividends
distributed during the fiscal
year qualifies for the
dividends-received
deductions for corporate
shareholders. The fund will
notify shareholders in January
1995 of these percentages for
use in preparing 1994 income
tax returns.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Sherritt Gordon Mines Ltd. 1.4 0.8
(Canada)
Kverneland Gruppen AS
(Norway) 1.4 0.7
Methanex Corp. (Canada) 1.4 -
Hitachi Ltd. (Japan) 1.1 -
Federal Mogul Corp. $1.9375
(United States) 1.1 0.7
TOP FIVE BONDS AS OF JULY 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) 17.9 11.1
French Government (various 5.8 1.9
issues)
Canadian Government (various 5.3 0.3
issues)
Italian Government (various issues) 2.5 1.7
Mexican Government 1.9 3.2
TOP FIVE COUNTRIES AS OF JULY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
United States of America 24.7 27.2
Argentina 17.9 11.4
Canada 14.0 6.3
Japan 8.0 2.3
France 7.3 4.1
ASSET ALLOCATION
AS OF JULY 31, 1994* AS OF JANUARY 31, 1994**
Row: 1, Col: 1, Value: 1.4
Row: 1, Col: 2, Value: 22.3
Row: 1, Col: 3, Value: 39.2
Row: 1, Col: 4, Value: 37.3
Stocks 36.6%
Bonds 34.3%
Convertible
securities 13.1%
Other securities
& short-term
investments 16.0%
Stocks 37.3%
Bonds 39.0%
Convertible
securities 22.3%
Other securities
& short-term
investments 1.4%
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
* FOREIGN
INVESTMENTS 75.3%
** FOREIGN
INVESTMENTS 59.6%
INVESTMENTS JULY 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 36.7%
SHARES VALUE (NOTE 1)
(000S)
AUSTRALIA - 0.4%
Coplex Resources NL 500,000 $ 137,421
Goodman Fielder Ltd. Ord. 603,200 637,920
Pacific Dunlop 151,500 505,308
QNI Ltd. 1,000 1,383
1,282,032
AUSTRIA - 0.9%
Heraklith Baustoffe AG 7,000 488,656
Heraklith Baustoffe Class E 3,500 244,328
Maculan Holding AG Ord. 1,100 109,276
Mayr Melnhof Karton AG 15,600 843,281
Radex Heraklith Industrie 13,000 510,762
Wienerberger Baustoffind AG 2,000 685,551
2,881,854
BELGIUM - 0.0%
Union Miniere SA 770 59,992
BRAZIL - 0.3%
Aracruz Celulose SA ADR (a) 79,550 894,938
CANADA - 6.0%
Alcan Aluminum Ltd. 1,000 24,527
Canadian Natural Resources Ltd. (a) 65,000 920,198
Cascades, Inc. 275,400 1,415,493
Cogas Energy Corp. Ltd. (a) 67,300 242,741
Cominco Fertilizer Ltd. 106,700 2,039,711
Cominco Ltd. (a) 1,000 15,870
Domtar, Inc. (a) 15,700 80,694
Inco Ltd. 1,000 27,412
Jordan Petroleum Ltd. (a) 32,000 253,923
Mark Resources, Inc. (a) 67,700 463,949
Methanex Corp. (a) 291,200 4,253,777
Noranda, Inc. 1,000 17,583
Poco Petroleums Ltd. (a) 154,200 1,042,831
QUNO Corp. (a)(e) 20,800 356,357
Renaissance Energy Ltd. (a) 9,200 195,780
Richland Petroleum Corp. Class A (a) 43,100 252,615
Rio Alto Exploration Ltd. (a) 91,100 575,022
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CANADA - CONTINUED
Seagram Co. Ltd. 32,600 $ 1,005,338
Sherritt Gordon Mines Ltd. (a) 492,300 4,394,742
St. Laurent Paperboard, Inc. (a) 5,700 53,968
St. Laurent Paperboard, Inc. (e) 104,500 989,782
18,622,313
DENMARK - 0.5%
FLS Industries (Smidth) Class B 9,100 810,302
Spar Nord Holdings 19,300 651,084
Spar Nord Holdings (New) 6,933 233,884
1,695,270
FINLAND - 0.0%
Kone Corp. Class B Ord. 100 10,424
FRANCE - 1.5%
Accor SA 3,112 402,272
Allevard Industries 1,000 77,485
CPR (Comp Par Reescompte) 5,325 421,864
Dapta-Mallinjoud SA 72,000 2,720,222
Elf Gabon 1,325 263,407
Montupet SA 4,710 682,105
4,567,355
GERMANY - 1.2%
Continental Gummi-Werke AG 7,550 1,280,591
DLW AG 3,100 877,322
Depfa Bank (Deut Pfandbrief) 700 350,221
Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. 3,500 1,148,831
3,656,965
HUNGARY - 0.0%
Pick Szeged RT sponsored GDS (a)(e) 1,000 51,000
IRELAND - 1.0%
Smurfit (Jefferson) Group PLC 565,700 3,070,144
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
JAPAN - 7.2%
Aoyama Trading Co. Ord. 1,000 $ 43,443
Fuji Electric Co. Ltd. 77,000 444,735
Fujitsu Ltd. 131,000 1,376,877
Hitachi Cable Ltd. 90,000 803,604
Hitachi Koki Co. Ord. 19,000 192,092
Hitachi Ltd. 346,000 3,342,242
Hitachi Maxell Ltd. 66,000 1,248,649
Marui Co. Ltd. 122,000 2,295,896
Matsushita Electric Industrial Co. Ltd. 177,000 2,905,706
Matsuzakaya Co. Ltd. 500 6,807
Nichicon Corp. 33,000 469,069
Nifco, Inc. 24,000 386,787
Nikko Securities 25,000 310,310
Nisshinbo Industries 49,000 549,349
Nitto Denko Corp. 52,000 827,628
Nomura Securities Ltd. 46,000 1,017,618
Ohtsu Tire & Rubber Co. 63,000 288,198
Omron Corp. 44,000 748,749
TDK Corp. 46,000 1,970,771
Takasago Thermal Engineering Co. 1,000 16,316
Tokai Rika Denki Co. Ltd. 32,000 329,930
Toppan Printing Co. Ltd. 60,000 894,895
Toyobo Co. 192,000 889,849
Uny Co. Ltd. 34,000 581,982
Zexel Corp. 28,000 186,667
22,128,169
NETHERLANDS - 2.7%
Bam Groep NV 21,194 1,263,322
Hoogovens en Staalfabrieken 100 4,471
Koninklijke PPT Nederland 18,400 517,348
Koninklijke PPT Nederland (e) 23,000 646,685
KLM Royal Dutch Airlines (a) 15,800 489,800
KLM Royal Dutch Airlines Ord. (a) 19,500 602,008
MacIntosh Confectionary Works 1,650 42,032
NBM-Amstelland NV 305,600 2,938,628
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NETHERLANDS - CONTINUED
Pirelli Tyre Holdings NV:
Ord. 53,333 $ 479,856
(warrant) (a) 13,333 19,119
Vredestein NV 177,000 1,333,746
8,337,015
NEW ZEALAND - 0.8%
Brierley Investments Ltd. 1,638,059 1,183,825
Skellerup Group Ltd. 1,049,900 1,340,481
2,524,306
NORWAY - 1.7%
Kverneland Gruppen AS 310,400 4,268,798
Norsk Hydro AS 20,300 752,309
Norsk Hydro AS ADR 4,300 158,563
5,179,670
PORTUGAL - 0.2%
Soporcel SA (Soc Port Cell SA) 41,000 724,976
SOUTH AFRICA - 0.9%
Buffelsfontein Gold Mining Co. Ltd. ADR 33,000 325,875
Buffelsfontein Gold Mining Co. Ltd. Ord. 500 4,949
Free State Consolidated Gold Mines Ltd.:
ADR 35,344 475,487
Ord. 11,481 154,414
Vaal Reefs Exploration & Mining Co. Ltd.:
ADR (New) 58,900 508,013
(Reg.) 200 17,474
Western Deep Levels Ltd.:
ADR 21,200 882,450
Ord. 6,600 275,533
2,644,195
SPAIN - 0.1%
Prosegur Comp Securidad SA (Reg.) 7,100 154,786
SWEDEN - 0.9%
Aktiebolaget Electrolux 4,600 223,957
Catena AB Class A Free shares 148,000 1,429,676
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SWEDEN - CONTINUED
Foreningsbanken AB Class A Ord. (a) 200,000 $ 425,038
Ratios AB Free B 75,700 838,511
Trelleborg Class B Free shares (a) 1,000 13,524
2,930,706
UNITED KINGDOM - 2.7%
BET Public Ltd. Co. Ord. 127,900 225,124
British Petroleum PLC ADR 40,000 3,040,000
Canning (W) PLC 100,000 299,536
Clinton Cards PLC 451,000 661,527
Cook (D.C.) Holdings PLC 1,369,200 980,803
Eurocamp PLC 375,000 1,545,930
Resort Hotels PLC 570,000 356,432
Wace Group PLC 345,000 1,214,510
8,323,862
UNITED STATES OF AMERICA - 7.7%
Agricultural Minerals Co. LP 2,400 65,700
Bank of Boston Corp. 27,000 712,125
Barrett Resources Corp. (a) 100 1,619
Becton, Dickinson & Co. 7,700 324,363
Berry Petroleum Co. Class A 60,700 591,825
CMG Information Services, Inc. (a) 126,000 1,071,000
CenFed Financial Corp. 10,000 185,000
Chesapeake Corp. 53,600 1,514,200
Comerica, Inc. 100 2,975
Computer Data Systems, Inc. 1,000 13,000
Crown Central Petroleum Corp. Class A (a) 100 1,738
Dayton Hudson Corp. 15,200 1,254,000
Federal Paper Board Co., Inc. 23,600 590,000
Gaylord Container Corp.:
Class A (a) 34,500 198,375
(warrants) (a) 19,100 88,338
Georgia-Pacific Corp. 100 6,450
Hecla Mining Co. (a) 30,500 308,813
IMC Fertilizer Group, Inc. (a) 10,100 393,900
Illinova Corp. 2,600 54,275
International Business Machines Corp. 16,700 1,031,225
Jefferson Smurfit Corp. (a) 36,300 648,863
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED STATES OF AMERICA - CONTINUED
LTC Properties, Inc. 4,000 $ 57,000
Longview Fibre Co. 74,800 1,505,350
Marine Drilling Cos., Inc. (a) 1,000 5,313
McDermott International, Inc. 18,400 462,300
Olin Corp. 19,300 1,066,325
Omnicom Group, Inc. 358 18,213
Questar Corp. 1,000 33,250
SCECorp. 100 1,350
Sensormatic Electronics Corp. 2 60
Service Fracturing Co. (a) 48,800 158,600
Stone Container Corp. (a) 193,200 3,187,800
Swift Energy Co. (a) 15,900 170,925
TETRA Technologies, Inc. (a) 51,000 484,500
TSI, Inc. 2,900 39,875
Tandem Computers, Inc. (a) 48,900 672,375
Tektronix, Inc. 22,700 712,213
Temple-Inland, Inc. 37,300 1,906,963
Terra Industries, Inc. 166,300 1,122,525
Texas Instruments, Inc. 24,100 1,894,863
Vigoro Corp. 11,200 364,000
Wellman, Inc. 27,800 799,250
Western Co. of North America (a) 1,000 13,000
23,733,834
TOTAL COMMON STOCKS
(Cost $109,517,180) 113,473,806
PREFERRED STOCKS - 7.4%
CONVERTIBLE PREFERRED STOCKS - 6.8%
BERMUDA - 0.2%
Jardine Strategic Holdings Ltd. 7 1/2% (g) 4,950 621,225
HONG KONG - 0.6%
Amoy Properties Ltd. 5 1/2% (e)(g) 9,500 945,250
Dairy Farm International Holdings 6 1/2% (g) 8,120 856,660
1,801,910
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
UNITED STATES OF AMERICA - 6.0%
Alco Standard Corp. Series AA, $2.30 (g) 19,000 $ 1,339,500
Alumax, Inc. Series A, $4.00 3,100 419,275
Armco, Inc. Class A, $3.625 1,800 94,050
Banc One Corp. Series C, $3.50 (g) 200 12,150
Bank of New York 7.75% (g) 9,000 524,250
Barnett Banks, Inc. Series A, $4.50 (g) 1,000 86,500
Battle Gold Co. 14,100 888,300
Bowater, Inc. depository shares representing 1/4 shares
Series B 17,000 425,000
Echo Bay Finance Corp. Series A, $1.75 17,500 660,625
Equitable Co. $3 (e)(g) 8,900 460,575
Federal Mogul Corp. $1.9375 (e)(g) 39,700 3,334,800
Federal Paper Board, Inc. $2.875 2,800 140,000
First Commerce Corp. $1.80 (g) 700 23,100
Ford Motor Co. (Del.) Series A, $4.20 (g) 14,100 1,466,400
Gensia Pharmaceuticals, Inc. $3.75 (e)(g) 3,300 72,600
Ico, Inc. $1.6875 12,000 243,000
Kaiser Aluminum Corp. $.96 30,200 332,200
Kaiser Aluminum Corp. depository shares representing
1/10 pfd. Series A $.65 132,300 1,108,013
Magma Copper Series D $2.8 (g) 2,000 127,500
Newmont Mining Corp. depository shares representing
1/2 pfd. $1.375 (e) 21,400 1,241,200
Noble Drilling Corp. exchangeable $2.25 12,800 505,600
Norwest Corp. Series B, $3.50 (g) 5,850 427,050
Occidental Petroleum Corp. Series A, Indexed $3 48,900 2,176,050
Reynolds Metals Co. $3.31 16,900 870,350
Union Planters Corp. Series E $2.00 (g) 9,100 300,300
Unocal Corp. $3.50 (e) 23,800 1,314,950
18,593,338
TOTAL CONVERTIBLE PREFERRED STOCKS 21,016,473
NONCONVERTIBLE PREFERRED STOCKS - 0.6%
AUSTRIA - 0.3%
MaCulan Holding Ord. 8,100 830,044
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
CANADA - 0.0%
Gulf Canada Resources Ltd. (a)(d) 279 $ 732
GERMANY - 0.3%
Fuchs Petrolub AG Oel & Chemie (a) 8,000 910,676
TOTAL NONCONVERTIBLE PREFERRED STOCKS 1,741,452
TOTAL PREFERRED STOCKS
(Cost $24,069,836) 22,757,925
CORPORATE BONDS - 18.5%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
CONVERTIBLE BONDS - 15.5%
AUSTRALIA - 0.0%
Pacific Dunlop Ltd. 6 3/4%, 7/2/97 - AUD 60,000 62,700
CANADA - 2.7%
Domtar, Inc. 8%, 3/18/03 - CAD 970,000 888,656
Horsham Corp. 3 1/4%, 12/10/18 Ba2 678,000 552,570
Repap Enterprise Inc.:
8 1/2%, 8/1/97 - 460,000 423,200
9%, 6/30/98 - CAD 2,220,000 1,393,255
St. Laurent Paperboard, Inc. 8%, 6/15/04 (e) - CAD 1,350,000 1,051,758
Stone Consolidated Corp. 8%, 12/31/03 - CAD 2,000,000 1,781,785
Ulster Petes Ltd. 7 1/2%, 6/1/04 (e) - CAD 3,150,000 2,420,018
8,511,242
JAPAN - 0.8%
Nitto Denko Corp. 3.9%, 3/30/01 - JPY 34,000,000 439,039
Sony Corp. 1 2/5%, 9/30/03 Aa3 JPY 166,000,000 1,919,226
2,358,265
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
LUXEMBOURG - 0.8%
Softe SA euro 4 1/4%, 7/30/98 (j) - ITL 3,335,000 $ 2,544,271
NETHERLANDS - 0.4%
Hoogovens En Staalfabrieken NV 4 1/2%,
4/11/01 - NLG 2,050,000 1,308,412
NEW ZEALAND - 0.2%
Brierley Investments Ltd. 9%, 6/30/98 - NZD 707,300 511,166
SWEDEN - 0.6%
Ericsson (LM) Telephone Co. 4 1/4%, 6/30/00 (g) A2 SEK 5,494,000
1,026,056
Investor AB 8%, 6/1/01 (g) - SEK 5,350,000 864,793
1,890,849
UNITED KINGDOM - 0.4%
Carlton Communications 7 1/2%, 8/14/07 (g) - GBP 85,000 179,143
Daily Mail General Trust PLC 8 3/4%,
9/27/05 (g) - GBP 400,000 951,104
1,130,247
UNITED STATES OF AMERICA - 9.6%
Arrow Electronics, Inc. 5 3/4%, 10/15/02 (g) Baa3 695,000 854,850
Aspect Telecommunication Corp. 5%,
10/15/03 (e)(g) B3 382,000 360,990
Bank of New York Co., Inc. 7 1/2%, 8/15/01 (g) Baa1 20,000 32,300
Carnival Cruise Lines, Inc. 4 1/2%, 7/1/97 (g) Baa1 3,107,000 4,458,545
Cellular Communications Puerto Rico, Inc.
8 1/4%, 8/1/00 (g) Caa 1,148,000 1,938,685
Century Telephone Enterprises, Inc.
