FIDELITY
(REGISTERED TRADEMARK)
PURITAN(registered trademark)
FUND
ANNUAL REPORT
JULY 31, 1996
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 44 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 48 Notes to the financial statements.
REPORT OF INDEPENDENT 54 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 55
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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first seven
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in both the stock and bond markets so far
this year. In 1995, both stock and bond markets posted strong results,
while the year before, stocks posted below-average returns and bonds had
one of the worst years in history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term. You also can help to manage some of the risks of investing
through diversification. A stock fund is already diversified because it
invests in many issues. You can diversify even further by placing some of
your money in several different types of stock funds or in other investment
categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells securities that have grown in value). Effective January 1, 1996, the
fund's 2% sales charge was eliminated. This sales charge was in effect
October 1, 1987 through December 31, 1992, then waived through 1995. If
this sales charge were taken into account, total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Puritan 10.06% 90.08% 214.62%
S&P 500(registered trademark) 16.57% 89.62% 269.48%
Lehman Brothers Aggregate Bond Index 5.54% 47.08% 125.81%
Equity Income Funds 14.65% 79.89% 188.57%
Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. For example, if
you invested $1,000 in a fund that had a 5% return over the past year, the
value of your investment would be $1,050. You can compare the fund's
returns to the performance of the Standard & Poor's 500 Index - a widely
recognized, unmanaged index of common stocks - and the performance of the
Lehman Brothers Aggregate Bond Index, a market value weighted performance
benchmark for investment-grade fixed-rate debt issues, including
government, corporate, asset-backed, and mortgage-backed securities, with
maturities of at least one year. To measure how the fund's performance
stacked up against its peers, you can compare it to the equity income funds
average, which reflects the performance of 144 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. over the past 12
months. These benchmarks reflect reinvestment of dividends and capital
gains, if any, but do not reflect any sales charges, brokerage commisions,
or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Puritan 10.06% 13.71% 12.14%
S&P 500 16.57% 13.65% 13.94%
Lehman Brothers Aggregate Bond Index 5.54% 8.02% 8.49%
Equity Income Funds Average 14.65% 12.37% 10.83%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19960731 19960814 160549 S00000000000001
Puritan SP Standard & Poor 500 LB
Aggregate Bond
00004 SP001 LB001
1986/07/31 10000.00 10000.00
10000.00
1986/08/31 10541.35 10742.00
10248.50
1986/09/30 10343.03 9853.64
10147.36
1986/10/31 10640.39 10422.19
10294.05
1986/11/30 10737.26 10675.45
10438.06
1986/12/31 10769.56 10403.23
10477.24
1987/01/31 11427.27 11804.54
10624.94
1987/02/28 11648.44 12270.82
10698.62
1987/03/31 11845.04 12625.45
10650.39
1987/04/30 11771.66 12513.08
10358.35
1987/05/31 11755.05 12621.94
10317.83
1987/06/30 12062.42 13259.35
10459.83
1987/07/31 12404.66 13931.60
10451.79
1987/08/31 12657.64 14451.25
10395.86
1987/09/30 12394.44 14134.77
10174.49
1987/10/31 10563.41 11090.14
10536.86
1987/11/30 10187.75 10176.31
10621.25
1987/12/31 10576.70 10950.73
10765.93
1988/01/31 11218.83 11411.75
11144.38
1988/02/29 11558.24 11943.54
11276.67
1988/03/31 11345.91 11574.49
11170.84
1988/04/30 11504.39 11702.96
11110.55
1988/05/31 11700.17 11804.78
11035.87
1988/06/30 12124.33 12346.62
11302.12
1988/07/31 12152.75 12299.70
11242.84
1988/08/31 12029.61 11881.51
11272.31
1988/09/30 12371.94 12387.66
11527.51
1988/10/31 12573.97 12732.04
11744.53
1988/11/30 12487.39 12549.97
11601.86
1988/12/31 12574.44 12769.60
11614.92
1989/01/31 13195.28 13704.33
11782.04
1989/02/28 13077.02 13363.09
11696.64
1989/03/31 13314.57 13674.45
11747.21
1989/04/30 13764.73 14384.16
11993.03
1989/05/31 14224.89 14966.72
12308.18
1989/06/30 14324.36 14881.41
12682.94
1989/07/31 15115.64 16225.20
12952.54
1989/08/31 15217.09 16543.21
12760.64
1989/09/30 15049.32 16475.38
12825.95
1989/10/31 14599.31 16093.16
13141.77
1989/11/30 14871.41 16421.46
13267.02
1989/12/31 15038.86 16815.57
13302.52
1990/01/31 14402.18 15687.25
13144.45
1990/02/28 14555.86 15889.61
13186.98
1990/03/31 14576.81 16310.69
13196.69
1990/04/30 14220.19 15902.92
13075.79
1990/05/31 15011.44 17453.45
13462.94
1990/06/30 14931.09 17334.77
13678.96
1990/07/31 14795.35 17279.30
13868.18
1990/08/31 13901.75 15717.25
13682.98
1990/09/30 13256.24 14951.82
13796.18
1990/10/31 13026.29 14887.53
13971.33
1990/11/30 13762.11 15849.26
14272.08
1990/12/31 14083.84 16291.46
14494.46
1991/01/31 14714.99 17001.76
14673.63
1991/02/28 15568.20 18217.39
14798.89
1991/03/31 15671.63 18658.25
14900.70
1991/04/30 15802.13 18703.03
15062.13
1991/05/31 16573.26 19511.00
15150.21
1991/06/30 15998.23 18617.40
15142.50
1991/07/31 16551.97 19484.97
15352.49
1991/08/31 16840.88 19946.76
15684.72
1991/09/30 16855.03 19613.65
16002.55
1991/10/31 17099.30 19876.47
16180.72
1991/11/30 16513.04 19075.45
16329.08
1991/12/31 17528.25 21257.68
16814.03
1992/01/31 17677.01 20862.29
16585.28
1992/02/29 18172.86 21133.50
16693.12
1992/03/31 18084.03 20721.40
16599.02
1992/04/30 18674.68 21330.61
16718.91
1992/05/31 18888.33 21435.13
17034.39
1992/06/30 18786.57 21115.74
17268.83
1992/07/31 19358.94 21979.38
17621.15
1992/08/31 19168.15 21528.80
17799.66
1992/09/30 19401.88 21782.84
18010.65
1992/10/31 19255.40 21859.08
17771.86
1992/11/30 19774.73 22604.47
17775.88
1992/12/31 20232.41 22882.51
18058.54
1993/01/31 20808.91 23074.72
18404.84
1993/02/28 21234.42 23388.54
18727.02
1993/03/31 22074.07 23882.04
18805.05
1993/04/30 22490.56 23304.09
18936.00
1993/05/31 22795.99 23928.64
18960.11
1993/06/30 22950.24 23998.03
19303.73
1993/07/31 23287.13 23902.04
19412.91
1993/08/31 23960.89 24807.93
19753.17
1993/09/30 23795.96 24616.91
19807.43
1993/10/31 24414.63 25126.48
19881.44
1993/11/30 24022.30 24887.78
19712.31
1993/12/31 24571.66 25188.92
19819.15
1994/01/31 25663.74 26045.34
20086.74
1994/02/28 25382.92 25339.51
19737.77
1994/03/31 24438.14 24234.71
19251.15
1994/04/30 24705.83 24544.92
19097.42
1994/05/31 24863.29 24947.45
19094.75
1994/06/30 24670.84 24336.24
19052.55
1994/07/31 25289.99 25134.47
19430.99
1994/08/31 26036.15 26164.98
19455.11
1994/09/30 25474.77 25523.94
19168.76
1994/10/31 25773.50 26098.23
19151.68
1994/11/30 24960.30 25147.73
19109.15
1994/12/31 25010.08 25520.67
19241.10
1995/01/31 24891.87 26182.42
19621.89
1995/02/28 25651.80 27202.75
20088.42
1995/03/31 26247.15 28005.50
20211.66
1995/04/30 26774.82 28830.27
20493.99
1995/05/31 27353.55 29982.61
21287.05
1995/06/30 27660.78 30679.11
21443.12
1995/07/31 28585.66 31696.43
21395.22
1995/08/31 28722.68 31775.99
21653.44
1995/09/30 29134.21 33116.93
21864.09
1995/10/31 28665.42 32998.70
22148.43
1995/11/30 29689.81 34447.35
22480.32
1995/12/31 30377.36 35110.80
22795.81
1996/01/31 30805.97 36305.98
22947.19
1996/02/29 31198.86 36642.53
22548.31
1996/03/31 31718.22 36995.40
22391.57
1996/04/30 31736.20 37540.71
22265.65
1996/05/31 31933.99 38508.89
22220.44
1996/06/30 32078.82 38655.61
22518.84
1996/07/31 31461.92 36947.80
22580.46
IMATRL PRASUN SHR__CHT 19960731 19960814 160556 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Puritan Fund on July 31, 1986. As the chart shows, by July 31,
1996, the value of the investment would have grown to $31,462 - a 214.62%
increase on the 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 and capital gains, if any, reinvested, the same $10,000
investment in the S&P 500 would have grown to $36,948 - a 269.48% increase.
If $10,000 was put in the bond index, it would have grown to $22,581 - a
125.81% 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
While both the stock and bond
markets enjoyed banner years in
1995, they have encountered
some difficulty thus far in 1996.
Several corporate earnings
disappointments and growing
fears of lower corporate earnings
made for a volatile stock market in
May, June and July. Nevertheless,
the Standard & Poor's 500 Index
finished the 12 months ended July
31, 1996, with a return of 16.57%
- - above its long-term historical
average of about 12%. The stock
market spent much of the past
year breaking price and trading
volume records, as strong
corporate earnings reports, large
cash inflows into mutual funds,
several high-profile mergers and
widespread optimism propelled
equity share prices higher. Even
though in late January the Federal
Reserve Board lowered its target
for the federal funds rate - the
rate banks charge each other on
overnight loans - from 5.50% to
5.25%, the move largely was
discounted by the bond market. In
March, better-than-expected
employment figures spooked the
bond market, pushing long-term
interest rates over 7%. By June,
however, soothing comments
from Federal Reserve Board
Chairman Alan Greenspan helped
ease the market's fears of Fed
interest-rate increases, and bond
markets stabilized in June and
July, with the 30-year Treasury
yield dropping back below 7%. For
the 12 months ended July 31,
1996, the Lehman Brothers
Aggregate Bond Index - a broad
measure of U.S. taxable bonds -
returned 5.54%.
NOTE TO SHAREHOLDERS:
Bettina Doulton became Portfolio Manager of Fidelity Puritan Fund on March
26, 1996.
Q. BETTINA, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended July 31, 1996, the fund posted a total return of
10.06%, lagging both the 14.65% return for the equity income funds average
tracked by Lipper Analytical Services and the 16.57% return of the Standard
& Poor's 500 Index over the same period.
Q. WHY DID THE FUND'S PERFORMANCE TRAIL THAT OF THE LIPPER AVERAGE AND THE
S&P 500?
A. There were several reasons. First, the performance of the fund, which
has been and will continue to be managed as a balanced fund, was hindered
by some of its bond holdings. Generally, the high-grade bonds that
constitute the bulk of the fund's bond exposure underperformed equities
during the period. Second, the fund had been more heavily invested in
foreign markets, namely Japan, where returns did not match those of the
domestic markets. Third, the equity investments had been concentrated in
small- to medium-capitalization stocks during a period when the market was
more smitten with larger-capitalization stocks. Finally, the exposure to
the finance sector, which I increased dramatically upon assuming fund
management responsibilities, was adversely impacted by the recent back-up
in interest rates and concerns about deteriorating credit quality.
Q. WHAT CHANGES HAVE BEEN MADE TO THE FUND?
A. There have been two notable changes. First, we've formalized the
sub-portfolio approach we've used in the past. As such, there is a
portfolio manager responsible for the individual issues in the high-grade
fixed-income component of the fund, and another dedicated to the high-yield
debt component. Second, the equity component is managed to generate an
average yield in excess of the market; capital appreciation is secondary.
The equities reflect a more traditional equity income style, highlighted by
holdings in the finance, energy and consumer nondurables sectors, which
historically have offered relatively higher dividends. Specific actions I
have taken include purchasing securities that I believe will help generate
a higher yield, and reducing foreign holdings from more than 18% six months
ago to 9.1% of investments at the end of the period. The overseas
investments now are mainly European energy and pharmaceutical stocks.
Q. WHAT ELSE CAN YOU TELL US ABOUT THE SORTS OF STOCKS YOU CHOOSE FOR THE
FUND?
A. Typically, the fund's larger holdings are investments that I feel
confident can sustain relatively strong profit growth over the medium to
long term. Regardless of industry, these preferred companies have similar
characteristics: dominant market positions, globalization opportunities,
low cost structures, restructuring activities, strong free cash flow and
shareholder-oriented management. In an increasingly competitive business
environment, I expect companies with these characteristics to post the best
returns.
Q. LET'S GET BACK TO THE FUND'S FINANCE HOLDINGS. THIS WAS THE FUND'S TOP
SECTOR WEIGHT AT THE END OF THE PERIOD AT 15.2%. WHAT CAN YOU TELL US ABOUT
SOME OF THE FUND'S INVESTMENTS IN THIS AREA?
A. Most importantly, the finance stake reflected investments in several
individual stocks that I believe offered compelling business prospects and
valuations, not my feeling on the direction of interest rates. I'd like to
highlight two stocks, Citicorp and American Express. Citicorp's appeal was
its franchise, especially in developing economies where it was positioned
to grow its consumer credit card business as per capita incomes were rising
and to expand its corporate finance operations as cross-border business
activity became more prevalent. Management's goals were aligned with
shareholders through a stock option program. In light of strong business
prospects, the stock appeared inexpensive. American Express, with its
reduced cost structure and improved information systems, regained market
share by introducing new charge card products. Better revenue growth
combined with tight expense controls were driving the company's profit
growth and cash generation. Despite the positive prospects offered by these
two companies, their share prices got caught in the downdraft experienced
by most of the finance sector during the period, as concerns about
deteriorating credit quality re-emerged.
Q. CAN YOU HIGHLIGHT THOSE STOCKS THAT TURNED IN POSITIVE PERFORMANCE FOR
THE FUND OVER THE PAST SIX MONTHS?
A. Sure. United Technologies was one. This conglomerate continued to reduce
its costs and expand its operating margins. It generated an increasing
amount of free cash flow as net profits rose and started to manage its
balance sheet better. The stock has performed well recently as investors
became more willing to pay a premium for the company's strong, consistent
profits, cash flow and management strength. The other two stocks I'd like
to mention are British Petroleum and Schlumberger. The energy sector
generally has done well over the past six months because the supply/demand
dynamic has been favorable. New drilling technologies and cost reduction
throughout the industry have made new field development more economic,
improving the prospects for production growth. British Petroleum also
realized the benefits of a multi-year cost-cutting and asset redeployment
program. During the period, the company was in a position to grow its
production profitably, generate additional excess capital and eventually
consider share repurchases and additional dividend increases. A pick-up in
drilling activity and better pricing for Schlumberger's oil field services
were the primary contributors to its improved results.
Q. WHAT'S YOUR READ ON THE ECONOMY GOING FORWARD?
A. I'd describe myself as a bottom-up investor. That is, the fund is built
up on a stock-by-stock basis as individual company prospects are analyzed,
not on an assessment of macro-economic trends and looking at the economy as
a whole. Recently, however, I've become concerned that the pace of economic
growth could be slowing. Durable goods purchases and loan demands have
moderated since earlier in the year. As a result, I've shifted my focus
away from those stocks that tend to move in synch with the economy, and
toward those companies that traditionally post more stable earnings growth,
such as pharmaceutical stocks. Am I saying we're going into a recession?
No, but we don't seem to have the strong economic growth at our back that
we've had over the past few years, and I think it will be harder for
Corporate America to generate the strong profit growth it has over the past
five years.
Q. SO, THEN HOW WOULD YOU SUM UP YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I think it will be a more difficult environment for investors. It
appears that corporate profit growth is slowing at the hands of more
intense competition, less favorable foreign exchange rates, exhausted
cost-cutting efforts and stepped-up investment activities. Therefore, I
would expect fewer companies to sustain solid earnings growth going
forward. Those that are successful should be rewarded with higher stock
prices.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high income with
preservation of capital. The
fund also considers the
potential for the growth of
capital
START DATE: April 16, 1947
SIZE: as of July 31, 1996,
more than $16.6 billion
MANAGER: Bettina Doulton,
since March 1996; manager,
Fidelity Advisor Income &
Growth Fund and Fidelity
Advisor Annuity Income &
Growth Fund, since March
1996; Fidelity Advisor Equity
Income Fund and Fidelity
VIP: Equity-Income Portfolio,
1993-
March 1996; Fidelity Value
Fund, 1995-March 1996;
Fidelity Select
Automotive Portfolio, 1993;
joined Fidelity in 1986
(checkmark)
BETTINA DOULTON ON HER
INVESTMENT APPROACH:
"My investment approach is
quite simple. I look for
companies whose stocks are
trading at attractive valuations
that offer improving
fundamentals, or business
prospects. I take a bottom-up
approach, which means that I
begin by evaluating the merits
of individual companies, rather
than looking first at sectors or
economic trends. I try to be
open-minded and flexible.
Finally, I believe that it's every
bit as important to avoid the
losers as it is to pick the
winners to generate
consistent performance
results for the fund's
shareholders."
(solid bullet) As of August 1, 1996, the
fund adopted an investment
policy change related to asset
allocation. When
management's outlook is neutral
- - that is, with market
conditions appearing to favor
no particular class of security
- - the fund will have an asset
allocation of approximately 60%
in equity securities and 40% in
fixed-income securities. This
allocation represents a typical
asset mix for balanced funds
within the industry. The fund
maintains the flexibility to
adjust this asset allocation as
market and other conditions
warrant.
(solid bullet) As of September 13, 1996,
Lipper Analytical Services
changed the fund's peer group
from equity income funds to
balanced funds. This change
allows the fund's performance
to be compared with other
funds that closely mirror its
investment objectives.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Philip Morris Companies, Inc. 3.9 0.5
General Electric Co. 3.0 0.0
Citicorp 2.0 0.0
Royal Dutch Petroleum Co. ADR 1.9 0.2
AlliedSignal, Inc. 1.7 0.1
TOP FIVE BOND ISSUERS AS OF JULY 31, 1996
(WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE BONDS
6 MONTHS AGO
United States Government 20.9 18.3
Lockheed Martin Corp. 0.4 0.0
Quebec Province 0.4 0.0
Apache Corp. 0.3 0.0
360 Degrees Communications Co. 0.3 0.0
TOP FIVE MARKET SECTORS AS OF JULY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Finance 15.2 8.5
Energy 10.0 11.0
Nondurables 6.7 4.1
Industrial Machinery & Equipment 6.0 5.4
Health 5.5 1.9
ASSET ALLOCATION
AS OF JULY 31, 1996 * AS OF JANUARY 31, 1996 **
Row: 1, Col: 1, Value: 3.8
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 1.9
Row: 1, Col: 4, Value: 32.8
Row: 1, Col: 5, Value: 60.3
Row: 1, Col: 1, Value: 6.9
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 2.6
Row: 1, Col: 4, Value: 25.7
Row: 1, Col: 5, Value: 63.3
Stocks 61.3%
Bonds 33.8%
Convertible
securities 0.9%
Other 0.2%
Short-term
investments 3.8%
FOREIGN
INVESTMENTS 9.1%
Stocks 63.3%
Bonds 26.7%
Convertible
securities 2.6%
Other 0.5%
Short-term
investments 6.9%
FOREIGN
INVESTMENTS 18.5%
*
**
INVESTMENTS JULY 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 60.5%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.1%
AEROSPACE & DEFENSE - 0.8%
Lockheed Martin Corp. 1,015,600 $ 84,168
Rockwell International Corp. 755,400 39,659
123,827
SHIP BUILDING & REPAIR - 0.3%
General Dynamics Corp. 889,100 56,902
TOTAL AEROSPACE & DEFENSE 180,729
BASIC INDUSTRIES - 4.1%
CHEMICALS & PLASTICS - 4.0%
Dow Chemical Co. 1,227,800 91,318
du Pont (E.I.) de Nemours & Co. 2,305,800 186,194
Great Lakes Chemical Corp. 759,900 43,789
Monsanto Co. 3,224,000 100,750
Nalco Chemical Co. 822,700 24,681
Praxair, Inc. 2,599,800 99,767
Shin-Etsu Chemical Co. Ltd. 300 5
Union Carbide Corp. 1,951,600 81,967
Witco Corp. 1,583,000 45,907
674,378
PACKAGING & CONTAINERS - 0.1%
Crown Cork & Seal Co., Inc. 324,432 14,437
TOTAL BASIC INDUSTRIES 688,815
CONGLOMERATES - 3.1%
AlliedSignal, Inc. 4,898,300 287,775
Textron, Inc. 213,500 17,080
Tyco International Ltd. 1,219,600 50,004
United Technologies Corp. 1,372,600 154,589
509,448
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - 0.2%
BUILDING MATERIALS - 0.2%
Masco Corp. 572,000 $ 15,944
Sherwin-Williams Co. 609,760 27,592
43,536
DURABLES - 3.2%
AUTOS, TIRES, & ACCESSORIES - 2.5%
Eaton Corp. 645,700 35,998
Ford Motor Co. 4,286,000 139,295
General Motors Corp. 1,348,719 65,750
Johnson Controls, Inc. 1,457,300 104,925
Michelin SA (Compagnie Generale des Etablissements) Class B 50 2
Scania AB:
Class A 280,000 7,495
Class B 280,000 7,495
Snap-on Tools Corp. 1,225,200 54,368
415,328
CONSUMER DURABLES - 0.6%
Minnesota Mining & Manufacturing Co. 1,424,100 92,566
CONSUMER ELECTRONICS - 0.1%
Newell Co. 703,300 22,594
TOTAL DURABLES 530,488
ENERGY - 8.8%
ENERGY SERVICES - 1.8%
Baker Hughes, Inc. 1,908,900 56,074
McDermott International, Inc. 1,465,600 26,564
Schlumberger Ltd. 1,922,600 153,808
Western Atlas, Inc. (a) 1,132,600 61,443
297,889
OIL & GAS - 7.0%
Amerada Hess Corp. 1,672,900 81,345
Atlantic Richfield Co. 387,317 44,929
British Petroleum PLC:
ADR 2,436,352 267,694
Ord. 7,786,512 70,516
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Exxon Corp. 1,690,900 $ 139,076
Harcor Energy, Inc. (warrants) (a) 165,000 330
Mobil Corp. 1,201,300 132,593
Occidental Petroleum Corp. 3,779,200 84,560
Royal Dutch Petroleum Co.:
ADR 2,135,500 322,194
Ord. 148,200 22,282
1,165,519
TOTAL ENERGY 1,463,408
FINANCE - 12.1%
BANKS - 5.5%
Bank of Boston Corp. 1,669,514 88,484
BankAmerica Corp. 3,423,900 273,056
Canadian Imperial Bank of Commerce 500,000 16,620
Chase Manhattan Corp. 430,300 29,906
Citicorp 4,151,700 339,920
Comerica, Inc. 523,500 22,969
National City Corp. 1,173,229 40,623
NationsBank Corp. 1,211,400 104,029
915,607
CREDIT & OTHER FINANCE - 1.7%
American Express Co. 5,539,927 242,372
Associates First Capital Corp. (a) 191,000 7,330
First Chicago NBD Corp. 710,000 27,335
Household International, Inc. 26 2
277,039
FEDERAL SPONSORED CREDIT - 2.4%
Federal Home Loan Mortgage Corporation 2,444,000 205,907
Federal National Mortgage Association 6,122,550 194,391
400,298
INSURANCE - 2.5%
Aetna, Inc. 901,300 52,388
Allstate Corp. 3,015,022 134,922
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
ITT Hartford Group, Inc. 1,463,800 $ 77,398
Loews Corp. 1,787,100 144,085
408,793
SECURITIES INDUSTRY - 0.0%
ECM Corp. LP (h) 6,318 632
TOTAL FINANCE 2,002,369
HEALTH - 5.5%
DRUGS & PHARMACEUTICALS - 5.3%
American Home Products Corp. 1,234,300 70,046
Bristol-Myers Squibb Co. 1,894,600 164,120
Glaxo PLC sponsored ADR 1,374,400 38,140
Glaxo Holdings PLC 3,400,000 47,324
Merck & Co., Inc. 1,411,700 90,702
Pharmacia & Upjohn, Inc. 4,752,830 196,054
Pfizer, Inc. 850,000 59,394
Rhone Poulenc Rorer, Inc. 84,200 5,557
SmithKline Beecham PLC ADR 3,831,500 205,943
877,280
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
Hillenbrand Industries, Inc. 1,008,000 33,768
TOTAL HEALTH 911,048
HOLDING COMPANIES - 0.0%
SDW Holdings Corp. (warrants) (a) 1,970 6
INDUSTRIAL MACHINERY & EQUIPMENT - 5.6%
ELECTRICAL EQUIPMENT - 3.7%
Emerson Electric Co. 1,139,500 96,145
General Electric Co. 5,988,700 493,319
General Signal Corp. 161,500 6,319
Omron Corp. 660,000 12,110
607,893
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 1.1%
Cooper Industries, Inc. 2,102,494 $ 82,785
Goulds Pumps, Inc. 801,000 17,822
Harnischfeger Industries, Inc. 1,230,800 38,155
Stanley Works 1,028,800 29,321
Tenneco, Inc. 195,700 9,638
Terex Corp. (rights) (a)(g) 5,610 1
177,722
POLLUTION CONTROL - 0.8%
Browning-Ferris Industries, Inc. 2,659,700 59,511
WMX Technologies, Inc. 2,588,500 76,684
136,195
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 921,810
MEDIA & LEISURE - 1.0%
BROADCASTING - 0.0%
Benedek Communications Corp. unit Class A 5,190 5,190
ENTERTAINMENT - 0.0%
Cedar Fair LP (depositary unit) 150,000 5,269
Live Entertainment, Inc. (a)(g):
$2.00 (warrants) 256,000 13
$2.72 (warrants) 244,705 12
5,294
LEISURE DURABLES & TOYS - 0.3%
Fleetwood Enterprises, Inc. 1,367,600 41,541
IHF Capital, Inc. (a)(h):
Series H (warrants) 10,225 956
Series I (warrants) 5,050 119
42,616
LODGING & GAMING - 0.1%
Bally Gaming International, Inc. (warrants) (a) 135,000 371
ITT Corp. 422,500 23,977
Motels of America, Inc. (a) 3,000 195
24,543
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - 0.6%
Dun & Bradstreet Corp. 759,200 $ 43,654
General Media, Inc. (warrants) (a) 1,110 1
Knight-Ridder, Inc. 1,624,600 53,206
96,861
TOTAL MEDIA & LEISURE 174,504
NONDURABLES - 6.1%
BEVERAGES - 0.5%
Anheuser-Busch Companies, Inc. 1,202,000 89,850
FOODS - 0.3%
General Mills, Inc. 373,800 20,279
Kellogg Co. 108,100 8,080
Nabisco Holdings Corp. Class A 468,200 15,802
44,161
HOUSEHOLD PRODUCTS - 0.6%
Premark International, Inc. 490,500 8,829
Procter & Gamble Co. 1,103,200 98,599
107,428
TOBACCO - 4.7%
Philip Morris Companies, Inc. 6,159,980 644,488
RJR Nabisco Holdings Corp. 3,436,122 105,661
UST, Inc. 792,600 26,354
776,503
TOTAL NONDURABLES 1,017,942
RETAIL & WHOLESALE - 2.7%
APPAREL STORES - 0.3%
Lamonts Apparel, Inc. (a) 50,220 11
Lamonts Apparel, Inc. (warrants) (a) 92,674 -
Melville Corp. 1,070,300 41,875
41,886
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - 1.7%
Dayton Hudson Corp. 473,700 $ 14,330
Kmart Corp. 349,400 3,494
Penney (J.C.) Co., Inc. 621,700 30,930
Sears, Roebuck & Co. 1,080,400 44,296
Wal-Mart Stores, Inc. 7,687,600 184,502
277,552
GROCERY STORES - 0.0%
FF Holdings Corp. (a)(g) 39,600 79
Food 4 Less Holdings, Inc. (warrants) (a)(g) 14,206 213
Grand Union Capital Corp. Class B 5,975 -
292
RETAIL & WHOLESALE, MISCELLANEOUS - 0.7%
Barry's Jewelers, Inc. (warrants) (a) 5,697 1
Tandy Corp. 1,293,000 54,629
Town & Country Jewelry Manufacturing Corp. Class A 234,694 161
Toys "R" Us, Inc. 2,568,900 67,755
122,546
TOTAL RETAIL & WHOLESALE 442,276
SERVICES - 1.0%
PRINTING - 0.6%
Deluxe Corp. 2,491,100 91,859
SERVICES - 0.4%
ADT Ltd. (a) 1,773,300 33,471
Block (H & R), Inc. 1,433,100 37,440
70,911
TOTAL SERVICES 162,770
TECHNOLOGY - 2.9%
COMPUTERS & OFFICE EQUIPMENT - 1.5%
Exide Electronics Group, Inc. (warrants) (a)(h) 4,180 84
Pitney Bowes, Inc. 2,725,240 132,174
Xerox Corp. 2,386,600 120,225
252,483
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - 0.5%
AMP, Inc. 1,015,700 $ 39,231
Thomas & Betts Corp. 1,273,050 46,466
85,697
PHOTOGRAPHIC EQUIPMENT - 0.9%
Eastman Kodak Co. 1,205,600 89,968
Polaroid Corp. 1,480,700 62,560
152,528
TOTAL TECHNOLOGY 490,708
TRANSPORTATION - 1.2%
RAILROADS - 0.8%
Burlington Northern Santa Fe Corp. 1,484,500 117,090
Conrail, Inc. 172,400 11,292
128,382
TRUCKING & FREIGHT - 0.4%
Caliber System, Inc. 1,235,400 22,546
Consolidated Freightways, Inc. 1,507,900 29,592
Roadway Express, Inc. (f) 1,221,850 17,870
70,008
TOTAL TRANSPORTATION 198,390
UTILITIES - 1.9%
CELLULAR - 0.0%
Comunicaciones Cellulares SA (warrants) (a)(h) 5,730 287
ELECTRIC UTILITY - 0.0%
El Paso Electric Co. (a) 62,493 336
GAS - 0.6%
Consolidated Natural Gas Co. 1,882,900 94,851
UGI Corp. (warrants) (a) 13,633 2
94,853
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 1.3%
Ameritech Corp. 861,500 $ 47,813
BCE, Inc. 565,100 22,565
Bell Atlantic Corp. 343,900 20,333
BellSouth Corp. 1,229,300 50,401
NYNEX Corp. 771,100 34,603
SBC Communications, Inc. 882,900 43,152
218,867
TOTAL UTILITIES 314,343
TOTAL COMMON STOCKS
(Cost $9,307,004) 10,052,590
PREFERRED STOCKS - 1.3%
CONVERTIBLE PREFERRED STOCKS - 0.5%
ENERGY - 0.2%
ENERGY SERVICES - 0.1%
McDermott International, Inc., Series C, $2.875 (h) 300,000 12,075
OIL & GAS - 0.1%
Occidental Petroleum Corp. $3.875 (h) 339,500 18,672
TOTAL ENERGY 30,747
FINANCE - 0.1%
INSURANCE - 0.1%
Aetna, Inc. Class C, 6.25% 484,000 30,310
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 63,000 10,395
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Town & Country Corp. (a) 3,520 5
TOTAL RETAIL & WHOLESALE 10,400
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - 0.1%
TELEPHONE SERVICES - 0.1%
Sprint Corp. $2.63 305,700 $ 11,426
TOTAL CONVERTIBLE PREFERRED STOCKS 82,883
NONCONVERTIBLE PREFERRED STOCKS - 0.8%
CONGLOMERATES - 0.0%
Teledyne, Inc., Series E, 8% pfd. 4,012 62
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd. (g) 46,430 139
Gulf Canada Resources Ltd., Series 1, adj. rate 528,170 1,683
1,822
FINANCE - 0.1%
SAVINGS & LOANS - 0.1%
First Nationwide Bank 11 1/2% 120,329 13,477
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp. 8% (g) 2,581 1,893
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.5%
Cablevision System Corp.:
$11.125 pay-in-kind (h) 103,615 9,636
Series H, $11.75 exchangeable pay-in-kind (a) 150,691 14,467
Chancellor Radio Broadcasting Co. exchangeable
pay-in-kind (h) 64,300 6,591
PanAmSat Corp. 12 3/4% pay-in-kind 22,735 25,463
Time Warner, Inc., Series K, exchangeable 27,063 26,860
83,017
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
MEDIA & LEISURE - CONTINUED
PUBLISHING - 0.1%
K-III Communications Corp.:
Series B, $11.625 pay-in-kind 12,836 $ 1,264
Series C, exchangeable (h) 161,300 14,275
15,539
TOTAL MEDIA & LEISURE 98,556
UTILITIES - 0.1%
ELECTRIC UTILITY - 0.1%
Entergy Gulf States, Inc.:
$9.96 44,488 4,538
Series A, adj. rate 39,778 3,610
8,148
TELEPHONE SERVICES - 0.0%
Intelecom Group USA, Inc. 7,829 7,829
TOTAL UTILITIES 15,977
TOTAL NONCONVERTIBLE PREFERRED STOCKS 131,787
TOTAL PREFERRED STOCKS
(Cost $221,892) 214,670
CORPORATE BONDS - 11.5%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - 0.4%
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
LTC Properties, Inc.:
8 1/2%, 1/1/00 B2 $ 2,088 2,161
8 1/2%, 1/1/01 B2 343 365
2,526
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Cooper Industries, Inc. 7.05%, 1/1/15 A3 $ 26,962 $ 28,580
PRECIOUS METALS - 0.0%
Agnico Eagle Mines Ltd. yankee 3 1/2% 1/27/04 B1 9,165 8,306
RETAIL & WHOLESALE - 0.1%
GENERAL MERCHANDISE STORES - 0.1%
Federated Department Stores, Inc. 5%, 10/1/03 Ba3 15,200 15,998
SERVICES - 0.1%
ADT Operations, Inc. liquid yield option notes
0%, 7/6/10 Ba3 29,760 16,889
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
GST Telecommunications, Inc.