6%, 2/1/07 (e)(g) Baa1 9,000 9,697
Cincinnati Financial Corp. 5 1/2%, 5/1/02 (g) A2 521,000 638,225
Coeur D'Alene Mines Corp. Idaho 7%,
11/30/02 B2 700,000 878,500
General Instrument Corp. 5%, 6/15/00 (g) B1 1,334,000 1,829,247
Genesis Health Ventures, Inc. 6%, 11/30/03 (g) B2 150,000 184,500
Hillhaven Corp. 7 3/4%, 11/1/02 (g) B3 386,000 474,780
Homestake Mining Co. 5 1/2%,
6/23/00 (e) Ba3 1,420,000 1,455,500
LAM Research Corp. 6%, 5/1/03 (g) B2 782,000 981,410
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
UNITED STATES OF AMERICA - CONTINUED
Lowe's Companies, Inc. 3%, 7/22/03 (g) Baa1 $ 1,925,000 $ 2,656,500
Manpower, Inc. 6 1/4%, 10/1/02 (e) Ba3 440,000 586,300
Mark IV Industries, Inc. 6 1/4%, 2/15/07 (g) B1 1,138,000 1,537,722
News America Holdings, Inc. gtd. exchangeable
0%, 3/31/02 (g) Ba3 120,000 92,100
Office Depot liquid yield option notes 0%,
12/11/07 (g) Ba2 669,000 446,557
Orbital Sciences Corp. 6 3/4%, 3/1/03 (g) B3 829,000 1,052,830
Owens Corning Fiberglass Corp. 8%,
12/30/05 (e)(g) Ba1 858,000 980,265
Solectron Corp. liquid yield option 0%, 5/5/12 (g) B1 140,000 80,325
South Carolina National Corp. euro 6 1/2,
5/15/01 (g) A1 200,000 341,000
Sports and Recreation 4 1/4%, 11/1/00 (g) B2 711,000 709,222
Sysco Corp. liquid yield option notes
0%, 10/12/04 (g) A2 150,000 86,625
TPI Enterprises, Inc. gtd. 8 1/4%, 7/15/02 (g) B3 730,000 795,700
Thermo Electron Corp.:
4 5/8%, 8/1/97 (e)(g) Ba1 3,488,000 4,604,160
6 3/4%, 2/15/01 (e)(g) Ba2 91,000 159,364
euro 6 3/4%, 2/15/01 (g) Ba2 10,000 17,400
Unisys Corp. 8 1/4%, 8/1/00 (g) B2 85,000 89,356
Wendy's International, Inc. 7%, 4/1/06 (g) Baa3 649,000 889,130
West One Bancorp 7 3/4%, 6/30/06 (g) Baa1 292,000 493,480
Whirlpool Corp. liquid yield option notes 0%,
5/14/11 (g) Baa1 60,000 22,162
29,737,427
TOTAL CONVERTIBLE BONDS 48,054,579
NONCONVERTIBLE BONDS - 3.0%
CHILE - 0.5%
Compania de Telefonos de Chile Yankee bonds
4 1/2%, 1/15/03 (g) Baa2 1,466,000 1,608,935
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEXICO - 1.1%
Banco Nacional De Commerce EXT SNC:
8%, 8/5/03 (e) Ba2 $ 1,000,000 $ 845,000
euro 8%, 8/5/03 Ba2 500,000 422,500
Desc (Soc De Fomento Indust) euro 11%,
12/15/97 - 100,000 103,241
Empresas La Moderna SA 10 1/4%,
11/12/97 (e) - 500,000 507,500
First Mexican Acceptance Corp. euro
10 3/4%, 9/15/96 - 500,000 511,365
Grupo Dina (Consorcio G):
10 1/2%, 11/18/97 (e) - 100,000 98,500
euro 10 1/2%, 11/18/97 - 200,000 197,000
Third Mexican Acceptance Corp. coll. notes gtd.
by Grupo Sidek SA and Grupo Situr SA
10 1/2%, 3/15/98 (e) - 750,000 732,187
3,417,293
SOUTH AFRICA - 1.4%
Transnet Ltd. 12 1/2%, 4/1/97 - ZAR 20,650,000 4,392,625
TOTAL NONCONVERTIBLE BONDS 9,418,853
TOTAL CORPORATE BONDS
(Cost $60,738,673) 57,473,432
GOVERNMENT OBLIGATIONS (H) - 36.2%
ARGENTINA - 17.9%
Argentina Republic (c):
Brady:
euro 4 1/4%, 3/31/23 B1 18,250,000 9,353,125
5%, 3/31/23 (e) - 250,000 128,125
BOCON:
3 1/4%, 4/1/01 - ARP 11,726,055 6,328,631
5.563%, 4/1/01 B1 9,695,933 6,914,461
5.563%, 9/1/02 - 6,097,952 3,827,014
3 1/4%, 4/1/07 - ARP 9,706,749 3,967,197
GOVERNMENT OBLIGATIONS (H) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
ARGENTINA - CONTINUED
Argentina Republic - continued
5%, 3/31/05 (e) - $ 250,000 $ 183,125
euro 5%, 3/31/05 BB- 33,750,000 24,721,875
55,423,553
BRAZIL - 0.1%
Siderurgica Brasileiras SA Inflation Indexed 6%,
8/15/99 (i) - BRR 3,545,700 423,780
CANADA - 5.3%
Canadian Government:
13 3/4%, 3/15/00 Aaa CAD 1,750,000 1,504,274
10 1/2%, 7/1/00 Aaa CAD 3,400,000 2,619,441
7 1/2%, 12/1/03 Aaa CAD 5,000,000 3,234,698
6 1/2%, 6/1/04 Aaa CAD 2,535,000 1,515,974
12 1/2%, 3/1/06 Aaa CAD 415,000 365,589
13%, 10/1/07 Aaa CAD 920,000 843,513
8%, 6/1/23 Aa1 CAD 8,000,000 5,014,969
Stripped Coupon:
12/1/10 Aaa CAD 1,000,000 162,164
3/15/11 Aaa CAD 3,100,000 469,165
6/1/11 Aaa CAD 3,500,000 519,351
9/15/11 Aaa CAD 255,000 36,827
12/1/11 Aaa CAD 1,300,000 183,993
16,469,958
FINLAND - 1.2%
Finland Government 9 1/2%, 3/15/04 Aa2 FIM 20,000,000 3,713,572
FRANCE - 5.8%
French Government:
8 1/2%, 12/26/12 Aaa FRF 45,000,000 8,950,068
OAT 8 1/2%, 4/25/23 Aaa FRF 24,950,000 4,944,783
Strips 4/25/23 Aaa FRF 207,500,000 3,969,081
17,863,932
GOVERNMENT OBLIGATIONS (H) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
ITALY - 2.5%
Italian Government (j):
8 1/2%, 12/21/94 - ITL 7,000,000 $ 4,072,888
8 1/2%, 1/1/99 A1 ITL 6,100,000 3,560,384
7,633,272
MEXICO - 1.9%
Mexican Government Brady 6.63%, 12/31/19 Ba2 FRF 52,250,000 5,894,129
Mexico Value Recovery (rights) (a) - 6,499,000 65
5,894,194
NEW ZEALAND - 1.3%
New Zealand Government 8%, 4/15/04 Aaa NZD 6,800,000 4,075,479
UNITED STATES OF AMERICA - 0.2%
U.S. Treasury Bill, yields at time of purchase
3.92% to 4.11%, 9/8/94 (f) - 650,000 647,290
VENEZUELA - 0.0%
Venezuela Republic (warrant) (a) - 1,000,000 10
TOTAL GOVERNMENT OBLIGATIONS
(Cost $124,629,966) 112,145,040
INDEXED SECURITIES - 0.3%
UNITED STATES OF AMERICA - 0.3%
Citibank Nassau Cert. of dep. 5.05%,
12/21/94 (inversely indexed to 3 LIBOR rate,
multiplied by 12)(Cost $920,880) 920,880 929,536
REPURCHASE AGREEMENTS - 0.9%
MATURITY
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 4.23% dated
7/29/94 due 8/1/94 $ 2,638,930 2,638,000
PURCHASED OPTIONS - 0.0%
EXPIRATION DATE/ UNDERLYING FACE VALUE (NOTE 1)
STRIKE PRICE AMOUNT AT VALUE
Put Option on CAD Aug.12,1994/1.40 $ 9,392,245 $ 12,480
Put Option on CAD Sept. 6, 1994/1.41 1,907,124 3,566
Call Option on JPY Aug. 11, 1994/96 9,129,129 2,851
TOTAL PURCHASED OPTIONS
(Cost $145,765) 18,897
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $322,660,300) $ 309,436,636
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
29 S&P 500 Contracts September, 1994 $ 6,654,050 $ 162,076
147 U.S. Treasury Bond Contracts September, 1994 15,402,844 16,097
TOTAL PURCHASED FUTURES CONTRACTS $ 22,056,894 $ 178,173
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 7.1%
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
676,872,288 BEF 8/4/94 to 8/8/94 $ 20,698,963 $ 858,320
3,818,125 CAD 8/26/94 2,751,875 5,096
15,108,723 CHF 8/31/94 10,800,442 (299,559)
4,206,100 DEM 8/25/94 2,655,858 55,858
27,631,246 DKK 8/11/94 4,436,602 188,699
96,842,726 FRF 9/1/94 to 10/20/94 17,900,004 656,684
2,988,421 GBP 8/25/94 4,609,728 9,728
15,057,657,650 ITL 8/3/94 9,489,725 144,108
1,389,762,250 JPY 9/8/94 13,939,427 (160,573)
20,333,440 NLG 8/25/94 11,430,036 230,037
TOTAL CONTRACTS TO BUY
(Payable amount $97,024,262) $ 98,712,660 1,688,398
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 31.9%
FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
676,872,288 BEF 8/4/94 to 8/8/94 $ 20,698,963 $ (891,511)
6,958,500 CAD 8/25/94 to 8/26/94 5,015,272 (15,273)
24,711,865 CHF 8/31/94 17,967,557 (284,796)
7,942,052 DEM 8/25/94 to 10/5/94 5,014,851 (193,912)
27,631,246 DKK 8/11/94 4,436,602 (195,421)
12,614,915 FIM 9/9/94 2,419,872 (127,432)
213,893,209 FRF 9/1/94 to 10/20/94 39,514,919 (1,141,575)
4,521,728 GBP 8/25/94 6,974,903 (174,903)
15,057,657,650 ITL 8/3/94 9,489,725 (46,227)
3,906,573,400 JPY 9/8/94 39,201,771 465,233
46,558,617 NLG 8/25/94 to 10/12/94 26,171,175 (702,943)
TOTAL CONTRACTS TO SELL
(Receivable amount $173,596,850) $ 176,905,610 (3,308,760)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 57.2%
$ (1,620,362)
SECURITIES SOLD SHORT
NUMBER OF SHARES ISSUER VALUE
20,600 Alco Standard Corp. $ 1,254,025
718,500 Amoy Properties Ltd. 916,169
20,800 Arrow Electronics, Inc. 777,400
9,800 Aspect Telecommunications Corp. 291,550
275 Banc One Corp. 9,178
17,600 Bank of New York Co., Inc. 556,600
1,800 Barnett Banks, Inc. 80,550
5,900 Carlton Communications PLC ADR 162,250
89,300 Carnival Corporation Class A 4,219,425
79,200 Cellular Communications Puerto Rico, Inc. 1,960,200
350 Century Telephone Enterprises, Inc. 9,100
10,500 Cincinnati Financial Corp. 559,125
17,500 Compania De Teldphonica Chile
sponsored ADR 1,406,562
549,900 Dairy Farm International Holdings Ltd. 768,812
17,900 Equitable Companies, Inc. 391,562
18,079 Ericsson (LM) Telephone Co. Class B ADR 985,305
109,600 Federal Mogul Corp. 3,041,400
SECURITIES SOLD SHORT - CONTINUED
NUMBER OF SHARES ISSUER VALUE
750 First Commerce Corp. $ 20,437
45,800 Ford Motor Co. 1,454,150
26,300 General Instrument Corp. 1,594,438
6,700 Genesis Heatlh Ventures, Inc. 164,150
5,900 Gensia Pharmaceuticals, Inc. 47,200
22,900 Hillhaven Corp. 412,200
34,300 Investor Ab Free B shares 790,791
144,600 Jardine Strategic Holdings Ltd. 539,105
31,200 Lam Research 881,400
73,600 Lowe's Companies, Inc. 2,649,600
6,900 Magma Copper Co. 115,575
78,750 Mark IV Industries, Inc. 1,515,938
1,800 News Corp. Ltd. ADR 92,700
15,800 Norwest Corp. 412,775
19,500 Office Depot, Inc. 411,938
57,500 Orbital Sciences Corp. 991,875
28,569 Owens-Corning Fiberglas Corp. 949,919
21,600 Reuter Holdings PLC ADR 931,500
2,900 Solectron Corp. 78,300
18,300 Sports and Recreation 603,900
3,400 Sysco Corp. 80,325
111,400 TPI Enterprises, Inc. 703,213
111,900 Thermo Electron Corp. 4,462,013
11,300 Union Planters Corp. 286,738
8,300 Unisys Corp. 73,663
10,365 Wachovia Corp. 338,158
52,400 Wendy's International, Inc. 805,650
15,400 West One Bancorp 481,250
400 Whirlpool Corp. 20,350
TOTAL SECURITIES SOLD SHORT
(Total proceeds $40,811,403) $ 39,298,464
THE VALUE OF SECURITIES SOLD SHORT AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 12.7%
CURRENCY ABBREVIATIONS
ARP - Argentinean peso
AUD - Australian dollar
BEF - Belgian franc
BRR - Brazilian real
GBP - British pound
CAD - Canadian dollar
DKK - Danish krone
NLG - Dutch guilder
FIM - Finnish markka
FRF - French franc
DEM - German Deutsche mark
ITL - Italian lira
JPY - Japanese yen
NZD - New Zealand dollar
ZAR - South African rand
SEK - Swedish krona
CHF - Swiss franc
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(d) 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
(e) 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 $23,535,688 or 7.5% of net
assets.
(f) Security pledged to cover margin requirements for futures contracts. At
the period end, the value of securities pledged amounted to $647,290.
(g) Security pledged to cover margin requirements on open short sale
transactions (see Note 2 of Notes to Financial Statements). At the period
end the value of securities pledged amounted to $42,045,018.
(h) Most foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
(i) Principal amount shown is original face amount and does not reflect the
inflation adjustments.
(j) Principal amount in thousands.
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 16.1% AAA, AA, A 11.8%
Baa 3.6% BBB 4.8%
Ba 5.2% BB 10.5%
B 8.2% B 2.5%
Caa 0.6% CCC 0.9%
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 12.9% including long-term debt
categorized as other securities. FMR has determined that unrated debt
securities that are lower quality account for 9.0% of the total value of
investment in securities.
INCOME TAX INFORMATION
At July 31, 1994, the aggregate cost of investment securities for income
tax purposes was $324,311,293. Net unrealized depreciation aggregated
$14,874,657, of which $13,095,083 related to appreciated investment
securities and $27,969,740 related to depreciated investment securities.
The fund has elected to defer to its fiscal year ending July 31, 1995
$7,297,972 of losses recognized during the period November 1, 1993 to July
31, 1994.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.3%
Basic Industries 14.4%
Chemicals & Plastics 3.6
Iron & Steel 0.8
Metals & Mining 2.4
Packaging & Containers 0.1
Paper & Forest Products 7.5
Conglomerates 0.8
Construction & Real Estate 2.9%
Building Materials 0.9
Construction 1.4
Engineering 0.3
Real Estate 0.3
Durables 6.9%
Autos, Tires, & Accessories 3.7
Consumer Electronics 1.6
Home Furnishings 0.9
Textiles & Apparel 0.7
Energy 6.9%
Energy Services 0.4
Independent Power 1.5
Oil & Gas 5.0
Finance 3.6%
Banks 2.0
Credit & Other Finance 0.9
Insurance 0.2
Savings & Loans 0.1
Securities Industry 0.4
Government Obligations 36.2
Health 0.3%
Medical Equipment & Supplies 0.1
Medical Facilities Management 0.2
Holding Companies 1.9
Indexed Securities 0.3
Industrial Machinery & Equipment 2.2%
Electrical Equipment 0.7
Industrial Machinery & Equipment 1.4
Pollution Control 0.1
Media & Leisure 3.3%
Broadcasting 0.1%
Entertainment 1.7
Leisure Durables & Toys 0.2
Lodging & Gaming 0.5
Publishing 0.5
Restaurants 0.3
Nondurables 0.7%
Beverages 0.3
Foods 0.2
Tobacco 0.2
Precious Metals 2.5
Retail & Wholesale 2.7%
General Merchandise Stores 1.2
Grocery Stores 0.3
Retail, Miscellaneous 1.2
Services 2.3%
Advertising 0.4
Printing 0.7
Services 1.2
Repurchase Agreements 0.9
Technology 6.2%
Communications Equipment 1.0
Computers & Office Equipment 1.0
Electronic Instruments 0.5
Electronics 3.7
Transportation 1.8%
Air Transportation 0.4
Shipping 1.4
Utilities 2.9%
Cellular 0.7
Electric Utility 0.5
Telephone Services 1.7
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS JULY 31, 1994
ASSETS
Investment in securities, at value (including repurchase $ 309,436,636
agreements of $2,638,000) (cost $322,660,300)
(Notes 1 and 2) - See accompanying schedule
Securities sold short, at value (proceeds received (39,298,464) $ 270,138,172
$40,811,403) (Note 2)
Restricted cash on securities sold short 40,811,403
Cash 2,772,414
Receivable for investments sold, regular delivery 23,750,673
Receivable for securities sold on delayed delivery basis 1,530,000
Unrealized appreciation on foreign currency contracts (Note 2,809,620
2)
Receivable for closed foreign currency contracts 43,717
Receivable for fund shares sold 6,625,923
Dividends receivable 367,980
Interest receivable 3,179,700
Receivable for daily variation on futures contracts 283,337
Other receivables 25,824
TOTAL ASSETS 352,338,763
LIABILITIES
Payable for investments purchased 23,815,948
Unrealized depreciation on foreign currency contracts (Note 4,429,982
2)
Payable for fund shares redeemed 9,725,406
Accrued management fee 207,210
Other payables and accrued expenses 913,814
TOTAL LIABILITIES 39,092,360
NET ASSETS $ 313,246,403
Net Assets consist of (Note 1):
Paid in capital $ 334,657,094
Distributions in excess of net investment income (6,426,643)
Accumulated undistributed net realized gain (loss) on (2,049,913)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on investments (12,934,135)
and assets and liabilities in foreign currencies
NET ASSETS, for 26,125,861 shares outstanding $ 313,246,403
NET ASSET VALUE, offering price and redemption price per $11.99
share ($313,246,403 (divided by) 26,125,861 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1994
INVESTMENT INCOME $ 3,169,446
Dividends
Interest 10,438,606
TOTAL INCOME 13,608,052
EXPENSES
Management fee (Note 4) $ 2,479,145
Transfer agent fees (Note 4) 1,367,128
Accounting fees and expenses (Note 4) 200,170
Non-interested trustees' compensation 1,623
Custodian fees and expenses 450,166
Registration fees 236,470
Audit 55,428
Legal 1,272
Interest (Notes 5 and 6) 181,579
Reports to shareholders 59,153
Dividends on securities sold short 369,959
Miscellaneous 1,283
Total expenses before reductions 5,403,376
Expense reductions (Note 7) (34,358) 5,369,018
NET INVESTMENT INCOME 8,239,034
REALIZED AND UNREALIZED GAIN (LOSS) (NOTES 1, 2 AND
3)
Net realized gain (loss) on:
Investment securities (1,964,275)
Foreign currency transactions (12,475,273)
Futures contracts 2,408,165
Short sales 1,136,168 (10,895,215)
Change in net unrealized appreciation (depreciation) on:
Investment securities (13,793,851)
Futures contracts 178,173
Short sales 1,575,284
Assets and liabilities in foreign currencies (2,133,460) (14,173,854)
NET GAIN (LOSS) (25,069,069)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ (16,830,035)
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 1, 1993
JULY 31, 1994 (COMMENCEMENT
OF
OPERATIONS) TO
JULY 31, 1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ 8,239,034 $ 719,089
Net investment income
Net realized gain (loss) (10,895,215) 2,424,404
Change in net unrealized appreciation (depreciation) (14,173,854) 1,239,719
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (16,830,035) 4,383,212
FROM OPERATIONS
Distributions to shareholders: (2,705,641) (257,569)
From net investment income
From net realized gain (2,011,483) -
In excess of net realized gain (3,553,845) -
Return of capital (3,298,633) -
TOTAL DISTRIBUTIONS (11,569,602) (257,569)
Share transactions 710,176,957 106,408,972
Net proceeds from sales of shares
Reinvestment of distributions 11,133,210 247,400
Cost of shares redeemed (463,821,613) (26,624,529)
Net increase (decrease) in net assets resulting from 257,488,554 80,031,843
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 229,088,917 84,157,486
NET ASSETS
Beginning of period 84,157,486 -
End of period (including under (over) distribution of net $ 313,246,403 $ 84,157,486
investment income of $(6,426,643) and $461,520,
respectively)
OTHER INFORMATION
Shares
Sold 54,873,359 9,266,816
Issued in reinvestment of distributions 878,740 21,384
Redeemed (36,649,262) (2,265,176)
Net increase (decrease) 19,102,837 7,023,024
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 1, 1993
JULY 31, 1994 (COMMENCEMENT
OF
OPERATIONS) TO
JULY 31, 1993
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.98 $ 10.00
Income from Investment Operations
Net investment income .32F .15
Net realized and unrealized gain (loss) .25E 1.91
Total from investment operations .57 2.06
Less Distributions
From net investment income (.15) (.08)
From net realized gain (.11) -
In excess of net realized gain (.20) -
Return of capital (.10) -
Total distributions (.56) (.08)
Net asset value, end of period $ 11.99 $ 11.98
TOTAL RETURN B, C 4.58% 20.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 313,246 $ 84,157
Ratio of expenses to average net assets D 1.67% 2.12%A
Ratio of expenses to average net assets before expense 1.68% 2.12%A
reductions D
Ratio of net investment income to average net assets 2.56% 4.02%A
Portfolio turnover rate 226% 172%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
D SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS.
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF
SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET
VALUES OF THE INVESTMENTS OF THE FUND.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1994
1. 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 prevailing rates
of exchange at period end. Purchases and sales of securities, income
receipts, and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Effective August 1, 1993, the fund adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts and foreign
currency options, disposition of foreign currencies, currency gains and
losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. Further, as
permitted under the SOP, the effects of changes in foreign currency
exchange rates on investments in securities are not segregated in the
Statement of Operations from the effects of changes in market prices of
those securities, but are included with the net realized and unrealized
gain or loss on investment in securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
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 and may
affect net investment income per-share disclosed. Undistributed net
investment income may include temporary book and tax basis differences
which will reverse in a subsequent period. Distributions in excess of net
investment income may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
For the period ended July 31, 1994, the fund's distributions exceeded the
aggregate amount of taxable income and net realized gains resulting in a
return of capital. This was due to certain foreign currency losses which
decreased taxable income available for distribution after certain
distributions had already been made. (The tax treatment of distributions
for the 1994 calendar year will be reported to shareholders prior to
February 1, 1995).
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY
CONTRACTS. The fund may enter into forward foreign currency contracts.
These contracts involve market risk in excess of the amount reflected in
the fund's Statement of Assets and Liabilities. The face or contract amount
in U.S. dollars, as reflected in the schedule of investments
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
under the caption "Forward Foreign Currency Contracts," 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 any realized gain (loss) is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible for
determining that the value of these underlying securities remains at least
equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (SEC), the fund, along with other
affiliated entities of FMR, may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
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.
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.
2. OPERATING POLICIES -
CONTINUED
SHORT SALES AGAINST THE BOX -
CONTINUED
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 and options
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 $732 or 0% of net assets.
3. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $925,237,212 and $696,651,880, respectively, of which U.S.
government and government agency obligations aggregated $9,807,529 and
$14,652,036, respectively.
The market value of futures contracts opened and closed amounted to
$225,733,272 and $206,262,716, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED.
fee rate plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a series
of rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .30% to .52% for the period
from August 1, 1993 to October 31, 1993 and .285% to .520% for the period
from November 1, 1993 to July 31, 1994. In the event that these rates were
lower than the contractual rates in effect during those periods, FMR
voluntarily implemented the above rates, as they resulted in the same or a
lower manage- ment fee. The annual individual fund fee rate is .45%. For
the period, the management fee was equivalent to an annual rate of .77% of
average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2700% to .5200%. Effective August 1, 1994, 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 FEES. 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 FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $185,026 for the period.
5. INTERFUND LENDING.
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $28,748,000 and $16,024,955,
respectively. The weighted average interest rate was 3.76%. Interest
expense includes $37,383 paid under the interfund lending program.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $29,541,000 and $10,665,587,
respectively. The weighted average interest rate was 4.05%.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$34,358 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Global Balanced Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Puritan Trust: Fidelity Global Balanced Fund, including the
schedule of portfolio investments, as of July 31, 1994, and the related
statement of operations for the year then ended, the statement of changes
in net assets and the financial highlights for the year then ended and for
the period February 1, 1993 (commencement of operations) to July 31, 1993.
These financial statements and financial highlights are the responsibility
of the fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Puritan Trust as of July 31, 1994, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and for the period February 1,
1993 (commencement of operations) to July 31, 1993, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 2, 1994
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 International Investment Advisors
Pembroke, Bermuda
Fidelity International Investment Advisors (U.K.) Limited
Kent, England
Fidelity Investments Japan Ltd.
Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Robert Haber, Vice President
William J. Hayes, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis*
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann*
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'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
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PURITAN
FUND
ANNUAL REPORT
JULY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 53 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 57 Notes to the financial statements.
REPORT OF INDEPENDENT 63 The auditor's opinion.
ACCOUNTANTS
DISTRIBUTIONS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR
GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK.
The Board of Trustees of Fidelity Puritan Trust: Fidelity Puritan Fund
voted to pay on September 6, 1994, to shareholders of record at the opening
of
business on September 2, 1994 a distribution of $.58 derived from capital
gains realized from sales of portfolio securities and a dividend of $.13
from net investment income.
6.51% of the dividends distributed during the fiscal year were derived from
interest on U.S. Government securities which is generally exempt from state
income tax.
18% of the dividends distributed during the fiscal year qualifies for the
dividends-received deductions for corporate shareholders. The fund will
notify shareholders in January 1995 of these percentages for use in
preparing 1994 income tax returns.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The first half of 1994 was an unsettling time for many investors. After
three years of a nearly perfect environment for stock market investing,
stock prices generally fell from February through June. Investors disagree
about whether this decline represents only a short-term correction or
signals the beginning of a longer bear market. One can collect statistics
to support either opinion, but of course, nobody knows for sure what will
happen to stock prices in the months ahead.
We do know, however, that market declines are a normal part of stock market
investing. We have historically seen corrections of 10% or more every two
years. That's why I thought this might be a good time to review three basic
investment principles that have proven helpful to successful stock market
investors in every market cycle.
First, take a long-term approach when investing in stocks and stock funds.
If you can afford to leave your money invested through the market's
inevitable ups and downs, you will greatly reduce your vulnerability to any
single decline. Over time, stock prices have gone up - and have
significantly outperformed other types of investments and stayed ahead of
inflation. But in the short-term, because of their volatility, stocks have
greater risk.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. 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). Puritan has
a 2% sales charge, which was in effect October 1, 1987 through December 31,
1992, then waived through 1995.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Puritan 8.60% 67.31% 322.83%
Puritan (including 2% sales charge) 6.43% 63.96% 314.37%
Lehman Brothers Aggregate Bond Index 0.09% 50.02% 192.52%
S&P 500(registered trademark) 5.16% 54.91% 327.52%
Average Equity Income Fund 3.78% 46.65% 240.50%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or 10 years. For
example, if you had invested $1,000 in a fund that had a 5% return over the
past year, you would have $1,050. For comparison, you can look at the
performance of the Standard & Poor's 500 Composite Stock Price Index - a
common proxy for the U.S. stock market - and the performance of the Lehman
Brothers Aggregate Bond Index, a broad measure of the bond market. You can
also look at the average equity income fund, which reflects the performance
of 104 equity income funds tracked by Lipper Analytical Services. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Puritan 8.60% 10.84% 15.51%
Puritan (including 2% sales charge) 6.43% 10.40% 15.28%
Lehman Brothers Aggregate Bond 0.09% 8.45% 11.33%
Index
S&P 500(registered trademark) 5.16% 9.15% 15.64%
Average Equity Income Fund 3.78% 7.85% 12.65%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
Puritan (Standard & Poor'sAggregate Bond Index (SH01)
07/31/84 9800.00 10000.00 10000.00
08/31/84 10572.44 11105.00 10169.00
09/30/84 10851.93 11107.22 10410.01
10/31/84 11098.66 11150.54 10851.39
11/30/84 11147.73 11025.65 11045.63
12/31/84 11353.80 11316.73 11206.90
01/31/85 12023.58 12198.30 11462.41
02/28/85 12113.45 12348.34 11228.58
03/31/85 12313.18 12356.99 11457.64
04/30/85 12454.80 12345.87 11694.82
05/31/85 13023.23 13059.46 12306.45
06/30/85 13317.60 13264.49 12436.90
07/31/85 13518.88 13244.59 12393.37
08/31/85 13487.56 13132.01 12626.37
09/30/85 13434.33 12720.98 12702.13
10/31/85 13714.26 13308.69 12968.87
11/30/85 14216.14 14221.67 13280.13
12/31/85 14612.98 14910.00 13686.50
01/31/86 15038.63 14993.49 13763.14
02/28/86 15845.12 16115.01 14305.41
03/31/86 16485.57 17014.22 14748.88
04/30/86 16485.91 16821.96 14827.05
05/31/86 16690.48 17716.89 14543.85
06/30/86 16822.85 18016.31 14924.90
07/31/86 16384.78 17009.19 15057.73
08/31/86 17271.77 18271.28 15431.16
09/30/86 16946.83 16760.24 15278.39
10/31/86 17434.03 17727.31 15498.40
11/30/86 17592.76 18158.08 15715.38
12/31/86 17645.67 17695.05 15773.53
01/31/87 18723.33 20078.57 15995.93
02/28/87 19085.71 20871.68 16106.31
03/31/87 19407.84 21474.87 16033.83
04/30/87 19287.61 21283.74 15594.50
05/31/87 19260.39 21468.91 15533.68
06/30/87 19764.01 22553.09 15748.05
07/31/87 20324.76 23696.53 15735.45
08/31/87 20739.27 24580.41 15652.05
09/30/87 20308.02 24042.10 15318.66
10/31/87 17307.92 18863.43 15864.01
11/30/87 16692.40 17309.09 15990.92
12/31/87 17329.69 18626.31 16208.39
01/31/88 18381.80 19410.48 16778.93
02/29/88 18937.91 20315.00 16978.60
03/31/88 18590.02 19687.27 16819.00
04/30/88 18849.70 19905.80 16728.18
05/31/88 19170.48 20078.98 16616.10
06/30/88 19865.45 21000.60 17016.55
07/31/88 19912.01 20920.80 16926.36
08/31/88 19710.25 20209.50 16970.37
09/30/88 20271.15 21070.42 17355.59
10/31/88 20602.18 21656.18 17681.88
11/30/88 20460.31 21346.49 17466.16
12/31/88 20602.95 21720.06 17485.37
01/31/89 21620.18 23309.97 17737.16
02/28/89 21426.42 22729.55 17609.46
03/31/89 21815.64 23259.15 17685.18
04/30/89 22553.20 24466.30 18054.80
05/31/89 23307.16 25457.18 18529.64
06/30/89 23470.14 25312.07 19094.79
07/31/89 24766.65 27597.76 19501.51
08/31/89 24932.87 28138.67 19212.89
09/30/89 24657.98 28023.30 19310.87
10/31/89 23920.64 27373.16 19785.92
11/30/89 24366.47 27931.57 19973.89
12/31/89 24640.83 28601.93 20027.82
01/31/90 23597.65 26682.74 19789.49
02/28/90 23849.45 27026.95 19852.81
03/31/90 23883.78 27743.16 19866.71
04/30/90 23299.47 27049.59 19683.94
05/31/90 24595.91 29686.92 20266.58
06/30/90 24464.26 29485.05 20592.87
07/31/90 24241.86 29390.70 20877.05
08/31/90 22777.71 26733.78 20597.30
09/30/90 21720.05 25431.84 20768.26
10/31/90 21343.30 25322.49 21032.02
11/30/90 22548.92 26958.32 21484.20
12/31/90 23076.06 27710.46 21819.36
01/31/91 24110.18 28918.63 22089.92
02/28/91 25508.15 30986.31 22277.68
03/31/91 25677.62 31736.18 22431.40
04/30/91 25891.44 31812.35 22673.66
05/31/91 27154.91 33186.64 22805.16
06/30/91 26212.74 31666.69 22793.76
07/31/91 27120.03 33142.36 23110.59
08/31/91 27593.40 33927.84 23609.78
09/30/91 27616.59 33361.24 24089.06
10/31/91 28016.83 33808.28 24356.45
11/30/91 27056.25 32445.81 24580.53
12/31/91 28719.66 36157.61 25310.57
01/31/92 28963.39 35485.08 24966.35
02/29/92 29775.82 35946.38 25128.63
03/31/92 29630.29 35245.43 24987.91
04/30/92 30598.06 36281.64 25167.82
05/31/92 30948.11 36459.42 25643.49
06/30/92 30781.39 35916.18 25997.37
07/31/92 31719.21 37385.15 26527.72
08/31/92 31406.60 36618.75 26795.65
09/30/92 31789.55 37050.86 27114.52
10/31/92 31549.55 37180.53 26753.90
11/30/92 32400.47 38448.39 26759.25
12/31/92 33150.36 38921.31 27184.72
01/31/93 34094.95 39248.24 27706.67
02/28/93 34792.14 39782.02 28191.53
03/31/93 36167.89 40621.42 28309.94
04/30/93 36850.30 39638.38 28508.11
05/31/93 37350.74 40700.69 28545.17
06/30/93 37603.48 40818.72 29061.83
07/31/93 38155.46 40655.45 29227.49
08/31/93 39259.41 42196.29 29738.97
09/30/93 38989.18 41871.38 29819.26
10/31/93 40002.85 42738.12 29929.59
11/30/93 39360.03 42332.10 29675.19
12/31/93 40260.15 42844.32 29835.44
01/31/94 42049.49 44301.03 30238.22
02/28/94 41589.37 43100.47 29712.07
03/31/94 40041.38 41221.29 28978.18
04/30/94 40479.98 41748.92 28746.36
05/31/94 40737.98 42433.61 28743.48
06/30/94 40422.65 41393.98 28680.25
07/29/94 41437.12 42751.71 29251.98
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity Puritan
Fund on July 31, 1984 and paid the 2% sales charge. As the chart shows, by
July 31, 1994, the value of your investment would have grown to $41,437 - a
314.37% 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 $42,752 - a 327.52% increase. If you'd put $10,000
in the bond index, it would have grown to $29,252 - a 192.52% 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
MARKET RECAP
After generally falling through
much of 1994, U.S. stock prices
rebounded in July on the strength
of improving corporate earnings.
Rising interest rates caused the
stock market to stumble from
February through June. Stocks
largely took their cue from bonds,
which fell sharply due to
concerns that the strengthening
economy might trigger higher
inflation. Late in the period, a
weakening U.S. dollar put
additional downward pressure on
stocks. The Standard & Poor's
500 index had a total return of
5.16% for the 12 months ended
July 31, 1994, mainly due to
gains made in 1993. Cyclical
stocks - those whose prices
tend to move in tandem with the
economy - were among the
market leaders. These included
such sectors as chemicals,
metals and paper. Market
laggards included most
consumer nondurables -
especially retail, beverage and
drug companies. In addition,
rising interest rates hurt such
rate-sensitive sectors as
insurance and utilities. Aside from
Japanese stocks, which made
strong gains due to a
strengthening economy and yen,
most foreign markets suffered
corrections in 1994. However,
strong gains in 1993 helped drive
the Morgan Stanley EAFE
(Europe, Australia, Far East)
index to a 14.13% total return for
the 12 months ended July 31.