0%, 12/15/05 (d)(h) - 40 36
TOTAL CONVERTIBLE BONDS 72,335
NONCONVERTIBLE BONDS - 11.1%
AEROSPACE & DEFENSE - 0.5%
Lockheed Martin Corp. 7.20%, 5/1/36 A3 74,700 73,975
Northrop Grumman Corp. 7%, 3/1/06 Baa3 10,360 9,921
RHI Holdings, Inc. 11 7/8%, 3/1/99 B2 2,090 2,090
85,986
BASIC INDUSTRIES - 0.5%
CHEMICALS & PLASTICS - 0.2%
Atlantis Group, Inc. 11%, 2/15/03 B2 5,630 5,405
Foamex JPS Automotive LP, Series B, 14%, 7/1/04 Caa 2,400 1,662
Foamex LP/Faomex Capital Corp.:
9 1/2%, 6/1/00 B1 320 320
11 7/8%, 10/1/04 B3 3,530 3,653
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Methanex Corp. 8 7/8%, 11/15/01 A3 $ 25,455 $ 27,284
Texas Petrochemicals Corp.
11 1/8%, 7/1/06 (h) B3 610 627
38,951
METALS & MINING - 0.0%
Renco Metals, Inc. 11 1/2%, 7/1/03 B2 930 949
PACKAGING & CONTAINERS - 0.0%
Crown Packaging Holdings Ltd.
0%, 11/1/03 (d) Caa 8,160 3,101
PAPER & FOREST PRODUCTS - 0.3%
Chesapeake Corp.:
10 3/8%, 10/1/00 Baa3 2,700 3,014
9 7/8%, 5/1/03 Baa3 10,000 11,258
Florida Coast Paper Co. LLC
12 3/4, 6/1/03 (h) B3 5,610 5,848
Great Northern Nekoosa Corp. 9 1/8%, 2/1/98 Baa2 7,800 8,069
Rapp International Finance Co. BV yankee
13 1/4%, 12/15/05 Ba3 4,070 4,487
Riverwood International 10 7/8%, 4/1/08 B3 11,420 11,192
43,868
TOTAL BASIC INDUSTRIES 86,869
CONGLOMERATES - 0.2%
American Standard, Inc. 0%, 6/1/05 (d) B1 15,000 13,200
Jordan Industries, Inc.
10 3/8%, 8/1/03 B3 9,120 8,618
0%, 8/1/05 (d) Caa 8,060 5,642
Talley Industries, Inc. 0%, 10/15/05 (d) B2 7,391 5,913
33,373
CONSTRUCTION & REAL ESTATE - 0.2%
CONSTRUCTION - 0.2%
McDermott J Ray SA 9 3/8%, 7/15/06 Ba3 12,490 12,240
WCI Communities LP 17%, 7/24/98 (g) - 15,000 15,000
27,240
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.2%
APS, Inc. 11 7/8%, 1/15/06 B2 $ 380 $ 397
Collins & Aikman Products Co.
11 1/2%, 4/15/06 B3 6,970 7,127
Delco Remy International, Inc.
10 5/8%, 8/1/06 (h) B2 1,520 1,524
Harvard Industries, Inc.:
12%, 7/15/04 B3 640 627
11 1/8%, 8/1/05 B3 5,420 5,095
Hayes Wheels International, Inc. 11%, 7/15/06 B3 2,380 2,415
Lear Corp. 9 1/2%, 7/15/06 B1 7,020 7,143
Venture Holdings Trust 9 3/4%, 4/1/04 B3 2,950 2,463
26,791
HOME FURNISHINGS - 0.1%
Interlake Corp. 12 1/8%, 3/1/02 B3 7,880 7,900
Knoll, Inc. 10 7/8%, 3/15/06 B3 4,100 4,182
12,082
TEXTILES & APPAREL - 0.0%
CMI Industries, Inc. 9 1/2%, 10/1/03 B1 3,120 2,761
Dominion Textile USA, Inc. 9 1/4%, 4/1/06 Ba2 3,280 3,190
5,951
TOTAL DURABLES 44,824
ENERGY - 1.0%
ENERGY SERVICES - 0.3%
Petroliam Nasional BHD yankee (h):
6 7/8%, 7/1/03 A1 15,120 14,832
7 1/8%, 8/15/05 A1 27,050 26,635
41,467
OIL & GAS - 0.7%
Apache Corp.:
7.70%, 3/15/26 Baa3 24,000 23,019
7.95%, 4/15/26 Baa3 25,500 25,095
Clark USA, Inc. 10 7/8%, 12/1/05 B2 5,080 5,118
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Coastal Corp.:
8 1/8%, 9/15/02 Baa3 $ 4,150 $ 4,304
9 3/4%, 8/1/03 Baa3 2,410 2,703
Harcor Energy, Inc. 14 7/8%, 7/15/02 B3 7,500 8,325
Mesa Operating Co. 10 5/8%, 7/1/06 B2 680 696
Norcen Energy Resources Ltd. yankee
7 3/8%, 5/15/06 Baa3 11,500 11,322
Occidental Petroleum Corp. 8 1/2%, 11/9/01 Baa3 5,900 6,243
Parker & Parsley Petroleum Co.
8 1/4%, 8/15/07 Ba2 15,750 16,326
Plains Resources, Inc. 10 1/4%, 3/15/06 (h) B2 630 624
Tosco Corp. 7 5/8%, 5/15/06 Ba1 15,730 15,591
119,366
TOTAL ENERGY 160,833
FINANCE - 2.9%
ASSET-BACKED SECURITIES - 0.3%
Airplanes Pass Through Trust
Class D 10 7/8%, 3/15/19 Ba2 8,380 8,736
Ford Credit Grantor Trust 5.90%, 10/15/00 Aaa 15,343 15,254
General Motors Acceptance Corp. Grantor
Trust 1995-A, 7.15%, 3/15/00 Aaa 9,423 9,503
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 2,264 2,249
Premier Auto Trust:
4.90%, 12/15/98 Aaa 851 844
4.95%, 2/2/99 A2 2,182 2,157
Standard Credit Card Master Trust I:
4.85%, 3/7/99 A2 7,800 7,746
7.65%, 2/15/00 A2 3,800 3,857
Union Federal Savings Bank Grantor Trust
8.20%, 1/10/01 Baa2 1,272 1,288
51,634
BANKS - 1.8%
Bank of Boston Corp. 9 1/2%, 8/15/97 Baa1 5,298 5,461
Banponce Corp. 6 3/4%, 12/15/05 Baa1 23,700 22,214
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Capital One Bank 7.20%, 7/19/99 Baa3 $ 22,000 $ 22,044
Citicorp:
euro 5.5625%, 7/10/97 (j) A2 2,000 2,000
8.80%, 2/1/00 A1 8,220 8,323
Corporacion Andina De Fomento yankee
7 1/4%, 4/30/98 (h) Baa2 5,900 5,924
Export Import Bank of Korea 6 3/8%, 2/15/06 A1 17,570 16,322
First Fidelity Bancorporation 8 1/2%, 4/1/98 A2 7,485 7,707
First Maryland Bancorp 10 3/8%, 8/1/99 Baa1 8,345 9,103
Firstar Corp. 7.15%, 9/1/00 A3 11,970 12,018
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 3,520 3,599
Hartford National Corp. 9.85%, 6/1/99 A3 2,000 2,142
Kansallis-Osake-Pankki 10%, 5/1/02 A3 5,285 5,931
Korea Development Bank:
6 1/4%, 5/1/00 A1 6,000 5,825
yankee 7 1/4%, 5/15/06 A1 31,000 30,553
Manufacturers Hanover Corp. 8 1/2%, 2/15/99 A2 160 167
Manufacturers Hanover Trust
5 3/4%, 4/30/97 (j) A1 500 499
Merchants National Corp. 9 7/8%, 10/1/99 A2 6,850 7,407
Merita Bank Ltd. yankee 6 1/2%, 1/15/06 A3 23,000 21,300
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 16,530 16,645
Midlantic Corp:
9 7/8%, 12/1/99 A3 18,227 19,716
9.20%, 8/1/01 A3 11,550 12,415
NationsBank Corp. 5 1/8%, 9/15/98 A2 2,000 1,945
Provident Bank 6 1/8%, 12/15/00 A3 27,500 26,444
Shawmut National Corp. 8 5/8%, 12/15/99 A3 7,440 7,789
Shawmut Corp. 8 1/8%, 2/1/97 A2 9,125 9,217
Signet Banking Corp.:
5 5/8%, 5/15/97 (j) Baa2 2,640 2,627
5 3/4%, 4/15/98 (j) Baa2 6,210 6,170
9 5/8%, 6/1/99 Baa2 7,500 7,992
United Virginia Bankshares, Inc.
8 5/8%, 4/15/98 Baa1 1,522 1,567
301,066
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.5%
Chrysler Financial Corp. 6.80%, 5/26/98 A3 $ 5,000 $ 5,026
Finova Capital Corp. 6.14%, 11/2/98 Baa1 1,880 1,859
Fleet Mortgage Group, Inc. 6 1/2%, 6/15/00 A2 3,900 3,821
Ford Motor Credit Co. 5 5/8%, 3/3/97 A1 1,250 1,247
Ford Motor Credit Co. euro 8 5/8%, 1/24/00 A1 7,250 7,651
General Motors Acceptance Corp.:
5 3/8%, 3/9/98 A3 2,700 2,658
8 5/8%, 6/15/99 A3 6,400 6,705
8%, 10/1/99 A3 6,200 6,411
6.65%, 5/24/00 A3 5,950 5,897
Greyhound Financial Corp.:
8%, 1/15/97 Baa1 3,000 3,025
6.95%, 1/28/98 Baa2 2,000 2,013
HMC Acquisition Properties, Inc. 9%, 12/15/07 Ba3 17,230 15,852
Homeside, Inc. 11 1/4%, 5/15/03 (h) B+ 3,190 3,326
MCN Investment Corp. 5.84%, 2/1/99 Baa2 11,820 11,583
Polysindo International Finance Co. BV
yankee 11 3/8%, 6/15/06 Ba3 3,190 3,222
80,296
INSURANCE - 0.1%
Metropolitan Life Insurance Co.
6.30%, 11/1/03 (h) A1 13,640 12,841
Penncorp Financial Group, Inc.
9 1/4%, 12/15/03 B1 4,110 4,141
16,982
SAVINGS & LOANS - 0.2%
First Nationwide Holdings, Inc. 9 1/8%, 1/15/03 Ba3 1,930 1,838
First Nationwide Parent Holdings Ltd.
12 1/2%, 4/15/03 B2 17,430 18,040
Great Western Bank FSB 10 1/4%, 6/15/20 A3 2,400 2,583
Great Western Financial Corp. 6 3/8%, 7/1/00 Baa1 1,330 1,303
Home Savings of America 6%, 11/1/00 A3 10,500 10,070
33,834
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
SECURITIES INDUSTRY - 0.0%
ECM Corp. extendable 14%, 6/1/02 (h) - $ 875 $ 962
TOTAL FINANCE 484,774
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Wright Medical Technology, Inc.
10 3/4%, 7/1/00 B3 2,830 2,830
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.1%
Magnetek, Inc. 10 3/4%, 11/15/98 B1 14,580 14,361
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Exide Corp. 10%, 4/15/05 B1 2,110 2,068
Specialty Equipment Companies, Inc.
11 3/8%, 12/1/03 B3 11,440 11,840
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 B3 2,790 2,797
10 3/4%, 11/1/03 Caa 8,019 7,989
24,694
POLLUTION CONTROL - 0.0%
Envirosource, Inc. 9 3/4%, 6/15/03 B3 910 840
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 39,895
MEDIA & LEISURE - 1.7%
BROADCASTING - 0.9%
Adelphia Communicastions Corp.
12 1/2%, 5/15/02 B3 2,110 2,158
Bell Cablemedia PLC yankee
0%, 9/15/05 (d) B2 16,230 10,063
Cablevision Systems Corp. 10 1/2%, 5/15/16 B2 10,830 10,397
Chancellor Broadcasting Co. 9 3/8%, 10/1/04 B3 3,850 3,725
Citicasters, Inc. 9 3/4%, 2/15/04 B2 7,813 8,008
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
CS Wireless Systems, Inc.
0%, 3/1/06 Unit (d)(h) - $ 4,995 $ 10,040
Diamond Cable Communications PLC
yankee 0%, 12/15/05 (d) B3 14,320 8,485
Granite Broadcasting Corp. 10 3/8%, 5/15/05 B3 800 796
Grupo Televisa SA de CV yankee
11 7/8%, 5/15/06 (h) Ba3 4,870 4,961
Intermedia Capital Partners IV LP/ Intermedia
Partners IV Capital Corp. 11 1/4%,
8/1/06 (h) B2 7,180 7,198
JCAC, Inc. 10 1/8%, 6/15/06 B2 880 883
NWCG Holdings Corp. 0%, 6/15/99 Caa 10,135 7,943
Peoples Choice TV Corp. Unit
0%, 6/1/04 (d) Caa 15,320 8,618
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 4,270 4,270
Telewest PLC 0%, 10/1/07 (d) B1 12,100 7,079
Time Warner, Inc.:
7 3/4%, 6/15/05 Ba1 22,000 21,381
6.85%, 1/15/26 Ba1 14,000 13,361
UIH Australia/Pacific, Inc.
0%, 5/15/06 (d)(h) B2 16,660 8,663
United International Holdings, Inc. 0%, 11/15/99 B3 1,710 1,128
Viacom, Inc. 8%, 7/7/06 B1 12,820 11,698
Videotron Group Ltd. yankee 10 5/8%, 2/15/05 Ba3 2,950 3,109
153,964
ENTERTAINMENT - 0.1%
Alliance Gaming Corp. 12 7/8%, 6/30/03 B2 3,660 3,568
AMF Group, Inc. (h):
10 7/8%, 3/15/06 B2 6,555 6,539
0%, 3/15/06 (d) B2 7,390 4,194
14,301
LEISURE DURABLES & TOYS - 0.1%
ICON Health and Fitness, Inc. 13%, 7/15/02 B3 5,050 5,580
IHF Holdings, Inc. 0%, 11/ 15/04 (d) Caa 10,225 6,953
12,533
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 0.3%
American Skiing Co. 12%, 7/15/06 (h) B3 $ 4,530 $ 4,383
Aztar Corp. 13 3/4%, 10/1/04 B2 9,420 10,715
Grand Casinos, Inc. 10 1/8%, 12/1/03 Ba3 16,453 16,124
HMH Properties, Inc. 9 1/2%, 5/15/05 B1 12,770 12,259
Horseshoe Gaming LLC 12 3/4%, 9/30/00 B1 4,820 5,170
Stratosphere Corp. 14 1/4%, 5/15/02 B2 1,950 1,794
Wyndham Hotel Corp. 10 1/2%, 5/15/06 B2 430 431
50,876
PUBLISHING - 0.2%
Hollinger International Publishing, Inc.
9 1/4%, 2/1/06 B1 4,115 3,786
Marvel Holdings, Inc. 0%, 4/15/98 B3 16,115 12,731
Marvel Parent Holdings, Inc. 0%, 4/15/98 B3 11,535 8,911
News American Holdings, Inc.:
gtd. 9 1/8%, 10/15/99 Baa3 10,000 10,601
8 5/8%, 2/1/03 Baa3 3,805 4,029
40,058
RESTAURANTS - 0.1%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 A3 3,170 2,909
Host Marriott Travel Plazas, Inc., Series B,
9 1/2, 5/15/05 B1 15,390 14,774
17,683
TOTAL MEDIA & LEISURE 289,415
NONDURABLES - 0.6%
FOODS - 0.2%
Dart and Kraft Finance NV gtd.
7 3/4%, 11/30/98 A2 7,239 7,393
Ralcorp Holdings, Inc. 8 3/4%, 9/15/04 Ba1 18,000 18,600
Specialty Foods Corp.:
10 1/4%, 8/15/01 B3 2,565 2,373
11 1/8%, 10/1/02 B3 3,040 2,858
11 1/4%, 8/15/03 Caa 4,140 3,477
34,701
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.1%
Revlon Worldwide Corp. secured 0%, 3/15/98 B3 $ 16,510 $ 13,827
TOBACCO - 0.3%
Philip Morris Companies, Inc. 6.95%, 6/1/06 A2 20,550 20,585
RJR Nabisco, Inc.:
gtd. 8 3/4%, 4/15/04 Baa3 2,000 1,980
8 3/4%, 8/15/05 Baa3 11,000 10,812
8 3/4%, 7/15/07 Baa3 9,000 8,765
42,142
TOTAL NONDURABLES 90,670
RETAIL & WHOLESALE - 0.4%
APPAREL STORES - 0.2%
Apparel Retailers, Inc. 0%, 8/15/05 (d) Caa 6,050 4,749
Lamonts Apparel, Inc. 10 1/4%, 11/1/99
pay-in-kind (b)(h) - 3,082 139
Mothers Work, Inc. 12 5/8%, 8/1/05 B3 10,210 10,720
Specialty Retailers, Inc.:
10%, 8/15/00 B1 3,850 3,812
11%, 8/15/03 B3 5,110 5,008
Series D, 11%, 8/15/03 B- 10,000 9,800
34,228
GENERAL MERCHANDISE STORES - 0.0%
Pantry, Inc. 12%, 11/15/00 B2 6,420 5,810
GROCERY STORES - 0.2%
Food 4 Less Holdings, Inc. 0%, 7/15/05 (d) Caa 10,800 4,860
Pathmark Stores, Inc. 11 5/8%, 6/15/02 B3 8,540 8,497
Ralph's Grocery Co. 10.45%, 6/15/04 (h) B1 8,120 7,958
Star Markets, Inc. 13%, 11/1/04 B3 7,120 7,405
28,720
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Brylane LP 10%, 9/1/03 B2 $ 320 $ 311
Guitar Center Management Co., Inc.
11%, 7/1/06 (h) B2 2,230 2,252
Town & Country Corp. 11 1/2%, 9/15/97 B3 1,370 1,356
3,919
TOTAL RETAIL & WHOLESALE 72,677
SERVICES - 0.2%
PRINTING - 0.1%
Big Flower Press:
10 3/4%, 8/1/03 B2 204 199
Class A, 10 3/4%, 8/1/03 (h) - 2,570 2,506
Class B, 10 3/4%, 8/1/03 B2 861 840
Sullivan Graphics, Inc. 12 3/4%, 8/1/05 Caa 7,880 7,486
11,031
SERVICES - 0.1%
Loewen Group International, Inc.
7 1/2%, 4/15/01 (h) Ba1 12,000 11,738
TOTAL SERVICES 22,769
TECHNOLOGY - 0.5%
COMMUNICATIONS EQUIPMENT - 0.1%
Echostar Satellite Broadcasting Corp.
0%, 3/15/04 (d) Caa 9,810 6,082
Hyperion Telecommunication, Inc.
0%, 4/15/03 Unit (d)(h) - 22,020 11,671
17,753
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Bell & Howell Co. 0%, 3/1/05 (d) B3 12,755 8,705
Comdisco, Inc.:
7 1/4%, 4/15/98 Baa2 20,205 20,430
9.28%, 6/5/00 Baa2 2,000 2,154
9.3%, 6/27/00 Baa2 2,000 2,160
9 1/4%, 7/6/00 Baa2 7,625 8,211
9 1/2%, 1/28/02 Baa2 2,580 2,853
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Dictaphone Corp. 11 3/4%, 8/1/05 B3 $ 8,890 $ 8,268
Exide Electronics Group, Inc., Series B,
11 1/2%, 5/15/06 B3 4,180 4,159
Unisys Corp.:
10 5/8%, 10/01/99 B1 2,250 2,239
Series B, 12%, 4/15/03 B1 10,190 10,241
69,420
ELECTRONICS - 0.0%
Alpine Group, Inc. 12 1/4%, 7/15/03 B3 800 808
TOTAL TECHNOLOGY 87,981
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.1%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 3,500 3,544
9 1/2%, 7/15/98 Baa3 5,690 5,962
United Airlines Pass Through Trust
7.27%, 1/30/13 Baa1 12,130 11,340
USAir:
Series 1993-A1 Pass Through Trust
8 5/8%, 9/1/98 B1 3,000 2,940
10 3/8%, 3/1/13 B1 1,850 1,813
25,599
RAILROADS - 0.2%
Burlington Northern Santa Fe Corp.
7.29%, 6/1/36 Baa2 22,430 22,230
Transtar Holdings LP/Transtar Cap Corp.
0%, 12/15/03 (d) B- 9,742 7,209
29,439
TOTAL TRANSPORTATION 55,038
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - 1.6%
CELLULAR - 0.8%
Arch Communications Group, Inc.
0%, 3/15/08 (d) B3 $ 18,530 $ 9,497
Comunicaciones Celulares SA yankee
0%, 11/15/03 (d) B3 5,730 3,381
Intercel, Inc. (d):
0%, 2/1/06 Unit B2 8,080 4,484
0%, 5/1/06 B2 8,720 4,491
International Cabletel, Inc. 0%, 2/1/06 (d) B3 9,460 5,345
Microcell Telecommunications, Inc.
0%, 6/1/06 unit (h) B3 26,120 12,407
Millicom International Cellular SA
0%, 6/1/06 (d)(h) B3 52,420 26,079
Mobilemedia Communications, Inc.
0%, 12/1/03 (d) B3 4,150 2,946
Mobilemedia Corp. 9 3/8%, 11/1/07 B3 1,740 1,536
Paging Network, Inc. 10 1/8%, 8/1/07 B2 870 857
360 Degrees Communications Co.
7 1/2%, 3/1/06 Ba2 50,000 47,703
Vanguard Cellular Systems, Inc. 9 3/8%, 4/15/06 B1 5,220 5,031
Western Wireless Corp. 10 1/2%, 6/1/06 B3 2,450 2,410
126,167
ELECTRIC UTILITY - 0.2%
British Columbia Hydro & Power Authority
yankee 12 1/2%, 1/15/14 Aa2 8,660 10,064
Systems Energy Resources, Inc. 1st mtg.
10 1/2%, 9/1/96 Baa3 1,000 1,005
Texas Utilities Electric Co.:
7 1/8%, 6/1/97 1st Mtg. & Collateral Trust Baa2 3,000 3,020
6 3/8%, 8/1/97 Baa2 2,000 1,999
9 1/2%, 8/1/99 Baa2 2,000 2,123
United Illuminating Co.:
7 3/8%, 1/15/98 Baa3 4,000 4,021
9.76%, 1/2/06 Baa3 12,297 12,805
35,037
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
GAS - 0.3%
Kern River Funding Corp.
6.72%, 9/30/01 (h) A3 $ 20,000 $ 19,651
Southwest Gas Corp.:
9 3/4%, 6/15/02 Baa3 20,650 23,061
9 3/8%, 2/1/17 Baa3 4,250 4,462
47,174
TELEPHONE SERVICES - 0.3%
GST USA, Inc. 0%, 12/15/05 (d) - 320 174
Intermedia Communications, Inc. 0%, 5/15/06 B3 9,990 5,345
MCI Communications Corp. 7 1/8%, 6/15/27 A2 17,700 17,915
MFS Communications, Inc. 0%, 1/15/06 (d) B1 16,635 9,794
Pagemart, Inc. 0%, 11/1/03 (d) - 12,450 9,400
Shared Technologies Fairchild Corp.
0%, 3/1/06 (d)(h) Caa 9,370 7,027
49,655
TOTAL UTILITIES 258,033
TOTAL NONCONVERTIBLE BONDS 1,843,207
TOTAL CORPORATE BONDS
(Cost $1,925,026) 1,915,542
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 10.9%
U.S. TREASURY OBLIGATIONS - 8.8%
8 3/4%, 10/15/97 Aaa 30,495 31,448
7 3/8%, 11/15/97 Aaa 29,000 29,462
6 1/8%, 3/31/98 Aaa 227,365 227,294
9 1/4%, 8/15/98 Aaa 168,560 178,094
8 7/8%, 2/15/99 Aaa 6,830 7,228
9 1/8%, 5/15/99 Aaa 20,800 22,230
7 3/4%, 12/31/99 Aaa 233,284 242,396
7 7/8%, 8/15/01 Aaa 17,070 18,009
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
U.S. TREASURY OBLIGATIONS - CONTINUED
11 5/8%, 11/15/04 Aaa $ 107,250 $ 139,878
11 3/4%, 2/15/10 Aaa 139,740 183,146
12 3/4%, 11/15/10 Aaa 36,507 51,001
13 7/8%, 5/15/11 Aaa 21,940 32,697
9%, 11/15/18 Aaa 59,960 72,627
8 7/8%, 2/15/19 Aaa 117,865 141,180
12%, 8/15/23 Aaa 48,550 68,084
6 7/8%, 8/15/25 Aaa 9,400 9,233
TOTAL U.S. TREASURY OBLIGATIONS 1,454,007
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.1%
Federal Agricultural Mortgage Corp.:
7.01%, 8/10/03 Aaa 1,040 1,044
7.01%, 8/10/04 Aaa 1,340 1,335
7.04%, 8/10/05 Aaa 5,100 5,055
Federal Farm Credit Bank:
6.32%, 9/9/02 Aaa 6,545 6,375
6.40%, 10/3/02 Aaa 3,200 3,124
6.87%, 6/6/03 Aaa 1,380 1,376
8.06%, 1/4/05 Aaa 3,500 3,706
Federal Home Loan Bank:
5.77%, 2/3/04 Aaa 3,920 3,639
6.75%, 4/5/04 Aaa 14,000 13,797
7.56%, 9/1/04 Aaa 1,340 1,377
8.195%, 12/22/04 Aaa 10,000 10,728
Federal Home Loan Mortgage Corp.:
7.14%, 7/31/02 Aaa 300 298
Federal National Mortgage Association:
4 7/8%, 10/15/98 (callable) Aaa 5,000 4,833
6.05%, 6/30/03 Aaa 3,000 2,850
5.45%, 10/10/03 Aaa 8,500 7,793
Government Trust Certificates
(assets of Trust guaranteed by U.S. Government
through Defense Security Assistance Agency):
Class 1-C 9 1/4%, 11/15/01 Aaa 6,427 6,839
Class 2-E 9.40%, 5/15/02 Aaa 19,233 20,546
Class T-2 9 5/8%, 5/15/02 Aaa 24,405 26,038
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Government Trust Certificates - continued
(assets of Trust guaranteed by U.S.