The Morgan Stanley Emerging
Markets Free Index was up
40.62%, again due to strong
performance in 1993.
An interview with Richard Fentin, Portfolio Manager of Fidelity Puritan
Fund
Q. RICH, HOW DID THE FUND PERFORM?
A. Quite well. For the year ended July 31, 1994, the fund had a total
return of 8.60%, beating the average equity income fund, which returned
3.78% for the same period, and the Standard & Poor's 500 Stock index, which
returned 5.16%.
Q. WHY DID IT OUTPERFORM THE S&P 500 INDEX?
A. In general, the fund turned in higher numbers than the S&P 500 because
it owned stocks that the index didn't. For example, while the index invests
primarily in U.S. stocks, more than 7% of the fund was in Japanese
equities. These stocks were the fund's top performers, with returns
averaging about 30% during the period. The fund's other foreign stocks,
which were mostly in Europe, also performed well. The fund also outdid the
S&P 500 because its domestic stocks performed better than those in the
index. Specifically, I made good choices in cyclical stocks - those that
tend to move in tandem with the economy. Cyclical stocks, such as the heavy
machinery manufacturer Caterpillar, which the fund owned for most of the
period, pushed up the fund's performance. That said, I should note that
some of the fund's domestic stocks, such as retail companies like
Price/Costco, Inc., turned in poor performance. In addition, the bond
portion of the fund hurt its returns compared to the index. That's because
over the past six months interest rates rose worldwide, negatively
affecting bond prices. While about one-third of the fund was invested in
bonds, the index owns only stocks.
Q. GETTING BACK TO YOUR JAPANESE INVESTMENTS. WHICH WERE THE STANDOUTS?
A. Virtually all of the fund's Japanese stocks turned in solid results
during the period as the country's economy started to pick up. One example
is the brokerage company Nomura Securities - considered the Merrill Lynch
of Japan by many people. Over the past six months, Nomura was a great
performer because it had excellent management, a fabulous balance sheet,
and it benefited from the increase in trading of Japanese securities. On
top of this, it was very inexpensive when I bought it. Exporters such as
Sony and Matsushita also did well when the worldwide economy picked up and
their previous cost-cutting efforts paid off.
Q. SINCE WE'RE DISCUSSING THE FUND'S OVERSEAS INVESTMENTS, LET'S DISCUSS
FOREIGN BONDS. YOU MENTIONED THAT BONDS IN GENERAL HURT THE FUND'S
PERFORMANCE. WHAT WAS THE IMPACT OF FOREIGN BONDS?
A. Before we discuss foreign bonds,
I should first point out that nearly all bonds took a beating over the past
six months. In the United States, bonds fell for a couple reasons. First,
the economy started growing more quickly and
commodity prices began rising. This increased bond investors' concerns
about inflation - which eats away at a bond's fixed interest payment. In
addition,worries about future inflation led the Federal Reserve Bank to
raise short-term interest rates four times during this period. In response,
yields on short-, intermediate- and long-term U.S. Treasuries rose and
prices dropped. For the most part, the fund's U.S. bonds - which were
mostly short-term - slightly outper-formed the general U.S. bond market.
Q. AND FOREIGN BONDS . . .
A. Many of the fund's overseas bonds, which also tended to be fairly
short-term, turned in performances that were slightly above average.
However, long-term bonds, mostly in emerging markets such as Mexico and
Argentina, hurt the fund more than any of its other investments. These
bonds turned in extremely poor performance - falling more than 30% in some
cases. These bond markets fell more than most other world bond markets
largely because so many of their investors had highly leveraged positions,
meaning they were investing mostly with borrowed money. When bond yields
rose - and prices fell - many of these investors couldn't hold onto their
positions and had to sell. About 20% of the fund's bond investments were in
emerging market securities.
Q. YET AT THE END OF THE PERIOD,
YOU CUT BACK ON YOUR U.S. CORPORATE BONDS, WHICH PRETTY MUCH HELD THEIR
OWN. INSTEAD YOU ADDED MORE LONG-TERM BONDS, AND EVEN EMERGING MARKET
BONDS. WHY?
A. Because these bonds had become very cheap and were great buys. Don't
forget that an important part of my strategy in managing the fund is to
look for value - inexpensive stocks and bonds that have growth potential.
Q. IS THE SAME THINKING BEHIND THE SHIFT OVER THE PAST SIX MONTHS FROM
ABOUT 50% TO ALMOST 65% OF THE FUND IN STOCKS?
A. Absolutely. The bottom line is that I found a lot of cheap stocks during
the period, and I bought them. Many of these stocks were great values in
terms of price, but some of their fundamentals - or business prospects -
probably need to improve before the stock can rise. In general, you can
rarely buy a stock that's cheap and has great fundamentals; it's usually
cheap and the fundamentals will improve later.
Q. SO WHAT VALUE STOCKS DID YOU LIKE THE BEST?
A. The fund's biggest new position is the energy service company
Schlumberger, its top stock at the end of the period.
I bought this stock when drilling levels were depressed due to the decline
in oil prices. In addition, the stock was cheap. Now, with energy demand
beginning to increase, Schlumberger's fundamentals should improve. That's
because when demand increases, and there is a limited supply - as there is
with oil - prices increase. Another inexpensive stock that's worth noting
is the women's clothing store The Limited. Right now the company's earnings
are flat, but if it can come up with the right fashions going forward -
which I expect it to - it could be a solid performer.
Q. LET'S SWITCH DIRECTION A BIT AND TALK ABOUT SOMETHING THAT'S BEEN IN THE
NEWS A LOT LATELY - DERIVATIVES. DID THE FUND OWN THEM?
A. Yes, it owned some. Mostly, the fund holds foreign currency contracts,
which are considered derivatives. I owned these investments to hedge
against the yen and protect the value of my Japanese investments - which
were purchased in yen - from a rising dollar. Unfortunately, the value of
these currency contracts declined because the dollar weakened against the
strengthening yen. Still, I see it as a wash since the value of my Japanese
stocks went up when the yen strengthened. It's true that the fund would
have been better off if I hadn't hedged the yen, but I wasn't willing to
make that move and expose the fund to currency risk. I should note that I
only use currency hedges if I think a foreign currency is seriously
mispriced.
Q. HOW DID THE DECLINE OF THESE CURRENCY CONTRACTS AFFECT THE FUND?
A. As I indicated, it was pretty much a wash for the fund. However, any
losses from hedging do come out of the fund's dividend. At this point, it
looks as though the dividend could drop slightly due to hedging losses, but
I don't want to make any predictions. If the dollar turns around and
strengthens against the yen before the end of the year, the situation could
reverse.
Q. WHAT DO YOU THINK SHAREHOLDERS CAN EXPECT GOING FORWARD?
A. With most of the indexes showing modest returns right now, I don't
expect to see stocks make any major gains in the near future. However, the
fund could see decent returns on specific stocks it picked. In terms of
bonds, I think they look pretty healthy and world economies look fairly
solid. However, I would caution shareholders that, in my opinion, the big
bond returns are done for a while.
FUND FACTS
GOAL: to provide as much
income as possible
consistent with preservation
of capital by investing in
stocks and bonds
START DATE: April 16, 1947
SIZE: as of July 31, 1994
more than $10.8 billion
MANAGER: Richard Fentin,
since April 1987; manager
Fidelity Growth Company
Fund, January 1983 - April
1987; joined Fidelity in 1980
(checkmark)
RICH FENTIN ON PURITAN AS A
STOCK FUND:
"Even though the fund hasn't
looked like a traditional stock
fund for a while, it's moving
more in that direction. Over
the past six months, I've
increased the percentage of
the fund in stocks from about
50% to about 65%. I made the
shift because with stock
prices dropping, individual
equities looked like excellent
values. Before this period, I
was having trouble finding
inexpensive stocks with good
potential. As a result, I was
buying bonds as an
alternative."
(solid bullet) Over the period, most
high-dividend yielding
securities, such as utilities,
have been terrible
performers. If the fund had
invested more heavily in
them, it could have increased
its dividends, but the fund's
share price may have fallen.
(solid bullet) If the yields on cash and
other short-term investments
continue to increase, the fund
may increase its investment
to secure these higher yields,
instead of using cash as a
defensive alternative to
volatile stock and bond
markets.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1994
% OF FUND'S
% OF FUND'S INVESTMENTS IN
INVESTMENTS THESE STOCKS 6
MONTHS AGO
Schlumberger Ltd. 2.2 1.3
British Petroleum PLC ADR 1.5 1.4
Loews Corp. 1.4 1.1
Grace (W.R.) & Co. 1.2 1.6
Philip Morris Companies, Inc. 1.2 0.9
TOP FIVE BONDS AS OF JULY 31, 1994
% OF FUND'S
% OF FUND'S INVESTMENTS IN
INVESTMENTS THESE BONDS 6
MONTHS AGO
United States Government (various issues) 9.2 11.2
Argentina Republic (various issues) 2.6 2.1
French Government (various issues) 1.1 1.0
New Zealand Government (various issues) 0.8 -
Danish Government (various issues) 0.8 1.7
TOP FIVE INDUSTRIES AS OF JULY 31, 1994
% OF FUND'S
INVESTMENTS IN
% OF FUND'S THESE INDUSTRIES
INVESTMENTS 6 MONTHS AGO
Finance 14.6 15.1
Basic Industries 11.3 8.5
Energy 10.3 9.2
Retail & Wholesale 6.2 4.9
Durables 6.2 5.4
ASSET ALLOCATION
AS OF JULY 31, 1994* AS OF JANUARY 31, 1994**
Row: 1, Col: 1, Value: 2.3
Row: 1, Col: 2, Value: 3.6
Row: 1, Col: 3, Value: 30.1
Row: 1, Col: 4, Value: 64.0
Row: 1, Col: 1, Value: 10.2
Row: 1, Col: 2, Value: 4.2
Row: 1, Col: 3, Value: 35.9
Row: 1, Col: 4, Value: 49.7
Stocks 64.0%
Bonds 30.1%
Convertible
securities 3.6%
Short-term and
other investments 2.3%
FOREIGN
INVESTMENTS 31.2%
Stocks 49.7%
Bonds 35.9%
Convertible
securities 4.2%
Short-term and
other investments 10.2%
FOREIGN
INVESTMENTS 33.7%
*
*
*
INVESTMENTS JULY 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 61.6%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.3%
AEROSPACE & DEFENSE - 0.3%
Flightsafety International, Inc. 778,600 $ 28,224
Sundstrand Corp. 13,600 648
28,872
DEFENSE ELECTRONICS - 0.0%
Raytheon Co. 10,000 656
TOTAL AEROSPACE & DEFENSE 29,528
BASIC INDUSTRIES - 9.7%
CHEMICALS & PLASTICS - 6.2%
Akzo NV Ord. 374,400 45,139
Betz Laboratories, Inc. (f) 2,056,200 90,473
Cominco Fertilizer Ltd. 133,500 2,552
DSM NV 215,000 17,277
Dow Chemical Co. 134,600 9,304
du Pont (E.I.) de Nemours & Co. 180,100 10,693
Goodrich (B.F.) Company 71,500 3,271
Grace (W.R.) & Co. 3,278,164 136,044
Great Lakes Chemical Corp. 1,498,400 89,155
Hoechst AG Ord. 110,100 23,981
Imperial Chemical Industries PLC:
ADR 80,200 4,110
Ord. 1,759,200 22,680
Methanex Corp. (a) 3,193,700 46,653
Nalco Chemical Co. 2,968,000 96,831
Olin Corp. 156,000 8,619
Sekisui Chemical 1,282,000 13,988
Shinetsu Chemical 1,606,000 33,277
Union Carbide Corp. 838,300 23,682
677,729
IRON & STEEL - 0.3%
Avesta Sheffield Aktiebokg:
(New) 160,471 1,271
Ord. Free shares (a) 1,123,300 8,898
Hoogovensen Staalfabrieken (a) 395,000 17,659
Oregon Steel Mills, Inc. 239,900 4,498
32,326
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 1.5%
Alcan Aluminium Ltd. 3,803,700 $ 93,292
Alumax, Inc. (a) 1,000,100 30,753
De Beers Consolidated Mines Ltd. ADR 500,000 11,875
English China Clay PLC 1,000,000 5,844
Noranda, Inc. 845,100 14,860
Preussag AG 20,000 5,761
Reynolds Metals Co. 71,600 3,607
165,992
PACKAGING & CONTAINERS - 0.2%
Ball Corp. 301,525 7,953
Carnaudmetalbox SA 285,000 9,229
Owens-Illinois, Inc. (a) 505,300 5,368
Sonoco Products Co. 124,700 2,962
25,512
PAPER & FOREST PRODUCTS - 1.5%
Albany International Corp. Class A 10,000 168
Champion International Corp. 1,607,000 55,040
Chesapeake Corp. 467,300 13,201
Georgia-Pacific Corp. 10,000 645
International Paper Co. 40,797 2,973
Jefferson Smurfit Corp. (a) 833,500 14,899
Longview Fibre Co. 211,500 4,256
Mail-Well Holdings, Inc. 7,500 53
Mead Corp. 10,000 446
QUNO Corp. (a) 233,300 3,997
QUNO Corp. (a)(h) 49,300 845
Repola OY 1,432,900 26,270
Scott Paper Co. 120,600 6,965
Stone Container Corp. (a) 1,029,500 16,986
Union Camp Corp. 259,400 12,257
Westvaco Corp. 211,100 7,257
Weyerhaeuser Co. 10,000 420
166,678
TOTAL BASIC INDUSTRIES 1,068,237
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONGLOMERATES - 1.3%
Allied-Signal, Inc. 200,000 $ 7,650
Brascan Ltd. Class A 950,000 13,106
Coltec Industries, Inc. (a) 360,900 6,812
Crane Co. 978,700 25,079
ITT Corp. 44,900 3,850
Textron, Inc. 334,000 17,786
United Technologies Corp. 1,112,200 67,010
141,293
CONSTRUCTION & REAL ESTATE - 1.3%
BUILDING MATERIALS - 0.0%
Adience, Inc. (a) 160,060 160
CONSTRUCTION - 0.0%
Centex Corp. 30,200 755
ENGINEERING - 0.5%
EG & G, Inc. (f) 3,170,000 48,739
REAL ESTATE - 0.0%
MBO Properties, Inc. 187,405 750
Mid-Atlantic Realty Trust 272,000 2,414
3,164
REAL ESTATE INVESTMENT TRUSTS - 0.8%
Associated Estates Realty Corp. 87,700 1,886
Carr Realty Corp. 98,200 2,013
Crown American Realty Trust (SBI) 735,200 10,477
Developers Diversified Realty 80,000 2,450
Excel Realty Trust, Inc. 61,800 1,228
Federal Realty Investment Trust (SBI) 316,500 7,873
Haagen Alexander Properties, Inc. 155,000 2,713
Kimco Realty Corporation 52,500 1,943
LTC Properties, Inc. 284,600 4,056
Liberty Property Trust SBI 277,500 5,446
Macerich Company 234,500 4,631
Nationwide Health Properties, Inc. 82,300 2,983
Simon Properties Group, Inc. 826,000 21,992
Taubman Centers, Inc. 139,000 1,598
Urban Shopping Centers, Inc. 160,000 3,520
Vornado Realty Trust 157,200 5,777
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Weingarten Realty Investors (SBI) 197,532 $ 7,407
Western Investment Real Estate Trust (SBI) 257,300 3,570
91,563
TOTAL CONSTRUCTION & REAL ESTATE 144,381
DURABLES - 5.8%
AUTOS, TIRES, & ACCESSORIES - 3.2%
BMW AG 141,272 77,374
Cooper Tire & Rubber Co. 10,000 246
Honda Motor Co. Ltd. 2,827,000 48,956
Johnson Controls, Inc. 1,562,600 81,841
Pacific Dunlop 9,031,075 30,122
Snap-on Tools Corp. 272,000 9,962
Suzuki Motor Corp. 1,052,000 13,795
Toyota Motor Corporation 4,050,000 85,946
348,242
CONSUMER ELECTRONICS - 1.4%
Aktiebolaget Electrolux 210,900 10,268
Black & Decker Corp. 10,000 206
Matsushita Electric Industrial Co. Ltd. 4,464,000 73,283
Sony Corp. 1,235,200 72,579
156,336
TEXTILES & APPAREL - 1.2%
Burlington Industries, Inc. (a) 812,800 12,090
Dominion Textile, Inc. 110,400 558
Kellwood Co. 400,000 9,100
Liz Claiborne, Inc. 1,153,300 24,508
Nisshinbo Industries 1,082,000 12,131
Russell Corp. 157,000 4,749
Shaw Industries, Inc. 54,500 838
Stride Rite Corp. 1,287,400 16,575
Unifi, Inc. 1,815,800 45,168
125,717
TOTAL DURABLES 630,295
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 8.8%
COAL - 0.0%
Eastern Enterprises Co. 32,900 $ 757
ENERGY SERVICES - 3.6%
Baker Hughes, Inc. 1,739,800 36,753
Halliburton Co. 1,191,200 40,501
Helmerich & Payne, Inc. (f) 1,343,700 37,456
Marine Drilling Companies, Inc. (a) 500,000 2,656
McDermott International, Inc. 1,399,700 35,167
Schlumberger Ltd. 4,023,300 237,375
389,908
OIL & GAS - 5.2%
Amerada Hess Corp. 2,029,200 105,518
British Borneo Petroleum 305,600 1,014
British Petroleum PLC:
ADR 2,183,600 165,954
Ord. 6,643,222 42,362
Cabot Oil & Gas Corp. Class A (f) 1,118,800 21,677
Coastal Corp. (The) 1,588,800 49,848
Mesa, Inc. (a) 95,994 516
Murphy Oil Corp. 940,400 41,848
Occidental Petroleum Corp. 2,499,500 49,678
Oryx Energy Co. 10,000 154
Pennzoil Co. 62,200 3,133
Petro-Canada, Inc. 557,200 4,572
Royal Dutch Petroleum Co. 102,200 11,549
San Juan Basin Royalty Trust (UBI) 1,469,600 12,308
Sun Company, Inc. 10,000 273
Total Compagnie Francaise des Petroles Class B 751,024 43,304
Total SA sponsored ADR 218,276 6,275
Unocal Corp. 98,300 2,851
562,834
TOTAL ENERGY 953,499
FINANCE - 7.0%
BANKS - 0.7%
Bank of Boston Corp. 422,110 11,133
Bank of New York Co., Inc. 404,100 12,780
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
BankAmerica Corp. 120,000 $ 5,790
Chase Manhattan Corp. (warrants) (a) 50,221 364
Chemical Banking Corp. 411,200 15,780
Deutsche Bank AG 50,000 23,105
First Chicago Corp. 51,200 2,573
Grant Street National Bank (a) 1,047,299 65
Shawmut National Corp. (warrants) (a) 1,436 7
71,597
CREDIT & OTHER FINANCE - 0.8%
American Express Co. 1,630,000 43,195
Argentaria Corp. Bancaria de Espana 500,000 21,993
GFC Financial Corp. 757,900 28,705
93,893
INSURANCE - 4.0%
ACE Ltd. 369,800 8,644
Allstate Corp. 2,650,700 66,268
Berkley (W.R.) Corp. 443,600 16,746
Heath (CE) 1,988,000 9,178
Loews Corp. 1,702,300 150,228
MBIA, Inc. 524,100 30,398
NAC Re Corp. 707,900 19,821
Providian Corp. 30,000 926
SAFECO Corp. 447,600 24,785
Travelers, Inc. (The) 3,042,248 100,774
Western National Corp. 399,000 6,135
433,903
SAVINGS & LOANS - 0.4%
Ahmanson (H.F.) & Co. 1,912,300 38,007
Golden West Financial Corp. 155,000 6,181
Great Western Financial Corp. 163 3
44,191
SECURITIES INDUSTRY - 1.1%
Daiwa Securities 864,000 13,838
ECM Corp. L.P. (a)(h) 6,318 632
Invesco Mim PLC 1,601,400 4,352
Lehman Brothers Holdings, Inc. 457,000 7,198
Midland Walwyn, Inc. 368,300 2,424
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - CONTINUED
Morgan Stanley Group, Inc. 30,300 $ 1,837
Nomura Securities Ltd. 3,845,000 85,060
PaineWebber Group, Inc. 356,400 5,747
121,088
TOTAL FINANCE 764,672
HEALTH - 2.4%
DRUGS & PHARMACEUTICALS - 1.2%
Allergan, Inc. 1,613,900 38,935
American Cyanamid Co. 1,359,200 82,401
Warner-Lambert Co. 55,100 3,582
124,918
MEDICAL EQUIPMENT & SUPPLIES - 1.2%
Baxter International, Inc. 1,883,900 49,688
Becton, Dickinson & Co. 302,400 12,739
Bergen Brunswig Corp. Class A 113,000 1,596
Boston Scientific Corp. (a) 1,125,900 15,340
Pall Corp. 3,229,500 50,865
St. Jude Medical, Inc. 162,300 5,153
135,381
TOTAL HEALTH 260,299
HOLDING COMPANIES - 0.3%
Brierley Investments Ltd. 33,815,185 24,438
Lagardere Groupe SCA (Reg.) 200,000 4,956
29,394
INDUSTRIAL MACHINERY & EQUIPMENT - 3.1%
ELECTRICAL EQUIPMENT - 0.4%
AMETEK, Inc. (f) 2,984,300 48,122
Ampex Corp.:
Class A (warrants) (a) 93,301 140
Class C (f) 346 1
Westinghouse Electric Corp. 20,000 242
48,505
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 2.4%
Caterpillar, Inc. 480,800 $ 52,107
Cooper Industries, Inc. 745,400 27,952
Gardner Denver Machinery, Inc. (a) 1,200 11
Goulds Pumps, Inc. 1,010,100 20,454
Harnischfeger Industries, Inc. 997,200 20,567
Keystone International, Inc. 941,000 17,761
Mitsubishi Heavy Industry 5,758,000 44,784
Parker-Hannifin Corp. 1,270,600 54,795
Terex Corp. (rights) (a) 5,610 4
Thermadyne Holdings Corp. (a)(f) 82,056 821
Valmet Corp. Ord. 1,000,000 19,198
Watts Industries, Inc. Class A 3,000 73
258,527
POLLUTION CONTROL - 0.3%
Safety Kleen Corp. 1,074,800 18,809
WMX Technologies, Inc. 600,000 17,475
36,284
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 343,316
MEDIA & LEISURE - 0.5%
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. (a)(g):
$2.00 (warrants) 256,000 256
$2.72 (warrants) 244,705 245
Sun International Hotels Ltd. (a) 39,111 929
1,430
LODGING & GAMING - 0.3%
Accor SA 170,000 21,975
Bally Entertainment Corp. (a) 28,758 194
Bally's Gaming International, Inc. (a) 84,392 992
Bally's Gaming International, Inc. (warrants) (a) 135,000 945
Bally's Grand, Inc. (a) 238,531 2,743
Bally's Grand, Inc. (warrants) (a) 12,878 58
Forte PLC 2,250,000 8,060
Motels of America, Inc. (h) 3,000 210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - CONTINUED
Resorts International, Inc. (a) 333,838 $ 355
Trump Plaza Holding Associates (warrants) (a) 270 148
35,680
PUBLISHING - 0.2%
General Media, Inc. (warrants) (a) 1,110 11
McClatchy Newspapers, Inc. Class A 100,000 2,650
Times Mirror Co., Series A 400,000 11,950
14,611
RESTAURANTS - 0.0%
Back Bay Restaurant Group, Inc. (a) 42,324 444
TOTAL MEDIA & LEISURE 52,165
NONDURABLES - 4.1%
BEVERAGES - 0.7%
Seagram Co. Ltd. 2,354,700 72,616
FOODS - 1.3%
Ben & Jerry's Homemade, Inc. Class A (a) 15,000 229
Borden, Inc. 10,000 118
ConAgra, Inc. 2,613,300 82,972
Dole Food, Inc. 898,900 25,282
Goodman Fielder Ltd. Ord. 30,107,491 31,840
140,441
HOUSEHOLD PRODUCTS - 0.7%
First Brands Corp. 67,400 2,317
London International Group (a) 10,370,000 13,610
Orkla AS:
Class A Free shares 922,150 32,439
Class B (non-vtg.) 297,250 10,370
Rubbermaid, Inc. 173,600 4,752
Stanhome, Inc. 342,900 11,187
74,675
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
TOBACCO - 1.4%
American Brands, Inc. 10,000 $ 341
Philip Morris Companies, Inc. 2,327,400 128,007
RJR Nabisco Holdings Corp. (a) 4,766,500 29,195
157,543
TOTAL NONDURABLES 445,275
PRECIOUS METALS - 0.2%
Agnico Eagle Mines Ltd. 1,133,600 13,901
Sudbury Contact Mines Ltd. (a) 312,700 3,835
17,736
RETAIL & WHOLESALE - 5.9%
APPAREL STORES - 1.9%
Charming Shoppes, Inc. 4,339,600 40,684
Edison Brothers Stores, Inc. 1,043,600 26,090
Filene's Basement Corp. (a)(f) 1,842,800 17,046
Lamonts Apparel, Inc. (a) 50,220 50
Limited, Inc. (The) 4,902,500 96,824
Melville Corp. 151,900 5,639
Petrie Stores Corp. 378,300 9,316
Rawlings Sporting Goods, Inc. (a)(f) 799,500 8,994
United States Shoe Corp. 113,700 2,189
206,832
DRUG STORES - 0.0%
Long Drug Stores, Inc. 65,300 2,261
Thrifty Payless Holdings, Inc. Class C (a) 71,250 178
2,439
GENERAL MERCHANDISE STORES - 1.9%
Aoyama Trading Co. Ord. 115,000 4,996
Dayton Hudson Corp. 1,369,000 112,943
Federated Department Stores, Inc. (a) 10,000 204
Kaufhof AG 30,000 9,248
Mac Frugals Bargains C/O, Inc. (a) 140,000 2,485
Mercantile Stores Co., Inc. 29,600 966
Price/Costco, Inc. 1,481,000 22,215
Sears, Roebuck & Co. 1,121,300 52,981
206,038
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 1.6%
Fleming Companies, Inc. 1,172,200 $ 34,580
FF Holdings Corp. (a)(g) 39,600 79
Food 4 Less Holdings, Inc. (warrants) (a) 14,206 431
Giant Food, Inc. Class A 972,200 19,444
Grand Union Capital Corp. Class B (f) 5,975 1,494
Grand Union Co. (warrants) (a) 2,130 533
Great Atlantic & Pacific Tea Co., Inc. 1,583,300 31,864
Supervalu, Inc. 2,941,600 84,203
172,628
RETAIL & WHOLESALE, MISCELLANEOUS - 0.5%
Barrys Jewelers, Inc. (a) 227,883 164
Barrys Jewelers, Inc. (warrants) (a) 5,697 1
Duty Free International, Inc. 1,029,700 10,040
Fabri-Centers of America, Inc. (a) 350,300 4,510
Finlay Enterprises, Inc. 3,670 51
Handleman Co. (Del.) 400,000 4,150
Sotheby's Holdings, Inc. Class A 859,700 10,854
Uny Co. Ltd. 1,332,000 22,800
52,570
TOTAL RETAIL & WHOLESALE 640,507
SERVICES - 1.8%
LEASING & RENTAL - 0.0%
PHH Corp. 41,700 1,558
PRINTING - 0.8%
Deluxe Corp. 50,000 1,300
Donnelley (R.R.) & Sons Co. 1,588,100 46,650
Harland (John H.) Co. 5,000 103
Komori Corp. 757,000 20,308
Nashua Corp. (f) 235,700 6,452
Standard Register Co. 97,200 2,005
Toppan Printing Co. Ltd. 813,000 12,126
88,944
SERVICES - 1.0%
ADT Ltd. (a) 1,516,300 15,731
Angelica Corp. 10,000 264
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
BET Public Ltd. Co. Ord. 12,348,100 $ 21,735
CPI Corp. 331,400 5,882
Jostens, Inc. 2,056,500 33,418
National Service Industries, Inc. 343,700 9,409
Town & Country Corp. Class A (a) 534,507 1,203
Western Atlas, Inc. (a) 366,800 17,836
105,478
TOTAL SERVICES 195,980
TECHNOLOGY - 4.5%
COMPUTER SERVICES & SOFTWARE - 0.0%
Mentor Graphics Corp. 545,000 5,518
COMPUTERS & OFFICE EQUIPMENT - 1.9%
Canon, Inc. 3,761,000 64,377
Casio Computer Co. Ltd. Ord. 3,317,000 40,508
Comdisco, Inc. 355,400 6,930
Data General Corp. (a) 670,000 5,360
Digital Equipment Corp. (a) 176,300 3,416
Fujitsu Ltd. 1,400,000 14,715
International Business Machines Corp. 982,400 60,663
Oce Van Der Grinten NV 287,000 12,524
Tandem Computers, Inc. (a) 367,200 5,049
213,542
ELECTRONIC INSTRUMENTS - 0.3%
Measurex Corp. 582,700 10,562
Tektronix, Inc. 649,600 20,381
30,943
ELECTRONICS - 1.8%
AMP, Inc. 1,278,300 95,553
Anthem Electronics, Inc. (a) 103,100 2,294
Hitachi Ltd. 7,980,000 77,084
Nitto Denko Corp. 441,000 7,019
Taiyo Yuden Co. Ltd. 774,000 8,910
Toshiba Corp. 218,000 1,600
192,460
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
PHOTOGRAPHIC EQUIPMENT - 0.5%
Eastman Kodak Co. 10,000 $ 484
Fuji Photo Film Co. Ltd. 902,000 19,954
Polaroid Corp. 867,200 29,918
50,356
TOTAL TECHNOLOGY 492,819
TRANSPORTATION - 1.2%
AIR TRANSPORTATION - 0.2%
Continental Airlines, Inc. (a) 2,298 40
Continental Airlines, Inc. Class A (a) 827 15
Delta Air Lines, Inc. 86,000 4,139
KLM Royal Dutch Airlines (a) 68,800 2,133
KLM Royal Dutch Airlines Ord. (a) 489,800 15,121
21,448
RAILROADS - 0.8%
CSX Corp. 10,000 776
Canadian Pacific Ltd. Ord. 5,081,154 74,682
Illinois Central Corp., Series A 591,400 18,851
94,309
TRUCKING & FREIGHT - 0.2%
Roadway Services, Inc. 298,800 18,115
TOTAL TRANSPORTATION 133,872
UTILITIES - 3.4%
ELECTRIC UTILITY - 1.9%
Baltimore Gas & Electric Co. 1,319,400 30,181
Centerior Energy Corp. 3,055,600 30,938
DPL, Inc. 1,329,700 27,093
EUA Power Corp. (a) 1,300 1
Fuji Electric Co. Ltd. 2,466,000 14,243
New England Electric Systems 867,000 28,394
Northeast Utilities 1,167,600 27,293
Public Service Co. of New Mexico (a) 188,200 2,282
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Texas Utilities Co. 8,132 $ 267
Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. 154,900 50,844
211,536
GAS - 0.0%
ENSERCH Corp. 60,000 945
UGI Corp. (warrants) (a) 13,633 14
959
TELEPHONE SERVICES - 1.5%
Ameritech Corp. 100,000 4,092
Koninklijke PPT Nederland 946,200 26,604
Koninklijke PTT Nederland (h) 653,900 18,386
NYNEX Corp. 2,187,100 84,203
Pacific Telesis Group 190,300 6,232
Telebras PN (Reg.) 475,076,000 22,270
161,787
TOTAL UTILITIES 374,282
TOTAL COMMON STOCKS
(Cost $6,087,658) 6,717,550
PREFERRED STOCKS - 5.0%
CONVERTIBLE PREFERRED STOCKS - 2.6%
BASIC INDUSTRIES - 0.3%
IRON & STEEL - 0.0%
Bethlehem Steel Corp. $5.00 17,200 940
METALS & MINING - 0.3%
Alumax, Inc., Series A, $4.00 97,233 13,151
Reynolds Metals Co. $3.31 330,400 17,015
30,166
TOTAL BASIC INDUSTRIES 31,106
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
ENERGY - 0.6%
ENERGY SERVICES - 0.1%
McDermott International, Inc. Series C, $2.875 (h) 300,000 $ 12,862
OIL & GAS - 0.5%
Occidental Petroleum Corp. $3.875 (h) 389,500 19,865
Unocal Corp. $3.50 (h) 510,500 28,205
Valero Energy Corp. $3.125 120,000 5,280
53,350
TOTAL ENERGY 66,212
FINANCE - 0.2%
BANKS - 0.2%
Citicorp depository shares representing 1/12 preferred,
Series 15, $1.217 484,500 9,508
Wells Fargo, Series C, 9% 316,050 8,218
17,726
HEALTH - 0.2%
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
U.S. Surgical Corp. $2.20 (h) 782,000 18,768
INDUSTRIAL MACHINERY & EQUIPMENT - 0.6%
ELECTRICAL EQUIPMENT - 0.4%
Alcatel Alsthom 6 1/2% 59,450 8,356
Ampex Corp. 8% 3,217 1,544
Westinghouse Electric Corp. $1.30 (h) 2,595,000 36,330
46,230
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Cooper Industries, Inc. $8.00 exchangeable 967,500 22,494
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 68,724
MEDIA & LEISURE - 0.0%
ENTERTAINMENT - 0.0%
Live Entertainment, Inc., Series B, pay-in-kind (a) 508,660 4,069