Government through Export-Import Bank):
Series 1992-A 7.02%, 9/1/04 Aaa $ 4,365 $ 4,408
Series 1994-A 7.39%, 6/26/06 Aaa 1,529 1,555
Series 1994-C 6.61%, 9/15/99 Aaa 1,995 2,002
Series 1994-F 8.187%, 12/15/04 Aaa 5,563 5,799
Series 1995-B 6.13%, 6/15/04 Aaa 3,115 3,036
Series 1996-A, 6.55%, 6/15/04 Aaa 13,224 13,083
Israel Export Trust Certificates Series 1994-1
(assets of Trust guaranteed by U.S. Government
through Export-Import Bank)
6.88%, 1/26/03 Aaa 6,868 6,877
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
7 3/4%, 4/1/98 Aaa 1,653 1,682
4 7/8%, 9/15/98 Aaa 11,520 11,181
7 3/4%, 11/15/99 Aaa 31,010 32,017
8%, 11/15/01 Aaa 39,490 41,510
6 1/4%, 8/15/02 Aaa 27,813 27,019
6 1/8%, 3/15/03 Aaa 7,210 6,909
6 5/8%, 2/15/04 Aaa 3,530 3,431
7 5/8%, 8/15/04 Aaa 8,330 8,601
5.89%, 8/15/05 Aaa 6,910 6,378
8 1/2%, 4/1/06 Aaa 9,580 10,307
Private Export Funding Corp. secured:
7.90%, 3/31/00 Aaa 2,275 2,357
8.40%, 7/31/01 Aaa 10,945 11,640
6.90%, 1/31/03 Aaa 4,800 4,797
8 3/4%, 6/30/03 Aaa 4,315 4,737
5.80%, 2/1/04 Aaa 4,790 4,575
6.86%, 4/30/04 Aaa 3,752 3,755
U.S. Housing & Urban Development
8.27%, 8/1/03 Aaa 11,375 12,231
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 350,640
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,835,038) 1,804,647
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 10.0%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.4%
5.50%, 11/1/98 to 7/1/03 Aaa $ 22,956 $ 21,604
7%, 11/1/96 to 7/1/01 Aaa 33,157 33,229
8%, 10/1/16 to 7/1/26 Aaa 8,270 8,368
63,201
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.9%
5.50%, 8/1/02 to 5/1/26 Aaa 352,125 326,320
6%, 4/1/00 to 4/1/26 Aaa 350,726 326,391
6.50%, 1/1/24 to 4/1/26 Aaa 84,729 79,129
7%, 1/1/24 to 11/1/25 Aaa 81,384 78,117
7.50%, 8/1/07 to 5/1/08 Aaa 5,579 5,618
8%, 6/1/07 Aaa 122 125
8.50%, 1/1/09 to 7/1/21 Aaa 96 99
10%, 8/1/17 Aaa 142 155
815,954
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 4.7%
6%, 9/15/08 to 7/15/11 Aaa 59,861 56,955
6.50%, 6/15/02 to 8/15/25 Aaa 28,690 26,834
7%, 10/15/17 to 1/15/26 Aaa 267,443 257,113
7.50%, 8/15/21 to 11/15/25 Aaa 185,997 183,603
8%, 4/15/00 to 6/15/26 Aaa 213,334 215,660
8.50%, 11/15/05 to 5/15/26 Aaa 9,561 9,863
9%, 3/15/10 to 1/15/25 Aaa 2,107 2,214
9.50%, 7/15/09 to 11/15/24 Aaa 2,943 3,162
10%, 11/15/09 to 1/15/26 Aaa 22,014 23,980
11%, 3/15/10 to 5/15/19 Aaa 4,168 4,643
784,027
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $1,697,706) 1,663,182
COMMERCIAL MORTGAGE SECURITIES - 1.1%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
ACP Mortgage LP Commercial floater Series E,
7.440205%, 2/28/28 (h) BB $ 2,299 $ 1,669
American Southwest Financial Securities
commercial Series 1994-C2 Class B2,
13.341940%, 12/25/01 (h)(j) - 3,000 2,820
CBA Mortgage Corp. commercial
Series 1993-C1 Class E, 7.153756%,
12/25/03 (h)(j) Ba2 3,169 2,524
CBM Funding Corp. sequential pay
Series 1996-1B:
Class A1, 7.55%, 7/1/99 AA 1,849 1,864
Class C, 7.86%, 2/1/08 BBB 12,500 12,088
CS First Boston Mortgage Securities Corp.:
commercial Series 1994-CFB1 Class E, 7.8629%,
1/25/28 (h)(j) Ba2 2,716 2,114
commercial Series 1994-M1 Class E,
12.60%, 2/15/02 (h) - 1,410 1,406
commercial Series 1995-AEWI Class A1,
6.665%, 11/25/27 AAA 9,837 9,664
commercial floater Series 1995-AEWI Class E,
10.324480%, 11/25/97 (h) - 3,000 2,582
commercial Series 1995-WF1 Class A-2,
6.648%, 12/21/27 AAA 31,981 30,222
DLJ Mortgage Acceptance Corp. commercial
Series 1993-MF12 Class B-2,
10.10%, 9/18/03 (h) - 2,800 2,513
Equitable Life Assurance Society of the
United States commercial Series 1996-1
Class C1, 7.52%, 5/15/06 (h) A2 6,000 5,933
FSB Trust Receipts commercial Series 1994
Class 1-B, 7.89%, 12/1/24 - 9,080 6,057
Kearny Street Mortgage (h):
commercial floater Series 1995-1
Class E, 7.791976%, 2/20/30 BB 5,000 3,919
commercial Class II-C, 7.30%, 10/15/03 - 1,776 1,777
commercial Class II-D, 7 3/4%, 10/15/05 - 1,800 1,803
Lennar Central Partners LP commercial
Series 1995-1 Class F, 11.70%, 5/15/05 (h) - 2,400 2,414
Merrill Lynch Mortgage Investments, Inc.
commercial Series 1995 Class C2-E,
8.15%, 6/15/21 (h) Ba3 2,508 2,280
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
Morgan Stanley Capital One, Inc. (h):
commercial Series 1995-TNE
Class D2, 8.24%, 12/15/23 Ba3 $ 2,001 $ 1,772
commercial Series 1996-MBL1
Class E, 8.661%, 5/25/21 - 4,063 3,500
commercial Series 1996-MBL1
Class F, 8.66%, 9/25/00 - 2,009 1,682
Mortgage Capital Funding, Inc. commercial
Series 1996-MC1 Class G, 7.15%,
7/15/28 (h) BB 4,000 2,936
Oregon Commercial Mortgage, Inc. commercial
Series 1995 Class E, 9.910710%, 6/25/26 (h) BB 3,208 2,688
Phoenix Real Estate Securities, Inc. commercial
Series 1993, Class D-1, 8 1/4%, 11/25/23 (h) Ba2 3,500 3,057
Resolution Trust Corp.:
commercial Series 1994-C1
Class E, 8%, 6/25/26 BB 4,645 3,961
commercial Series 1994-C2
Class E, 8%, 4/25/25 BB+ 3,275 3,078
commercial Series 1995-C1
Class A-2A, 6 1/4%, 2/25/27 Aaa 1,267 1,266
Class A-4A, 6 1/4%, 2/25/27 Aaa 5,978 5,942
commercial Series 1995-C2
Class D, 7%, 5/25/27 Baa2 4,107 3,831
SML, Inc. commercial Series 1994-C1 Class C,
9.20%, 9/18/99 (g) - 2,450 1,629
Structured Asset Securities Corp.:
commercial Series 1992-M1 Class C,
7.05%, 11/25/02 B2 3,200 2,531
commercial Series 1993-C1 Class A-1,
6.60%, 10/25/24 AA+ 3,058 3,039
commercial Series 1995-C1:
Class A-1A, 7 3/8%, 9/25/24 AAA 5,435 5,423
Class E, 7 3/8%, 9/25/24 (h) BB 7,896 5,887
commercial Series 1995-C4 Class A-1A,
6.90%, 6/25/26 AAA 9,580 9,470
commercial Series 1996-CFL Class E,
7 3/4%, 2/25/28 BB+ 11,188 10,464
Whitehall Partners commercial Series 1995-C1
Class E, 8.01%, 7/20/25 (h) - 8,892 8,628
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $176,158) 174,433
FOREIGN GOVERNMENT OBLIGATIONS (I) - 0.7%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
Manitoba Province Canada:
yankee 6%, 10/15/97 A1 $ 5,000 $ 4,986
6 3/4%, 3/1/03 A1 5,000 4,919
Nova Scotia Province CDA yankee
9 1/5%, 2/1/19 A3 20,030 23,631
Ontario Province yankee:
7 3/4%, 6/4/02 Aa3 6,000 6,235
15 3/4%, 3/15/12 Aa3 9,400 10,437
Quebec Province (e):
7.22%, 7/22/36 A2 45,000 45,162
yankee 6.86%, 4/15/26 A2 16,750 16,133
Victorian Public Authorities Finance Agency:
8.45%, 10/1/01 Aa2 6,700 7,121
8 1/4%, 1/15/02 Aa2 2,000 2,110
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $121,594) 120,734
SUPRANATIONAL OBLIGATIONS - 0.2%
African Development Bank:
6 3/4%, 7/30/99 Aa1 10,200 10,178
9.30%, 7/1/00 Aa1 15,000 16,177
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $26,709) 26,355
REPURCHASE AGREEMENTS - 3.8%
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.65%, dated
7/31/96 due 8/1/96 $ 634,793 634,693
PURCHASED OPTIONS - 0.0%
EXPIRATION DATE/ UNDERLYING FACE VALUE
STRIKE PRICE AMOUNT AT VALUE (NOTE 1)
(000S) (000S)
J. Aron and Co. OTC Put Options
on 957,000,000 Japanese Yen Sept. 96/
(Cost $130) 110 $ 8,959 $ 13
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $15,945,950) $ 16,606,859
LEGEND
1. Non-income producing
2. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
3. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
4. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
5. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
6. Affiliated company (see Note 7 of Notes to Financial Statements).
7. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Ampex Corp. 8% 2/16/95 $ 1,355
FF Holdings 10/2/92 to
Corp. 1/14/94 $ 159
Food 4 Less Holdings,
Inc. (warrants) 12/30/92 $ 428
Gulf Canada
Resources Ltd. 10/15/93 $ 117
Live Entertainment, Inc.:
$2.00 (warrants) 3/23/93 $ 230
$2.72 (warrants) 3/23/93 $ 241
SML, Inc. commercial
Series 1994-C1 Class C,
9.20%, 9/18/99 8/11/94 $ 1,593
Terex Corp. (rights) 7/29/92 $ -
WCI Communities LP
17%, 7/24/98 7/24/95 $ 14,812
8. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $347,816,000 or 2.1% of net
assets.
9. Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
10. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
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 25.3% AAA, AA, A 24.1%
Baa 2.3% BBB 4.3%
Ba 1.6% BB 1.6%
B 3.4% B 3.3%
Caa 0.5% CCC 0.3%
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 0.5%.
INCOME TAX INFORMATION
At July 31, 1996, the aggregate cost of investment securities for income
tax purposes was $15,978,878,000. Net unrealized appreciation aggregated
$627,981,000, of which $1,013,456,000 related to appreciated investment
securities and $385,475,000 related to depreciated investment securities.
The fund hereby designates approximately $129,730,000 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 AMOUNT) JULY 31, 1996
ASSETS
Investment in securities, at value (including repurchase $ 16,606,859
agreements of $634,693) (cost $15,945,950) -
See accompanying schedule
Cash 2,752
Receivable for investments sold 202,469
Receivable for fund shares sold 20,124
Dividends receivable 18,329
Interest receivable 89,644
Other receivables 319
TOTAL ASSETS 16,940,496
LIABILITIES
Payable for investments purchased $ 159,414
Payable for fund shares redeemed 26,272
Accrued management fee 7,061
Other payables and accrued expenses 5,174
Collateral on securities loaned, at value 43,858
TOTAL LIABILITIES 241,779
NET ASSETS $ 16,698,717
Net Assets consist of:
Paid in capital $ 14,429,464
Undistributed net investment income 64,786
Accumulated undistributed net realized gain (loss) on 1,543,563
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 660,904
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 962,965 shares outstanding $ 16,698,717
NET ASSET VALUE, offering price and redemption price $17.34
per share ($16,698,717 (divided by) 962,965 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME $ 256,622
Dividends (including $14,831 received from
affiliated issuers)
Interest (including income on securities loaned of $333) 403,190
TOTAL INCOME 659,812
EXPENSES
Management fee $ 80,692
Transfer agent fees 33,204
Accounting and security lending fees 850
Non-interested trustees' compensation 49
Custodian fees and expenses 1,103
Registration fees 775
Audit 124
Legal 108
Miscellaneous 31
Total expenses before reductions 116,936
Expense reductions (2,205) 114,731
NET INVESTMENT INCOME 545,081
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of 1,769,272
$46,214
on sales of investments in affiliated issuers)
Foreign currency transactions 103,469 1,872,741
Change in net unrealized appreciation (depreciation) on:
Investment securities (921,094)
Assets and liabilities in foreign currencies (21,401) (942,495)
NET GAIN (LOSS) 930,246
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,475,327
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 545,081 $ 431,287
Net investment income
Net realized gain (loss) 1,872,741 130,192
Change in net unrealized appreciation (depreciation) (942,495) 1,062,780
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,475,327 1,624,259
FROM OPERATIONS
Distributions to shareholders (504,777) (340,712)
From net investment income
From net realized gain (389,349) (540,172)
TOTAL DISTRIBUTIONS (894,126) (880,884)
Share transactions 4,041,699 3,938,809
Net proceeds from sales of shares
Reinvestment of distributions 843,928 826,084
Cost of shares redeemed (3,154,783) (2,020,911)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,730,844 2,743,982
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,312,045 3,487,357
NET ASSETS
Beginning of period 14,386,672 10,899,315
End of period (including under (over) distribution $ 16,698,717 $ 14,386,672
of net investment income of $64,786 and $(22,089),
respectively)
OTHER INFORMATION
Shares
Sold 234,833 253,871
Issued in reinvestment of distributions 49,609 53,552
Redeemed (183,230) (129,845)
Net increase (decrease) 101,212 177,578
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31,
1996 1995 1994 E 1993 C 1992
SELECTED PER-SHARE DATA
Net asset value, beginning $ 16.69 $ 15.93 $ 16.59 $ 15.22 $ 13.75
of period
Income from Investment
Operations
Net investment income .64 .42 .46 .72 .88 D
Net realized and 1.00 1.53 .88 2.14 1.37
unrealized gain (loss)
Total from investment 1.64 1.95 1.34 2.86 2.25
operations
Less Distributions
From net investment income (.55) (.44) (.51) (.80) (.78)
From net realized gain (.44) (.75) (1.49) (.69) -
Total distributions (.99) (1.19) (2.00) (1.49) (.78)
Net asset value, end of period $ 17.34 $ 16.69 $ 15.93 $ 16.59 $ 15.22
TOTAL RETURN A, B 10.06% 13.03% 8.60% 20.29% 16.96%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of $ 16,699 $ 14,387 $ 10,899 $ 7,828 $ 5,578
period (in millions)
Ratio of expenses to .74% .77% .80% .74% .64%
average net assets
Ratio of expenses to .72% F .77% .79% .74% .64%
average net assets after F
expense reductions
Ratio of net investment income 3.44% 3.50% 4.00% 4.89% 6.23%
to average net assets
Portfolio turnover rate 139% 76% 74% 76% 102%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
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 $0.14 PER SHARE.
E 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1996
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 financial statements have been prepared
in conformity with generally accepted accounting principles which permit
management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Debt securities for which quotations are readily
available are valued by a pricing service at their market values as
determined by their most recent bid prices in the principal market (sales
prices if the principal market is an exchange) in which such securities are
normally traded. Equity securities for which 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
market quotations are not readily available are valued at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities
maturing within sixty days of their purchase date are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts 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. The
effects of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or loss
on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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, which may result in distribution
reclassifications, are primarily due to differing treatments for litigation
proceeds, paydown gains/losses on certain securities, foreign currency
transactions, defaulted bonds, 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 the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
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. Losses
may
arise due to changes in the market value of the underlying securities or if
the counterparty does not perform under the contract.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the stock market and to fluctuations in
currency values. Buying futures, writing puts, and buying calls tend to
increase the fund's exposure to the underlying instrument. Selling futures,
buying puts, and writing calls tend to decrease the fund's exposure to the
underlying instrument, or hedge other fund investments. The underlying face
amount at value is shown in the schedule of investments under the caption
"Purchased Options." This amount reflects each contract's exposure to the
underlying instrument at period end. Losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparties do not perform under the
contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options 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 securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are
2. OPERATING POLICIES - CONTINUED
RESTRICTED SECURITIES - CONTINUED
registered. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at an acceptable price may be
difficult. At the end of the period, restricted securities (excluding 144A
issues) amounted to $18,979,000 or 0.1% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $22,052,261,000 and $21,119,689,000, respectively, of which U.S.
government and government agency obligations aggregated $7,706,064,000 and
$6,846,682,000, 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 .2500% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .20%. For
the period, the management fee was equivalent to an annual rate of .51% of
average net assets.
Effective August 1, 1996, FMR voluntarily agreed to reduce the individual
fund fee rate from .20% to .15%.
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, voluntarily waived the sales charge (2% of the
offering price) on the sales of shares. Effective January 1, 1996, the
fund's 2% sales charge was eliminated.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annual rate of .21%
of average net assets.
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 $4,599,000 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 $41,915,000 and
$43,858,000, respectively.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$1,323,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $85,000 and $797,000,
respectively, under these arrangements.
7. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
AMETEK, Inc. $ 5,154 $ 41,092 $ 360 $ -
Berkley (W.R.) Corp. - 10,932 325 -
Betz Laboratories, Inc. - 34,671 1,673 -
Brinker International, Inc. 12,981 77,613 - -
Caliber System, Inc. - 42,078 - -
EG & G, Inc. 725 15,677 1,310 -
Filene's Basement Corp. - 19,056 - -
Fingerhut Companies, Inc. 1,608 2,860 268 -
Fleetwood Enterprises, Inc. 774 10,510 718 -
Heilig-Myers Co. 46,019 50,513 - -
Helmerich & Payne, Inc. 5,381 38,040 541 -
Ideon Group, Inc. - 34,581 383 -
Jostens, Inc. - 20,105 1,346 -
Kelly Oil & Gas Corp. - 3,185 - -
Mac Frugals Bargains Closeouts, Inc. - 4,545 - -
Nalco Chemical Co. 14,047 42,441 2,771 -
Rawlings Sporting Goods, Inc. - 8,610 - -
Roadway Express, Inc. 515 - 61 17,870
Russell Corp. 2,080 6,871 404 -
7. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Safety Kleen Corp. $ 20,603 $ 71,376 $ 444 $ -
Snap-On Tool Corp. 11,618 42,605 2,273 -
Sotheby's Holdings, Inc. Class A - 24,048 396 -
Sunbeam-oster, Inc. 4,957 70,669 108 -
Unifi, Inc. 28,306 114,619 1,450 -
TOTALS $ 154,768 $ 786,697 $ 14,831 $ 17,870
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, 1996, 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, 1996 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, 1996, 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 11, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Puritan Fund voted to pay on September 9,
1996, to shareholders of record at the opening of business on September 6,
1996, a distribution of $1.50 per share derived from capital gains realized
from sales of portfolio securities and a dividend of $.16 per share from
net investment income.
A total of 14.14% 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 28% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of these percentages for
use in preparing 1996 income tax returns.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Market Index Fund
Puritan Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(REGISTERED TRADEMARK)
BALANCED
FUND
ANNUAL REPORT
JULY 31, 1996
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 33 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 37 Notes to the financial statements.
REPORT OF INDEPENDENT 43 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 44
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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first seven
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in both the stock and bond markets so far
this year. In 1995, both stock and bond markets posted strong results,
while the year before, stocks posted below-average returns and bonds had
one of the worst years in history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term. You also can help to manage some of the risks of investing
through diversification. A stock fund is already diversified because it
invests in many issues. You can diversify even further by placing some of
your money in several different types of stock funds or in other investment
categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return 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, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Balanced 2.25% 47.89% 147.78%
S&P 500(registered trademark) 16.57% 89.62% 250.61%
Lehman Brothers Aggregate Bond 5.54% 47.08% n/a
Index
Balanced Funds Average 9.81% 63.39% n/a
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 invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks - and the performance of the Lehman Brothers Aggregate Bond
Index, a market value weighted performance benchmark for investment-grade
fixed-rate debt issues, including government, corporate, asset-backed, and
mortgage-backed securities, with maturities of at least one year. To
measure how the fund's performance stacked up against its peers, you can
compare it to the balanced funds average, which reflects the performance of
253 mutual funds with similar objectives tracked by Lipper Analytical
Services, Inc. over the past 12 months. These benchmarks reflect
reinvestment of dividends and capital gains, if any, but do not reflect any
sales charges, brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Balanced 2.25% 8.14% 9.76%
S&P 500 16.57% 13.65% 13.74%
Lehman Brothers Aggregate Bond Index 5.54% 8.02% n/a
Balanced Funds Average 9.81% 10.27% 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
IMAHDR PRASUN SHR__CHT 19960731 19960820 091923 S00000000000001
Balanced Fund SP S&P 500 LB Aggregate
00304 SP001 LB001
1986/11/30 10000.00 10000.00 10000.00
1986/12/31 9970.56 9745.00 10037.54
1987/01/31 10490.68 11057.65 10179.04
1987/02/28 10765.46 11494.43 10249.62
1987/03/31 10942.82 11826.62 10203.42
1987/04/30 10675.43 11721.36 9923.64
1987/05/31 10625.92 11823.34 9884.81
1987/06/30 10845.17 12420.42 10020.86
1987/07/31 10995.11 13050.13 10013.15
1987/08/31 11135.05 13536.90 9959.57
1987/09/30 10945.73 13240.44 9747.49
1987/10/31 10019.00 10388.45 10094.65
1987/11/30 9864.55 9532.44 10175.51
1987/12/31 10166.90 10257.86 10314.11
1988/01/31 10648.05 10689.72 10676.68
1988/02/29 10951.39 11187.86 10803.41
1988/03/31 10854.98 10842.15 10702.02
1988/04/30 10939.87 10962.50 10644.27
1988/05/31 10982.31 11057.87 10572.72
1988/06/30 11420.26 11565.43 10827.80
1988/07/31 11355.68 11521.48 10771.01
1988/08/31 11301.86 11129.75 10799.24
1988/09/30 11572.03 11603.88 11043.73
1988/10/31 11746.70 11926.47 11251.64
1988/11/30 11637.53 11755.92 11114.96
1988/12/31 11771.18 11961.65 11127.47
1989/01/31 12172.85 12837.24 11287.58
1989/02/28 12083.59 12517.59 11205.76
1989/03/31 12217.63 12809.25 11254.21
1989/04/30 12613.58 13474.05 11489.72
1989/05/31 12896.39 14019.75 11791.64
1989/06/30 13089.00 13939.84 12150.67
1989/07/31 13604.77 15198.61 12408.96
1989/08/31 13685.00 15496.50 12225.11
1989/09/30 13695.74 15432.96 12287.68
1989/10/31 13742.16 15074.92 12590.24
1989/11/30 13951.08 15382.45 12710.24
1989/12/31 14091.15 15751.63 12744.25
1990/01/31 13570.63 14694.69 12592.81
1990/02/28 13669.77 14884.25 12633.55
1990/03/31 13781.31 15278.69 12642.86
1990/04/30 13592.87 14896.72 12527.03
1990/05/31 14045.13 16349.15 12897.94
1990/06/30 14107.61 16237.98 13104.89
1990/07/31 14145.80 16186.01 13286.17
1990/08/31 13547.38 14722.80 13108.74
1990/09/30 13326.05 14005.80 13217.18
1990/10/31 13261.49 13945.57 13384.99
1990/11/30 13726.35 14846.46 13673.12
1990/12/31 14025.60 15260.67 13886.16
1991/01/31 14606.15 15926.04 14057.82
1991/02/28 15265.87 17064.75 14177.82
1991/03/31 15557.86 17477.72 14275.36
1991/04/30 15811.81 17519.66 14430.01
1991/05/31 16319.71 18276.51 14514.39
1991/06/30 16022.99 17439.45 14507.01
1991/07/31 16442.51 18252.13 14708.18
1991/08/31 16821.43 18684.70 15026.47
1991/09/30 16964.60 18372.67 15330.96
1991/10/31 17344.09 18618.86 15501.65
1991/11/30 17034.87 17868.52 15643.79
1991/12/31 17781.87 19912.68 16108.38
1992/01/31 17781.87 19542.31 15889.24
1992/02/29 18041.04 19796.35 15992.56
1992/03/31 17926.03 19410.33 15902.40
1992/04/30 18144.64 19980.99 16017.26
1992/05/31 18479.84 20078.90 16319.50
1992/06/30 18421.89 19779.72 16544.10
1992/07/31 18864.37 20588.71 16881.64
1992/08/31 18967.62 20166.64 17052.65
1992/09/30 19098.85 20404.61 17254.79
1992/10/31 19007.32 20476.03 17026.02
1992/11/30 19053.08 21174.26 17029.87
1992/12/31 19194.74 21434.70 17300.67
1993/01/31 19616.43 21614.75 17632.43
1993/02/28 20147.44 21908.71 17941.09
1993/03/31 20789.95 22370.99 18015.85
1993/04/30 21453.45 21829.61 18141.30
1993/05/31 21801.01 22414.64 18164.40
1993/06/30 21818.20 22479.65 18493.60
1993/07/31 22105.70 22389.73 18598.20
1993/08/31 22824.46 23238.30 18924.18
1993/09/30 22604.67 23059.36 18976.16
1993/10/31 22788.72 23536.69 19047.07
1993/11/30 22387.15 23313.09 18885.04
1993/12/31 22894.97 23595.18 18987.39
1994/01/31 23510.52 24397.42 19243.75
1994/02/28 23100.16 23736.25 18909.42
1994/03/31 22152.04 22701.35 18443.23
1994/04/30 21962.12 22991.92 18295.95
1994/05/31 21996.65 23368.99 18293.39
1994/06/30 21769.75 22796.45 18252.96
1994/07/31 22187.06 23544.18 18615.52
1994/08/31 22395.72 24509.49 18638.62
1994/09/30 22238.25 23909.00 18364.30
1994/10/31 21975.59 24446.96 18347.93
1994/11/30 21660.40 23556.60 18307.18
1994/12/31 21678.30 23905.94 18433.60
1995/01/31 21678.30 24525.82 18798.41
1995/02/28 22154.55 25481.60 19245.36
1995/03/31 22527.17 26233.56 19363.43
1995/04/30 22758.67 27006.14 19633.91
1995/05/31 23186.07 28085.57 20393.69
1995/06/30 23439.13 28738.00 20543.20
1995/07/31 23781.43 29690.95 20497.32
1995/08/31 23835.48 29765.47 20744.70
1995/09/30 24050.66 31021.58 20946.51
1995/10/31 23832.02 30910.83 21218.92
1995/11/30 24506.16 32267.82 21536.88
1995/12/31 24909.04 32889.29 21839.12
1996/01/31 25130.13 34008.85 21984.15
1996/02/29 24669.53 34324.11 21602.01
1996/03/31 24470.71 34654.65 21451.86
1996/04/30 24545.26 35165.46 21331.22
1996/05/31 24713.00 36072.38 21287.90
1996/06/30 24900.64 36209.81 21573.78
1996/07/31 24316.30 34610.06 21632.82
IMATRL PRASUN SHR__CHT 19960731 19960820 091928 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Balanced Fund on November 30, 1986, shortly after the
fund started. As the chart shows, by July 31, 1996, the value of the
investment would have grown to $24,316 - a 143.16% increase on the 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
$34,610 - a 246.10% increase. If $10,000 was put in the bond index, it
would have grown to $21,633 - a 116.33% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks 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
While both the stock and bond
markets enjoyed banner years in
1995, they have encountered
some difficulty thus far in 1996.
Several corporate earnings
disappointments and growing
fears of lower corporate earnings
made for a volatile stock market
in May, June and July.
Nevertheless, the Standard &
Poor's 500 Index finished the 12
months ended July 31, 1996, with
a return of 16.57% - above its
long-term historical average of
about 12%. The stock market
spent much of the past year
breaking price and trading
volume records, as strong
corporate earnings reports, large
cash inflows into mutual funds,
several high-profile mergers and
widespread optimism propelled
equity share prices higher. Even
though in late January the
Federal Reserve Board lowered
its target for the federal funds rate
- - the rate banks charge each
other on overnight loans - from
5.50% to 5.25%, the move largely
was discounted by the bond
market. In March,
better-than-expected
employment figures spooked the
bond market, pushing long-term
interest rates over 7%. By June,
however, soothing comments
from Federal Reserve Board
Chairman Alan Greenspan
helped ease the market's fears of
Fed interest-rate increases, and
bond markets stabilized in June
and July, with the 30-year
Treasury yield dropping back
below 7%. For the 12 months
ended July 31, 1996, the Lehman
Brothers Aggregate Bond Index
- - a broad measure of U.S.
taxable bonds - returned 5.54%.
NOTE TO SHAREHOLDERS: Stephen Petersen became portfolio manager of Fidelity
Balanced Fund on March 26, 1996.
Q. HOW DID THE FUND PERFORM, STEVE?
A. For the 12 months ended July 31, 1996, the fund had a total return of
2.25%. For the same period, the Lehman Brothers Aggregate Bond Index
returned 5.54%, while the Standard & Poor's 500 Index returned 16.57%.
Additionally, the balanced funds average, as tracked by Lipper Analytical
Services, Inc., was 9.81% for the past year.
Q. WHY DO YOU THINK THE FUND UNDERPERFORMED?
A. Since I became portfolio manager, the fund's equity component has been
run in a traditional equity-income or value style - that is, an emphasis on
undervalued, dividend-paying stocks. By comparison, many funds in its peer
group emphasized growth stocks, which outperformed value stocks during the
period.
Q. MORE SPECIFICALLY, WHAT WERE SOME OF THE CHANGES YOU MADE?
A. On the equity side, I generally emphasized large-capitalization stocks
over the small- and mid-cap stocks the fund held previously. As for fixed
income, I've brought the fund's interest-rate sensitivity in line with its
benchmark index. This allowed me to focus on the credit of individual
issuers and to emphasize higher quality bonds. Additionally, I reduced the
fund's exposure to foreign securities.
Q. WHAT DO YOU THINK IS BEHIND THE RECENT VOLATILITY IN THE STOCK MARKET?
A. What's hurt the market of late is the belief that we are near the end of
the expansionary economy that began about five years ago. As the economy
matures, it becomes more difficult for companies to consistently increase
earnings. Therefore, with every disappointing corporate earnings
announcement, investors grow more squeamish and the market becomes more
volatile.
Q. LOOKING AT SOME OF THE FUND'S EQUITY ALLOCATIONS, ITS LARGEST SECTOR
WEIGHTING IS IN FINANCIAL STOCKS. DOES THIS IMPLY YOU THINK INTEREST RATES
MAY FALL?
A. No. It often appears that the prices of financial stocks track the
market's interest rate outlook. Fidelity's research, however, proves that,
historically, this has not been the case. Like other sectors of the market,
stock prices of financial
companies follow their earnings growth over time. As for the performance of
the financial sector over the past six months, it has been somewhat of a
roller coaster ride as many financial stocks rose in the first quarter of
1996 and then came back down in the second.
Q. DO YOU THINK BANK STOCKS HAD SOMETHING TO DO WITH THE TOPSY-TURVY
PERFORMANCE OF THE FINANCIAL SECTOR?
A. Yes, I think banks were one issue. Five or six years ago, the banking
industry was undercapitalized, had inadequate loan-loss reserves and was
unable to offer competitive financial products. Today, many banks are
either adequately capitalized or overcapitalized, have sufficient reserves
and are offering better financial services. From the fund's perspective,
I've concentrated on banks with particularly effective cost-cutting and
consolidation programs - including NationsBank and BankAmerica - and banks
that have become more efficient through acquisition - such as Wells Fargo's
acquisition of First Interstate earlier this year. What's become a concern
in the banking industry is the astronomical level of consumer debt. Many
banks have seen a steady increase in write-offs of credit card receivables.
To address this concern, I've tried to balance the fund's bank holdings
between consumer-oriented banks and those with businesses that cater to
institutional customers.
Q. WHY HAVE THE OIL PRODUCTION AND OIL SERVICE COMPANY STOCKS IN THE ENERGY
SECTOR REMAINED A SIGNIFICANT PART OF THE FUND?
A. Over the past few years, most oil producers have gone to great lengths
to cut costs, streamline operations and rid themselves of inefficient
divisions. If you look across the industry, many major oil companies have
gone through a restructuring program to increase their profitability per
barrel of oil produced. Some of the fund's major holdings in oil producers
during the period were British Petroleum and Royal Dutch Petroleum. As for
oil service companies, I've favored the larger firms - such as Schlumberger
- - that provide a greater variety of services than smaller players,
including everything from drilling, providing drilling equipment and
conducting seismic data work.
Q. STEVE, WOULD YOU DESCRIBE THE FUND'S FOREIGN POSITION DURING THE PERIOD?
A. Sure. In Japan, I reduced the fund's exposure to semiconductor companies
because a worldwide supply glut has depressed semiconductor prices. I also
rotated out of some consumer electronics companies as their stocks have
become less attractive.
Q. WHAT ABOUT EUROPE?
A. As investors wait for an economic recovery in Europe, many quality
companies are trading at low price levels. Additionally, many of these
companies have shown a greater willingness to raise shareholder value by
divesting themselves of unprofitable operations and focusing on core
businesses.
Q. TURNING TO FIXED INCOME, HOW HAVE YOU STRUCTURED THE FUND'S BOND
COMPONENT?
A. The fund's largest bond position was in U.S. Treasuries. While most
types of bonds in the first half of 1996 were hurt by signs of strength in
the economy, Treasuries performed fairly well relative to investment-grade
corporate bonds. The fund also had some exposure to mortgaged-backed
securities, which historically have had good relative performance in a
rising interest rate environment.