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 0.0%
Bally Entertainment Corp., Series D, exchangeable (a) 4,303 $ 155
TOTAL MEDIA & LEISURE 4,224
NONDURABLES - 0.3%
TOBACCO - 0.3%
RJR Nabisco Holdings Corp., Series A, depository
shares representing 1/4 shares 5,941,800 37,136
TRANSPORTATION - 0.4%
AIR TRANSPORTATION - 0.2%
AMR Corp. $3.00 (h) 530,200 22,666
TRUCKING & FREIGHT - 0.2%
Consolidated Freightways, Inc., Series C, $1.54 947,000 20,834
TOTAL TRANSPORTATION 43,500
TOTAL CONVERTIBLE PREFERRED STOCKS 287,396
NONCONVERTIBLE PREFERRED STOCKS - 2.4%
BASIC INDUSTRIES - 0.0%
IRON & STEEL - 0.0%
Stelco, Inc., Series B, 7.76% 22,425 364
CONSTRUCTION & REAL ESTATE - 0.0%
CONSTRUCTION - 0.0%
UDC Homes, Inc. prime exchangeable (a) 274,651 2,231
DURABLES - 0.2%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Volkswagen AG $12.00 87,000 21,571
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
ENERGY - 0.1%
OIL & GAS - 0.1%
Gulf Canada Resources Ltd. (a)(g) 46,430 $ 122
Gulf Canada Resources Ltd., Series 1, adj. rate 2,130,977 5,860
5,982
FINANCE - 1.2%
BANKS - 1.0%
Chase Manhattan Corp., Series J, 9.08% 425,524 11,064
Citicorp depository shares representing 1/10,
Series 14, 9.08% 83,200 2,163
Continental Bank Corp.:
Series 1, adj. rate 182,500 9,239
Series 2, adj. rate 210,200 5,781
First Chicago Corp.:
Series C, adj. rate 60,714 5,859
adj. rate 80,700 4,045
First Fidelity Bancorporation:
Series D, adj. rate (a) 121,780 12,148
10.64% 15,700 432
First Interstate Bancorp:
depository shares representing 1/8 shares, Series F 531,291 14,146
depository shares representing 1/8 shares, Series G, 9% 307,000 8,059
First Madison Bank FSB 11 1/2% 91,000 9,168
First Union Corp., Series 1990, adj. rate (a) 55,000 2,908
Fleet Financial Group, Inc.:
depository shares representing 1/4, Series III, 10.12% 11,937 343
depository shares representing 1/4, Series IV 5,089 134
Marine Midland Banks, Inc., Series A, adj. rate 106,676 4,880
Mellon Bank Corp., Series I, 9.60% 141,050 3,755
Shawmut National Corp. depository shares representing
1/10th shares 9.30% 333,200 8,746
Summit Bancorporation adj. rate 105,069 2,312
UJB Financial Corp., Series B, adj. rate 20,600 968
106,150
CREDIT & OTHER FINANCE - 0.0%
Household International, Inc. depository shares
representing 1/4, Series 89-A, 9 1/2% 125,000 3,313
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - CONTINUED
INSURANCE - 0.0%
Travelers, Inc., Series D, 9 1/4% 142,980 $ 3,717
SAVINGS & LOANS - 0.2%
Ahmanson (H.F.) & Co. depository shares representing
1/2 shares, Series B, 9.60% 438,012 11,717
Dime Savings Bank of New York FSB 150 152
Washington Mutual Savings Bank Seattle, Series C, 9 1/8% 24,000 618
12,487
TOTAL FINANCE 125,667
SERVICES - 0.0%
Town & Country Corp. exchangeable (a) 112,098 729
TECHNOLOGY - 0.0%
ELECTRONICS - 0.0%
Berg Electronics Holding Corp., Series E, $3.4687 156,221 4,062
UTILITIES - 0.9%
ELECTRIC UTILITY - 0.7%
Cleveland Electric Illuminating Co.:
Series L, adj. rate (a) 25,000 1,750
Series M, adj. rate (a) 63,489 6,262
Series N, $9.125 15,196 1,487
Series R, $8.80 2,500 2,104
Georgia Power Co. Class A 1993 Series adj. rate 160,000 4,040
Gulf State Utilities Co.:
$1.75 500,000 11,688
$8.52 89,993 8,819
$9.96 14,788 1,532
Series A, adj. rate 44,407 4,468
Series B, adj. rate 82,405 4,182
Long Island Lighting Co. $7.95 570,100 13,469
Public Service Co. of New Hampshire, Series A 369,707 9,520
Texas Utilities Electric Co., Series B, adj. rate 10,700 1,019
70,340
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - CONTINUED
GAS - 0.0%
Transcontinental Gas Pipelines $6.65 38,665 $ 3,823
TELEPHONE SERVICES - 0.2%
Stet (Societa Finanziaria Telefonica) Spa (a) 8,976,000 24,743
TOTAL UTILITIES 98,906
TOTAL NONCONVERTIBLE PREFERRED STOCKS 259,512
TOTAL PREFERRED STOCKS
(Cost $539,012) 546,908
CORPORATE BONDS - 14.1%
MOODY'S RATINGS (D) PRINCIPAL
(UNAUDITED) AMOUNT (B) (000S)
CONVERTIBLE BONDS - 1.0%
AEROSPACE & DEFENSE - 0.0%
UNC, Inc. 7 1/2%, 3/31/06 B2 $ 3,569 2,891
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.1%
Hoogovens En Staalfabrieken NV
4 1/2%, 4/11/01 - NLG 8,420 5,374
Stelco, Inc. 7 3/4%, 8/31/98 - CAD 3,500 2,247
7,621
PAPER & FOREST PRODUCTS - 0.0%
Stone Container Corp. 8 7/8%, 7/15/00 (h) B2 1,100 1,812
TOTAL BASIC INDUSTRIES 9,433
CONGLOMERATES - 0.4%
Hanson America, Inc. 2.39%, 3/1/01 (h) A3 12,800 9,536
Hanson PLC euro 9 1/2%, 1/31/06 - GBP 19,500 33,269
42,805
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Centerpoint Properties 8.22%, 1/15/04 - $ 1,854 $ 2,076
Liberty Property L.P. 8%, 7/1/01 - 1,962 1,953
Sizeler Property Investors, Inc. 8%, 7/15/03 - 1,000 990
5,019
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Volvo B 10%, 3/31/95 - SEK 5,388 1,333
ENERGY - 0.1%
ENERGY SERVICES - 0.1%
Lone Star Technologies, Inc. euro 8%, 8/27/02 - 5,150 4,146
OIL & GAS - 0.0%
USX-Marathon Group 7%, 6/15/17 BB- 4,490 4,007
TOTAL ENERGY 8,153
FINANCE - 0.1%
BANKS - 0.1%
Bank of New York Co., Inc. 7 1/2%, 8/15/01 Baa1 2,725 4,401
Midlantic Banks, Inc. 8 1/4%, 7/1/10 Ba2 1,750 1,737
6,138
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp., Series C, 0%, 6/30/97 - 762 356
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.2%
Time Warner, Inc. 8 3/4%, 1/10/15 Ba3 20,000 20,025
UTILITIES - 0.1%
TELEPHONE SERVICES - 0.1%
Softe SA 4 1/4%, 7/30/98 (c) - ITL 16,010 12,214
TOTAL CONVERTIBLE BONDS 108,367
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - 13.1%
AEROSPACE & DEFENSE - 0.0%
Fairchild Corp.:
12%, 10/15/01 B3 $ 960 $ 893
12 1/4%, 3/15/06 B3 250 232
1,125
BASIC INDUSTRIES - 1.2%
CHEMICALS & PLASTICS - 0.2%
Methanex Corp. 8 7/8%, 11/15/01 Ba3 3,040 2,956
NL Industries, Inc. 0%, 10/15/05 B2 4,000 2,520
Rexene Corp.:
9%, 11/15/99 - 7,800 7,566
pay-in-kind 10%, 11/15/02 - 916 858
Trans Resources, Inc. 14 1/2%, 9/1/96 B2 515 538
14,438
IRON & STEEL - 0.2%
Inland Steel Industries, Inc. 12 3/4%, 12/15/02 Ba3 4,225 4,711
Republic Engineered Steels, Inc. 9 7/8%,
12/15/01 B2 12,100 11,435
Stelco, Inc. 10 1/4%, 4/30/96 - CAD 3,670 2,601
WCI Steel, Inc., Series B, 10 1/2%, 3/1/02 B1 3,000 3,060
21,807
METALS & MINING - 0.0%
Sherritt Inc.:
10 1/2%, 3/31/14 B1 1,800 1,764
11%, 3/31/14 B1 2,500 1,750
3,514
PAPER & FOREST PRODUCTS - 0.8%
Alto Parana euro 12%, 3/4/95 - 4,000 1,480
Chesapeake Corp.:
10 3/8%, 10/1/00 Baa3 2,700 3,012
9 7/8%, 5/1/03 Baa3 10,000 10,994
Container Corp. of America:
13 1/2%, 12/1/99 B2 12,250 13,337
14%, 12/1/01 B3 9,220 10,061
gtd. 11 1/4%, 5/1/04 B3 12,460 12,896
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Crown Packaging Holdings Ltd. :
10 3/4%, 11/1/00 B3 $ 2,250 $ 2,205
12 1/4%, 11/1/03 (e) Caa 7,000 3,395
Great Northern Nekoosa Corp. 9 1/8%, 2/1/98 Baa3 7,800 8,273
Indorayon Yankee 9 1/8%, 10/15 /00 - 3,500 3,069
Mail-Well Corp. 10 1/2%, 2/15/04 B3 1,150 1,012
Mail-Well Holdings, Inc. 11 3/4%, 2/15/06
(5 common & $1,000 bonds 0/11
3/4%, 2/15/06) (e) Caa 1,500 615
Stone Container Corp.:
11 1/2%, 9/1/99 B2 2,000 1,960
9 7/8%, 2/1/01 B2 9,240 8,593
10 3/4%, 4/1/02 B1 6,000 5,640
86,542
TOTAL BASIC INDUSTRIES 126,301
CONGLOMERATES - 0.1%
Insilco Corp.:
9 1/2%, 7/1/97 Ca 2,290 2,278
9 1/2%, 7/1/97 (g) Ca 3,420 3,386
10 3/8%, 7/1/97 - 1,774 1,756
Jordan Industries, Inc.:
10 3/8%, 8/1/03 B3 3,500 3,325
11 3/4%, 8/1/05 Caa 6,220 3,608
Sequa Corp. 9 3/8%, 12/15/03 B3 1,840 1,702
16,055
CONSTRUCTION & REAL ESTATE - 0.6%
BUILDING MATERIALS - 0.6%
Adience, Inc. 11%, 6/15/02 - 1,415 1,122
Building Materials Corp. of America 0%,
7/1/04 (e)(h) B1 7,950 4,213
Cemex SA 8 7/8%, 6/10/98 (h) Ba2 7,000 6,956
DAL Tile International, Inc. secured 0%, 7/15/98 Caa 15,420 9,503
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
BUILDING MATERIALS - CONTINUED
Hillsborough/Jim Walter Corp. (k):
17%, 1/1/96 Ca $ 497 $ 437
sinking fund 13 3/4%, 2/1/03 Ca 875 717
PT Semen Cibinong 9%, 12/15/98 (h) - 8,000 7,560
Sunbelt (Cemex) Enterprises 8 1/2%, 5/4/95 (g) - 5,000 4,925
Tolmex SA de CV 8 3/8%, 11/1/03 Ba2 10,000 8,780
USG Corp.:
10 1/4%, 12/15/02 B1 3,500 3,518
Series B, 10 1/4%, 12/15/02 B2 4,290 4,290
Westinghouse Credit Corp.:
9.04%, 6/1/98 Ba1 2,250 2,326
9.30%, 6/7/99 Ba1 3,400 3,560
8.93%, 6/22/99 Ba1 1,200 1,239
59,146
CONSTRUCTION - 0.0%
UDC Homes 11 3/4%, 4/30/03 B2 3,700 3,515
REAL ESTATE - 0.0%
Bramalea Ltd. 0%, 3/22/98 - 2,778 1,861
MBO Properties, Inc. 10%, 4/27/04 - 28 28
1,889
TOTAL CONSTRUCTION & REAL ESTATE 64,550
DURABLES - 0.2%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Clevite Industries, Inc. sinking fund
12 3/8%, 6/30/01 - 3,600 1,944
Grupo Dina (Consorcio G) 10 1/2%,
11/18/97 (h) - 5,000 4,925
6,869
TEXTILES & APPAREL - 0.1%
Alpargatas SA euro 9%, 3/15/98 - 3,000 2,610
Fortsmann & Co., Inc. 14 3/4%, 4/15/99 (i) Caa 700 749
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Leslie Fay Companies, Inc. (g)(k):
10.54%, 1/15/02 - $ 1,021 $ 715
9.53%, 1/15/00 - 1,130 881
Westpoint Stevens 9 3/8%, 12/15/05 B3 6,500 5,882
10,837
TOTAL DURABLES 17,706
ENERGY - 0.7%
ENERGY SERVICES - 0.2%
McDermott International, Inc. 10 1/4%, 6/1/95 Baa3 6,975 7,183
Petroliam Nasional Berhad yankee
6 7/8%, 7/1/03 (h) A2 12,000 11,217
TransTexas Gas Corp. 10 1/2%, 9/1/00 B1 7,040 7,075
25,475
OIL & GAS - 0.5%
Brid Sapic euro 11 3/4%, 2/24/97 - 4,000 3,900
Deeptech International, Inc. 12%, 12/15/00 B3 2,230 2,219
Mesa Capital Corp. secured 12 3/4%,
6/30/98 (e) B3 15,576 14,135
Petro-Canada, Inc.:
Series A, 9 3/8%, 6/24/97 - CAD 2,000 1,449
yankee 8.60%, 10/15/01 Baa1 5,000 5,230
Petroleos Mexicanos (h):
5.5625%, 3/8/99 (i) - 15,000 14,812
11.43% 12/13/95 Ba2 4,000 4,020
Societe Nationale Elf Aquitaine 7 3/4%, 5/1/99 Aa3 2,850 2,914
48,679
TOTAL ENERGY 74,154
FINANCE - 6.1%
ASSET BACKED SECURITIES - 0.3%
Capital Auto Receivables Asset Trust 5.85%,
1/15/98 Aaa 6,824 6,758
Discover Card Trust 6 1/8%, 5/15/98 A2 3,700 3,664
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
ASSET BACKED SECURITIES - CONTINUED
Ford Credit Auto Loan Master Trust 7 3/8%,
4/15/99 Aaa $ 10,000 $ 10,170
Premier Auto Trust 4.95%, 2/2/99 A2 4,662 4,556
Standard Credit Card Master Trust I:
5 1/2%, 9/7/98 A2 5,600 5,376
6 1/4%, 9/7/98 A2 2,650 2,572
33,096
BANKS - 4.2%
Banco Nacional de Commercio SNC:
7 1/2%, 7/1/00 Ba2 25,000 22,906
8%, 8/5/03 (h) Ba2 7,500 6,338
Banco Nacional de Mexico SA:
euro 9 1/8%, 4/6/00 Ba2 6,500 6,500
9 1/8%, 4/6/00 (h) - 2,500 2,500
Bancomer SA (h):
euro 8%, 7/7/98 - 6,000 5,835
9% 6/1/00 - 8,000 7,780
Bancomer SNC euro 8%, 7/7/98 Ba2 6,000 5,835
Bank of Boston Corp.:
10.30%, 9/1/00 Baa2 11,703 12,221
5%, 2/28/01 (i) Baa2 13,750 13,441
6 7/8%, 7/15/03 Baa2 2,000 1,867
6 5/8%, 2/1/04 Baa2 5,000 4,543
9 1/2%, 8/15/97 Baa2 5,298 5,669
Banobras euro 10 3/4%, 8/16/96 Ba2 5,000 5,200
Central Fidelity Banks, Inc. 8.15%, 11/15/02 Baa2 13,000 13,284
Chase Manhattan Corp. euro 5%, 5/31/00 (i) Baa2 11,000 10,721
Citicorp:
8.40%, 2/12/97 Baa2 5,000 5,203
8.42%, 2/12/97 Baa2 5,000 5,204
euro:
5 1/2%, 7/10/97 (i) Baa3 2,000 1,983
5%, 1/30/98 (i) A3 3,000 2,985
5%, 10/25/05 (i) Baa2 22,250 21,221
Continental Bank Corp. 4 1/2%, 5/18/00 (i) Baa3 9,500 9,452
Corporacion Andina de Fomento yankee bonds
7 1/4%, 4/30/98 (h) - 5,900 5,679
Credit Local de France 8 1/2%, 6/26/97 Aaa FRF 107,000 20,678
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
First of America Bank Corp. 8 1/2%, 2/1/04 A3 $ 2,645 $ 2,731
First Bank System, Inc. euro 5 1/4%,
11/30/10 (i) Baa1 2,000 1,960
First Fidelity Bancorporation:
8 1/2%, 4/1/98 A3 6,200 6,474
9 5/8%, 8/15/99 A3 6,000 6,541
First Hawaiian Bank secured 6.93%, 12/1/03 (h) A1 13,000 12,015
First Interstate Bancorp:
9 3/8%, 1/23/02 Baa3 3,350 3,651
9 1/8%, 2/1/04 Baa1 5,750 6,192
First Maryland Bancorp:
10 3/8%, 8/1/99 Baa1 8,345 9,367
8 3/8%, 5/15/02 Baa1 6,030 6,241
First National Bank of Boston 8 3/8%, 12/15/02 Baa1 4,450 4,561
First USA Bank Wilmington:
5 3/4%, 1/15/99 Baa3 6,000 5,633
7.65%, 8/1/03 Ba1 18,000 17,159
Fleet Financial Group, Inc. 8 1/8%, 7/1/04 A3 3,370 3,432
HSBC Finance Nederland BV 7.40%, 4/15/03 (h) A3 4,000 3,880
Hartford National Corp. 9.85%, 6/1/99 Baa2 9,399 10,271
Integra Financial Corp. 8 1/2%, 5/15/02 Baa2 2,500 2,575
Manufacturers Hanover Corp. 8 1/2%, 2/15/99 A3 8,365 8,730
Manufacturers Hanover Trust:
5 1/4%, 4/30/97 (i) A3 500 501
euro 5 1/4%, 7/15/97 (i) Baa2 500 498
Marine Midland Banks, Inc.:
8 5/8%, 3/1/99 Baa1 14,818 15,386
5 1/4%, 12/20/00 (i) Baa2 16,550 16,095
Mercantile Bancorporation, Inc.
7 5/8%, 10/15/02 Baa1 8,010 7,890
Merchants National Corp. 9 7/8%, 10/1/99 A2 6,850 7,552
Midland International Financial Services BV
euro 5%, 3/6/99 (i) - 5,000 4,906
Midlantic Corp.:
9 7/8%, 12/1/99 Ba2 16,610 18,013
9 1/5%, 8/1/01 Ba2 11,245 11,878
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Provident Bank 7 1/8%, 3/15/03 Baa2 $ 4,500 $ 4,255
Shawmut Corp.:
8 7/8%, 4/1/96 Baa1 6,840 7,052
8 1/8%, 2/1/97 Baa1 9,125 9,399
Siam Commercial Bank Co. Ltd.:
7%, 11/29/95 - THB 300,000 11,553
7 1/4%, 11/29/96 - THB 100,000 3,811
Signet Banking Corp.:
5 1/4%, 4/15/98 (i) Baa1 6,210 6,171
9 5/8%, 6/1/99 Baa1 7,250 7,851
UJB Financial Corp. 8 5/8%, 12/10/02 Baa3 17,450 18,203
Wells Fargo and Company euro
5 1/4%, 4/28/00 (i) Baa2 2,000 1,947
461,419
CREDIT & OTHER FINANCE - 0.6%
Chrysler Financial Corp. 9 1/2%, 12/15/99 A3 8,000 8,736
Fleet Mortgage Group, Inc. 6 1/8%, 8/15/97 A3 9,800 9,596
GPA Delaware, Inc.:
8 1/2%, 3/3/97 - 4,200 3,654
gtd. 8 3/4%, 12/15/98 Caa 310 253
8 5/8%, 1/15/99 - 2,900 2,255
General Motors Acceptance Corp.:
7%, 3/6/95 Baa1 6,000 6,041
7 3/4%, 1/28/97 Baa1 4,250 4,333
Greyhound Financial Corp. 6.95%, 1/28/98 Baa2 2,000 1,985
Indah Kiat International Finance Co. BV gtd.