Q. WE UNDERSTAND THAT AS OF AUGUST 1, 1996, THE FUND ADOPTED AN INVESTMENT
POLICY RELATED TO ASSET ALLOCATION?
A. When management's outlook is neutral - that is, with market conditions
appearing to favor no particular class of security - the fund will have an
asset allocation of approximately 60% in equity securities and 40% in
fixed-income securities. This allocation represents a typical asset mix for
balanced funds within the industry. The fund maintains the flexibility to
adjust this asset allocation as market and other conditions warrant.
Q. WHAT'S YOUR OUTLOOK?
A. Corporate earnings play a big part in the direction of the stock market.
If the current trend of fewer and fewer companies reporting positive
earnings surprises continues, we could see continued choppiness in the
market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: seeks high income
with preservation of capital
by investing in a broadly
diversified portfolio of
high-yielding equity and debt
securities
START DATE: November 6,
1986
SIZE: as of July 31, 1996,
more than $4.0 billion
MANAGER: Stephen
Petersen, since March 1996;
manager, Fidelity Equity
Income Fund, since 1993;
manager, various institutional
accounts, since 1987; joined
Fidelity in 1980
(checkmark)
STEPHEN PETERSEN ON HIS
INVESTING STYLE:
"As a value investor, my first
criterion for buying a stock is
whether or not it is cheap
relative to the company's
earnings, cash flow, sales or
other factors. Once a stock
passes that hurdle, I work
closely with Fidelity's
research department to
determine if the company has
the strong financial
fundamentals necessary to
grow its business. Aside from
reviewing a company's
financials, the research
process involves
management interviews,
on-site visits and a thorough
knowledge of a company's
product line.
"Investors should keep in
mind that the value
investment process is very
disciplined. There will be
times when the value style is
out of favor in the market, and
I may be buying when the
market is selling and vice
versa. In my opinion, sticking
with a consistent,
value-oriented approach will
uncover more opportunities
over the long haul than
following the herd."
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Philip Morris Companies, Inc. 2.2 1.2
General Electric Co. 1.7 0.0
Allstate Corp. 1.7 0.0
General Motors Corp. 1.3 0.4
British Petroleum PLC Ord. 1.3 0.0
TOP FIVE BOND ISSUERS AS OF JULY 31, 1996
(WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE BONDS
6 MONTHS AGO
U.S. Treasury Obligations 13.8 33.7
Federal National Mortgage Association 8.3 2.1
Government National Mortgage Association 1.8 0.7
Inco Ltd. 0.9 0.7
Ford Motor Credit Co. 0.7 0.1
TOP FIVE MARKET SECTORS AS OF JULY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Finance 17.8 6.0
Energy 11.1 3.9
Utilities 6.7 5.6
Durables 5.8 2.2
Nondurables 5.4 3.2
ASSET ALLOCATION
AS OF JULY 31, 1996 * AS OF JANUARY 31, 1996 **
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 2.2
Row: 1, Col: 3, Value: 5.6
Row: 1, Col: 4, Value: 36.4
Row: 1, Col: 5, Value: 30.0
Row: 1, Col: 6, Value: 25.8
Stocks and
equity futures 49.4%
Bonds 43.3%
Convertible
securities 7.4%
Short-term
investments -1.1%
Other
investments 1.0%
FOREIGN
INVESTMENTS 16.4%
Stocks 55.8%
Bonds 36.4%
Convertible
securities 5.6%
Short-term
investments 2.2%
Other
investments 0.0%
FOREIGN
INVESTMENTS 11.4%
Row: 1, Col: 1, Value: 2.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 7.4
Row: 1, Col: 4, Value: 43.3
Row: 1, Col: 5, Value: 48.4
*
**
INVESTMENTS JULY 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 55.8%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.6%
AEROSPACE & DEFENSE - 1.4%
Harsco Corp. 104,800 $ 6,209
Lockheed Martin Corp. 315,100 26,114
Northrop Grumman Corp. 130,000 8,938
Rockwell International Corp. 312,400 16,401
57,662
DEFENSE ELECTRONICS - 0.2%
Raytheon Co. 165,000 8,003
TOTAL AEROSPACE & DEFENSE 65,665
BASIC INDUSTRIES - 3.3%
CHEMICALS & PLASTICS - 1.4%
Bayer AG 75,000 2,521
DSM NV 15,100 1,379
Dow Chemical Co. 85,000 6,322
du Pont (E.I.) de Nemours & Co. 375,800 30,346
Ethyl Corp. 253,300 2,280
Great Lakes Chemical Corp. 59,900 3,452
IMC Fertilizer Group, Inc. 136,600 5,396
Witco Corp. 203,800 5,910
57,606
METALS & MINING - 1.0%
Aluminum Co. of America 321,300 18,635
Kaiser Aluminum Corp. (a) 149,400 1,643
Pechiney SA Class A 247,600 10,185
Reynolds Metals Co. 164,700 8,359
38,822
PACKAGING & CONTAINERS - 0.4%
Corning, Inc. 245,000 9,034
Tupperware Corp. 112,200 4,797
13,831
PAPER & FOREST PRODUCTS - 0.5%
Champion International Corp. 97,900 4,136
International Paper Co. 111,300 4,215
Weyerhaeuser Co. 313,600 13,093
21,444
TOTAL BASIC INDUSTRIES 131,703
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONGLOMERATES - 1.7%
AlliedSignal, Inc. 336,100 $ 19,746
American Standard Companies, Inc. (a) 257,900 8,285
Brascan Ltd. Class A 598,400 11,534
Crane Co. 179,400 6,548
Dial Corp. (The) 10,300 301
Hanson PLC sponsored ADR 308,600 3,935
Harris Corp. 124,600 7,165
Textron, Inc. 114,400 9,152
United Technologies Corp. 19,200 2,162
68,828
CONSTRUCTION & REAL ESTATE - 1.1%
BUILDING MATERIALS - 0.2%
Dexter Corp. 155,000 4,553
Masco Corp. 200,000 5,575
10,128
CONSTRUCTION - 0.1%
Lennar Corp. 103,000 2,305
REAL ESTATE - 0.0%
Fastighets AB Tornet 46,820 415
REAL ESTATE INVESTMENT TRUSTS - 0.8%
Equity Residential Properties Trust (SBI) 230,200 7,769
First Industrial Realty Trust, Inc. 360,900 8,481
Liberty Property Trust (SBI) 269,100 5,348
Speiker Properties, Inc. 311,200 8,869
30,467
TOTAL CONSTRUCTION & REAL ESTATE 43,315
DURABLES - 5.8%
AUTOS, TIRES, & ACCESSORIES - 5.2%
Bridgestone Corp. 300,000 5,448
Chrysler Corp. 1,724,400 48,930
Continental Gummi-Werke AG 185,900 2,973
Cummins Engine Co., Inc. 43,000 1,607
Daimler-Benz AG Ord. 75,000 3,992
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Dana Corp. 222,500 $ 6,202
Eaton Corp. 126,000 7,025
Federal-Mogul Corp. 105,400 1,779
Ford Motor Co. 205,000 6,663
General Motors Corp. 1,059,100 51,631
Genuine Parts Co. 250,100 10,598
Goodyear Tire & Rubber Co. 89,700 3,969
Johnson Controls, Inc. 198,200 14,270
Modine Manufacturing Co. 91,900 2,412
Scania AB:
Class A 76,000 2,034
Class B 177,600 4,754
Snap-on Tools Corp. 300,700 13,344
Standard Products Co. 45,600 1,089
Toyota Motor Corp. 300,000 7,274
Volkswagen AG 8,900 3,022
Volvo AB Class B 458,800 9,950
208,966
CONSUMER DURABLES - 0.0%
Swedish Match Co. 288,500 853
CONSUMER ELECTRONICS - 0.3%
Whirlpool Corp. 210,500 10,367
TEXTILES & APPAREL - 0.3%
Burlington Industries, Inc. (a) 67,200 907
Kellwood Co. 294,700 4,715
Stride Rite Corp. 134,300 974
Unifi, Inc. 137,600 3,801
10,397
TOTAL DURABLES 230,583
ENERGY - 8.5%
ENERGY SERVICES - 1.2%
Schlumberger Ltd. 600,000 48,000
OIL & GAS - 7.3%
Amoco Corp. 356,200 23,821
Atlantic Richfield Co. 232,500 26,970
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
British Petroleum PLC:
Ord. 5,625,837 $ 50,949
ADR 373,900 41,082
Burlington Resources, Inc. 50,000 2,138
Coastal Corp. (The) 204,300 7,610
Exxon Corp. 62,500 5,141
Kerr-McGee Corp. 164,900 9,399
Mobil Corp. 158,000 17,439
Occidental Petroleum Corp. 328,300 7,346
Phillips Petroleum Co. 277,500 10,961
Royal Dutch Petroleum Co. ADR 240,000 36,210
Santa Fe Energy Resources, Inc. (a) 1,609,400 18,307
Total SA Class B 357,867 25,715
USX-Marathon Group 458,300 9,395
292,483
TOTAL ENERGY 340,483
FINANCE - 12.0%
BANKS - 3.8%
Bank of Boston Corp. 193,100 10,234
Bank of New York Co., Inc. 25,000 1,287
BankAmerica Corp. 162,000 12,919
Canadian Imperial Bank of Commerce 196,200 6,522
Chase Manhattan Corp. 201,500 14,004
Citicorp 108,800 8,908
Comerica, Inc. 217,700 9,552
Core States Financial Corp. 66,100 2,594
Den Norske Bank:
Class A Free shares 140,000 444
AS (e) 1,727,600 5,482
First Bank System, Inc. 232,400 14,235
First Tennessee National Corp. 142,500 4,204
HSBC Holdings PLC 176,000 2,840
National Bank of Canada 1,140,700 9,210
NationsBank Corp. 150,300 12,907
Norwest Corp. 243,900 8,658
Royal Bank of Canada 500,000 12,092
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Sparbanken Sverige Ab Class A (e) 468,200 $ 5,645
Sparebanken Norway primary shares certificates 175,000 4,385
Wells Fargo & Co. 36,500 8,500
154,622
CREDIT & OTHER FINANCE - 2.3%
American Express Co. 1,104,600 48,326
Associates First Capital Corp. (a) 17,100 656
Beneficial Corp. 137,700 7,436
First Chicago NBD Corp. 491,000 18,903
Hees International Corp. 375,100 4,365
Household International, Inc. 135,000 10,058
Transamerica Corp. 29,000 2,005
91,749
FEDERAL SPONSORED CREDIT - 1.3%
Federal National Mortgage Association 1,587,800 50,413
INSURANCE - 3.7%
Aetna, Inc. 277,700 16,141
Allstate Corp. 1,548,700 69,304
American Bankers Insurance Group, Inc. 370,000 14,800
American Financial Group, Inc. 360,400 10,632
Highlands Insurance Group, Inc. (a) 190,000 3,230
ITT Hartford Group, Inc. 375,000 19,828
Provident Companies, Inc. 38,800 1,416
Providian Corp. 73,800 2,924
Reliastar Financial Corp. 230,000 9,631
147,906
SAVINGS & LOANS - 0.2%
Washington Mutual, Inc. 288,100 10,480
SECURITIES INDUSTRY - 0.7%
Bear Stearns Companies, Inc. 155,000 3,488
First Marathon Inc. Class A (non-vtg.) 350,000 3,322
Lehman Brothers Holdings, Inc. 519,600 12,016
Nomura Securities Co. Ltd. 452,000 7,912
26,738
TOTAL FINANCE 481,908
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 1.3%
DRUGS & PHARMACEUTICALS - 0.9%
Bristol-Myers Squibb Co. 153,900 $ 13,332
Pharmacia & Upjohn, Inc. 282,700 11,661
Schering-Plough Corp. 220,800 12,172
37,165
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
Baxter International, Inc. 93,600 3,896
Bergen Brunswig Corp. Class A 127,100 3,305
7,201
MEDICAL FACILITIES MANAGEMENT - 0.2%
Foundation Health Corp. (a) 50,000 1,225
Health Systems International, Inc. (a) 149,000 2,943
Tenet Healthcare Corp. (a) 85,400 1,655
5,823
TOTAL HEALTH 50,189
HOLDING COMPANIES - 0.0%
U.S. Industries, Inc. (a) 58,000 1,305
INDUSTRIAL MACHINERY & EQUIPMENT - 5.1%
ELECTRICAL EQUIPMENT - 2.7%
Alcatel Alsthom Compagnie Generale d'Electricite SA 71,144 5,824
Emerson Electric Co. 216,000 18,225
General Electric Co. 846,500 69,730
Omron Corp. 471,000 8,642
Westinghouse Electric Corp. 294,200 4,928
107,349
INDUSTRIAL MACHINERY & EQUIPMENT - 1.4%
Caterpillar, Inc. 244,500 16,106
Cooper Industries, Inc. 222,900 8,777
Deere & Co. 100,000 3,575
Ingersoll-Rand Co. 121,000 5,158
Parker-Hannifin Corp. 248,200 8,656
Tenneco, Inc. 49,200 2,423
Timken Co. 292,500 10,713
55,408
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 1.0%
Browning-Ferris Industries, Inc. 569,900 $ 12,751
Safety Kleen Corp. 46,200 803
WMX Technologies, Inc. 839,600 24,873
Zurn Industries, Inc. 168,200 3,427
41,854
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 204,611
MEDIA & LEISURE - 1.4%
BROADCASTING - 0.0%
Jacor Communications, Inc. Class A (a) 38,700 1,180
LEISURE DURABLES & TOYS - 0.7%
Brunswick Corp. 847,900 16,110
Hasbro, Inc. 300,000 10,763
26,873
LODGING & GAMING - 0.4%
Bally Entertainment Corp. 673,900 17,606
PUBLISHING - 0.2%
Dun & Bradstreet Corp. 111,600 6,417
RESTAURANTS - 0.1%
Darden Restaurants, Inc. 364,100 2,867
TOTAL MEDIA & LEISURE 54,943
NONDURABLES - 4.0%
BEVERAGES - 0.2%
PepsiCo, Inc. 200,000 6,325
Seagram Co. Ltd. 68,200 2,252
8,577
FOODS - 0.5%
General Mills, Inc. 190,900 10,356
Kellogg Co. 50,000 3,737
Ralston Purina Group 122,400 7,681
21,774
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.4%
Premark International, Inc. 201,800 $ 3,632
Rubbermaid, Inc. 440,000 12,650
16,282
TOBACCO - 2.9%
BAT Industries PLC:
Ord. 272,400 2,136
sponsored ADR 55,000 880
Dimon, Inc. 102,600 1,937
Philip Morris Companies, Inc. 849,380 88,866
RJR Nabisco Holdings Corp. 538,100 16,547
Universal Corp. 190,000 5,273
115,639
TOTAL NONDURABLES 162,272
PRECIOUS METALS - 0.1%
Newmont Mining Corp. 43,200 2,133
RETAIL & WHOLESALE - 2.3%
APPAREL STORES - 0.4%
Limited, Inc. (The) 215,000 4,139
Melville Corp. 193,400 7,567
Payless Shoe Source, Inc. (a) 182,880 5,921
17,627
GENERAL MERCHANDISE STORES - 1.5%
K mart Corp. 65,600 656
May Department Stores Co. (The) 184,800 8,293
Sears, Roebuck & Co. 443,600 18,188
Wal-Mart Stores, Inc. 1,348,500 32,364
59,501
RETAIL & WHOLESALE, MISCELLANEOUS - 0.4%
Tandy Corp. 114,300 4,829
Toys "R" Us, Inc. 368,200 9,711
14,540
TOTAL RETAIL & WHOLESALE 91,668
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 0.7%
LEASING & RENTAL - 0.2%
GATX Corp. 173,600 $ 7,812
PRINTING - 0.2%
Donnelley (R.R.) & Sons Co. 120,500 3,886
Harland (John H.) Co. 79,400 1,925
New England Business Service, Inc. 129,300 2,214
8,025
SERVICES - 0.3%
Block (H&R), Inc. 218,400 5,706
Jostens, Inc. 114,500 2,190
National Service Industries, Inc. 114,700 4,373
12,269
TOTAL SERVICES 28,106
TECHNOLOGY - 0.7%
COMPUTERS & OFFICE EQUIPMENT - 0.5%
Digital Equipment Corp. (a) 154,100 5,451
International Business Machines Corp. 116,800 12,600
Olivetti & Co. Spa Ord. (a) 3,877,200 1,824
19,875
ELECTRONICS - 0.2%
AMP, Inc. 94,100 3,635
Nitto Denko Corp. 276,000 4,470
8,105
TOTAL TECHNOLOGY 27,980
TRANSPORTATION - 0.3%
RAILROADS - 0.3%
Burlington Northern Santa Fe Corp. 152,700 12,044
UTILITIES - 5.9%
ELECTRIC UTILITY - 1.5%
American Electric Power Co., Inc. 168,300 6,984
CILCORP, Inc. 62,900 2,626
DQE, Inc. 55,000 1,506
DPL, Inc. 190,000 4,299
Entergy Corp. 490,600 12,510
Illinova Corp. 300,000 7,725
PECO Energy Co. 100,000 2,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Pinnacle West Capital Corp. 200,000 $ 5,650
Unicom Corp. 150,000 3,525
Veba AG Ord. 218,600 11,128
58,303
GAS - 1.3%
Enron Corp. 327,900 12,911
MCN Corp. 225,000 5,288
Nova Corp. 447,400 3,807
Pacific Enterprises 427,000 12,543
Panenergy Corp. 286,900 9,109
Questar Corp. 295,000 9,293
52,951
TELEPHONE SERVICES - 3.1%
AT&T Corp. 163,000 8,496
Ameritech Corp. 488,400 27,106
BCE, Inc. 147,900 5,906
Bell Atlantic Corp. 514,500 30,420
BellSouth Corp. 342,800 14,055
Frontier Corp. 181,400 5,102
Lucent Technologies, Inc. 51,400 1,908
NYNEX Corp. 412,300 18,502
SBC Communications, Inc. 279,800 13,675
125,170
TOTAL UTILITIES 236,424
TOTAL COMMON STOCKS
(Cost $2,262,115) 2,234,160
CONVERTIBLE PREFERRED STOCKS - 4.0%
BASIC INDUSTRIES - 0.6%
METALS & MINING - 0.6%
Alumax, Inc., Series A, $4.00 133,033 16,762
Kaiser Aluminum Corp. $0.97 550,400 6,123
22,885
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 1.8%
OIL & GAS - 1.8%
Occidental Petroleum Corp. Indexed $3.00 748,900 $ 44,279
Santa Fe Energy Resources, Inc. $0.732 508,300 5,210
Unocal Corp. $3.50 (e) 379,400 21,341
70,830
FINANCE - 0.3%
BANKS - 0.1%
Boatmen's Bancshares, Inc. $1.75 73,700 2,524
INSURANCE - 0.0%
Aetna, Inc. Class C $4.7578 25,400 1,591
SECURITIES INDUSTRY - 0.2%
Merrill Lynch & Co, Inc. exchangeable $2.3906 72,700 2,908
Salomon, Inc. $2.03 117,400 3,052
5,960
TOTAL FINANCE 10,075
MEDIA & LEISURE - 0.0%
LEISURE DURABLES & TOYS - 0.0%
Tyco Toys, Inc. $0.4125 depositary share
representing 1/20 pfd., Series C 208,300 1,146
NONDURABLES - 1.2%
TOBACCO - 1.2%
RJR Nabisco Holdings Corp. depositary shares
representing 1/10 pfd., Series C 7,959,400 48,751
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.0%
TJX Companies, Inc., Series E, $7.00 10,700 1,765
GENERAL MERCHANDISE STORES - 0.1%
K mart Financing I $3.875 98,500 4,790
TOTAL RETAIL & WHOLESALE 6,555
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
Trans World Airlines, Inc. $4.00 (e) 39,400 $ 1,527
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $165,319) 161,769
CORPORATE BONDS - 10.0%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - 1.6%
BASIC INDUSTRIES - 0.9%
METALS & MINING - 0.9%
Inco Ltd. 5 3/4%, 7/1/04 Baa $ 29,650 35,728
ENERGY - 0.3%
OIL & GAS - 0.3%
Pennzoil Co. exchangeable 6 1/2%, 1/15/03 Baa 9,500 13,205
FINANCE - 0.2%
CREDIT & OTHER FINANCE - 0.2%
MBL International Finance of Bermuda
3%, 11/30/02 Aa3 5,000 5,488
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
POLLUTION CONTROL - 0.1%
WMX Technologies, Inc. 2%, 1/24/05 A2 6,080 5,198
MEDIA & LEISURE - 0.1%
LEISURE DURABLES & TOYS - 0.1%
Hasbro Corp. 6%, 11/15/98 A3 1,980 2,453
LODGING & GAMING - 0.0%
Hilton Hotels Corp. 5%, 5/15/06 Baa 1,580 1,588
TOTAL MEDIA & LEISURE 4,041
TOTAL CONVERTIBLE BONDS 63,660
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - 8.4%
AEROSPACE & DEFENSE - 0.1%
Lockheed Martin Corp. 7.70%, 6/15/08 A3 $ 3,500 $ 3,539
ENERGY - 0.5%
ENERGY SERVICES - 0.3%
Petroliam Nasional BHD yankee
6 7/8%, 7/1/03 (e) A1 9,420 9,241
OIL & GAS - 0.2%
McDermott, Inc. 7.95%, 7/7/97 Baa3 5,000 5,050
Petro-Canada, Inc. yankee 7 7/8%, 6/15/26 Baa1 4,000 4,037
9,087
TOTAL ENERGY 18,328
FINANCE - 5.3%
ASSET-BACKED SECURITIES - 0.9%
Discover Card Master Trust I 6.90%, 2/16/00 A2 4,500 4,534
Green Tree Financial Corp. 6.10%, 4/15/27 Aaa 4,880 4,835
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 1,192 1,184
Premier Auto Trust:
4.90%, 12/15/98 Aaa 638 633
8.05%, 4/4/00 Aaa 3,450 3,532
6%, 5/6/00 Aaa 3,920 3,891
Standard Credit Card Master Trust I:
8 1/4%, 10/7/97 A2 5,025 5,060
5 1/2%, 9/7/98 participation certificates A2 2,800 2,772
4.85%, 3/7/99 A2 5,200 5,164
7.65%, 2/15/00 A2 2,300 2,334
Union Federal Savings Bank Grantor Trust:
7.275%, 10/10/00 Baa2 1,152 1,156
8.20%, 1/10/01 Baa2 763 773
35,868
BANKS - 2.4%
Banponce Financial Corp. 6.88%, 6/16/00 Baa1 2,500 2,480
Banponce Corp.:
5 3/4%, 3/1/99 Baa1 1,620 1,575
6.378%, 4/8/99 Baa1 2,980 2,935
6 3/4%, 12/15/05 Baa2 1,000 937
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Capital One Bank 7.20%, 7/19/99 Baa3 $ 18,000 $ 18,036
Chase Manhattan Corp. 7 1/2%, 12/1/97 A2 2,100 2,127
Citicorp euro 5.5625%, 7/10/97 (f) A2 1,000 1,000
Corporacion Andina De Fomento:
euro 7 1/4%, 4/30/98 Baa3 800 803
yankee 7 1/4%, 4/30/98 (e) Baa2 5,900 5,924
Den Danske Bank Group AS yankee
7 1/4%, 6/15/05 (e) A2 2,000 1,968
Export Import Bank of Korea
6 3/8%, 2/15/06 A1 10,000 9,289
Firstar Corp. 7.15%, 9/1/00 A3 6,210 6,235
Keycorp 7 1/2%, 6/15/06 A2 8,600 8,609
Korea Development Bank:
6 1/4%, 5/1/00 A1 4,150 4,029
yankee 7 1/4%, 5/15/06 A1 7,000 6,899
Merita Bank Ltd. yankee 6 1/2%, 1/15/06 A3 1,000 926
Midland American Capital Corp.
12 3/4%, 11/15/03 A1 590 663
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 4,500 4,531
Signet Banking Corp.:
5 3/4%, 4/15/98 (f) Baa2 3,750 3,726
9 5/8%, 6/1/99 Baa2 4,469 4,762
Zions Bancorporation 8 5/8%, 10/15/02 BBB- 6,000 6,378
93,832
CREDIT & OTHER FINANCE - 1.8%
Chrysler Financial Corp.:
5.74%, 1/11/99 A3 10,000 9,793
5 5/8%, 1/15/99 A3 15,000 14,642
Finova Capital Corp.:
6.14%, 11/2/98 Baa1 1,750 1,731
6.12%, 5/28/02 Baa1 5,000 4,746
Ford Motor Credit Co.:
euro 8 5/8%, 1/24/00 A1 3,766 3,974
5.73%, 2/23/00 A1 4,500 4,340
6.20%, 3/12/01 A1 20,000 19,339
General Motors Acceptance Corp.:
6 3/4%, 2/25/98 A3 5,000 5,026
6.65%, 5/24/00 A3 5,000 4,955
Greyhound Financial Corp. 6.95%, 1/28/98 Baa2 1,250 1,258
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Secured Finance, Inc. secured
9.05%, 12/15/04 Aaa $ 1,500 $ 1,642
Union Acceptance Corp. 7.075%, 7/10/02 Baa2 1,740 1,733
73,179
INSURANCE - 0.2%
Metropolitan Life Insurance Co.
6.30%, 11/1/03 (e) A1 9,390 8,840
TOTAL FINANCE 211,719
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc. 6 1/4%, 4/1/99 A1 8,500 8,412
HEALTH - 0.1%
HOSPITALS, GENERAL MEDICAL - 0.1
Columbia/HCA Healthcare Corp.
6 7/8%, 7/15/01 A3 3,000 2,987
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.0%
Circus Circus Enterprises, Inc. 6.45%, 2/1/06 Baa2 1,000 921
PUBLISHING - 0.1%
News America Holdings, Inc. 8 5/8%, 2/1/03 Baa3 4,180 4,427
RESTAURANTS - 0.0%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 A3 1,400 1,285
TOTAL MEDIA & LEISURE 6,633
NONDURABLES - 0.2%
FOODS - 0.1%
Dart and Kraft Finance NV
7 3/4%, 11/30/98 A2 3,750 3,830
Ralcorp Holdings, Inc. 8 3/4%, 9/15/04 Ba1 1,000 1,033
4,863
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - CONTINUED
TOBACCO - 0.1%
Philip Morris Companies, Inc. 6.95%, 6/1/06 A2 $ 3,000 $ 3,005
TOTAL NONDURABLES 7,868
RETAIL & WHOLESALE - 0.0%
GENERAL MERCHANDISE STORES - 0.0%
Dayton Hudson Corp. 6.40%, 2/15/03 Baa1 1,000 949
TECHNOLOGY - 0.6%
COMPUTERS & OFFICE EQUIPMENT - 0.6%
Comdisco, Inc.:
7.82%, 2/5/97 Baa2 2,000 2,016
7 1/4%, 4/15/98 Baa2 7,000 7,078
9.45%, 6/8/00 Baa2 6,000 6,495
9.30%, 6/27/00 Baa2 3,750 4,050
5 3/4%, 2/15/01 Baa2 5,000 4,764
TOTAL TECHNOLOGY 24,403
TRANSPORTATION - 0.5%
AIR TRANSPORTATION - 0.5%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 2,030 2,056
9 1/2%, 7/15/98 Baa3 4,000 4,191
Delta Air Lines, Inc.:
9 7/8%, 5/15/00 Baa3 2,000 2,163
equip. trust cert. 8.54%, 1/2/07 Baa1 904 937
Delta Air, Inc. pass thru trust:
9 7/8%, 4/30/08 Baa1 5,010 5,540
10 1/2%, 4/30/16 Baa1 2,000 2,352
United Airlines pass thru trust
7.27%, 1/30/13 Baa1 2,750 2,571
TOTAL TRANSPORTATION 19,810
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - 0.8%
CELLULAR - 0.1%
360 Degrees Communications Co.
7 1/8%, 3/1/03 Ba2 $ 5,750 $ 5,535
ELECTRIC UTILITY - 0.2%
Gulf States Utilities Co. 1st mortgage
6 3/4%, 10/1/98 Baa3 1,000 1,000
Hydro-Quebec 8.40%, 1/15/22 A2 4,000 4,208
Texas Utilities Electric Co.:
7 1/8%, 6/1/97 Baa2 2,000 2,014
9 1/2%, 8/1/99 Baa2 1,000 1,062
8,284
GAS - 0.4%
Southwest Gas Corp.:
9 3/4%, 6/15/02 Baa3 8,700 9,715
9 3/8%, 2/1/17 Baa3 4,000 4,200
13,915
TELEPHONE SERVICES - 0.1%
MCI Communications Corp. 7 1/8%, 6/15/27 A2 3,000 3,036
TOTAL UTILITIES 30,770
TOTAL NONCONVERTIBLE BONDS 335,418
TOTAL CORPORATE BONDS
(Cost $406,888) 399,078
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 16.8%
U.S. TREASURY OBLIGATIONS - 13.8%
7 3/8%, 11/15/97 Aaa 38,390 39,002
6 1/8%, 3/31/98 Aaa 88,790 88,762
9 1/4%, 8/15/98 Aaa 38,065 40,218
7 3/4%, 12/31/99 Aaa 15,959 16,582
6 7/8%, 3/31/00 Aaa 4,685 4,742
7 7/8%, 8/15/01 Aaa 130,005 137,155
7 7/8%, 11/15/04 Aaa 2,500 2,675
11 3/4%, 2/15/10 Aaa 91,510 119,935
13 7/8%, 5/15/11 Aaa 12,000 17,884
9%, 11/15/18 Aaa 68,000 82,365
8 7/8%, 2/15/19 Aaa 5,000 5,989
555,309
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.0%
Federal Agricultural Mortgage Corp.:
7.01%, 2/10/05 Aaa $ 1,530 $ 1,523
7.04%, 8/10/05 Aaa 2,400 2,379
Federal Farm Credit Bank 6.09%, 4/03/00 Aaa 1,770 1,738
Federal Home Loan Bank:
7.36%, 7/1/04 Aaa 2,990 3,054
7.46%, 9/09/04 Aaa 1,540 1,583
7.87%, 10/20/04 Aaa 6,400 6,724
Federal Home Loan Mortgage Corporation:
8.065%, 1/27/05 Aaa 4,500 4,780
6.783%, 8/18/05 Aaa 3,660 3,593
Federal National Mortgage Association:
9.20%, 9/11/00 Aaa 9,075 9,882
7.05%, 11/12/02 Aaa 3,800 3,832
7.49%, 3/02/05 Aaa 10,000 10,283
7.65%, 3/10/05 Aaa 2,000 2,082
7.35%, 3/28/05 Aaa 3,490 3,560
Government Trust Certificates:
(assets of Trust guaranteed by U.S. Government
through Defense Security Assistance Agency)
Class T-2 9 5/8%, 5/15/02 Aaa 2,960 3,158
Class 1-C 9 1/4%, 11/15/01 Aaa 2,617 2,785
(assets of Trust guaranteed by U.S. Government
through Export-Import Bank)
Series 1992-A 7.02%, 9/1/04 Aaa 3,030 3,061
Guaranteed Export Trust Certificates:
(assets of Trust guaranteed by U.S. Government
through Export-Import Bank)
Series 1994-C, 6.61%, 9/15/99 Aaa 1,049 1,052
Series 1996-A, 6.55%, 6/15/04 Aaa 4,452 4,405
Private Export Funding Corp. secured:
6.24%, 5/15/02 Aaa 970 942
6.90%, 1/31/03 Aaa 7,380 7,376
8 3/4%, 6/30/03 Aaa 4,655 5,111
5.80%, 2/1/04 Aaa 4,580 4,374
6.86%, 4/30/04 Aaa 1,928 1,929
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
7 3/4%, 4/1/98 Aaa $ 1,220 $ 1,241
7 3/4%, 11/15/99 Aaa 8,448 8,722
8%, 11/15/01 Aaa 3,440 3,616
6 1/4%, 8/15/02 Aaa 5,916 5,747
5.89%, 8/15/05 Aaa 4,527 4,179
U.S. Housing & Urban Development
8.27%, 8/1/03 Aaa 6,270 6,742
119,453
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $684,216) 674,762
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 9.5%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.1%
7%, 11/1/96 to 7/1/01 Aaa 4,038 4,046
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 7.6%
5 1/2%, 11/1/08 to 5/1/11 Aaa 27,348 25,346
6%, 12/1/00 to 4/1/26 Aaa 82,924 77,750
6 1/2%, 12/1/08 to 5/1/26 . Aaa 85,895 80,197
7%, 6/1/07 to 5/1/26 Aaa 90,826 87,272
7 1/2%, 6/1/07 to 4/1/08 Aaa 3,207 3,225
8%, 9/1/17 to 3/1/26 Aaa 29,511 29,719
303,509
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.8%
7 1/2%, 7/15/25 to 4/15/26 Aaa 49,190 48,343
8%, 1/15/17 to 7/15/26 Aaa 16,274 16,379
9%, 11/15/14 to 2/15/25 Aaa 6,266 6,568
9 1/2%, 6/15/09 to 11/15/24 . Aaa 1,613 1,733
73,023
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $384,311) 380,578
COMMERCIAL MORTGAGE SECURITIES - 0.7%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
Equitable Life Assurance Society of the United States:
sequential pay Series 174
Class A1, 7.24%, 5/15/06 (e) Aaa $ 7,100 $ 7,020
commercial Series 1996-1 (e):
Class B1, 7.33%, 5/15/06 Aa2 4,000 3,955
Class C1, 7.52%, 5/15/06 A2 4,000 3,955
Oregon Commercial Mortgage commercial
Series 1995 Class 1-A, 7.15%, 6/25/26 (e)(f) AAA 3,835 3,811
Resolution Trust Corp. commercial Series 1995-C1
Class A4-A, 6 1/4%, 2/25/27 Aaa 2,248 2,234
Structured Asset Securities Corp. commercial Series:
1993-C1 Class A-1, 6.60%, 10/25/24 AA+ 2,010 1,997
1995-C1 Class A1-A, 7 3/8%, 9/25/24 AAA 2,677 2,671
Wells Fargo Capital Markets Apartment
Financing Trust commercial
6.56%, 12/29/05 (e) Aaa 4,500 4,319
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $30,056) 29,962
FOREIGN GOVERNMENT OBLIGATIONS (B) - 0.9%
Ontario Province:
7%, 8/4/05 Aa3 10,000 9,819
yankee 15 3/4%, 3/15/12 Aa3 5,000 5,551
Quebec Province:
yankee 7 1/8%, 2/9/24 A2 4,000 3,645
7.22%, 7/22/36 (d) A2 15,000 15,054
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $34,730) 34,069
SUPRANATIONAL OBLIGATIONS - 0.1%
African Development Bank 7 3/4%, 12/15/01
(Cost $2,979) Aa1 3,000 3,106
REPURCHASE AGREEMENTS - 2.2%
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.65%, dated
7/31/96 due 8/1/96 $ 88,556 88,542
PURCHASED OPTIONS - 0.0%
EXPIRATION DATE/ UNDERLYING FACE VALUE
STRIKE PRICE AMOUNT AT VALUE (NOTE1) (000S) (000S)
J. Aron and Co. OTC Put Option
on 2,754,950,000 Japanese Yen Sept. 96/
(Cost $1,367) 100.18 $ 25,791 $ 1,587
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,060,523) $ 4,007,613
LEGEND
1. Non-income producing
2. Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
3. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
4. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
5. 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 $83,028 or 2.1% of net
assets.
6. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
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 40.5% AAA, AA, A 40.1%
Baa 4.7% BBB 4.5%
Ba 0.6% BB 0.8%
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.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 88.6%
Canada 3.4
United Kingdom 2.6
France 1.0
Others (individually less than 1%) 4.4
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1996, the aggregate cost of investment securities for income
tax purposes was $4,063,544,000. Net unrealized depreciation aggregated
$55,931,000, of which $85,835,000 related to appreciated investment
securities and $141,766,000 related to depreciated investment securities.
At July 31, 1996, the fund had a capital loss carryforward of approximately
$18,945,000, all of which will expire on July 31, 2003.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JULY 31, 1996
ASSETS
Investment in securities, at value (including repurchase $ 4,007,613
agreements of $88,542) (cost $4,060,523) -
See accompanying schedule
Cash 93
Receivable for investments sold 18,082
Receivable for fund shares sold 1,754
Dividends receivable 5,889
Interest receivable 27,304
Other receivables 17
TOTAL ASSETS 4,060,752
LIABILITIES
Payable for investments purchased $ 15,031
Payable for fund shares redeemed 17,800
Accrued management fee 1,725
Other payables and accrued expenses 1,846
Collateral on securities loaned, at value 2,090
TOTAL LIABILITIES 38,492
NET ASSETS $ 4,022,260
Net Assets consist of:
Paid in capital $ 4,046,884
Undistributed net investment income 52,588
Accumulated undistributed net realized gain (loss) on (24,483)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on (52,729)
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 311,840 shares outstanding $ 4,022,260
NET ASSET VALUE, offering price and redemption price per $12.90
share ($4,022,260 (divided by) 311,840 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME $ 68,227
Dividends
Interest (including income on securities loaned of $303) 162,108
TOTAL INCOME 230,335
EXPENSES
Management fee $ 23,861
Transfer agent fees 11,663
Accounting and security lending fees 811
Non-interested trustees' compensation 31
Custodian fees and expenses 630
Registration fees 46
Audit 104
Legal 33
Interest 29
Dividends on securities sold short 1,027
Miscellaneous 35
Total expenses before reductions 38,270
Expense reductions (1,366) 36,904
NET INVESTMENT INCOME 193,431
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 119,861
Foreign currency transactions 15,754
Futures contracts 29,850
Short sales (54,213) 111,252
Change in net unrealized appreciation (depreciation) on:
Investment securities (229,482)
Assets and liabilities in foreign currencies 6,028
Futures contracts (275)
Short sales 37,642 (186,087)
NET GAIN (LOSS) (74,835)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 118,596
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 193,431 $ 277,107
Net investment income
Net realized gain (loss) 111,252 (148,167)
Change in net unrealized appreciation (depreciation) (186,087) 230,830
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 118,596 359,770
FROM OPERATIONS
Distributions to shareholders from net investment income (211,267) (183,542)
Share transactions 1,055,217 1,416,410
Net proceeds from sales of shares
Reinvestment of distributions 203,684 175,630
Cost of shares redeemed (2,214,260) (2,088,073)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (955,359) (496,033)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,048,030) (319,805)
NET ASSETS
Beginning of period 5,070,290 5,390,095
End of period (including undistributed net investment $ 4,022,260 $ 5,070,290
income of $52,588 and $75,847, respectively)
OTHER INFORMATION
Shares
Sold 79,220 110,702
Issued in reinvestment of distributions 15,438 13,918
Redeemed (166,917) (162,998)
Net increase (decrease) (72,259) (38,378)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31,
1996 1995 1994 B 1993 1992
SELECTED PER-SHARE DATA
Net asset value, $ 13.20 $ 12.76 $ 13.84 $ 12.79 $ 12.15
beginning of period
Income from Investment
Operations
Net investment income .57 .62 .25 .62 .62
Net realized and unrealized (.27) .27 (.17) 1.45 1.07
gain (loss)
Total from investment .30 .89 .08 2.07 1.69
operations
Less Distributions
From net investment income (.60) (.45) (.25) (.66) (.60)
From net realized gain - - (.50) (.36) (.45)
In excess of net realized gain - - (.41) - -
Total distributions (.60) (.45) (1.16) (1.02) (1.05)
Net asset value, end of period $ 12.90 $ 13.20 $ 12.76 $ 13.84 $ 12.79
TOTAL RETURN A 2.25% 7.19% .37% 17.18% 14.73%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,022 $ 5,070 $ 5,390 $ 3,599 $ 1,366
(in millions)
Ratio of expenses to average .82% .91% 1.02% .93% .96%
net assets
Ratio of expenses to average net .79% .90% 1.01% .93% .96%
assets after expense C C C
reductions
Ratio of net investment income to 4.12% 5.33% 4.09% 5.07% 5.68%
average net assets
Portfolio turnover rate 247% 269% 157% 162% 242%
</TABLE>
G 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).
H 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, NET INVESTMENT INCOME PER SHARE MAY
REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
I FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 8 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1996
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 financial statements have been prepared
in conformity with generally accepted accounting principles which permit
management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Debt securities for which quotations are readily
available are valued by a pricing service at their market values as
determined by their most recent bid prices in the principal market (sales
prices if the principal market is an exchange) in which such securities are
normally traded. Equity securities for which 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
market quotations are not readily available are valued at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities
maturing within sixty days of their purchase date are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
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, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, foreign currency transactions, market discount,
partnerships, capital loss carryforwards and losses deferred due to wash
sales and futures and options.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
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.
Losses may arise due to changes in the market value of the underlying
securities or if the counterparty does not perform under the contract.
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
SHORT SALES AGAINST THE BOX - CONTINUED
Dividends declared on securities sold short are recorded on the ex-dividend
date, and included as an expense of the fund.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Buying futures, writing
puts, and buying calls tend to increase the fund's exposure to the
underlying instrument. Selling futures, buying puts, and writing calls tend
to decrease the fund's exposure to the underlying instrument, or hedge
other fund investments. The underlying face amount at value is shown in the
schedule of investments under the caption "Purchased Options." This amount
reflects each contract's exposure to the underlying instrument at period
end. Losses may arise from changes in the value of the underlying
instruments, if there is an illiquid secondary market for the contracts, or
if the counterparties do not perform under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options 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 securities that
are subject to legal or contractual restrictions on resale. These
securities generally 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, the
fund had no investments in restricted securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $11,283,359,000 and $11,956,490,000, respectively, of which U.S.
government and government agency obligations aggregated $5,171,744,000 and
$5,830,127,000, respectively.
The market value of futures contracts opened and closed during the period
amounted to $1,923,384,000 and $2,007,232,000, 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 .2500% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates,
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
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 .51% of average net assets.
Effective August 1, 1996, FMR voluntarily agreed to reduce the individual
fund fee rate from .20% to .15%.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annual rate of .25%
of average net assets.
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 $2,586,000 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 $2,046,000 and $2,090,000, respectively.
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 period for
which loans were outstanding amounted to $24,330,000 and $14,835,000,
respectively. The weighted average interest rate was 5.46%. Interest
expense includes $16,000 paid under the interfund lending program.
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
7. BANK BORROWINGS -
CONTINUED
loan and the average daily loan balances during the period for which loans
were outstanding amounted to $13,540,000 and $10,214,000, respectively. The
weighted average interest rate was 5.67%. Interest expense includes $13,000
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
$991,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $12,000 and $363,000,
respectively, under these arrangements.
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, 1996, 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, 1996 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, 1996, 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 11, 1996
DISTRIBUTIONS
A total of 39.92% 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 14% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of these percentages for
use in preparing 1996 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.
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)(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)(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 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(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
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
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
Michael Gray, Vice President
Stephen R. Petersen, Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
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 Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(REGISTERED TRADEMARK)
LOW-PRICED STOCK
FUND
ANNUAL REPORT
JULY 31, 1996
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 38 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 42 Notes to the financial statements.
REPORT OF INDEPENDENT 51 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 52
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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first seven
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in both the stock and bond markets so far
this year. In 1995, both stock and bond markets posted strong results,
while the year before, stocks posted below-average returns and bonds had
one of the worst years in history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term. You also can help to manage some of the risks of investing
through diversification. A stock fund is already diversified because it
invests in many issues. You can diversify even further by placing some of
your money in several different types of stock funds or in other investment
categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Low-Priced Stock 11.50% 139.01% 215.00%
Low-Priced Stock (incl. 3% sales 8.15% 131.84% 205.55%
charge)
Russell 2000(registered trademark) Index 6.91% 97.58% 114.12%
Small Company Growth Funds 10.50% 106.78% n/a
Average
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 December 27, 1989. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Russell 2000 Index - an unmanaged index of 2,000 small capitalization
stocks with market values of $250 million or less. To measure how the
fund's performance stacked up against its peers, you can compare it to the
small company growth funds average, which reflects the performance of 338
mutual funds with similar objectives tracked by Lipper Analytical Services,
Inc. over the past 12 months. Both benchmarks reflect reinvestment of
dividends and capital gains, if any, but do not reflect any sales charges,
brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Low-Priced Stock 11.50% 19.04% 18.99%
Low-Priced Stock (incl. 3% sales charge) 8.15% 18.31% 18.44%
Russell 2000 Index 6.91% 14.59% 12.23%
Small Company Growth Funds Average 10.50% 15.33% 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
IMAHDR PRASUN SHR__CHT 19960731 19960816 102559 S00000000000001
Low-Priced Stock Fund RS Russell 2000
00316 RS002
1989/12/27 9700.00 10000.00
1989/12/31 9593.30 10183.51
1990/01/31 9535.10 9293.82
1990/02/28 9719.40 9582.38
1990/03/31 9816.40 9955.08
1990/04/30 9447.80 9630.04
1990/05/31 10194.70 10311.66
1990/06/30 10476.00 10332.56
1990/07/31 10417.80 9878.09
1990/08/31 9379.90 8562.52
1990/09/30 8968.27 7804.83
1990/10/31 8816.43 7328.36
1990/11/30 9292.18 7887.14
1990/12/31 9585.72 8200.08
1991/01/31 10466.35 8941.65
1991/02/28 11397.59 9938.77
1991/03/31 12156.76 10638.35
1991/04/30 12622.38 10611.58
1991/05/31 12814.70 11117.39
1991/06/30 12045.42 10469.50
1991/07/31 12784.34 10836.89
1991/08/31 13138.61 11238.01
1991/09/30 13192.71 11326.01
1991/10/31 13653.40 11625.57
1991/11/30 13098.47 11087.87
1991/12/31 14019.94 11975.73
1992/01/31 15233.92 12946.08
1992/02/29 16211.56 13323.74
1992/03/31 15674.40 12872.75
1992/04/30 15824.80 12421.76
1992/05/31 15932.23 12586.94
1992/06/30 15545.48 11991.68
1992/07/31 16050.41 12408.75
1992/08/31 16007.44 12058.59
1992/09/30 16137.72 12336.88
1992/10/31 16406.50 12729.02
1992/11/30 17515.20 13703.05
1992/12/31 18079.01 14180.43
1993/01/31 18543.44 14660.38
1993/02/28 18384.85 14321.78
1993/03/31 18939.91 14786.51
1993/04/30 18758.67 14380.63
1993/05/31 19155.14 15016.96
1993/06/30 19223.10 15110.64
1993/07/31 19472.31 15319.27
1993/08/31 20163.30 15981.08
1993/09/30 20327.14 16432.07
1993/10/31 21075.97 16855.01
1993/11/30 20713.64 16300.25
1993/12/31 21733.10 16857.57
1994/01/31 22863.72 17386.11
1994/02/28 22851.16 17323.23
1994/03/31 21846.16 16408.60
1994/04/30 22034.60 16506.13
1994/05/31 21959.22 16320.79
1994/06/30 21645.16 15766.59
1994/07/31 22135.10 16025.63
1994/08/31 22964.22 16918.62
1994/09/30 23073.27 16861.97
1994/10/31 23252.45 16795.42
1994/11/30 22632.20 16117.11
1994/12/31 22778.19 16550.13
1995/01/31 22763.95 16341.32
1995/02/28 23418.83 17021.10
1995/03/31 23575.43 17314.24
1995/04/30 24344.19 17699.23
1995/05/31 24842.46 18003.56
1995/06/30 25796.30 18937.50
1995/07/31 27405.01 20028.34
1995/08/31 27661.27 20442.67
1995/09/30 28155.35 20807.74
1995/10/31 27354.31 19877.17
1995/11/30 28066.35 20712.30
1995/12/31 28448.62 21258.78
1996/01/31 28756.17 21236.00
1996/02/29 29678.83 21897.81
1996/03/31 30170.91 22343.56
1996/04/30 31431.88 23538.31
1996/05/31 32385.29 24465.89
1996/06/30 31770.18 23461.24
1996/07/31 30555.35 21412.05
IMATRL PRASUN SHR__CHT 19960731 19960816 102602 R00000000000083
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Low-Priced Stock Fund on December 27, 1989, when the
fund started, and the maximum 3% sales charge was paid. As the chart shows,
by July 31, 1996, the value of the investment would have grown to $30,555 -
a 205.55% increase on the initial investment. For comparison, look at how
the Russell 2000 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have grown to
$21,412 - a 114.12% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Joel Tillinghast, Portfolio Manager of Fidelity
Low-Priced Stock Fund
Q. HOW DID THE FUND PERFORM, JOEL?
A. For the 12-month period ended July 31, 1996, the fund provided a return
of 11.50%. This outdistanced the small company growth funds average, as
tracked by Lipper Analytical Services, which returned 10.50% for the same
period. The fund also outperformed the Russell 2000 Index, which had a
12-month return of 6.91%.
Q. WHAT SPECIFIC FACTORS CONTRIBUTED TO FUND PERFORMANCE - EITHER
NEGATIVELY OR POSITIVELY - DURING THE PERIOD?
A. On a positive note, the fund benefited from sound individual stock
selection as several companies enjoyed accelerating earnings. The fund also
was able to capitalize on the improved performance turned in by the retail
sector over the past year. Retail stocks in general have been dragged
through the mud over the past couple of years, but they finally managed to
reward patient investors in the first half of 1996. Health care stocks also
contributed to the good results, as the fund held companies that were
mostly serving growing markets that weren't too severely affected by
reimbursement pressures. As far as hindrances go, the fund was hurt by its
relatively large cash position and the fact that the market seemed to favor
larger capitalization stocks during much of the period instead of the
smaller companies
which comprised the bulk of the portfolio. The fallout from the inventory
adjustments of the technology sector also hurt somewhat.
Q. WHAT WAS BEHIND THE TURNAROUND IN THE RETAIL SECTOR?
A. Despite my small retail weighting at the outset, retail stocks made up
the fund's third largest sector holding at the end of the period. Retail
stocks are cyclical - that is, their performance tends to mimic the
movements of the overall economy. Since the economy was stronger than many
of us had believed, this contributed to their positive showing. More
importantly, retail companies have slowed the rate of new store openings.
Over the past couple years, the square footage - either the expansion of an
existing store or construction of a new one - of most retail concepts grew
more rapidly than retail sales. As a result, profits were horrible across
the board. When retailers began to realize the market was saturated, square
footage growth diminished, and they focused on improving margins at
existing stores.
Q. WHAT HOLDINGS WERE IMPORTANT CONTRIBUTORS TO THE FUND'S PERFORMANCE?
A. One area which stood out was the athletic footwear sector. With the
Olympics taking place this year, the stage was set for the more
marketing-savvy companies such as Fila to roll out new and interesting
styles which appealed to consumers. This also helped Finish Line, an
athletic shoe store chain. Cole National, an optical and household goods
chain, gained from marketing vision-related benefits to managed-care
providers. South Trust, an Alabama bank, enjoyed continued strong loan
growth and high credit quality. Universal Health Services, a hospital
chain, benefited from population growth in its Nevada and Texas markets, as
well as attractive acquisitions.
Q. WHICH HOLDINGS OR SECTORS DIDN'T PERFORM AS WELL AS YOU WOULD HAVE
LIKED?
A. The technology field had a good number of earnings disappointments over
the period. Companies met the strong demand of 1995 and increased their
production. Over the past year, production surpassed demand, companies were
stuck with large inventories, and prices and profits fell. Most of the
technology company stocks that are lower-priced produce components that go
into finished PCs or workstations. During the technology sell-off, the
smaller component-making firms were much more susceptible to the downturn.
One specific example is Quantum, a disk drive company that acquired Digital
Equipment's disk drive business. Quantum took large losses in attempting to
merge these operations and had to outsource some manufacturing.
Q. YOU FOLLOW A UNIQUE STRATEGY IN MANAGING THIS FUND. COULD YOU SPEAK TO
THAT?
A. Sure. As the name of the fund suggests, I focus on stocks that are
priced low, specifically, trading for $25 or less. That's one part of it.
The other is that I seek out stocks that are priced low compared to my
estimate of their investment value. There are three major groups of stocks
which make up the majority of the "$25 and under" universe - small
companies, large-company turnarounds, and foreign companies. Small
companies take up the largest space in that universe and, correspondingly,
in the fund's portfolio. Since larger companies typically do not allow
their share price to fall below $25, the companies in this area that I do
own are depressed but exhibit good turnaround potential in my opinion.
Foreign stocks have always held a prominent place in both the fund and the
"$25 and under" universe, as many overseas companies are undervalued.
Q. WHAT'S YOUR OUTLOOK?
A. Many try to forecast the economy and other big picture factors, so my
ability to make a superior forecast is limited. Not as many forecast the
future of any individual small company, so it is possible to find shares
whose price indicates that consensus expectations are too cautious. I'll
continue to focus on finding companies with strong market niches, superior
profitability and solid cash flow, selling at moderate valuations, which
should produce satisfactory results.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high income with
preservation of capital. The
fund also considers the
potential for the growth of
capital
START DATE: April 16, 1947
SIZE: as of July 31, 1996,
more than $16.6 billion
MANAGER: Bettina Doulton,
since March 1996; manager,
Fidelity Advisor Income &
Growth Fund and Fidelity
Advisor Annuity Income &
Growth Fund, since March
1996; Fidelity Advisor Equity
Income Fund and Fidelity
VIP: Equity-Income Portfolio,
1993-
March 1996; Fidelity Value
Fund, 1995-March 1996;
Fidelity Select
Automotive Portfolio, 1993;
joined Fidelity in 1986
(checkmark)
BETTINA DOULTON ON HER
INVESTMENT APPROACH:
"My investment approach is
quite simple. I look for
companies whose stocks are
trading at attractive valuations
that offer improving
fundamentals, or business
prospects. I take a bottom-up
approach, which means that I
begin by evaluating the merits
of individual companies, rather
than looking first at sectors or
economic trends. I try to be
open-minded and flexible.
Finally, I believe that it's every
bit as important to avoid the
losers as it is to pick the
winners to generate
consistent performance
results for the fund's
shareholders."
(solid bullet) As of August 1, 1996, the
fund adopted an investment
policy change related to asset
allocation. When
management's outlook is neutral
- - that is, with market
conditions appearing to favor
no particular class of security
- - the fund will have an asset
allocation of approximately 60%
in equity securities and 40% in
fixed-income securities. This
allocation represents a typical
asset mix for balanced funds
within the industry. The fund
maintains the flexibility to
adjust this asset allocation as
market and other conditions
warrant.