11 7/8%, 6/15/02 Ba3 6,320 6,320
LaSalle National Trust NA, Trust No. 118501
mortgage note -- 2,000 2,000
Margaretten Financial Corp. 6 3/4%, 6/15/00 A2 2,260 2,180
Nacional Financiera SNC:
euro:
5 7/8%, 2/17/98 - 5,000 4,525
10 5/8%, 11/22/01 Ba2 9,000 9,158
9 3/8%, 7/15/02 Ba2 5,000 4,763
yankee 9 3/8%, 4/23/99 (h) Ba2 5,000 4,975
Tiphook Finance Corp. 8%, 3/15/00 Caa 1,960 1,401
72,175
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
INSURANCE - 0.4%
American Annuity Group, Inc. 11 1/8%, 2/01/03 B2 $ 1,760 $ 1,778
Metropolitan Life Insurance Co. 6.30%,
11/1/03 (h) Aa3 16,000 14,310
Nationwide Mutual Insurance Co.
6 1/2%, 2/15/04 (h) Aa3 7,500 6,675
New York Life Insurance Co. 6.40%, 12/15/03 (h) Aa2 9,500 8,609
Ohio National Life Insurance Co.
8 7/8%, 7/15/04 (h) A3 7,000 7,127
38,499
SAVINGS & LOANS - 0.6%
Anchor Bancorp, Inc. 8 7/8%, 7/9/03 Ba3 10,000 9,400
Great Western Financial Corp. 6 3/8%, 7/1/00 Baa2 2,740 2,587
Home Savings of America:
10 1/2%, 6/12/97 Baa1 3,700 3,931
6%, 11/1/00 Baa1 10,500 9,631
Household Bank FSB Newport Beach CA:
8.45%, 12/10/02 A3 7,600 7,884
6 1/2%, 7/15/03 A3 5,000 4,530
USAT Holdings, Inc. 8.05%, 1/15/98 (h) Ba2 19,550 18,915
World Savings & Loan Association Oakland CA
9.90%, 7/1/00 A2 2,400 2,635
59,513
SECURITIES INDUSTRY - 0.0%
ECM Corp. extendible 14%, 6/1/02 (h) - 1,939 2,133
TOTAL FINANCE 666,835
HEALTH - 0.0%
DRUG & PHARMACEUTICALS - 0.0%
Scherer (R.P.) International Corp.
6 3/4%, 2/1/04 Ba1 5,000 4,438
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.1%
Ametek, Inc. 9 3/4%, 3/15/04 Ba3 $ 2,860 $ 2,871
Specialty Equipment Cos., Inc.
11 3/8%, 12/1/03 B3 6,000 6,060
Westinghouse Electric Corp.:
9.15%, 1/20/98 Ba1 950 988
9.40%, 1/31/01 Ba1 1,725 1,807
11,726
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Joy Technologies, Inc. 10 1/4%, 9/1/03 B1 3,590 3,437
Rexnord Holdings, Inc. 11 7/8%, 3/1/99 B2 2,090 2,017
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 - 6,242 6,118
10 3/4%, 11/1/03 - 8,821 8,644
20,216
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 31,942
MEDIA & LEISURE - 1.3%
BROADCASTING - 0.4%
Grupo Televisa SA:
7.5625%, 4/7/96 (i) Ba2 13,120 13,448
euro 10%, 11/9/97 Ba2 4,000 4,110
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 3,410 3,231
SCI Television, Inc. secured 11%, 6/30/05 B3 7,560 7,701
Spectravision, Inc. pay-in-kind 11.65%, 12/1/02 B3 4,135 2,047
Telecommunications, Inc.:
7.13%, 2/2/98 Baa3 5,000 4,960
6.58%, 2/15/05 Baa3 6,000 5,703
Time Warner, Inc. 6.05%, 7/1/95 (h) Ba3 5,000 4,985
46,185
ENTERTAINMENT - 0.1%
Live Entertainment, Inc.:
12%, 9/15/94 (g) - 8,000 7,920
10%, 9/1/98 - 2,325 1,953
9,873
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 0.4%
Bally Gaming International, Inc.
10 3/8%, 7/15/98 - $ 4,500 $ 4,230
Bally's Park Place Funding, Inc. 9 1/4%, 3/15/04 B1 7,500 6,450
Ballys Grand, Inc., Series B, 10 3/8%,
12/15/03 (h) - 3,000 2,670
Boyd Gaming Corp. 10 3/4%, 9/3/03 - 8,000 7,920
California Hotel Finance Corp. gtd. 11%, 12/1/02 B2 5,000 5,025
Host Marriott Corp.:
9 1/8%, 12/1/00 B1 1,500 1,489
10 1/2%, 5/1/06 B1 1,000 1,000
11%, 5/1/06 B1 2,551 2,544
Host Marriott Hospitality, Inc. 10 3/8%, 6/15/11 B1 4,000 3,980
Motels of America, Inc. 12%, 4/15/04 (h) B3 3,000 2,895
Resorts International Hotel Financing, Inc.:
11%, 9/15/03 - 2,444 1,760
11 3/8%, 12/15/04 ($1,000 Jr. mtg. notes &
1 Class B New) - 684 458
40,421
PUBLISHING - 0.3%
GACC Holding Co. 9 3/4%, 3/1/04 (h) - 12,500 12,281
News America Holdings, Inc.:
gtd. 9 1/8%, 10/15/99 Ba1 7,000 7,318
8 5/8%, 2/1/03 Ba1 12,250 12,369
31,968
RESTAURANTS - 0.1%
American Restaurant Group, Inc.:
12%, 9/15/98 (New) B2 1,000 950
12%, 9/15/98 B2 4,430 4,209
Cafeteria Operators L.P. 11%, 6/30/98 (g)(k) - 7,577 3,031
Flagstar Corp. 11 1/4%, 11/1/04 B2 2,720 2,322
10,512
TOTAL MEDIA & LEISURE 138,959
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - 0.2%
BEVERAGES - 0.1%
Fomento Ecunomico Mexicano SA 9 1/2%,
7/22/97 (h) - $ 4,000 $ 4,070
Grupo Embotellador de Mexico SA de CV:
euro 10 3/4%, 11/19/97 Ba2 3,560 3,738
10 3/4%, 11/19/97 (h) Ba1 1,000 1,050
8,858
HOUSEHOLD PRODUCTS - 0.0%
Mary Kay Corp. 10 1/4%, 12/31/00 (h) B+ 2,080 2,012
Revlon World Wide secured 0%, 3/15/98 B3 2,840 1,108
3,120
TOBACCO - 0.1%
Empresas La Moderna SA 10 1/4%,
11/12/97 (h) - 7,300 7,410
TOTAL NONDURABLES 19,388
PRECIOUS METALS - 0.1%
Agnico Eagle Mines Ltd. yankee
3 1/2%, 1/27/04 B1 9,165 7,596
RETAIL & WHOLESALE - 0.3%
APPAREL STORES - 0.1%
Apparel Retailers, Inc. 12 3/4%, 8/15/05 Caa 4,720 2,832
Lamonts Apparel Corp. 10 1/4%, 11/1/99 - 2,893 2,177
Specialty Retailers, Inc. 11%, 8/15/03 B3 80 78
The Limited, Inc. 7 1/2%, 3/15 /23 A1 2,000 1,807
6,894
DRUG STORES - 0.0%
Thrifty Payless, Inc. 12 1/4%, 4/15/04 B3 2,940 2,962
GENERAL MERCHANDISE STORES - 0.1%
Controladora Comercial Mexicana SA de CV:
euro 8 3/4%, 4/21/98 - 3,570 3,458
8 3/4%, 4/21/98 (h) - 1,650 1,598
Dayton Hudson Corp. 9.18%, 2/27/98 A3 5,000 5,325
El Puerto de Liverpool SA de CV 7 1/4%,
10/19/96 (h) - 6,500 6,297
16,678
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 0.0%
Farm Fresh Holdings Corp. 14 1/4%,
10/1/02 (h) - $ 2,680 $ 2,205
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Barrys Jewelers, Inc. 11%, 12/22/00 - 1,595 1,563
Color Tile, Inc. 10 3/4%, 12/15/01 B2 7,750 7,440
Macy (R.H.) & Co. 14 1/2%, 10/15/98 Ca 10,542 6,958
15,961
TOTAL RETAIL & WHOLESALE 44,700
SERVICES - 0.2%
LEASING & RENTAL - 0.1%
Acme Holdings, Inc. 11 3/4%, 6/1/00 B3 2,950 1,150
Ryder System, Inc. 9 1/5%, 3/15/98 Baa1 750 764
U.S. Leasing International, Inc. 8 3/4%, 5/1/96 A2 4,475 4,648
6,562
SERVICES - 0.1%
Belmont L.V. Land L.P. 8.61%, 7/16/97 - 8,182 6,392
Comdata Network, Inc. 13 1/4%, 12/15/02 B3 4,300 4,751
Town & Country Corp.:
11 1/2%, 9/15/97 B 1,827 1,809
13%, 5/31/98 CCC+ 2,684 2,631
15,583
TOTAL SERVICES 22,145
TECHNOLOGY - 0.2%
COMPUTERS & OFFICE EQUIPMENT - 0.2%
Comdisco, Inc.:
9 3/4%, 1/15/97 Baa2 5,850 6,213
7.82%, 2/5/97 Baa2 2,000 2,033
9.28%, 6/5/00 Baa2 2,000 2,126
9.30%, 6/27/00 Baa2 2,000 2,165
9 1/4%, 7/6/00 Baa2 7,625 8,159
9 1/2%, 1/28/02 Baa2 2,580 2,774
23,470
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONICS - 0.0%
Berg Electronics 11 3/8%, 5/1/03 B3 $ 2,050 $ 2,055
Grupo Condumex SA de CV 6 1/4%,
7/27/96 (h) - 2,500 2,388
4,443
TOTAL TECHNOLOGY 27,913
TRANSPORTATION - 0.1%
AIR TRANSPORTATION - 0.1%
AMR Corp. 9 1/2%, 7/15/98 Baa3 4,750 4,944
Southwest Airlines Co. secured 9.40%, 7/1/01 Baa1 4,000 4,365
US Air, Inc.:
9 5/8%, 9/1/94 B1 1,410 1,269
10 3/8%, 3/1/13 B1 2,820 2,538
13,116
TRUCKING & FREIGHT - 0.0%
Consolidated Freightways, Inc. 9 1/8%, 8/15/99 Baa3 2,000 2,064
TOTAL TRANSPORTATION 15,180
UTILITIES - 1.5%
CELLULAR - 0.1%
Horizon Cellular Telephone 11 3/8%, 10/1/00 (e) Caa 6,300 4,284
Nextel Communications, Inc.
9 3/4%, 8/15/04 (e) B3 10,750 5,886
Pagemart, Inc. 12 1/4%, 11/1/03 ($1,000 bond
12 1/4%, 11/1/03 & 4.6 warrants) (e)(h) - 31 1,883
12,053
ELECTRIC UTILITY - 1.0%
CEZ AS 16 1/2%, 6/25/98 - CSK 50,620 1,960
Comision Federal de Electricidad euro
8%, 8/4/97 - 10,000 9,800
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Commonwealth Edison Co. 7 5/8%, 2/15/03 Baa3 $ 970 $ 922
EUA Power Corp. secured pay-in-kind (k):
17 1/2%,11/15/92 (h) - 719 58
17 1/2%, 5/15/93 - 4,080 326
El Paso Funding Corp. lease oblig.
10 3/4%, 4/1/13 (k) Ca 870 635
Hydro-Quebec euro 5 1/8%, 7/31/02 (i) 3,000 2,888
Long Island Lighting Co.:
8 3/4%, 5/1/96 Baa3 5,000 5,143
7.30%, 7/15/99 Ba1 17,800 16,481
N.A.E.C. 9.05%, 6/1/02 Ba1 9,000 8,471
Public Service Co. of New Hampshire:
1st mtg. 9.17%, 5/15/98 Baa3 8,000 8,150
contingent 15.23%, 7/1/00 Ba2 15,257 17,698
Systems Energy Resources, Inc. 1st mtg.
10 1/2%, 9/1/96 Baa3 1,000 1,044
Toledo Edison Co.:
secured 9.30%, 4/1/98 Baa3 8,500 8,593
8.70%, 9/1/02 Ba3 8,500 7,606
United Illuminating Co.:
7 3/8%, 1/15/98 Baa3 4,000 3,967
9.76%, 1/2/06 Baa3 13,135 13,827
107,569
GAS - 0.4%
Columbia Gas System, Inc.(k):
7 1/2%, 10/1/97 Caa 2,000 2,202
9.07%, 1/12/00 - 250 293
10 1/4%, 8/1/11 Caa 360 446
10.15%, 11/1/13 Caa 290 354
9.43%, 10/12/19 Caa 1,250 1,450
Enron Corp. 9.65%, 5/15/01 Baa2 2,000 2,221
Southwest Gas Corp.:
9 3/4%, 6/15/02 Ba1 15,150 16,140
9 3/8%, 2/1/17 Ba1 4,250 4,399
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
GAS - CONTINUED
Transcontinental Gas Pipe Line Corp.:
9%, 11/15/96 Ba2 $ 6,050 $ 6,156
extendible 6.21%, 5/15/00 Ba2 5,000 4,850
8 7/8%, 9/15/02 Ba2 3,200 3,144
41,655
TOTAL UTILITIES 161,277
TOTAL NONCONVERTIBLE BONDS 1,440,264
TOTAL CORPORATE BONDS
(Cost $1,596,058) 1,548,631
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 7.5%
U.S. TREASURY OBLIGATIONS - 6.5%
5 1/8%, 3/31/98 Aaa 47,000 44,929
7 7/8%, 8/15/01 Aaa 9,150 9,613
6 3/8%, 8/15/02 Aaa 8,500 8,164
6 1/4%, 2/15/03 Aaa 94,110 89,140
10 3/4%, 8/15/05 Aaa 91,260 115,501
9 7/8%, 11/15/15 Aaa 71,300 89,381
8 7/8%, 8/15/17 Aaa 7,700 8,857
8 1/8%, 8/15/19 Aaa 240,650 257,683
12%, 8/15/23 Aaa 63,745 88,925
712,193
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.0%
Agency for International Development
(guaranteed by U.S. government):
4 7/8%, 9/15/98 Aaa 7,100 6,656
5 3/4%, 3/15/00 Aaa 3,375 3,178
5 1/4%, 9/15/00 Aaa 16,780 15,265
Government Trust Certificates (guaranteed by the
Defense Security Assistance Agency)
9.40%, 5/15/02 Aaa 16,000 17,527
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Financing Corporation:
9.40%, 2/8/18 Aaa $ 3,000 $ 3,521
9.80%, 4/6/18 Aaa 18,155 22,098
9.65%, 11/2/18 Aaa 9,400 11,301
9.70%, 4/5/19 Aaa 6,525 7,883
Tennessee Valley Authority 8 1/4%, 4/15/42 Aaa 18,800 18,976
106,405
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS
(Cost $844,556) 818,598
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 1.7%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.0%
8%, 10/1/16 to 4/1/20 Aaa 5,141 5,105
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.5%
7 1/2%, 8/1/07 to 5/1/08 Aaa 7,252 7,240
8 1/2%, 1/1/09 to 7/1/21 Aaa 111 113
9%, 5/1/01 to 8/1/07 Aaa 42,223 44,070
10%, 8/1/17 Aaa 234 251
51,674
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.2%
7%, 10/15/17 to 11/15/23 Aaa 43,882 41,235
7 1/2%, 4/15/17 to 12/15/23 Aaa 39,155 38,030
8%, 4/15/17 to 10/15/23 Aaa 19,906 19,850
8 1/2%, 11/15/05 to 7/15/23 Aaa 1,437 1,469
8 1/2%, 8/15/22 Aaa 12,000 12,259
9 1/2%, 7/15/09 to 7/15/17 Aaa 348 370
10%, 3/15/16 to 8/15/21 Aaa 13,633 14,686
11%, 8/15/10 Aaa 2 3
127,902
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $191,839) 184,681
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.0%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
PRIVATE ISSUER -0.0%
Maryland National Bank pass thru series 1990-1
class A, 9 1/2%, 10/25/20 (Cost $903) Aaa $ 873 $ 872
COMMERCIAL MORTGAGE SECURITIES - 0.1%
CBA Mortgage Corp. commercial series 1993-C1
class E, 7.158%, 12/25/03 Ba2 2,169 1,738
CS First Boston Mortgage Securities Corp.