(solid bullet) As of September 13, 1996,
Lipper Analytical Services
changed the fund's peer group
from equity income funds to
balanced funds. This change
allows the fund's performance
to be compared with other
funds that closely mirror its
investment objectives.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JULY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Bank of Montreal 1.2 0.7
Hyder PLC 1.2 1.0
King World Productions, Inc. 1.1 0.0
Universal Health Services, Inc. Class B 1.0 1.5
Yorkshire Water PLC Ord. 1.0 0.7
Atlantic Richfield Co. exchangeable $2.23 1.0 0.3
Biomet, Inc. 1.0 0.0
United Insurance Companies, Inc. 0.9 0.9
Lyondell Petrochemical Co. 0.9 1.4
Century Telephone Enterprises, Inc. 0.8 0.9
TOP FIVE MARKET SECTORS AS OF JULY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO
Finance 16.5 17.2
Technology 8.5 7.7
Retail & Wholesale 7.2 3.7
Utilities 6.3 5.3
Health 6.1 6.6
ASSET ALLOCATION
AS OF JULY 31, 1996* AS OF JANUARY 31, 1996**
Row: 1, Col: 1, Value: 17.4
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 40.0
Row: 1, Col: 4, Value: 40.1
Row: 1, Col: 1, Value: 27.3
Row: 1, Col: 2, Value: 1.7
Row: 1, Col: 3, Value: 40.0
Row: 1, Col: 4, Value: 31.0
Stocks 82.1%
Bonds 0.5%
Short-term
investments 17.4%
FOREIGN
INVESTMENTS 21.2%
Stocks 72.4%
Bonds 0.3%
Short-term
investments 27.3%
FOREIGN
INVESTMENTS 20.3%
*
*
*
INVESTMENTS JULY 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 80.5%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.3%
AEROSPACE & DEFENSE - 0.2%
Allied Research Corp. (a)(c) 431,610 $ 2,104
Rohr Industries, Inc. (a) 44,400 977
Transtechnology Corp. (c) 313,800 5,609
8,690
DEFENSE ELECTRONICS - 0.1%
Ducommun, Inc. 12,400 194
Flir Systems, Inc. (a) 195,100 2,511
2,705
SHIP BUILDING & REPAIR - 0.0%
Celsius Industrier AB Class B (a) 25,000 334
TOTAL AEROSPACE & DEFENSE 11,729
BASIC INDUSTRIES - 4.7%
CHEMICALS & PLASTICS - 2.0%
AEP Industries, Inc. (c) 316,289 13,521
Aceto Corp. (c) 427,370 6,090
Blessings Corp. 75,500 774
CFC International, Inc. (a) 120,000 1,620
Cytec Industries, Inc. (a) 197,700 5,931
EVC International NV (e) 80,000 2,327
General Chemical Group, Inc. 200,000 3,625
Lyondell Petrochemical Co. 1,550,000 34,681
Martin Color-Fi, Inc. (a) 103,000 515
Mississippi Chemical Corp. 150,000 3,019
Spartech Corp. 728,200 6,918
79,021
IRON & STEEL - 1.0%
Cold Metal Products, Inc. (a)(c) 536,300 2,950
ICO, Inc. 575,528 3,453
Intermetco Ltd. (c) 251,700 1,382
Kentucky Electric Steel, Inc. (a)(c) 277,500 1,908
Roanoke Electric Steel Corp. 229,900 2,931
Samuel Manu-Tech, Inc. 575,000 5,019
Slater Steel, Inc. 375,000 3,382
Steel of West Virginia, Inc. (c) 663,000 4,890
Sudbury, Inc. 430,000 3,655
TriMas Corp. 474,900 9,854
39,424
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 0.3%
Acier Leroux, Inc. (a):
Class B 125,000 $ 405
Class B (e) 200,000 647
Aluminum of Greece SA (Reg.) 8,180 338
Century Aluminum Co. 50,000 731
Kaiser Aluminum Corp. (a) 500,000 5,500
Lindberg Corp. 183,500 1,652
MAXXAM, Inc. (a) 27,200 1,088
Ryerson Tull, Inc. Class A (a) 29,000 410
Titanium Metals Corp. (a) 25,000 606
11,377
PACKAGING & CONTAINERS - 0.4%
Cristaleria Espanola SA 10,000 604
Owens-Illinois, Inc. (a) 1,000,000 15,625
16,229
PAPER & FOREST PRODUCTS - 1.0%
ABT Building Products Corp. (a) 72,000 1,512
Alliance Forest Products, Inc. (a) 100,000 1,513
Crown Vantage, Inc. (a) 10,000 100
Enso OY Class R 2,000,000 15,943
Klippans Finpappersbruk AB 38,400 204
Metsa-Serla Ltd. Class B 3,000,000 21,376
Specialty Paperboard, Inc. (a) 64,000 896
Upm-Kymmene Corp. (a) 25,000 546
42,090
TOTAL BASIC INDUSTRIES 188,141
CONGLOMERATES - 0.1%
Bibby & Sons PLC 1,650,000 3,106
Quixote Corp. 350,700 2,543
5,649
CONSTRUCTION & REAL ESTATE - 3.8%
BUILDING MATERIALS - 1.4%
American Woodmark Corp. (a) 50,000 263
Centex Construction Products, Inc. 812,800 11,074
Chart Industries, Inc. 66,600 907
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
BUILDING MATERIALS - CONTINUED
Dahl International AB (a)(e) 165,000 $ 2,452
Devcon International Corp. (a) 217,700 1,606
Domco Industries Ltd. 42,200 276
Drew Industries, Inc. (a)(c) 421,300 7,741
Evered Bardon PLC 14,468,876 7,880
Patrick Industries, Inc. (c) 617,500 7,719
Polypipe PLC 175,000 517
Raytech Corp. (c) 260,800 978
Republic Gypsum Co. 211,300 2,932
Shelter Components Corp. (c) 715,625 8,409
Watsco, Inc. Class B 110,370 1,807
54,561
CONSTRUCTION - 2.1%
AAF Industries PLC (a)(c) 1,250,000 331
Belmont Homes, Inc. (a) 237,100 4,831
Cavco Industries, Inc. (a)(c) 240,550 3,458
Continental Homes Holding Corp. (c) 449,700 8,601
Crossman Communities, Inc. (a) 192,300 3,269
Engle Homes, Inc. 221,500 1,509
Higgs and Hill PLC 2,675,000 3,226
M/I Schottenstein Homes, Inc. (a)(c) 856,600 7,602
McAlpine (Alfred) Ord. 315,388 640
McDermott (J. Ray) SA 203,900 5,047
Monaco Coach Corp. (a) 41,900 482
Oriole Homes Corp. (a):
Class A 91,000 671
Class B (c) 276,800 2,007
Redman Industries, Inc. (a) 500,000 10,373
Schult Homes Corp. (c) 213,600 3,498
Selmer AS 50,000 1,233
Southern Energy Homes, Inc. 138,500 1,662
Technip SA (a)(e) 80,000 7,126
Tay Homes PLC (c) 2,000,000 3,548
U.S. Home Corp. (a) 555,645 12,155
Volker Stevin NV 36,400 2,686
Washington Homes, Inc. (a) 215,800 836
Zaring Homes, Inc. (a) 84,500 993
85,784
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
ENGINEERING - 0.1%
Harding Lawson Associations Group, Inc. (a) 198,200 $ 1,016
Simard Beaudry, Inc. 19,000 39
URS Corp. (c) 432,578 3,082
4,137
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Banyan Short Term Income Trust (SBI) (c) 653,200 449
Banyan Strategic Land Trust (SBI) (c) 991,750 3,967
First Union Real Estate Equity & Mortgage Investments 120,500 798
Home Properties of NY, Inc. 75,000 1,500
Sunstone Hotel Investors, Inc. 47,000 494
7,208
TOTAL CONSTRUCTION & REAL ESTATE 151,690
DURABLES - 5.4%
AUTOS, TIRES, & ACCESSORIES - 2.0%
Autocam Corp. 151,383 1,438
Cook (D.C.) Holdings PLC 405,800 442
Custom Chrome, Inc. 68,400 1,539
Deflecta-Shield Corp. (a) 48,600 310
Douglas & Lomason Co. 55,000 894
Durakon Industries, Inc. (a)(c) 651,800 8,799
Excel Industries, Inc. 159,000 2,445
Federal Screw Works (c) 108,800 2,910
Hahn Automotive Warehouse, Inc. 92,109 737
Lund International Holdings, Inc. (a)(c) 220,000 3,025
Manitou BF SA 8,000 914
Mercury Air Group (c) 540,392 3,985
Monro Muffler Brake, Inc. (c) 389,904 7,506
Peugeot SA Ord. 25,000 3,022
Superior Industries International, Inc. 525,000 12,009
Transpro, Inc. 297,325 2,267
Travel Ports of America (a) 79,500 261
Ugly Duckling Corp. (a) 80,000 710
Uni Select, Inc. (c) 580,800 4,964
Valley Forge Corp. (c) 229,200 2,808
World Fuel Services Corp. (c) 803,804 13,363
Wynn's International, Inc. 285,550 6,889
81,237
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER DURABLES - 0.9%
Aristocrat Leisure Ltd. (a) 767,000 $ 1,887
Beijer AG (G&L), Series B (c) 310,000 3,385
Finnveden Invest AB Class B Free shares 100,000 1,289
Libbey, Inc. (c) 767,300 20,237
Mikasa, Inc. (a) 722,800 6,686
York Group, Inc. (c) 150,000 2,475
35,959
CONSUMER ELECTRONICS - 0.4%
International Jensen, Inc. (a)(c) 567,000 6,237
LG Electronics, Inc. GDR (non-vtg.) 446,200 2,566
Movado Group, Inc. (c) 379,100 7,108
15,911
HOME FURNISHINGS - 0.9%
BMTC Group, Inc. Class A (sub-vtg.) 125,000 636
Bush Industries, Inc. Class A (c) 498,850 9,603
Carpetright PLC 75,000 607
Chromcraft Revington, Inc. (a) 99,900 2,335
DMI Furniture, Inc. (a) 93,000 151
Dorel Industries (a)(e):
Class A (vtg.) 125,000 1,146
Class B (sub-vtg.) (c) 725,000 6,486
Ethan Allen Interiors, Inc. 274,600 6,007
Falcon Products, Inc. 250,670 3,697
Haverty Furniture Companies, Inc. 108,950 1,076
O'Sullivan Industries Holdings (a) 209,600 1,572
Roberds, Inc. (a) 61,600 578
Rowe Furniture Corp. 48,800 244
Stanley Furniture 185,000 2,382
36,520
TEXTILES & APPAREL - 1.2%
Carli Gry International AS (a):
(Reg.) 162,700 5,431
(Reg.) (e) 66,500 2,220
Concord Fabrics, Inc. (a):
Class A (c) 226,300 1,330
Class B 65,100 374
Cone Mills Corp. (a) 54,700 526
Conso Products Co. (a) 161,900 2,469
Decorator Industries, Inc. (c) 241,866 2,207
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Designer Holdings Ltd. 162,100 $ 2,979
Donnkenny, Inc. (a) 67,500 1,215
Fila Holding Spa sponsored ADR 101,000 8,143
Galey & Lord, Inc. (a) 328,200 3,733
Maxwell Shoe, Inc. Class A (a) 26,200 138
Oshkosh B'Gosh, Inc. Class A 291,000 4,583
Superior Surgical Manufacturing, Inc. (c) 420,400 4,414
Tandy Brands Accessories, Inc. (a) 97,000 655
Worldtex Corp. (a)(c) 967,300 5,683
Yue Yuen Industrial Holdings Ltd. 600,000 171
46,271
TOTAL DURABLES 215,898
ENERGY - 3.4%
ENERGY SERVICES - 1.3%
Akita Drilling Ltd. Class A (non-vtg.) 770,950 3,530
Artisan Corp. 50,000 155
Aztec Manufacturing Co. (c) 569,500 3,559
Carbo Ceramics, Inc. 366,200 7,416
Computalog Ltd. (a)(c) 434,400 3,476
Dreco Energy Services Ltd. Class A (a)(c) 414,600 9,329
Key Energy Group, Inc. (a)(c) 573,000 4,763
Pe Ben Oilfield Services Ltd. (a)(c) 302,000 463
Petroleum Helicopters, Inc. 114,300 1,715
Petroleum Helicopters, Inc. (non-vtg.) 302,000 4,455
Pool Energy Services Co. (a) 442,500 4,923
Precision Drilling Corp. (a):
Class A 47,889 1,028
Class A (e) 50,000 1,073
RPC Energy Services, Inc. (a) 254,500 2,895
Superior Energy Services, Inc. (a)(c) 164,000 328
UTI Energy Corp. (a) 141,200 1,977
51,085
OIL & GAS - 2.1%
Adams Resources and Energy, Inc. (a) 122,100 870
Alamco, Inc. (a)(c) 465,300 5,293
Belden & Blake Corp. (a) 367,000 7,891
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
British Borneo Petroleum 500,000 $ 4,178
CEC Resources Ltd. (a)(c) 126,330 632
Castle Energy Corp. (a)(c) 988,750 10,133
Columbus Energy Corp. (a)(c) 277,526 2,498
ConVest Energy Corp. (a) 62,900 315
Cube Energy Corp. (a)(c) 271,600 1,531
Discovery West Corp. (a) 200,000 534
ENEX Resources Corp. (c) 144,300 1,371
Ensign Resource Service Group Ord. 225,500 1,640
Foremost Industries, Inc. (a)(c) 272,500 1,189
Giant Industries, Inc. 543,600 7,814
Hallwood Consolidated Resources Corp. (a) 35,950 1,654
Maynard Oil Co. (a) 132,100 1,106
McFarland Energy, Inc. (a) 81,300 818
Neste Oy 75,000 1,553
Novus Petroleum Ltd. 3,452,542 4,807
Oil Search Ltd. 100,000 101
Petro-Canada 200,000 2,488
Petro-Canada 1st Installment Receipt (f) 146,000 924
Petroleum Development Corp. (a)(c) 1,102,500 2,963
Premier Oil PLC 2,000,000 887
Saga Petroleum AS:
Class A 225,000 3,287
Class B 370,500 4,918
Swift Energy Co. (a) 609,959 11,589
YPF Sociedad Anonima sponsored ADR representing
Class D shares 95,000 1,995
84,979
TOTAL ENERGY 136,064
FINANCE - 16.5%
BANKS - 6.0%
Banco Pastor SA 20,000 1,159
Bank Atlantic Bancorp., Inc. (c) 627,237 8,076
Bank of Ireland, Inc. 101,088 711
Bank of Montreal 2,000,000 47,642
Bank of New York Co., Inc. (warrants) (a) 255,400 10,599
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Bergens Skillingsbank 175,000 $ 1,512
CVB Financial Corp. 24,200 387
Christiania Bank OG Kreditkasse (e) 100,000 242
Christiania Bank Free shares Ord. 150,000 363
Colonial Bancgroup, Inc. 166,300 5,426
Corus Bankshares, Inc. 147,000 4,300
Den Norske Bank AS Class A Free shares 50,000 159
Den Norske Bank AS (a)(e) 1,000,000 3,173
First Empire State Corp. 20,000 4,980
First Mutual Savings Bank 50,400 617
Firstbank Puerto Rico (c) 1,547,800 31,923
Fokus Bank AS 790,000 4,505
Fokus Bank AS (e) 317,300 1,809
Foreningsbanken AB Class A Ord. 500,000 1,691
GBC Bancorp (c) 499,200 12,043
Gronlandsbanken AS 10,000 457
HUBCO, Inc. 207,370 4,225
International Bank of Asia Ltd. 200,000 126
Nordlandsbanken AS 100,000 1,634
Nordbanken AB 675,000 13,103
Nordbanken AB (e) 107,000 2,077
Oriental Bank & Trust 159,900 3,058
Okobank Class A (a) 150,000 1,286
Ringkjobing Bank 4,000 689
SouthTrust Corp. 1,000,000 27,750
Sparbanken Sverige Ab Class A (e) 473,000 5,703
Sparebanken Norway primary shares certificates 700,000 17,539
Sparebanken More 64,286 1,373
Stadshypotek:
Series A 100,000 2,305
Series A (e) 100,000 2,305
Sumitomo Bank 304,100 7,222
Syd-Sonderjylland Holding 320,000 10,233
Union Bank of Hong Kong 100,000 107
242,509
CREDIT & OTHER FINANCE - 1.2%
ACC Consumer Finance Corp. (a) 62,000 434
Amagerbanken AS 30,000 907
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Cash America Investments, Inc. 133,300 $ 933
First Financial Caribbean Corp. 401,500 8,532
Greenpoint Financial Corp. 235,000 7,432
Investors Financial Services Corp. 62,200 1,330
Intrum Justitia NV (Reg.) 800,000 1,207
Mercury Finance Co. 1,700,000 18,487
National Home Loans Holdings PLC 650,000 961
Perpetual PLC 140,000 4,651
Surrey Metro Savings Credit Union (non-vtg.) 300,000 2,160
47,034
INSURANCE - 7.1%
Allmerica Financial Corp. 296,000 8,769
American Indemnity Financial Corp. (c) 194,000 2,086
Amwest Insurance Group, Inc. (c) 168,250 2,082
Bankers Life Holding Corp. 136,500 3,140
Blanch E.W. Holdings, Inc. 279,000 5,336
Capitol American Financial Corp. 179,800 4,315
Commerce Group, Inc. 1,390,000 28,669
Enhance Financial Services Group Corp. 76,700 2,234
Farm Family Holdings, Inc. (c) 280,000 4,900
First Central Financial Corp. (c) 595,000 3,124
Fremont General Corp. 873,500 21,834
Frontier Insurance Group, Inc. 270,270 9,155
Gainsco, Inc. (c) 1,512,300 15,123
GCR Holdings Ltd. 500,000 11,438
Guarantee Life Companies, Inc. 168,050 2,773
Home State Holdings, Inc. (a)(c) 294,800 2,137
Integon Corp. 47,600 934
Intercontinental Life Corp. (a)(c) 319,300 3,832
John Alden Financial Corp. 276,800 5,571
Kingsway Financial Services, Inc. (a) 41,000 522
Lloyd Thompson Group PLC 500,000 1,385
Life USA Holding, Inc. (a) 838,800 6,606
Life RE Corp. 73,800 2,039
Lowndes Lambert Group Holdings PLC 325,000 647
MMI Companies, Inc. 109,900 3,476
Merchants Group, Inc. 125,100 2,361
Meridian Insurance Group, Inc. 100,000 1,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Midland Financial Group, Inc. 160,000 $ 1,400
NY Magic, Inc. 46,400 858
National Western Life Insurance Co. Class A (a) 122,700 8,328
Nelson Hurst PLC 115,000 327
Pembridge, Inc. (a) 400,000 2,168
Penn-America Group, Inc. 59,200 858
Philadelphia Consolidated Holding Corp. 59,000 1,018
Protective Life Corp. 595,000 20,453
RLI Corp. (c) 480,000 11,400
Security-Connecticut Corp. 413,500 10,906
Stewart Information Services Corp. (c) 531,000 10,819
Titan Holdings, Inc. 280,869 3,932
Transport Holdings, Inc. Class A (a)(c) 113,254 5,210
Terra Nova Holdings Ltd. 179,000 2,998
Unionamerica Holdings PLC sponsored ADR (c) 585,600 9,370
United Coasts Corp. (a) 195,000 1,414
United Insurance Companies, Inc. (a)(c) 1,690,000 36,758
284,055
SAVINGS & LOANS - 1.7%
Andover Bancorp., Inc. 181,100 4,211
BankUnited Financial Corp. Class A (a)(c) 113,050 834
Coastal Bancorp., Inc. (c) 484,799 8,484
Collective Bancorp., Inc. 698,900 16,553
Crazy Woman Creek Bancorp., Inc. (c) 100,000 1,031
Eagle Financial Corp. 100,000 2,400
First Home Bancorp., Inc. 60,000 1,065
Independence Federal Savings Bank (c) 119,500 866
Iroquois Bancorp., Inc. 85,400 1,281
MAF Bancorp., Inc. 207,254 5,130
Poncebank (c) 587,900 8,892
Primary Bank 40,215 473
SIS Bancorp., Inc. (a) 106,780 1,909
Sovereign Bancorp., Inc. 945,525 9,101
Virginia First Financial Corp. 278,500 3,064
Warren Bancorp., Inc. (c) 304,400 3,615
68,909
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - 0.5%
BHC Financial, Inc. 175,000 $ 2,538
Charles JW Financial Services, Inc. (a) 75,200 367
Johnson Fry Holdings PLC Class L 25,000 53
London Pacific Group Ltd. 850,000 2,936
Raymond James Financial, Inc. 733,000 15,301
21,195
TOTAL FINANCE 663,702
HEALTH - 6.1%
DRUGS & PHARMACEUTICALS - 0.6%
Astra AB Class B Free shares 50,000 2,066
Bio-Rad Laboratories, Inc. Class A (a) 562,050 16,580
Natural Alternatives International, Inc. (a)(c) 481,800 4,699
Santen Pharmaceutical Co. Ord. 27,500 669
24,014
MEDICAL EQUIPMENT & SUPPLIES - 3.7%
Allied Healthcare Products, Inc. 189,300 1,325
Althin Medical AB, Series B 3,600 80
Ballard Medical Products 891,500 16,047
Biomet, Inc. (a) 2,566,500 39,460
Exactech, Inc. (a) 71,600 439
HPSC, Inc. (a)(c) 352,500 2,159
Haemonetics Corp. (a)(c) 1,516,700 29,198
Herbalife International, Inc. (c) 1,732,100 24,249
Hycor Biomedical, Inc. (a) 132,900 581
Laser Industries Ltd. Ord. (a)(c) 552,600 6,977
Moore Medical Corp. (a)(c) 290,100 3,481
OEC Medical Systems, Inc. (a)(c) 641,700 7,540
OY Tamro AB (e) 50,000 306
Orthofix International (a) 268,000 2,613
Sofamor/Danek Group, Inc. (a) 85,400 2,252
Spacelabs Medical, Inc. (a) 24,500 499
Utah Medical Products, Inc. (a)(c) 793,000 9,615
Vital Signs, Inc. 121,400 2,625
149,446
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - 1.8%
America Service Group, Inc. (a)(c) 172,500 $ 2,415
Clinic Holdings Ltd. 500,000 619
Horizon Mental Health Management, Inc. (a) 100,700 2,215
Living Centers of America, Inc. 800 20
Nexthealth, Inc. (a) 60,100 86
Rehabcare Corp. (a)(c) 426,000 7,029
Rightchoice Managed Care, Inc. Class A (a)(c) 304,700 3,504
Rotech Medical Corp. 265,000 4,638
Sierra Health Services, Inc. (a) 170,000 4,463
TheraTx, Inc. (a) 102,300 1,752
Universal Health Services, Inc. Class B (a)(c) 1,640,500 42,037
Vivra, Inc. (a) 130,000 3,786
Wellpoint Health Networks, Inc. 40,000 1,060
73,624
TOTAL HEALTH 247,084
HOLDING COMPANIES - 0.3%
DCC PLC 150,000 626
Industrivarden AB, Series C Free shares 200,000 6,975
Marine Wendel SA 45,776 3,922
Perry Group 150,000 427
Queensway Financial Holdings Ltd. (a)(e) 150,000 1,326
13,276
INDUSTRIAL MACHINERY & EQUIPMENT - 3.5%
ELECTRICAL EQUIPMENT - 0.6%
Blick PLC Class L 100,000 801
Derlan Industries Ltd. (a) 100,000 175
Emcee Broadcast Products, Inc. (a) 45,000 270
ILC Technology, Inc. (a)(c) 300,000 3,375
Juno Lighting, Inc. 33,000 495
Premier Farnell PLC sponsored ADR 200,038 3,926
Reflectone, Inc. (a) 67,500 1,266
Spectrum Control, Inc. (a) 220,700 910
Twentsche Kabel Holding NV 30,704 1,328
Vertex Communications Corp. (a)(c) 425,100 7,911
Westinghouse Electric Corp. 100,000 1,675
22,132
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 2.7%
Allied Products Corp. 274,500 $ 6,691
Arts Way Manufacturing Co., Inc. (a) 27,500 127
BT Industries AB 150,000 2,161
CPAC, Inc. (a) 266,500 2,732
Columbus McKinnon Corp. (c) 524,500 7,802
EDAC Technologies Corp. (a)(c) 235,000 264
Farr Co. (a) 95,499 1,313
Fedders Corp. Class A 219,750 1,126
Gardner Denver Machinery, Inc. (a) 179,600 4,625
Gehl Co. (a)(c) 314,100 2,395
Geveke NV 25,000 726
Hardinge, Inc. 298,700 7,019
Hein-Werner Corp. (c) 179,700 1,325
IWP International 50,000 396
IWP International (UK Reg.) 250,000 1,945
Kaydon Corp. 200,000 9,025
KCI (Konecranes International) (a) 50,000 1,303
KCI (Konecranes International) (a)(e) 118,000 3,074
Kverneland Gruppen AS 75,000 1,814
Molins PLC 100,000 1,411
Oilgear Co. 16,600 237
Park Ohio Industries, Inc. (a) 16,007 268
Powerscreen International PLC 2,400,000 18,598
Regal-Beloit Corp. (c) 1,090,800 17,453
Rotork PLC 100,000 363
SkyJack, Inc. (a)(e) 165,000 4,981
Speizman Industries, Inc. (a) 10,100 38
Stewart & Stevenson Services, Inc. 87,600 1,894
Svedala Industri Free shares 250,000 4,436
T B Wood's Corp. 116,800 1,022
Varlen Corp. 120,203 2,509
109,073
POLLUTION CONTROL - 0.2%
Chempower, Inc. (a)(c) 677,700 2,880
MFRI, Inc. (a) 44,000 297
NSC Corp. (c) 530,600 929
Sani Gestion, Inc. 76,800 223
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - CONTINUED
Sevenson Environmental Services, Inc. (c) 84,200 $ 1,284
Weston (Roy F.), Inc. Class A (a)(c) 393,800 1,772
7,385
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 138,590
MEDIA & LEISURE - 4.7%
BROADCASTING - 1.1%
Austereo Ltd. 1,034,201 1,440
BET Holdings, Inc. Class A (a) 359,400 8,805
Canwest Global Communications Corp.:
(sub-vtg.) 1,320,006 12,625
(non-vtg.) (a) 180,000 1,669
Cogeco Cable, Inc. (c) 300,000 1,800
Cogeco, Inc. 325,000 1,596
Electrohome Ltd. Class Y (non-vtg) 50,000 391
Moffat Communications Ltd. 350,000 4,684
Premier Choix Tvec, Inc. Class A (c) 200,600 2,809
Prime Television Ltd. 644,706 923
Publishing & Broadcasting Ltd. 900,000 3,794
Radiomutuel, Inc. Class A 100,000 400
Radio Pacific 100,000 220
Southern Cross Broadcasting Australia Ltd. 102,443 416
Tele-Metropole, Inc. Class B (a) 150,000 1,746
TV 4 AB Class A 30,000 569
WIC (Western International Communications) Class B 25,000 329
44,216
ENTERTAINMENT - 1.2%
Harveys Casino Resorts 11,500 230
King World Productions, Inc. (a) 1,248,400 44,787
Sydney Aquarium Ltd. 250,000 677
Television & Media Services Ltd. (a) 500,000 278
Vacation Break USA, Inc. (a) 48,100 589
Vaughns, Inc. (a)(c) 190,000 2,114
48,675
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.2%
Arctco, Inc. 29,400 $ 312
Golden Bear Golf, Inc. 10,000 160
Rexhall Industries, Inc. (a) 50,625 310
Varsity Spirit Corp. (c) 439,750 7,366
8,148
LODGING & GAMING - 0.1%
Griffin Gaming & Entertainment, Inc. (a) 33,200 394
Riviera Holdings Corp. 2,200 34
Sands Regent (c) 286,072 1,180
Sholodge, Inc. (a) 218,800 2,844
Supertel Hospitality, Inc. (a) 39,500 405
4,857
PUBLISHING - 0.7%
Adscene Group PLC Class L 150,000 390
Aamulehti Yhtynae Oy:
Series II 36,100 924
Series II (e) 25,000 640
Culturecom Holdings Ltd. 1,000,000 30
Independent Newspapers Ltd. 50,000 177
Nation Publishing Group (For. Reg.) 50,000 151
Perskor Groep Beperk 45,000 1,552
Sadlier (William H.), Inc. 8,000 90
Schibsted AS, Series B 100,000 1,398
Talentum Oy Class B (c) 203,200 2,375
WSOY (Werner Soderstrom) Class B (c) 775,000 15,878
Wegener Tijil NV 15,250 1,660
25,265
RESTAURANTS - 1.4%
ARK Restaurants Corp. (a)(c) 222,600 2,170
Brinker International, Inc. (a) 375,000 4,922
Buffets, Inc. (a) 1,106,500 13,900
Consolidated Products, Inc. (a) 546,200 7,920
Elxsi Corp. (a) 230,000 1,236
Fine Host Corp. (a) 25,000 263
IHOP Corp. (a) 355,100 8,167
M Corp, Inc. (a)(c) 272,500 545
My Kinda Town PLC Class L 50,000 111
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
Mortons Restaurant Group, Inc. (a) 80,100 $ 1,282
Ryan's Family Steak Houses, Inc. (a) 500,000 3,813
Sbarro, Inc. 412,700 9,544
Sonic Corp. (a) 96,500 2,039
55,912
TOTAL MEDIA & LEISURE 187,073
NONDURABLES - 3.3%
AGRICULTURE - 0.2%
Sylvan Foods Holdings, Inc. (a)(c) 631,900 6,793
BEVERAGES - 0.1%
Celestial Seasonings, Inc. (a) 46,500 1,023
Compania Cervejaria Brahma PN (Pfd. Reg.) 1,000,000 610
Coors (Adolph) Co. Class B 115,800 2,186
Todhunter International, Inc. (a) 86,900 826
4,645
FOODS - 0.7%
Cultor OY, Series 1 10,000 501
Darling International, Inc. (a) 45,000 1,238
Earthgrains Co. 151,100 4,949
GoodMark Foods, Inc. 108,000 1,512
Man (E D & F) Group PLC 250,000 650
Raision Tehtaat:
Class E (New) 15,018 1,020
Class V 70,090 4,838
Riviana Foods, Inc. 773,800 12,477
Thorn Apple Valley, Inc. 11,500 115
Western Beef, Inc. (a) 62,500 570
27,870
HOUSEHOLD PRODUCTS - 1.2%
Allou Health & Beauty Care, Inc. Class A (a)(c) 313,400 1,880
American Safety Razor Co. 75,000 853
DSG International Ltd. (a)(c) 688,200 7,398
Helen of Troy Corp. (a)(c) 1,340,600 18,434
Jean Philippe Fragrances, Inc. (a)(c) 774,900 5,424
Nutramax Products, Inc. 5,000 43
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - CONTINUED
Oriflame International SA (a) 398,700 $ 3,133
Premark International, Inc. 332,500 5,985
Safeskin Corp. 34,700 1,267
Stephan Co. (c) 412,200 5,719
50,136
TOBACCO - 1.1%
BAT Industries PLC Ord. 2,850,000 22,351
Dimon, Inc. 74,000 1,397
Standard Commercial Corp. 157,100 2,101
UST, Inc. 500,000 16,625
W.D. & H.O. Wills Holdings Ltd. 408,700 711
43,185
TOTAL NONDURABLES 132,629
PRECIOUS METALS - 0.6%
Industrias Penoles SA 4,900,000 20,349
Richmont Mines, Inc. (a) 432,700 1,621
Terra Mining AB (e) 125,000 2,559
TOTAL PRECIOUS METALS 24,529
RETAIL & WHOLESALE - 7.2%
APPAREL STORES - 1.1%
Baker (J.), Inc. 440,600 2,864
Buckle, Inc. (The) (a) 137,400 3,675
Chateau Stores of Canada Ltd. Class A 142,900 572
Claire's Stores, Inc. 149,950 4,292
Designs, Inc. (a) 296,500 1,705
Frederick's of Hollywood:
Class A 25,200 101
Class B 172,600 647
Gantos, Inc. (a) 300,000 1,294
ICC International PLC (For. Reg.) 50,000 395
Melville Corp. 272,100 10,643
One Price Clothing Stores, Inc. (a)(c) 970,600 4,004
Pantorama Industries, Inc. (a) 100,000 73
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Ross Stores, Inc. 318,400 $ 9,393
S & K Famous Brands, Inc. (a)(c) 373,900 3,038
Shoe Carnival, Inc. (a) 515,000 2,382
45,078
DRUG STORES - 0.3%
Jean Coutu Group, Inc. Class A (c) 1,350,000 8,445
Vitalink Pharmacy Services, Inc. (a) 243,800 5,516
13,961
GENERAL MERCHANDISE STORES - 2.7%
Algonquin Mercantile Corp. 49,700 181
Carson Pirie Scott & Co. (a) 30,900 688
Duckwall-Alto Stores, Inc. (a) 129,700 1,816
Family Dollar Stores, Inc. 523,600 8,247
K mart Corp. 909,700 9,097
Lechters, Inc. (a)(c) 1,465,400 7,419
Mac Frugals Bargains Closeouts, Inc. (a)(c) 1,553,100 28,537
99 Cents Only Stores (a)(c) 232,000 3,190
Service Merchandise Co., Inc. (a) 2,246,000 10,388
Stein Mart, Inc. 200,700 4,265
Uni Marts, Inc. 229,700 1,751
Venture Stores, Inc. (a) 672,000 3,612
Wal-Mart Stores, Inc. 1,150,000 27,600
106,791
GROCERY STORES - 0.9%
Food Lion, Inc. Class A 2,074,800 18,673
Riser Foods, Inc. Class A (c) 673,000 15,816
34,489
RETAIL & WHOLESALE, MISCELLANEOUS - 2.0%
Betterware PLC 540,000 907
Blair Co. 325,700 7,491
Brookstone, Inc. (a)(c) 739,600 7,396
Celebrity, Inc. (a)(c) 333,900 1,252
Cole National Corp. Class A (a)(c) 1,100,000 18,427
Fabri-Centers of America, Inc. (a):
Class A 174,900 2,602
Class B (non-vtg.) 386,400 5,506
Farepak PLC 50,000 231
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Finlay Enterprises, Inc. (a) 300,600 $ 4,058
Finish Line, Inc. Class A (a) 67,800 1,339
Flying Flowers Ltd. unit 29,166 86
Land's End, Inc. (a) 168,200 3,406
Little Switzerland, Inc. (a) 99,200 434
Old American Stores, Inc. (a)(c) 375,600 2,629
Partridge Fine Arts PLC 200,000 224
Piercing Pagoda, Inc. (a) 53,500 936
Rex Stores Corp. (a) 170,000 2,189
Sound Advice, Inc. (a)(c) 365,400 548
Sound Advice, Inc. (warrants) (a) 11,205 -
Transmedia Network, Inc. 321,400 2,089
Tuesday Morning Corp. (a) 94,000 1,093
Waban, Inc. (a) 959,700 18,234
Wolohan Lumber Co. 8,000 80
81,157
TRADING COMPANIES - 0.2%
Hagemeyer NV 121,938 9,321
TOTAL RETAIL & WHOLESALE 290,797
SERVICES - 3.1%
ADVERTISING - 0.3%
ADVO, Inc. 126,300 1,184
American List Corp. (c) 437,580 11,486
Ariely Advertising Ltd. 112,000 476
John Singleton Advertising Ltd. 200,000 511
More O'Ferrall PLC 25,000 242
13,899
EDUCATIONAL SERVICES - 0.0%
Strayer Education, Inc. 136,000 1,479
PRINTING - 0.6%
Cadmus Communications Corp. 22,000 278
Devon Group, Inc. (a)(c) 549,600 15,114
Graphic Industries, Inc. (c) 589,000 5,448
Paris Corp. (a) 164,500 699
Pubco Corp. (a) 164,000 1,210
Unidigital, Inc. (a)(c) 50,000 325
23,074
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - 2.2%
Barbers Hairstyling for Men, Inc. (a) 8,500 $ 87
Barefoot, Inc. 340,300 3,488
Berlitz International, Inc. (a) 40,100 837
Caldwell Partners International, Inc. Class A (non-vtg.) 725,000 3,164
Concord Career Colleges, Inc. (a) 250,000 250
Craig (Jenny), Inc. (a)(c) 1,235,700 20,234
Ecco Travaille Tempoire SA 25,000 2,302
FYI, Inc. (a)(c) 150,300 2,555
Firstservice Corp. (a) 10,000 36
Forensic Technologies International Corp. (a) 14,000 130
Franklin Quest Co. 44,800 885
ICTS Holland Production BV (a) 75,000 759
Insurance Auto Auctions, Inc. (a) 118,800 1,173
LCS Industries, Inc. 40,000 430
Lawyers Title Corp. (c) 617,800 12,356
Mail Boxes Etc. (a) 141,200 2,753
Morgan & Banks Ltd. 400,000 1,145
OroAmerica, Inc. (a)(c) 384,700 2,260
PCA International, Inc. 25,600 413
Programming & Systems, Inc. (a)(c) 313,300 3
Railtrack Group PLC (e) 1,968,000 6,951
Rentokil Group PLC 500,000 3,027
Right Management Consultants, Inc. (c) 599,400 12,288
Sophus Berendsen AS, Series B 9,000 1,172
Supercuts, Inc. (a) 426,500 3,732
Thomas Group (a)(c) 341,900 5,428
87,858
TOTAL SERVICES 126,310
TECHNOLOGY - 8.1%
COMMUNICATIONS EQUIPMENT - 0.6%
Amper SA (Reg.) (a) 75,000 924
Circuit Systems, Inc. (a)(c) 329,800 1,690
Communications Systems, Inc. (c) 500,000 6,250
Dycom Industries, Inc. (a) 149,000 1,658
Echostar Communications Corp. Class A 35,000 954
IPC Information Systems, Inc. (a)(c) 769,100 10,863
Napco Security Systems, Inc. (a) 196,800 763
23,102
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 4.4%
American Business Information, Inc. (a)(c) 2,077,050 $ 28,300
Ark AS 48,000 860
BancTec, Inc. (a) 938,500 19,709
Black Box Corp. (a)(c) 849,900 20,928
Boole & Babbage, Inc. (a) 68,000 1,649
Broadway & Seymour, Inc. (a) 200,000 2,150
Cheyenne Software, Inc. (a) 425,000 7,544
Claremont Technology Group, Inc. 75,000 1,266
Computer Power Group Ltd. (a) 200,000 456
Computer Data Systems, Inc. (c) 570,200 13,043
Coreco, Inc. (a)(e) 134,500 543
Digi International, Inc. (a) 260,000 3,315
ECI Telecom Ltd. 225,000 3,909
Edusoft Ltd. (a) 134,500 521
Enea Data AB, Series B Free shares (c) 122,700 1,972
Equitrac Corp. (a)(c) 217,700 1,742
FactSet Research Systems, Inc. (a) 15,000 300
Frontec AB, Series B 104,600 1,237
GSE System, Inc. (a)(c) 331,600 3,648
GEAC Computer Ltd. (a) 125,000 1,546
Government Technology Services, Inc. (a)(c) 666,500 3,582
Group 1 Software, Inc. (a) 165,400 1,489
Inacom Corp. (a) 182,600 4,063
Mai Systems Corp. (a) 212,250 1,645
Merkantildata 50,000 624
Metromail Corp. (a) 208,000 4,030
Misys PLC Ord. 195,700 2,330
New Dimension Software Ltd. (a) 145,700 729
Orcad, Inc. (a) 133,700 1,337
Ozemail Ltd. sponsored ADR (a) 142,500 1,104
Rainbow Technologies, Inc. (a)(c) 434,500 7,658
Restrac, Inc. 25,000 272
SPSS, Inc. (a) 236,200 5,964
Smith Micro Software, Inc. (a) 90,800 556
Software Spectrum, Inc. (a) 90,700 2,041
Softkey International, Inc. (a) 483,800 8,950
Softdesk, Inc. (a) 183,000 1,098
TECNOST Spa 40,000 69
TT Teito Oy 250,000 12,247
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
USCS International, Inc. (a) 27,000 $ 486
Unicomp, Inc. (a)(c) 431,800 2,483
Walsh International, Inc. (a) 58,500 475
Worldtalk Communications Corp. (a) 22,000 220
178,090
COMPUTERS & OFFICE EQUIPMENT - 0.9%
Cybex Corp. (a) 47,900 671
Genicom Corp. (a)(c) 630,000 2,599
International Imaging Materials, Inc. (a) 218,300 4,448
Kentek Information Systems, Inc. (a)(c) 197,000 1,625
Mizar, Inc. (a) 44,500 245
Performance Technologies, Inc. (a) 90,000 1,181
Pomeroy Computer Resources, Inc. (a) 135,000 2,194
Quantum Corp. (a) 1,656,400 20,083
Southern Electronics Corp. (a) 336,500 1,998
35,044
ELECTRONIC INSTRUMENTS - 0.4%
Aeroflex, Inc. (a) 93,300 525
BTU International, Inc. (a) 263,800 857
Credence Systems Corp. (a) 190,500 2,524
DSP Technology, Inc. (a)(c) 160,800 844
Elscint Ltd. (a) 556,100 5,631
Hurco Companies, Inc. (a) 215,928 1,080
Lam Research Corp. 105,000 2,336
Mesa Laboratories, Inc. (a) 57,900 398
Reliability, Inc. (a) 208,300 1,224
Safetytek Corp. (a) 56,200 548
15,967
ELECTRONICS - 1.7%
ASM Pacific Technology Ltd. 2,392,000 1,531
Bel Fuse, Inc. (a) 177,900 1,712
Benchmarq Microelectronics, Inc. (a) 55,000 399
Bergman & Beving AB Class B Free shares 300,000 8,872
C-MAC Industries, Inc. (a) 100,000 498
Corcom, Inc. (a)(c) 276,500 2,091
DH Technology, Inc. (a) 252,400 5,963
Dallas Semiconductor Corp. 1,253,000 22,083
Finvest OY Class B 357,500 358
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Griffon Corp. (a)(c) 1,528,900 $ 12,613
Kyocera Corp. (warrants) (a) 1,500 1,303
Linear Technology Corp. 120,000 3,780
Micro Linear Corp. (a) 170,800 1,196
Quality Semiconductor, Inc. (a)(c) 421,900 2,057
Samsung Electronics Co. Ltd. GDS (vtg.) (e) 248 13
Siliconix, Inc. (a) 23,100 416
Smartflex Systems, Inc. (a) 187,000 1,917
Sterling Electronics Corp. 43,000 543
Wongs Industrial International 7,000,000 1,150
68,495
PHOTOGRAPHIC EQUIPMENT - 0.1%
Imation Corp. 250,000 5,687
Wescam, Inc. (a) 125,000 605
6,292
TOTAL TECHNOLOGY 326,990
TRANSPORTATION - 3.2%
AIR TRANSPORTATION - 0.8%
America West Airlines, Inc. Class B (a) 274,400 4,390
Atlantic Southeast Airlines, Inc. 417,700 9,868
Helikopter Services AS 200,110 2,295
Midwest Express Holdings, Inc. (a)(c) 500,000 13,188
Qantas Airways Ltd. sponsored ADR (e) 47,400 741
Transat AT, Inc. (a) 175,000 3,055
33,537
RAILROADS - 0.8%
Canadian National Railway Co. 1st Installment Receipt (f) 1,750,000
31,885
Genesee & Wyoming, Inc. Class A (a) 80,000 1,800
33,685
TRUCKING & FREIGHT - 1.6%
Air Express International Corp. 478,500 12,561
Arnold Industries, Inc. 913,600 12,905
Cannon Express, Inc. (a)(c) 271,200 2,712
Hub Group, Inc. Class A (a) 102,500 1,973
Landstar System, Inc. (a) 70,100 1,805
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - CONTINUED
Mark VII, Inc. 156,000 $ 3,237
Marten Transport Ltd. (a)(c) 293,900 3,821
MTL, Inc. (a) 218,000 3,815
Pittston Co. (Burlington Group) 928,500 16,944
USFreightways Corp. 150,000 2,653
62,426
TOTAL TRANSPORTATION 129,648
UTILITIES - 6.2%
CELLULAR - 1.0%
Boston Communications Group, Inc. (a) 10,000 140
Century Telephone Enterprises, Inc. 1,072,400 34,183
Orange PLC (a) 300,000 817
Palmer Wireless, Inc. (a) 117,200 2,036
Rural Cellular Corp. Class A (a) 100,000 950
Star Telecom International Holding Ltd. 1,002,000 282
Vodafone Group PLC 400,000 1,428
39,836
ELECTRIC UTILITY - 0.9%
British Energy PLC (e) 1,000,000 1,548
Gas Y Electricidad 25,000 1,322
National Grid Co. PLC 9,100,000 24,922
Northern Ireland Electric PLC 812,900 4,478
Scottish Power PLC ADR 250,000 1,225
Scottish Hydro-Electric PLC Ord. 250,000 1,138
34,633
GAS - 0.7%
Aquila Gas Pipeline Corp. 956,800 12,080
Southwestern Energy Co. 515,200 7,277
USX-Delhi Group (c) 831,800 9,878
29,235
TELEPHONE SERVICES - 0.3%
Atlantic Tele-Network, Inc. (a) 121,300 2,547
Davel Communications Group, Inc. (a)(c) 444,800 6,894
Portugal Telecom SA sponsored ADR 150,000 3,844
13,285
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
WATER - 3.3%
Anglian Water Ord. 865,000 $ 7,538
Hyder PLC 4,350,002 47,213
Severn Trent PLC Ord. 700,000 6,241
South West Water PLC Ord. 500,000 5,532
Southern Water PLC Ord. 1,100,000 17,972
Thames Water PLC Ord. 800,000 6,716
Yorkshire Water PLC Ord. 4,250,039 41,796
133,008
TOTAL UTILITIES 249,997
TOTAL COMMON STOCKS
(Cost $2,829,888) 3,239,796
PREFERRED STOCKS - 1.6%
CONVERTIBLE PREFERRED STOCKS - 1.5%
CONSTRUCTION & REAL ESTATE - 0.0%
CONSTRUCTION - 0.0%
U S Home Corp. 45,000 962
ENERGY - 1.2%
OIL & GAS - 1.2%
Atlantic Richfield Co. exchangeable $2.23 1,824,100 41,726
Gerrity Oil & Gas Corp. $1.50 200,000 2,475
Goodrich Petroleum Corp., Series A 80,200 521
Patina Oil & Gas Corp. $1.78 127,638 2,968
TOTAL ENERGY 47,690
NONDURABLES - 0.3%
TOBACCO - 0.3%
RJR Nabisco Holdings Corp. depositary shares
representing 1/10 pfd., Series C 2,000,000 12,251
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
RETAIL & WHOLESALE - 0.0%
GENERAL MERCHANDISE STORES - 0.0%
Venture Stores, Inc. $3.25 29,400 $ 742
TOTAL CONVERTIBLE PREFERRED STOCKS 61,645
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
DURABLES - 0.0%
TEXTILES & APPAREL - 0.0%
Weber (Gerry) International AG 12,000 546
UTILITIES - 0.1%
TELEPHONE SERVICES - 0.1%
Telecom Italia Mobile Spa de Risp 2,000,000 2,426
WATER - 0.0%
Hyder PLC redeemable 500,000 762
TOTAL UTILITIES 3,188
TOTAL NONCONVERTIBLE PREFERRED STOCKS 3,734
TOTAL PREFERRED STOCKS
(Cost $67,074) 65,379
CORPORATE BONDS - 0.5%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED)(G) AMOUNT (000S)(B)
CONVERTIBLE BONDS - 0.5%
BASIC INDUSTRIES - 0.0%
PAPER & FOREST PRODUCTS - 0.0%
St Laurent Paperboard, Inc. 8%, 6/15/04 (e) - CAD 1,000 836
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Mercury Air Group, Inc. 7 3/4%, 2/1/06 B- 500 505
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Park Ohio Industries, Inc. 7 1/4%, 6/15/04 (d) - $ 2,000 $ 1,900
TECHNOLOGY - 0.4%
COMPUTER SERVICES & SOFTWARE - 0.1%
Softkey International, Inc. 5 1/2%,
11/1/00 (e) - 5,000 3,900
COMPUTERS & OFFICE EQUIPMENT - 0.2%
Quantum Corp. 5%, 3/1/03 (e) B2 10,000 8,400
ELECTRONICS - 0.1%
United Microelectronics Corp. euro 1 1/4%,
6/8/04 - 4,660 5,266
TOTAL TECHNOLOGY 17,566
TOTAL CONVERTIBLE BONDS 20,807
NONCONVERTIBLE BONDS - 0.0%
FINANCE - 0.0%
SECURITIES INDUSTRY - 0.0%
Everen Capital Corp. 13 1/2%, 9/15/07 - 782 876
TOTAL CORPORATE BONDS
(Cost $26,478) 21,683
REPURCHASE AGREEMENTS - 17.4%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account dated
7/31/96 due 8/1/96:
At 5.65% $ 695,149 695,040
At 5.66% 5,081 5,080
700,120
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,623,560) $ 4,026,978
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. Principal amount is stated in United States dollars unless otherwise
noted.