commercial series 1994-CFBI class E,
6.4769%, 1/25/28 (h) Ba2 3,025 2,439
Nomura Asset Securities Corp. commercial series
1994-MD-1 class B-1, 8.4263%, 3/25/18 - 2,840 2,246
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $6,456) 6,423
FOREIGN GOVERNMENT OBLIGATIONS - 7.2%
Argentina Republic:
BOCON (i):
3 1/4%, 4/1/01 - ARP 42,330 22,846
4 1/2%, 4/1/01 B1 118,929 84,812
3 1/4%, 9/1/02 - ARP 18,507 8,430
BOTE (i):
2.1275%, 5/31/96 Aaa 85,300 38,275
euro 3.515%, 9/1/97 - 14,800 10,654
4.2853%, 4/3/00 - 38,533 29,904
Brady:
euro 4%, 3/31/23 B1 83,000 42,537
4%, 3/31/23 (h) - 43,500 22,294
euro 5%, 3/31/05 (i) - 11,000 8,058
5%, 3/31/05 (h)(i) - 250 183
Canadian Government:
9 3/4%, 10/1/97 Aaa CAD 6,400 4,761
11 3/4%, 2/1/03 Aaa CAD 25,800 21,347
7 1/2%, 12/1/03 Aaa CAD 25,000 16,173
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
Danish Government Bullet:
9%, 11/15/00 Aa1 DKK 210,300 $ 35,641
8%, 5/15/03 Aa1 DKK 311,000 50,035
French Government OAT:
8 1/2%, 11/25/02 Aaa FRF 82,000 16,392
8 1/2%, 4/25/03 Aaa FRF 384,800 76,640
8 1/2%, 10/25/19 Aaa FRF 145,000 28,692
German Government: Treuhandanstalt,
7 1/8%, 1/19/03 Aaa DKK 17,500 11,133
Bank of Indonesia (SBI) 0%, 1/13/95 (c) - IDR 10,000 4,351
Italian Government 11%, 6/1/03 (c) - ITL 96,060 59,641
Mexican Government:
Adjustabono 4.80%, 9/1/94 (j) - MXN 9,000 3,552
Brady:
0%, 12/31/19 (i) Ba3 4,000 3,380
5.1875%, 12/31/19 (i) Ba3 3,600 3,042
5.4375%, 12/31/19 (i) Ba3 20,550 17,365
5.8125%, 12/31/19 (i) Ba3 4,950 4,183
6 1/4%, 12/31/19 Ba3 12,500 8,234
6 1/4%, 12/31/19 Ba3 8,000 5,270
Moroccan Government Trust 4 1/4%, 1/3/09 (h)(i) - 16,250 11,517
New Zealand Government:
10%, 3/15/02 Aaa NZD 33,300 22,368
8%, 4/15/04 Aaa NZD 110,300 66,107
Nigerian Government Brady 5 1/2%, 11/15/20 (e) - 3,000 1,080
Province of Alberta, Canada 9 1/4%, 4/1/00 Aa2 5,500 6,013
Province of Chaco, Argentina 11 7/8%,
9/10/97 (g) - 4,800 4,848
Province of Cordoba, Argentina 10%,
1/28/95 (g) - 6,394 6,266
Province of Manitoba, Canada:
yankee 6%, 10/15/97 A1 5,000 4,880
6 3/4%, 3/1/03 A1 5,000 4,717
Republic of Uruguay 8 1/4%, 6/8/95 (h) - 2,500 2,500
Territory of Victoria Public Authorities Finance
Agency, Australia:
8.45%, 10/1/01 A1 4,700 4,956
8 1/4%, 1/15/02 A1 4,000 4,160
United Kingdom of Great Britain & Northern Ireland
12%, 11/20/98 Aaa GBP 6,800 11,825
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $811,913) 789,062
SUPRANATIONAL OBLIGATIONS - 0.5%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (B) (000S) (000S)
African Development Bank:
6 3/4%, 7/30/99 Aa1 $ 10,000 $ 9,804
9.30%, 7/01/00 Aa1 15,000 16,334
Export-Import Bank Korea 7.85%, 11/1/96 A1 13,200 13,484
Korea Development Bank:
9 1/2%, 3/30/01 A1 7,000 7,582
9.60%, 12/1/00 A1 6,000 6,490
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $53,125) 53,694
OTHER SECURITIES - 1.0%
COLLATERALIZED NOTES - 0.3%
Ridgefield Investments Ltd. sr. notes 0%, 2/2/95
(collateralized by Mexican govt. securities) (h) 39,191 33,642
INDEXED SECURITIES - 0.0%
Bankers Trust New York Corp. note 13.84%, 8/7/95
(inversely indexed to 1-month gold lease rate) 4,000 4,118
Morgan Guaranty Trust Co. cert. of dep. 0%,
8/22/94 (indexed to $481 par of Westport
Investments Ltd. sr. notes, collateralized by
Mexican govt. securities, per $100 par) 268 267
4,385
PURCHASED BANK DEBT - 0.7%
Leslie Fay Companies, Inc.:
revolving loan 1/15/96 1,146 893
term loan 1/15/96 1,299 1,013
Macy (R.H.) & Co. (k):
49 Store loan 16,002 23,500
LBO Swap Claim 3,085 3,772
10 Store loan 6,034 7,362
10 Store Swap Claim 2,111 2,517
Working capital loan 19,752 31,890
70,947
TOTAL OTHER SECURITIES
(Cost $91,435) 108,974
CERTIFICATES OF DEPOSIT - 0.1%
Thai Military Bank Ltd. 8%, 10/28/96 (Cost $6,027) THB 150,000 5,715
COMMERCIAL PAPER - 0.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (B) (000S) (000S)
Bank Negara Malaysia 0%, 9/7/94 MYR 33,000 $ 12,671
Grupo Embotellador de Mexico SA de CV 0%,
8/10/94 (g) 2,000 1,996
Nacional Financiera SNC 0%, 7/23/96 MXN 29,000 6,407
TOTAL COMMERCIAL PAPER
(Cost $22,342) 21,074
REPURCHASE AGREEMENTS - 1.0%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 4.23% dated
7/29/94 due 8/1/94 $ 106,310 106,273
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $10,357,597) $ 10,908,455
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
12,083 CAD 9/7/94 $ 8,705 $ (12)
2,749 DEM 8/1/94 1,736 (9)
181,259 DKK 8/11/94 29,103 (596)
173,077 JPY 8/1/94 1,733 (22)
TOTAL CONTRACTS TO BUY
(Payable amount $41,916) $ 41,277 (639)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.4%
FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
12,083 CAD 9/7/94 $ 8,705 (17)
27,401 DEM 8/1/94 to 10/5/94 17,301 110
697,365 DKK 8/11/94 111,971 (4,837)
144,454 FIM 10/11/94 27,696 (234)
1,134,428 FRF 9/7/94 to 10/11/94 209,522 1,554
19,401 GBP 10/11/94 to 10/26/94 29,876 (218)
63,965,591 JPY 8/1/94 to 11/1/94 642,907 (5,507)
110,529 NLG 10/6/94 62,122 (370)
182,282 NOK 10/26/94 26,350 (225)
43,358 NZD 9/23/94 26,031 (376)
TOTAL CONTRACTS TO SELL
(Receivable amount $1,152,361) $ 1,162,481 (10,120)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 10.7%
$ (10,759)
CURRENCY ABBREVIATIONS
ARP - Argentinean peso
GBP - British pound
CAD - Canadian dollar
CSK - Czech koruna
DKK - Danish krone
NLG - Dutch guilder
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
SEK - Swedish krona
THB - Thai baht
LEGEND
(a) Non-income producing.
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Principal amount in millions.
(d) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(e) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(f) Affiliated company (see Note 6 of Notes to Financial Statements).
(g) 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 COST
SECURITY DATE (000'S)
Cafeteria Operators
L.P. 11%, 6/30/98 6/24/93 $ 6,063
FF Holdings 10/2/92 to
Corp. 3/8/93 159
Grupo Embotellador
de Mexico SA de
CV 0%, 8/10/94 12/2/92 1,996
Gulf Canada
Resources Ltd. 10/15/93 117
Insilco Corp.
9 1/2%, 7/1/97 7/14/93 3,424
Leslie Fay Companies, Inc.:
9.53%, 1/15/00 7/19/93 856
10.54%,1/15/02 7/19/93 to
11/11/93 675
Live Entertainment, Inc.:
$2.00 (warrants) 3/23/93 230
$2.72 (warrants) 3/23/93 241
12%, 9/15/94 3/23/93 7,529
Province of Chaco,
Argentina 11 7/8%,
9/10/97 3/9/94 4,931
Province of Cordoba,
Argentina 10%,
1/28/95 1/27/94 8,250
Sunbelt (Cemex) Enterprises
8 1/2%, 5/4/95 2/12/93 4,853
(h) 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 $454,968,000 or 4.2% of net
assets.
(i) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(j) Principal amount shown is original face amount and does not reflect the
inflation adjustments.
(k) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 15.3% AAA, AA, A 14.9%
Baa 3.7% BBB 4.0%
Ba 3.6% BB 2.6%
B 3.2% B 1.6%
Caa 0.3% CCC 0.3%
Ca,C 0.3% CC,C 0.0%
D 0.1%
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 4.9% including long-term debt categorized
as other securities.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 68.8%
Japan 7.4
Canada 4.1
United Kingdom 3.3
Argentina 2.6
Mexico 2.6
France 2.2
Germany 2.0
Netherlands 1.6
New Zealand 1.0
Others (individually less than 1%) 4.4
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1994, the aggregate cost of investment securities for income
tax purposes was $10,361,159,000. Net unrealized appreciation aggregated
$547,296,000, of which $951,688,000 related to appreciated investment
securities and $404,392,000 related to depreciated investment securities.
The fund hereby designates $52,000,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JULY 31, 1994
ASSETS
Investment in securities, at value (including repurchase $ 10,908,455
agreements of $106,273) (cost $10,357,597)
(Notes 1 and 2) - See accompanying schedule
Cash 2,834
Receivable for investments sold 65,467
Unrealized appreciation on foreign currency contracts 1,783
(Note 2)
Receivable for fund shares sold 28,521
Dividends receivable 13,476
Interest receivable 80,349
Other receivables 1,546
TOTAL ASSETS 11,102,431
LIABILITIES
Payable for investments purchased $ 173,129
Unrealized depreciation on foreign currency contracts 12,542
(Note 2)
Payable for fund shares redeemed 8,079
Accrued management fee 4,651
Other payables and accrued expenses 3,602
Collateral on securities loaned, at value (Note 5) 1,113
TOTAL LIABILITIES 203,116
NET ASSETS $ 10,899,315
Net Assets consist of (Note 1):
Paid in capital $ 9,901,352
Distributions in excess of net investment income (609)
Accumulated undistributed net realized gain (loss) on 457,953
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 540,619
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 684,175 shares outstanding $ 10,899,315
NET ASSET VALUE, offering price and redemption price per $15.93
share ($10,899,315 (divided by) 684,175 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1994
INVESTMENT INCOME $ 149,086
Dividends (including $1,858 received from affiliated
issuers) (Note 6)
Interest (including security lending fees of $59) (Note 5) 299,839
TOTAL INCOME 448,925
EXPENSES
Management fee (Note 4) $ 49,250
Transfer agent fees (Note 4) 21,132
Accounting and security lending fees (Note 4) 819
Non-interested trustees' compensation 55
Custodian fees and expenses 1,437
Registration fees 1,026
Audit 186
Legal 59
Interest (Note 7) 9
Reports to shareholders 677
Miscellaneous 90
Total expenses before reductions 74,740
Expense reductions (Note 8) (545) 74,195
NET INVESTMENT INCOME 374,730
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:
Investment securities (including realized loss of $293 709,664
on sales of investment in affiliated issuers)
Foreign currency transactions (100,065)
Futures contracts 3,490 613,089
Change in net unrealized appreciation (depreciation) on:
Investment securities (244,843)
Assets and liabilities in foreign currencies (13,174) (258,017)
NET GAIN (LOSS) 355,072
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 729,802
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ 374,730 $ 308,787
Net investment income
Net realized gain (loss) 613,089 604,934
Change in net unrealized appreciation (depreciation) (258,017) 278,984
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 729,802 1,192,705
FROM OPERATIONS
Distributions to shareholders: (289,622) (324,490)
From net investment income
From net realized gain (756,724) (258,105)
TOTAL DISTRIBUTIONS (1,046,346) (582,595)
Share transactions 4,210,808 2,083,363
Net proceeds from sales of shares
Reinvestment of distributions 970,508 526,678
Cost of shares redeemed (1,793,648) (969,803)
Net increase (decrease) in net assets resulting from 3,387,668 1,640,238
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,071,124 2,250,348
NET ASSETS
Beginning of period 7,828,191 5,577,843
End of period (including under (over) distribution $ 10,899,315 $ 7,828,191
of net investment income of $(609) and $53,154,
respectively)
OTHER INFORMATION
Shares
Sold 263,411 132,921
Issued in reinvestment of distributions 61,351 35,333
Redeemed (112,566) (62,745)
Net increase (decrease) 212,196 105,509
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31,
1994 1993C 1992 1991 1990
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 16.59 $ 15.22 $ 13.75 $ 13.08 $ 14.90
period
Income from Investment
Operations
Net investment income .46E .72 .88D .75 .88
Net realized and unrealized .88 2.14 1.37 .72 (1.17)
gain (loss)
Total from investment 1.34 2.86 2.25 1.47 (.29)
operations
Less Distributions
From net investment income (.51) (.80) (.78) (.80) (.99)
From net realized gain (1.49) (.69) - - (.54)
Total distributions (2.00) (1.49) (.78) (.80) (1.53)
Net asset value, end of period $ 15.93 $ 16.59 $ 15.22 $ 13.75 $ 13.08
TOTAL RETURN A, B 8.60% 20.29% 16.96% 11.87% (2.12)
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,899 $ 7,828 $ 5,578 $ 4,942 $ 4,766
(in millions)
Ratio of expenses to average net .79% .74% .64% .66% .65%
assets
Ratio of expenses to average net .80% .74% .64% .66% .65%
assets before expense
reductions
Ratio of net investment income 4.00% 4.89% 6.23% 5.94% 6.30%
to average net assets
Portfolio turnover rate 74% 76% 102% 108% 58%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN. (SEE NOTE 8 OF NOTES TO FINANCIAL
STATEMENTS)
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C AS OF AUGUST 1, 1992 THE FUND DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
D INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS WHICH
AMOUNTED TO $.14 PER SHARE.
E THE AMOUNT SHOWN REFLECTS CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES. (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS)
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Puritan 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 prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Effective August 1, 1993, the fund adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts, disposition
of foreign currencies, currency gains and losses realized between the trade
and settlement dates on securities transactions, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. Further, as permitted under the SOP, the effects of
changes in foreign currency exchange rates on investments in securities are
not segregated in the Statement of Operations from the effects of changes
in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment in securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
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
paydown gains/losses on certain securities, futures and options
transactions, foreign currency transactions, market discount, partnerships,
non-taxable dividends and losses deferred due to wash sales. The fund also
utilized earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect net investment income per share disclosed. Distributions in excess
of net investment income may include temporary book and tax differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
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 $27,398,000, a decrease in undistributed
net investment income of $28,797,000 and an increase in accumulated net
realized gain on investments of $1,399,000.
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, as reflected in the schedule of
investments
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
under the caption "Forward Foreign Currency Contracts," 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 any realized gain (loss) is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible for
determining that the value of these underlying securities remains at least
equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of FMR, may transfer uninvested cash balances into one or more
joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
FUTURES CONTRACTS AND OPTIONS.
The fund may invest in futures and options 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.
2. OPERATING POLICIES -
CONTINUED
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 $34,670,000 or 0.3% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $9,334,160,000 and $6,655,068,000, respectively, of which U.S.
government and government agency obligations aggregated $1,933,764,000 and
$1,610,909,000, respectively.
The market value of futures contracts opened and closed amounted to
$86,586,000 and $83,096,000, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .30% to .52% for the period from August 1, 1993 to Oct-
ober 31, 1993 and .285% to .520% for the period from November 1, 1993 to
July 31, 1994. In the event that these rates were lower than the
contractural rates in effect during those periods, FMR voluntarily
implemented the above rates, as they resulted in the same or a lower
management fee. The annual individual fund fee rate is .20%. For the
period, the management fee was equivalent to an annual rate of .53% of
average net assets .
The Board of Trustees has approved a new group fee rate schedule with rates
ranging from .27% to .52%. Effective August 1, 1994, FMR has voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
SALES LOAD. For the period January 1, 1993 through December 31, 1995,
Fidelity Distributors Corporation, an affiliate of FMR and the general
distributor of the fund, will voluntarily waive the sales charge (2% of the
offering price) on the sales of shares.
TRANSFER AGENT FEES. 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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting
records and administers the security lending program. The security lending
fee is based on the number and duration of lending transactions. The
accounting fee is based on the level of average net assets for the month
plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $2,528,000 for the period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, the value of the
securities loaned and the value of collateral amounted to $987,000 and
$1,113,000, respectively.
6. TRANSACTIONS WITH
AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions with companies which are or
were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
AMETEK, Inc. $ 9,628 $ - $ 481 $ 48,122
Ampex Corp. Class C 1 - - 1
Betz Laboratories, Inc. 28,801 - 703 90,473
Cabot Oil & Gas Corp. Class A 1,265 - - 21,677
EG & G, Inc. 5,812 - 444 48,739
Energen Corp. - 140 - -
Filene's Basement Corp. (a) - - - 17,046
Grand Union Capital Corp.
Class B - - - 1,494
Helmerich & Payne, Inc. 1,092 - 161 37,456
Nashua Corp. - 2,196 69 6,452
Rawlings Sporting Goods, Inc. (a) 9,594 - - 8,994
Thermadyne Holdings Corp. (a) - - - 821
TOTALS $ 56,193 $ 2,336 $ 1,858 $ 281,275
(a) non-income producing
7. 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 $32,931,000 and $19,314,000, respectively. The
weighted average interest rate was 4.1%.
8. 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
$545,000 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Puritan Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Puritan Trust: Fidelity Puritan Fund, including the schedule of
portfolio investments, as of July 31, 1994, and the related statement of
operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1994 by correspondence with the custodian
and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Puritan Trust: Fidelity Puritan Fund as of July 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 2, 1994
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
U.K. Inc. (FMR U.K.)
London, England
Fidelity Management & Research
Far East Inc. (FMR Far East)
Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Richard B. Fentin, Vice President
William J. Hayes, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Market Index Fund
Puritan Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