3. Affiliated company (see Note 6 of Notes to Financial Statements).
4. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Park Ohio Industries, Inc.
7 1/4%, 6/15/04 6/6/94 $ 2,000
5. 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 $74,604,000 or 1.9% of net
assets.
6. Purchased on an installment basis. Market value reflects only those
payments made through July 31, 1996. The remaining installment for Canadian
National Railway, aggregating CAD 18,813,000, is due November 26, 1996. The
remaining installments for Petro-Canada, aggregating CAD 1,241,000 are due
September 23, 1996 and March 24, 1997.
7. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 78.8%
United Kingdom 6.9
Canada 4.8
Finland 2.1
Sweden 1.6
Norway 1.2
Others (individually less than 1%) 4.6
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1996, the aggregate cost of investment securities for income
tax purposes was $3,624,600,000. Net unrealized appreciation aggregated
$402,378,000, of which $596,400,000 related to appreciated investment
securities and $194,022,000 related to depreciated investment securities.
The fund hereby designates approximately $32,649,000 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, 1996
ASSETS
Investment in securities, at value (including repurchase $ 4,026,978
agreements of $700,120) (cost $3,623,560) -
See accompanying schedule
Cash 1
Receivable for investments sold 17,074
Receivable for fund shares sold 7,584
Dividends receivable 6,380
Interest receivable 408
Redemption fees receivable 2
Other receivables 531
TOTAL ASSETS 4,058,958
LIABILITIES
Payable for investments purchased $ 29,263
Payable for fund shares redeemed 7,069
Accrued management fee 2,695
Other payables and accrued expenses 1,389
TOTAL LIABILITIES 40,416
NET ASSETS $ 4,018,542
Net Assets consist of:
Paid in capital $ 3,254,350
Undistributed net investment income 35,638
Accumulated undistributed net realized gain (loss) on 324,881
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 403,673
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 202,243 shares outstanding $ 4,018,542
NET ASSET VALUE and redemption price per share $19.87
($4,018,542 (divided by) 202,243 shares)
Maximum offering price per share $20.48
(100/97.00 of $19.87)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME $ 49,161
Dividends (including $6,148 received from
affiliated issuers)
Interest 42,740
91,901
Less foreign taxes withheld (3,419)
TOTAL INCOME 88,482
EXPENSES
Management fee $ 23,452
Basic fee
Performance adjustment 3,918
Transfer agent fees 7,966
Accounting fees and expenses 782
Non-interested trustees' compensation 33
Custodian fees and expenses 514
Registration fees 447
Audit 62
Legal 25
Miscellaneous 21
Total expenses before reductions 37,220
Expense reductions (475) 36,745
NET INVESTMENT INCOME 51,737
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of 425,923
$50,007 on sales of investments in affiliated issuers)
Foreign currency transactions 417 426,340
Change in net unrealized appreciation (depreciation) on:
Investment securities (121,920)
Assets and liabilities in foreign currencies 44 (121,876)
NET GAIN (LOSS) 304,464
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 356,201
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 51,737 $ 32,141
Net investment income
Net realized gain (loss) 426,340 175,957
Change in net unrealized appreciation (depreciation) (121,876) 345,583
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 356,201 553,681
FROM OPERATIONS
Distributions to shareholders (37,877) (12,296)
From net investment income
From net realized gain (204,731) (264,897)
TOTAL DISTRIBUTIONS (242,608) (277,193)
Share transactions 1,468,403 859,444
Net proceeds from sales of shares
Reinvestment of distributions 237,135 271,488
Cost of shares redeemed (748,770) (627,283)
Redemption fees 900 579
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 957,668 504,228
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,071,261 780,716
NET ASSETS
Beginning of period 2,947,281 2,166,565
End of period (including undistributed net investment $ 4,018,542 $ 2,947,281
income of $35,638 and $23,018, respectively)
OTHER INFORMATION
Shares
Sold 75,258 50,657
Issued in reinvestment of distributions 12,697 16,520
Redeemed (38,819) (37,030)
Net increase (decrease) 49,136 30,147
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31,
1996 1995 1994 C 1993 1992
SELECTED PER-SHARE DATA
Net asset value, beginning $ 19.25 $ 17.62 $ 17.19 $ 14.94 $ 12.63
of period
Income from Investment
Operations
Net investment income .26 .20 .06 .15 .11
Net realized and unrealized 1.83 3.57 2.15 2.88 2.93
gain (loss)
Total from investment 2.09 3.77 2.21 3.03 3.04
operations
Less Distributions
From net investment income (.23) (.09) (.16) (.10) (.15)
From net realized gain (1.24) (2.05) (1.62) (.69) (.60)
Total distributions (1.47) (2.14) (1.78) (.79) (.75)
Redemption fees added to - - - .01 .02
paid in capital
Net asset value, $ 19.87 $ 19.25 $ 17.62 $ 17.19 $ 14.94
end of period
TOTAL RETURN A, B 11.50% 23.81% 13.67% 21.32% 25.55%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 4,019 $ 2,947 $ 2,167 $ 2,116 $ 928
(in millions)
Ratio of expenses to average 1.05% 1.12% 1.14% 1.12% 1.20%
net assets
Ratio of expenses to average 1.04% 1.11% 1.13% 1.12% 1.20%
net assets after expense D D D
reductions
Ratio of net investment income 1.46% 1.31% .51% 1.00% 1.27%
to average net assets
Portfolio turnover rate 79% 65% 54% 47% 82%
</TABLE>
J THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
K TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
L 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, NET INVESTMENT INCOME PER SHARE MAY
REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
M FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1996
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 financial statements have
been prepared in conformity with generally accepted accounting principles
which permit management to make certain estimates and assumptions at the
date of the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, passive foreign investment companies (PFIC),
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 the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions 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 1.5% of the proceeds of the redeemed shares. The
fee, which is retained by the fund, 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.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Buying futures, writing
puts, and buying calls tend to increase the fund's exposure to the
underlying instrument. Selling futures, buying puts, and writing calls tend
to decrease the fund's exposure to the underlying instrument, or
hedge other fund investments. Losses may arise from changes in the value
of the underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparties do not perform under the contracts'
terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options 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 securities that
are subject to legal or contractual restrictions on resale. These
securities generally 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 $1,900,000 or .1%
of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,631,509,000 and $2,237,556,000, respectively, of which U.S.
government and government agency obligations aggregated $215,813,000 and
$219,458,000, 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 .2500% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .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 .77% of average net
assets after the performance adjustment.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the fund, received sales
charges of $5,685,000 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 account fees and asset-based fees
that vary according to account size and type of account. FSC pays for
typesetting, printing and mailing of all shareholder reports, except proxy
statements. For the period, the transfer agent fees were equivalent to an
annual rate of .22% of average net assets.
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 $591,000 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$402,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $15,000 and $58,000,
respectively, under these arrangements.
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 during the period with
companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND VALUE
AFFILIATES COST COST INCOME
AAF Industries PLC $ - $ - $ - $ 331
AEP Industries, Inc. 2,579 833 8 13,521
Aceto Corp. 2,583 174 127 6,090
Alamco, Inc. - - - 5,293
Allied Products Corp. - 2,240 - -
Allied Research Corp. 1,011 - - 2,104
Allou Health & Beauty Care, Inc.
Class A - 935 - 1,880
America Service Group, Inc. 562 886 - 2,415
American Business Information, Inc. 1,902 - - 28,300
American Consumer Products Corp. - 915 - -
American Indemnity Financial Corp. - - 58 2,086
American List Corp. 4,954 - 207 11,486
Amwest Insurance Group, Inc. 825 - 37 2,082
Andover Bancorp., Inc. - 3,648 134 -
ARI Holdings, Inc. - 1,915 - -
ARK Restaurants Corp. - 17 - 2,170
Aztec Manufacturing Co. 286 - 16 3,559
Bank Atlantic Bancorp., Inc. - 4,280 159 8,076
BankUnited Financial Corp. Class A - 28 - 834
Banyan Short Term Income Trust (SBI) - - - 449
Banyan Strategic Land Trust (SBI) - - 397 3,967
Bel Fuse, Inc. 2,008 5,339 - -
Beijer Ag (G&L), Series B 352 - 116 3,385
Bio-Rad Laboratories, Inc. Class A 1,746 1,851 - -
Black Box Corp. 245 314 - 20,928
Brookstone, Inc. 3,770 - - 7,396
BTU International, Inc. 17 460 - -
Bush Industries, Inc. Class A 1,034 219 8 9,603
Cannon Express, Inc. 318 - - 2,712
Cannon Express, Inc. Class B 420 2,341 - -
Castle Energy Corp. - 2,217 - 10,133
Cavco Industries Inc. 28 21 - 3,458
CEC Resources Ltd. - - - 632
Celebrity, Inc. 30 - - 1,252
Chempower, Inc. - - - 2,880
Circuit Systems, Inc. 223 1,431 - 1,690
Cityscape Financial Corp. - 1,494 - -
Coastal Bancorp., Inc. 3,938 276 104 8,484
Cogeco Cable, Inc. 22 - 74 1,800
Cohu, Inc. - 3,990 121 -
Cold Metal Products, Inc. 118 228 - 2,950
6. TRANSACTIONS WITH AFFILIATED
COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND VALUE
AFFILIATES COST COST INCOME
Cole National Corp. Class A $ 1,794 $ - $ - $ 18,427
Collective Bancorp, Inc. - 1,832 - -
Columbus Energy Corp. - 4 - 2,498
Columbus McKinnon Corp. 8,181 - 63 7,802
Communications Systems, Inc. 557 64 71 6,250
Computalog Ltd. 297 744 - 3,476
Computer Data Systems, Inc. 1,360 - 55 13,043
Concord Fabrics, Inc Class A - 5 - 1,330
Consolidated Products, Inc. - 448 - -
Continental Homes Holding Corp. 2,071 - 45 8,601
Corcom, Inc. 656 - - 2,091
Craig (Jenny), Inc. 3,010 - - 20,234
Crazy Woman Creek Bancorp., Inc. 1,056 - 5 1,031
Cube Energy Corp. - - - 1,531
Datron Systems, Inc. - 1,214 - -
Davel Communications Group, Inc. - 73 - 6,894
Decorator Industries, Inc. 69 283 54 2,207
Devon Group, Inc. - 658 - 15,114
Dorel Industries Class B (sub-vtg.) 2,299 - - 6,486
Dreco Energy Services Ltd. Class A 37 373 - 9,329
Drew Industries, Inc. 1,736 - - 7,741
DSG International Ltd. 2,891 - - 7,398
DSP Technology, Inc. 159 - - 844
Durakon Industries, Inc. - - - 8,799
EDAC Technologies Corp. - 92 - 264
Elco Industries, Inc. - 5,454 - -
Enea Data AB Series B Free shares - - 31 1,972
ENEX Resources Corp. - - 29 1,371
Equitrac Corp. 225 97 - 1,742
Exar Corp. - 4,307 - -
Farm Family Holdings, Inc. 4,480 - - 4,900
Federal Screw Works - - 120 2,910
Finish Line, Inc. Class A - - - -
First Central Financial Corp. 126 - 70 3,124
Firstbank Puerto Rico 3,440 1,268 525 31,923
First Financial Caribbean Corp. 456 - 119 -
Foremost Industries, Inc. 148 43 - 1,189
Future Now, Inc. - - - -
FYI, Inc. 1,952 - - 2,555
Gainsco, Inc. 2,874 22 66 15,123
GBC Bancorp 1,667 920 144 12,043
Gehl Co. 713 1,654 - 2,395
Genicom Corp. 481 - - 2,599
Giant Industries, Inc. 960 1,662 139 -
Government Technology Services, Inc. - - - 3,582
Griffon Corp. 639 - - 12,613
6. TRANSACTIONS WITH AFFILIATED
COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND VALUE
AFFILIATES COST COST INCOME
Graphic Industries, Inc. $ 2,876 $ - $ - $ 5,448
GSE System, Inc. 575 - - 3,648
Haemonetics Corp. 3,002 659 - 29,198
Harding Lawson
Associations Group, Inc. - 262 - -
Hardinge, Inc. 6,687 395 110 -
Hein-Werner Corp. 295 - - 1,325
Helen Of Troy Corp. 134 - - 18,434
Herbalife International, Inc. 3,393 - - 24,249
Home State Holdings, Inc. - - - 2,137
HPSC, Inc. - - - 2,159
Huffman Koos, Inc. - 2,322 - -
ILC Technology, Inc. 2,596 841 - 3,375
Inacom Corp. 2,803 5,390 - -
Independence Federal Savings Bank - - 26 866
Intercontinental Life Corp. 1,418 - - 3,832
Interface Systems, Inc. - 1,160 4 -
Intermetco Ltd. - 540 53 1,382
International Jensen, Inc. - - - 6,237
International Recovery Corp. - - - -
Interphase Corp. - 295 - -
IPC Information Systems, Inc. 8,889 627 - 10,863
Jean Coutu Group, Inc. Class A 2,243 - 87 8,445
Jean Philippe Fragrances, Inc. 2,942 - - 5,424
Kentek Information Systems, Inc. 1,576 - - 1,625
Kentucky Electric Steel, Inc. 97 - - 1,908
Key Energy Group, Inc. - - - 4,763
Lakeview Financial Corp. 89 592 18 -
Laser Industries Ltd. Ord. 1,249 610 - 6,977
Lawyers Title Corp. 1,872 - 28 12,356
Lechters, Inc. 7,423 - - 7,419
Libbey, Inc. - 825 237 20,237
Lund International Holdings, Inc. - 1,395 - 3,025
Luria (L.) & Son, Inc. - 447 - -
M Corp, Inc. - 280 - 545
M/I Schottenstein Homes, Inc. 4,136 - - 7,602
Mac Frugals Bargains Closeouts, Inc. 1,161 135 - 28,537
Marten Transport Ltd. 2,077 - - 3,821
Merchants Group, Inc. - 778 30 -
Mercury Air Group 1,368 408 28 3,985
Midwest Express Holdings, Inc. 110 - - 13,188
Minntech Corp. - 3,990 53 -
Monro Muffler Brake, Inc. 518 - - 7,506
Moore Medical Corp. 1,836 - - 3,481
Movado Group, Inc. 5,995 - 23 7,108
Natural Alternatives International, Inc. 2,009 - - 4,699
6. TRANSACTIONS WITH AFFILIATED
COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND VALUE
AFFILIATES COST COST INCOME
NSC Corp. $ 21 $ - $ - $ 929
99 Cents Only Stores - - - 3,190
OEC Medical Systems, Inc. 337 - - 7,540
Old American Stores, Inc. 173 - - 2,629
One Price Clothing Stores, Inc. 2,565 - - 4,004
Oriole Homes Corp. Class B - - - 2,007
OroAmerica, Inc. 11 - - 2,260
Orthofix International - 1,298 - -
Orthopedic Technology, Inc. - 1,075 - -
Paris Corp. - 295 - -
Patrick Industries, Inc. - - 99 7,719
Pe Ben Oilfield Services Ltd. - - - 463
Petroleum Development Corp. - - - 2,963
Poncebank 2,334 93 189 8,892
Portec, Inc. - 2,037 - -
Premier Choix Tvec, Inc. Class A - - 44 2,809
Programming & Systems, Inc. - - - 3
Pulse Engineering, Inc. - 4,187 - -
Quality Semiconductor, Inc. 1,097 273 - 2,057
Quixote Corp. - 2,821 51 -
Rainbow Technologies, Inc. 168 - - 7,658
Raytech Corp. - - - 978
Reliability, Inc. - 171 - -
Regal-Beloit Corp. 649 - 128 17,453
Rehabcare Corp. 632 - - 7,029
Right Management Consultants, Inc. - - - 12,288
Rightchoice Managed Care, Inc.
Class A 2,084 862 - 3,504
Riser Foods, Inc. Class A 3,274 782 120 15,816
RLI Corp. 75 1,292 267 11,400
S & K Famous Brands, Inc. 1,117 - - 3,038
Sands Regent 326 - 13 1,180
Schult Homes Corp. 197 - - 3,498
Security-Connecticut Corp. - 783 54 -
Serv-Tech, Inc. - 689 - -
Sevenson Environmental Services, Inc. - 1,172 32 1,284
Shelter Components Corp. 3,197 420 33 8,409
Smalls Oilfield Services Corp. - - - -
Software Spectrum, Inc. - 1,059 - -
Sound Advice, Inc. - 71 - 548
Spartech Corp. - - - -
Steel of West Virginia, Inc. 1,159 250 - 4,890
Stephan Co. 2,969 - 29 5,719
Sterile Concepts Holdings 380 3,165 35 -
Stewart Information Services Corp. - - 121 10,819
Superior Energy Services, Inc. - - - 328
6. TRANSACTIONS WITH AFFILIATED
COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND VALUE
AFFILIATES COST COST INCOME
Superior Surgical
Manufacturing, Inc. $ 157 $ - $ - $ 4,414
Swift Energy Co. - 909 - -
Syds-Sonderjylland Holding - - - -
Sylvan Foods Holdings, Inc. 4,332 - - 6,793
Syntellect, Inc. - 2,208 - -
Talentum Oy Class B 5 - 74 2,375
Tay Homes PLC - - 219 3,548
Terra Mining AB - 900 - -
Thomas Group 581 - - 5,428
Transport Holdings, Inc. Class A 516 - - 5,210
Transtechnology Corp. 1,066 - - 5,609
Travel Ports of America - 328 - -
Uni Select, Inc. - 268 80 4,964
Unicomp, Inc. 1,554 40 - 2,483
Unidigital, Inc. - - - 325
Unionamerica Holdings PLC
sponsored ADR 1,970 - - 9,370
United Insurance Companies, Inc. 4,600 - - 36,758
United Video, Inc. - 985 - -
Universal Health Services, Inc. Class B 15,753 6,712 - 42,037
URS Corp. - - - 3,082
USX-Delhi Group 2,496 - 126 9,878
Utah Medical Products, Inc. 369 720 - 9,615
Valley Forge Corp. 190 522 55 2,808
Varlen Corp. 2,937 4,221 33 -
Varsity Spirit Corp. 2,571 13 44 7,366
Vaughns, Inc. 302 - - 2,114
Vertex Communications Corp. 2,226 - - 7,911
Warren Bancorp., Inc. 953 - 23 3,615
Watsco, Inc. Class B - 569 32 -
Watsco, Inc. Class A - 2,761 11 -
Wedco Technology, Inc. - - - -
Weston (Roy F.), Inc. Class A - - - 1,772
Williams Clayton Energy, Inc. - 2,679 - -
World Fuel Services Corp. 2,991 - 169 13,363
Worldtex Corp. 1,400 - - 5,683
WSOY (Werner Soderstrom) Class B 6,399 - 262 15,878
York Group, Inc. 287 - 6 2,475
Zoom Telephonics, Inc. - 343 - -
TOTALS $ 219,094 $ 126,193 $ 6,148 $ 1,067,359
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, 1996, 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, 1996 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,
1996, 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 11, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Low-Priced Stock Fund voted to pay on
September 9, 1996, to shareholders of record at the opening of business on
September 6, 1996, a distribution of $1.42 per share derived from capital
gains realized from sales of portfolio securities and a dividend of $.16
per share from net investment income.
A total of 9.61% 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 11.0% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of these percentages for
use in preparing 1996 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.
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)(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)(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 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(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
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Joel Tillinghast, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Fidelity Fifty
Export Fund
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(REGISTERED TRADEMARK)
GLOBAL BALANCED
FUND
ANNUAL REPORT
JULY 31, 1996
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 21 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 25 Notes to the financial statements.
REPORT OF INDEPENDENT 30 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 31
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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first seven
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in both the stock and bond markets so far
this year. In 1995, both stock and bond markets posted strong results,
while the year before, stocks posted below-average returns and bonds had
one of the worst years in history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term. You also can help to manage some of the risks of investing
through diversification. A stock fund is already diversified because it
invests in many issues. You can diversify even further by placing some of
your money in several different types of stock funds or in other investment
categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1996 PAST 1 LIFE OF
YEAR FUND
Global Balanced 4.52% 36.38%
Morgan Stanley Capital International World Index 8.81% 60.00%
Salomon Brothers World Government Bond Index, Unhedged 2.05% 36.19%
Global Flexible Portfolio Funds Average 7.97% 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 invested $1,000 in a fund that had a
5% return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to the performance of the Morgan Stanley
Capital International World Index - a market capitalization weighted equity
index of over 1,500 stocks traded in 22 world markets - and the performance
of the Salomon Brothers World Government Bond Index, Unhedged, a market
capitalization weighted index which includes debt issues traded in 14 world
government bond markets. Issues included in the Index have fixed-rate
coupons and maturities of at least one year. To measure how the fund's
performance stacked up against its peers, you can compare it to the global
flexible portfolio funds average, which reflects the performance of 67
mutual funds with similar objectives tracked by Lipper Analytical Services,
Inc. over the past 12 months. These benchmarks reflect reinvestment of
dividends and capital gains, if any, but do not reflect any sales charges,
brokerage commissions, or other costs of investing.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1996 PAST 1 LIFE OF
YEAR FUND
Global Balanced 4.52% 9.27%
Morgan Stanley Capital International World Index 8.81% 14.38%
Salomon Brothers World Government Bond Index, 2.05% 9.23%
Unhedged
Global Flexible Portfolio Funds Average 7.97% 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
IMAHDR PRASUN SHR__CHT 19960731 19960819 095310 S00000000000001
Global Balanced MS World Index SB
World Government Bond
00334 MS004 SB006
1993/02/01 10000.00 10000.00
10000.00
1993/02/28 10490.00 10233.90
10196.73
1993/03/31 11161.12 10824.22
10353.27
1993/04/30 11752.77 11322.89
10572.06
1993/05/31 11983.41 11580.84
10678.07
1993/06/30 11853.13 11480.71
10655.31
1993/07/31 12064.62 11714.25
10685.55
1993/08/31 12759.49 12248.33
11006.79
1993/09/30 12696.03 12019.10
11137.36
1993/10/31 13268.94 12347.41
11118.50
1993/11/30 13115.48 11646.04
11038.81
1993/12/31 13738.72 12213.06
11132.73
1994/01/31 14417.31 13015.73
11222.38
1994/02/28 13895.32 12844.42
11149.10
1994/03/31 12974.09 12287.79
11133.09
1994/04/30 12795.94 12664.77
11145.90
1994/05/31 13005.53 12694.48
11048.06
1994/06/30 12385.09 12656.32
11207.44
1994/07/31 12616.58 12894.04
11296.74
1994/08/31 12879.65 13279.41
11257.60
1994/09/30 12848.08 12927.56
11339.07
1994/10/31 12679.72 13292.32
11520.87
1994/11/30 12321.95 12712.87
11362.55
1994/12/31 12164.11 12833.00
11393.86
1995/01/31 11837.91 12637.29
11632.93
1995/02/28 11964.18 12818.46
11930.70
1995/03/31 12300.91 13433.19
12639.37
1995/04/30 12490.31 13898.23
12873.46
1995/05/31 12500.83 14013.98
13235.62
1995/06/30 12532.40 14006.52
13313.53
1995/07/31 13048.01 14704.17
13344.84
1995/08/31 12963.83 14373.41
12886.26
1995/09/30 13153.23 14788.95
13174.07
1995/10/31 13026.96 14552.92
13272.26
1995/11/30 13268.98 15055.05
13422.39
1995/12/31 13563.95 15492.04
13562.92
1996/01/31 13574.51 15769.09
13395.35
1996/02/29 13352.67 15861.88
13327.05
1996/03/31 13426.62 16122.55
13308.55
1996/04/30 13806.91 16498.35
13255.54
1996/05/31 13828.04 16509.31
13258.39
1996/06/30 13933.68 16589.48
13362.62
1996/07/31 13637.89 15999.86
13618.77
IMATRL PRASUN SHR__CHT 19960731 19960819 095313 R00000000000045
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Global Balanced Fund on February 1, 1993, when the
fund started. As the chart shows, by July 31, 1996, the value of the
investment would have grown to $13,638 - a 36.38% increase on the initial
investment. For comparison, look at how both the Morgan Stanley Capital
International World Index and Salomon Brothers World Government Bond Index,
Unhedged did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment in the Morgan Stanley Capital
International World Index would have grown to $16,000 - a 60.00% increase.
If $10,000 was put in the Salomon Brothers World Government Bond Index,
Unhedged it would have grown to $13,619 - a 36.19% increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets, its
local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a fund
that invests exclusively in the
United States. Past performance
is no guarantee of future results
and you may have a gain or loss
when you sell your shares.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Stock and bond market
performance worldwide was
mixed. The U.S. stock market
spent much of the year breaking
price and trading volume records.
However, several corporate
earnings disappointments and
growing fears of lower corporate
earnings made for a volatile stock
market in May, June and July. For
the 12 months ended July 31,
1996, the Standard & Poor's 500
Index returned 16.57% - above
its long-term historical average
of about 12%. Stock markets
overseas gave back some of their
strong gains made earlier in the year.
The Morgan Stanley EAFE Index
(Europe, Australia, Far East)
returned 3.53% for the period,
while the Morgan Stanley
Emerging Markets Free Index
declined 1.16%. Evidence of a
global expansion did not bode well
for many bond markets; growth can
lead to inflation that erodes the
value of a bond's fixed payments.
Domestically, bond markets
stabilized in June and July after
stronger-than-expected-economic
statistics rattled them at the
beginning of 1996. The Lehman
Brothers Aggregate Bond Index -
a broad measure of U.S. taxable
bonds - returned 5.54% for the
period. The Salomon Brothers
World Government Bond Index,
Unhedged - a proxy of bond
market performance in developed
nations including the U.S. -
returned 2.05%. Emerging market
debt markets rocketed ahead of
their large-market counterparts, with
the J.P. Morgan Emerging Market
Bond Index rising 33.31% on the
solid performance of Brady bonds
- - dollar-denominated emerging
market debt backed by U.S.
Treasury securities.
NOTE TO SHAREHOLDERS:
Richard Mace became portfolio manager of Fidelity Global Balanced Fund on
March 26, 1996
Q. HOW DID THE FUND PERFORM, RICK?
A. For the 12-months ended July 31, 1996, the fund had a total return of
4.52%. For the same period, the global flexible portfolio funds average, as
tracked by Lipper Analytical Services, was 7.97%.
Q. HOW DO YOU EXPLAIN THE FUND'S PERFORMANCE?
A. During the period, the fund was weighted towards stocks. Unfortunately,
stocks underperformed bonds on a global basis.
Q. STARTING WITH THE EQUITY SIDE, WHAT'S BEEN THE STORY IN EUROPE?
A. I generally favored economically sensitive or cyclical companies that
have proven their commitment to raising shareholder value. Some examples
during the period included Volvo, Veba (a German conglomerate), Michelin,
Scania (a Swedish truck maker), British Petroleum, Royal Dutch Petroleum
and Total SA (a French oil company). I believe the aggressive cost cutting
of many European companies, the cheapness of European stocks and the
potential for a more robust European economy have provided outstanding
investment opportunities.
Q. INVESTORS HAVE BEEN WAITING FOR A SUSTAINED ECONOMIC EXPANSION IN EUROPE
FOR SOME TIME. WHAT MAKES YOU THINK EUROPE IS ON THE BRINK OF A RECOVERY
THAT WOULD HELP CYCLICAL STOCKS?
A. While there can be no guarantees about the future, current economic
evidence indicates the European economy has bottomed and is showing signs
of recovery. Energy prices have risen, chemical and commodity prices have
stabilized, and cyclical industries such as autos have reported higher
sales. It is in this type of environment that soundly managed cyclical
companies can grow earnings and raise their cash flow.
Q. WERE YOU ABLE TO FIND UNDERVALUED STOCKS IN JAPAN?
A. Yes. Japan offered opportunities because I found many cheap stocks
representing companies with managements working to contain costs and raise
shareholder value. I also invested in companies that benefited from a
stronger economy and a weak yen. Some companies I favored during the period
included Honda, Toyota, Bridgestone (a tire manufacturer) and Fuji Photo.
Q. ONE OF THE FUND'S TOP EQUITY HOLDINGS DURING THE PERIOD WAS TELEBRAS,
THE BRAZILIAN TELEPHONE COMPANY. DOES THIS INDICATE YOU WERE SHIFTING MORE
OF THE FUND'S ASSETS TO EMERGING MARKETS?
A. No. I've said before that I will consider buying emerging market
securities if, in my opinion, they're trading at prices less than what
they're worth; but they will generally be a minor component of the fund.
That was the case with Telebras, which I viewed as a fundamentally sound
company trading at an attractive valuation.
Q. TURNING TO FIXED INCOME, IT SEEMS THE FUND'S ITALIAN GOVERNMENT BOND
POSITION PERFORMED WELL . . .
A. These bonds enjoyed the double advantage of declining inflation and a
strengthening currency. As the economic fundamentals of the country
improved, Italian bond yields fell and their prices rose, resulting in the
price appreciation of the fund's Italian fixed-income holdings.
Q. HOW ABOUT THE FUND'S U.S. TREASURY BOND HOLDINGS?
A. I found it best to concentrate on the U.S. for fixed income rather than
equities. I think the U.S. bond position added some value to the fund,
especially in the last few months of the period. That said, I began to
reduce some of the interest-rate sensitivity in the fund's U.S. position -
reflecting the potential of continued economic growth in the U.S.
Q. WHAT WAS ONE OF THE MOST IMPORTANT ASSET ALLOCATION DECISIONS YOU MADE
WITH THE FIXED-INCOME PORTION OF THE PORTFOLIO?
A. I would say having no Japanese bonds and minimal fixed-income exposure
to some European countries was important. Paltry yields in Japan and a
negative return on the yen have made Japanese bonds an unattractive
investment for some time. In Europe, the fund was underweighted versus its
benchmark index in bonds, although it held some positions in longer
maturity French and German bonds.
Q. WHAT'S YOUR OUTLOOK?
A. It's clear to me that the global economy is expanding. With that in
mind, one can reasonably expect that - while economic expansion is good for
equities - the fund's fixed-income exposure could be reduced somewhat. That
said, in both asset classes, I will continue to look for securities with
good relative value while positioning the fund for any future
opportunities.
FUND FACTS
GOAL: high current income
with regard for both
preservation of capital and
potential for growth of capital
by investing in a broadly
diversified portfolio of high
yielding equity and debt
securities
START DATE: February 1, 1993
SIZE: as of July 31, 1996,
more than $87 million
MANAGER: Richard Mace,
since March 1996; manager,
Fidelity International Value
Fund, since 1994; manager,
Fidelity Overseas, Fidelity
Advisor Overseas, VIP:
Overseas, Fidelity Advisor
Annuity Overseas funds, since
March 1996; joined Fidelity in
1987
(checkmark)
RICK MACE ON SHAREHOLDER
FRIENDLINESS IN EUROPE:
"Although European
companies were not
traditionally known for
seeking to maximize
shareholder value, that has
changed dramatically as
several companies in
Europe have taken steps
to raise returns for their
shareholders. In my opinion,
this benefits both the
company and its
shareholders. To compete
globally, European
organizations need to be cost
competitive. This strategy
helps the company because it
brings down the cost of
capital, raises its return on
existing capital and fuels
earnings growth. Given that
earnings drive stock prices,
this strategy should have a
favorable effect on the
company's stock price.
"Let me give an example.
Volvo has actively pursued
shareholder interest. The
Swedish car company has
divested several non-core
businesses, including
tobacco-maker Swedish
Match. In addition, companies
such as Michelin, Veba,
Alcatel and Pechiney all have
made similar efforts to cut
costs and focus on core
businesses."
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Falconbridge Ltd. (Canada) 1.6 1.1
Burlington Resources, Inc. 1.5 0.0
(United States of America)
Telebras PN (Pfd. Reg.) (Brazil) 1.2 1.3
Veba AG Ord. (Germany) 1.1 0.0
Pechiney SA Class A (France) 1.0 0.1
TOP FIVE BOND ISSUERS AS OF JULY 31, 1996
(WITH MATURITIES MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE BONDS
6 MONTHS AGO
United States Treasury 23.9 29.3
German Federal Republic 3.4 2.6
Italian Republic 2.1 2.5
United Kingdom, Great Britain & 1.3 0.9
Northern Ireland
Swedish Kingdom 0.9 1.4
TOP FIVE COUNTRIES AS OF JULY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE COUNTRIES
6 MONTHS AGO
United States of America 44.2 48.2
Japan 15.2 24.8
France 6.4 3.5
Germany 6.0 3.8
United Kingdom 5.3 2.3
TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY,
INDICATING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT
RISKS. PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES CONTRACTS,
IF APPLICABLE.
ASSET ALLOCATION
AS OF JULY 31, 1996 * AS OF JANUARY 31, 1996 **
Row: 1, Col: 1, Value: 4.4
Row: 1, Col: 2, Value: 2.5
Row: 1, Col: 3, Value: 32.5
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 5, Value: 20.6
Row: 1, Col: 1, Value: 3.0
Row: 1, Col: 2, Value: 6.2
Row: 1, Col: 3, Value: 37.3
Row: 1, Col: 4, Value: 53.5
Stocks 60.6%
Bonds 32.5%
Convertible
securities 2.5%
Short-term
investments 4.4%
FOREIGN
INVESTMENTS 55.8%
Stocks and
equity futures 53.5%
Bonds 37.3%
Convertible
securities 6.2%
Short-term
investments 3.0%
FOREIGN
INVESTMENTS 47.0%
*
**
INVESTMENTS JULY 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 59.7%
SHARES VALUE (NOTE 1)
(000S)
AUSTRALIA - 0.8%
CSR Ltd. 28,100 $ 92,380
QNI Ltd. 176,500 329,041
Western Mining Holdings Ltd. 44,000 292,711
714,132
AUSTRIA - 0.1%
EVN (Energie-Versor Nieder) 600 82,096
BRAZIL - 1.9%
Compania Cervejaria Brahma PN (Pfd. Reg.) 832,300 507,955
Telebras PN (Pfd. Reg.) 14,709,100 1,066,654
Telecomunicacoes de Minas Gerais SA (Telemig) (a) 1,693,100 151,907
1,726,516
CANADA - 4.2%
BCE, Inc. 5,200 207,644
Barrick Gold Corp. 6,000 166,927
Bre-X Minerals Ltd. (a) 6,000 108,448
Bresea Resources Ltd. (a) 12,500 132,742
Canadian Natural Resources Ltd. (a) 21,600 403,768
Elan Energy, Inc. (a) 21,900 187,166
Falconbridge Ltd. 2nd Installment Receipt (e) 102,900 1,426,087
Greenstone Resources Ltd. (a) 7,200 84,576
Inco Ltd. 3,400 104,237
Magna International, Inc. Class A 2,000 89,246
Renaissance Energy Ltd. (a) 7,600 193,752
TVI Pacific, Inc. 10,600 12,428
Ulster Petroleums Ltd. (a) 91,600 582,973
3,699,994
DENMARK - 0.7%
International Service Systems AS, Series B 10,000 233,682
Teledanmark AS Class B 2,500 116,402
Unidanmark AS Class A 5,000 231,046
581,130
FINLAND - 1.5%
America Group Ltd. Class A 10,000 191,276
Huhtamaki Ord. 10,000 344,029
Kemira OY 20,000 218,219
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINLAND - CONTINUED
Valmet OY 15,000 $ 235,476
Valmet OY (d) 23,000 361,063
1,350,063
FRANCE - 5.5%
Alcatel Alsthom Compagnie Generale d'Electricite SA 11,000 900,520
Axa SA 2,000 109,568
Axime SA Ex Segin (a) (d) 4,000 584,468
Canal Plus SA 800 191,353
Credit Commercial de France Ord. 2,000 96,157
Elf Aquitaine SA sponsored ADR 3,000 108,000
Eramet SA 6,000 380,705
Michelin SA (Compagnie Generale des Etablissements)
Class B 17,783 807,283
Pechiney SA Class A 22,000 904,924
Societe Generale Class A 1,000 110,288
Total SA Class B 8,782 631,052
Usinor Sacilor 6,000 83,767
4,908,085
GERMANY - 2.2%
BASF AG 4,000 107,447
Bayer AG 3,000 100,859
Continental Gummi-Werke AG 7,000 111,964
Daimler-Benz AG Ord. 1,000 53,228
Deutsche Bank AG 7,000 354,528
Karstadt AG 500 179,984
Veba AG Ord. 19,000 967,195
Volkswagen AG 200 67,919
1,943,124
HONG KONG - 0.3%
Consolidated Electric Power Asia Ltd. 30,000 51,786
HSBC Holdings PLC 4,000 64,545
Peregrine Investments Holdings Ltd. 100,000 134,476
Peregrine Investments Holdings Ltd. (warrants) (a) 10,000 1,487
252,294
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ITALY - 0.4%
Italcementi Fabbriche Ruinite Cemento Spa 5,000 $ 35,327
Pirelli Spa Ord. (a) 60,000 97,453
Stet (Societa Finanziaria Telefonica) Spa Ord. 60,000 183,337
316,117
JAPAN - 14.8%
Acom Co. Ltd. 14,000 574,023
Akita Bank Ltd. 21,000 150,976
Aoyama Trading Co. Ord. 8,500 233,138
Bank of Tokyo-Mitsubishi Ltd. 27,050 569,740
Bridgestone Corp. 20,000 363,211
Canon, Inc. 27,000 510,555
DDI Corp. Ord. 24 193,887
Dai-Dan Co. Ltd. 10,000 162,883
Daito Trust Construction 30,000 393,166
Daiwa House Industry Co. Ltd. 10,000 151,650
Fuji Bank Ltd. 20,000 393,166
Fuji Photo Film Co. Ltd. 25,000 746,548
Hitachi Maxell Ltd. 15,000 306,108
Honda Motor Co. Ltd. 35,000 845,308
Hoya Corp. 3,000 90,990
Ito-Yokado Co. Ltd. 10,000 577,580
Jusco Co. Ltd. 8,000 257,618
Komatsu Ltd. Ord. 60,000 549,871
Matsushita Electric Industrial Co. Ltd. 36,000 626,820
Minebea Co. Ltd. 20,000 162,883
Mitsubishi Trust & Banking Corp. 10,000 166,628
Mitsui Trust and Banking Co. Ltd. 27,000 293,190
NKK Corp. (a) 125,000 356,892
Namco Ltd. 18,000 586,380
Nichiei Co. Ltd. 1,000 64,966
Nifco, Inc. 500 6,038
Nintendo Co. Ltd. Ord. 3,800 266,080
Nippon Shokubai Co. Ltd. 9,000 82,733
Nitto Denko Corp. 14,000 226,726
Nomura Securities Co. Ltd. 8,000 140,042
Omron Corp. 9,000 165,130
Orix Corp. 5,000 196,583
Promise Co. Ltd. 2,000 96,045
Sekisui Chemical Co. Ltd. 15,000 174,117
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
JAPAN - CONTINUED
Shin-Etsu Chemical Co. Ltd. 250 $ 4,423
Sho Bond Corp. Ord. 5,500 200,281
Sony Corp. 6,000 379,125
Sumitomo Metal Industries Ltd. 10,000 30,049
Sumitomo Trust & Banking Co. Ltd. 12,000 157,267
TDK Corp. 2,000 115,890
Takashimaya Co. Ltd. 5,000 72,081
Tokyo Style Co. Ltd. 7,000 117,950
Toyoda Gosei Co. 20,000 167,564
Toyota Motor Corp. 13,000 315,188
Uny Co. Ltd. 23,000 437,070
York Benimaru Co. 11,000 461,315
13,139,874
MEXICO - 0.1%
Tubos De Acero De Mexico ADR (a) 10,000 99,375
NETHERLANDS - 2.3%
DSM NV 1,000 91,321
ING Groep NV 10,000 306,622
Royal Dutch Petroleum Co.:
ADR 2,000 301,750
Ord. 3,000 451,043
Royal Ptt Nederland NV 10,000 352,585
Vendex International NV (d) 15,000 514,363
2,017,684
NORWAY - 0.7%
Den Norske Bank Class A Free shares 37,100 117,724
Fokus Bank AS 17,400 99,219
Fokus Bank AS (d) 10,000 57,023
Norsk Hydro AS ADR 2,500 108,438
Smedvig AS 10,000 239,558
621,962
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR (a) 5,000 89,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SPAIN - 1.3%
Banco Bilbao Vizcaya SA Ord. (Reg.) 10,000 $ 419,897
Banco de Santander SA Ord. (Reg.) 4,000 192,453
FOCSA (Fomento Construcciones y Contratas SA) 2,000 161,438
Tabacalera SA, Series A 9,000 403,674
1,177,462
SWEDEN - 3.4%
Autoliv AB 8,000 228,088
Bure Investment AB (d) 4,000 34,880
Electrolux AB 5,000 245,680
Esselte AB Class B Free shares 12,000 234,761
Scania AB:
Class A 3,500 93,684
Class B 17,000 455,038
Skandia Foersaekrings AB 9,000 224,524
Svedala Industri Free shares 20,000 354,871
Swedish Match Co. 45,000 133,077
Volvo AB:
Class B 37,000 802,402
Class B ADR 7,500 161,250
2,968,255
SWITZERLAND - 0.4%
Nestle SA (Reg.) 100 114,131
Sandoz AG (Reg.) 200 223,085
337,216
UNITED KINGDOM - 4.0%
Bass PLC Ord. 25,000 304,986
British Petroleum PLC Ord. 30,222 273,697
Caradon PLC 47,000 151,022
Christies International PLC 31,200 106,079
Cookson Group PLC 90,000 366,216
Courtaulds PLC Ord. 14,800 100,754
Glaxo Holdings PLC 15,000 208,783
Granada Group PLC 12,000 150,128
Guinness PLC Ord. 41,300 296,904
RTZ Corp. PLC Ord. 6,500 93,962
Rugby Group PLC 58,200 93,732
Sema Group PLC 14,500 162,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED KINGDOM - CONTINUED
Sema Group PLC (rights) 2,636 $ 4,922
Shanks & McEwan Group PLC 140,000 233,096
Shell Transport & Trading Co. PLC (Reg.) 35,000 502,410
SmithKline Beecham PLC Ord. 20,000 212,401
T & N PLC 40,000 80,603
Unilever PLC Ord. 5,000 95,892
WPP Group PLC 6,300 20,292
Wickes PLC 100,000 77,803
3,535,682
UNITED STATES OF AMERICA - 15.0%
AT&T Corp. 10,000 521,250
Allied Products Corp. 7,300 177,938
American Express Co. 16,500 721,875
American Standard Companies, Inc. (a) 10,000 321,250
Anheuser-Busch Companies, Inc. 4,400 328,900
Baker Hughes, Inc. 7,500 220,313
Beacon Properties Corp. 1,000 26,250
Berkley (W.R.) Corp. 6,800 277,100
Browning-Ferris Industries, Inc. 20,000 447,500
Burlington Northern Santa Fe Corp. 2,800 220,850
Burlington Resources, Inc. 30,300 1,295,325
Consolidated Freightways, Inc. 12,000 235,500
DSC Communications Corp. (a) 6,000 180,000
Dresser Industries, Inc. 16,500 445,500
du Pont (E.I.) de Nemours & Co. 3,800 306,850
Eaton Corp. 8,500 473,875
Equity Residential Properties Trust (SBI) 1,000 33,750
Excel Realty Trust, Inc. 1,000 20,500
Felcor Suite Hotels, Inc. 1,870 52,360
First Chicago NBD Corp. 5,000 192,500
Flightsafety International, Inc. 300 13,800
Fort Howard Corp. (a) 14,000 320,250
Genentech, Inc. special (a) 3,800 199,975
General Re Corp. 2,000 293,500
IMC Fertilizer Group, Inc. 12,000 474,000
International Business Machines Corp. 3,700 399,138
Lehman Brothers Holdings, Inc. 27,600 638,250
Liberty Property Trust (SBI) 1,400 27,825
Limited, Inc. (The) 11,000 211,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED STATES OF AMERICA - CONTINUED
Living Centers of America, Inc. (a) 800 $ 19,500
Masco Corp. 16,100 448,788
National Mercantile Bancorp. (warrants) (a) 2,403 -
Newell Co. 17,000 546,125
Newmont Mining Corp. 5,000 246,875
Pharmacia & Upjohn, Inc. 2,500 103,125
Pier 1 Imports, Inc. 20,600 347,625
Quaker Oats Co. 4,000 128,000
Silicon Graphics, Inc. (a) 10,000 235,000
Speiker Properties, Inc. 2,300 65,550
Tenet Healthcare Corp. (a) 10,000 193,750
Teradyne, Inc. (a) 10,000 135,000
Toys "R" Us, Inc. 10,000 263,750
UST, Inc. 15,000 498,750
Wal-Mart Stores, Inc. 21,000 504,000
Weeks Corp. 600 15,825
Zero Corp. 20,100 439,688
13,269,225
TOTAL COMMON STOCKS
(Cost $52,025,517) 52,829,661
PREFERRED STOCKS - 2.2%
CONVERTIBLE PREFERRED STOCKS - 1.3%
JAPAN - 0.4%
AJL participating trust exchangeable 15,000 315,000
UNITED STATES OF AMERICA - 0.9%
Alumax, Inc., Series A, $4.00 900 113,400
Kaiser Aluminum Corp. $0.97 35,100 390,488
Occidental Petroleum Corp. Indexed $3.00 5,400 319,275
823,163
TOTAL CONVERTIBLE PREFERRED STOCKS 1,138,163
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - 0.9%
AUSTRIA - 0.3%
Creditanstalt Bankverein 5,000 $ 240,777
GERMANY - 0.4%
Porsche AG (a) 200 116,141
Volkswagen AG 1,000 257,412
373,553
ITALY - 0.2%
Italmobiliare Spa 10,000 78,381
Stet (Societa Finanziaria Telefonica) Spa 50,000 116,025
194,406
TOTAL NONCONVERTIBLE PREFERRED STOCKS 808,736
TOTAL PREFERRED STOCKS
(Cost $2,017,800) 1,946,899
CONVERTIBLE BONDS - 1.2%
MOODY'S RATINGS (B) PRINCIPAL
(UNAUDITED) AMOUNT (C)
BERMUDA - 0.3%
MBL International Finance of
Bermuda 3%, 11/30/02 Aa3 $ 240,000 263,400
CANADA - 0.9%
Inco Ltd. 5 3/4%, 7/1/04 Baa2 680,000 819,400
TAIWAN (FREE CHINA) - 0.0%
Acer, Inc. euro 4%, 6/10/01 - 10,000 23,500
TOTAL CONVERTIBLE BONDS
(Cost $1,213,117) 1,106,300
GOVERNMENT OBLIGATIONS (F) - 32.5%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
FRANCE - 0.9%
French Government Oat 5 1/2%, 4/25/04 Aaa FRF 4,200,000 $ 806,289
GERMANY - 3.4%
German Federal Republic 6 5/8%, 7/9/03 AAA DEM 4,250,000 2,978,911
ITALY - 2.1%
Italian Republic 10 1/2%, 9/1/05 (g) A1 ITL 2,700,000 1,899,682
SWEDEN - 0.9%
Swedish Kingdom 10 1/4%, 5/5/03 Aa1 SEK 5,000,000 844,183
UNITED KINGDOM - 1.3%
United Kingdom, Great Britain &
Northern Ireland 9 1/2%, 4/18/05 Aaa GBP 650,000 1,115,104
UNITED STATES OF AMERICA - 23.9%
U.S. Treasury Obligations:
7 1/4%, 11/15/96 Aaa 3,490,000 3,506,368
7 7/8%, 8/15/01 Aaa 1,640,000 1,730,200
12 3/4%, 11/15/10 Aaa 880,000 1,229,386
13 7/8%, 5/15/11 Aaa 1,980,000 2,950,814
8 1/8%, 8/15/19 Aaa 2,300,000 2,562,706
7 1/4%, 2/15/23 Aaa 1,350,000 1,356,116
6 1/4%, 8/15/23 Aaa 3,325,000 2,995,094
7 1/2%, 11/15/24 Aaa 2,335,000 2,459,035
7 5/8%, 2/15/25 Aaa 1,560,000 1,670,167
6 7/8%, 8/15/25 Aaa 665,000 653,156
21,113,042
TOTAL GOVERNMENT OBLIGATIONS
(Cost $29,731,075) 28,757,211
REPURCHASE AGREEMENTS - 4.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.65%, dated
7/31/96 due 8/1/96 $ 3,870,607 3,870,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $88,857,509) $ 88,510,071
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
DEM - German deutsche mark
FRF - French franc
GBP - British pound
ITL - Italian lira
SEK - Swedish krona
LEGEND
1. Non-income producing
2. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
3. Principal amount is stated in United States dollars unless otherwise
noted.
4. 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 $1,551,797 or 1.8% of net
assets.
5. Purchased on an installment basis. Market value reflects only those
payments made through July 31, 1996. The remaining installment aggregating
CAD 977,550 is due January 31, 1997.
6. Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
7. 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 29.4% AAA, AA, A 32.8%
Baa 0.9% BBB 0.9%
Ba 0.0% BB 0.0%
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.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of
Investment in Securities
Basic Industries 8.6%
Construction & Real Estate 2.2
Durables 8.6
Energy 6.5
Finance 9.7
Government Obligations 32.5
Health 1.4
Industrial Machinery & Equipment 3.9
Media & Leisure 1.4
Nondurables 3.5
Precious Metals 1.3
Retail & Wholesale 5.1
Repurchase Agreements 4.4
Technology 4.4
Utilities 4.5
Others (individually less than 1%) 2.0
100.0%
INCOME TAX INFORMATION
At July 31, 1996, the aggregate cost of investment securities for income
tax purposes was $88,887,765. Net unrealized depreciation aggregated
$377,694, of which $3,797,491 related to appreciated investment securities
and $4,175,185 related to depreciated investment securities.
At July 31, 1996, the fund had a capital loss carryforward of approximately
$17,036,000 of which $10,190,000 and $6,846,000 will expire on July 31,
2003 and July 31, 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS JULY 31, 1996
ASSETS
Investment in securities, at value (including repurchase $ 88,510,071
agreements of $3,870,000) (cost $88,857,509) -
See accompanying schedule
Cash 867
Receivable for investments sold 563,558
Receivable for fund shares sold 73,565
Dividends receivable 178,382
Interest receivable 681,080
TOTAL ASSETS 90,007,523
LIABILITIES
Payable for investments purchased $ 623,913
Payable for fund shares redeemed 1,437,147
Accrued management fee 57,248
Other payables and accrued expenses 104,591
TOTAL LIABILITIES 2,222,899
NET ASSETS $ 87,784,624
Net Assets consist of:
Paid in capital $ 103,196,037
Undistributed net investment income 2,018,787
Accumulated undistributed net realized gain (loss) on (17,095,281)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on (334,919)
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 6,798,706 shares outstanding $ 87,784,624
NET ASSET VALUE, offering price and redemption price per $12.91
share ($87,784,624 (divided by) 6,798,706 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME $ 1,216,814
Dividends
Interest 3,773,897
TOTAL INCOME 4,990,711
EXPENSES
Management fee $ 879,204
Transfer agent fees 407,966
Accounting fees and expenses 78,969
Non-interested trustees' compensation 1,307
Custodian fees and expenses 117,283
Registration fees 29,957
Audit 75,963
Legal 1,019
Interest 854
Dividends on securities sold short 15,132
Miscellaneous 1,550
Total expenses before reductions 1,609,204
Expense reductions (27,029) 1,582,175
NET INVESTMENT INCOME 3,408,536
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 8,715,769
Foreign currency transactions (788,246)
Futures contracts 1,378,459
Short sales (2,409,787) 6,896,195
Change in net unrealized appreciation (depreciation) on:
Investment securities (7,733,452)
Assets and liabilities in foreign currencies 552,210
Futures contracts (212,606)
Short sales 2,350,083 (5,043,765)
NET GAIN (LOSS) 1,852,430
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 5,260,966
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 3,408,536 $ 10,413,648
Net investment income
Net realized gain (loss) 6,896,195 (26,837,322)
Change in net unrealized appreciation (depreciation) (5,043,765) 17,642,981
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 5,260,966 1,219,307
FROM OPERATIONS
Distributions to shareholders from net investment income (479,379) -
Share transactions 56,434,636 57,907,802
Net proceeds from sales of shares
Reinvestment of distributions 452,937 -
Cost of shares redeemed (122,715,801) (223,542,247)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (65,828,228) (165,634,445)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (61,046,641) (164,415,138)
NET ASSETS
Beginning of period 148,831,265 313,246,403
End of period (including undistributed net investment $ 87,784,624 $ 148,831,265
income of $2,018,787 and $384,901, respectively)
OTHER INFORMATION
Shares
Sold 4,439,802 4,870,593
Issued in reinvestment of distributions 35,497 -
Redeemed (9,683,927) (18,989,120)
Net increase (decrease) (5,208,628) (14,118,527)
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31, FEBRUARY 1,
1993
(COMMENCEMEN
T OF OPERATIONS)
TO JULY 31,
1996 1995 1994 F 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 12.40 $ 11.99 $ 11.98 $ 10.00
Income from Investment Operations
Net investment income .31 .28 .32 D .15
Net realized and unrealized .25 .13 E .25 1.91
gain (loss)
Total from investment operations .56 .41 .57 2.06
Less Distributions
From net investment income (.05) - (.15) (.08)
From net realized gain - - (.11) -
In excess of net realized gain - - (.20) -
Return of capital - - (.10) -
Total distributions (.05) - (.56) (.08)
Net asset value, end of period $ 12.91 $ 12.40 $ 11.99 $ 11.98
TOTAL RETURN B, C 4.52% 3.42% 4.58% 20.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 87,785 $ 148,831 $ 313,246 $ 84,157
(000 omitted)
Ratio of expenses to average 1.39% 1.34% 1.68% 2.12%
net assets A
Ratio of expenses to average net 1.36% 1.33% 1.67% 2.12%
assets after expense reductions G G G A
Ratio of net investment income to 2.94% 4.68% 2.56% 4.02%
average net assets A
Portfolio turnover rate 189% 242% 226% 172%
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO
FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
F 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, NET INVESTMENT INCOME PER SHARE MAY
REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1996
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 financial statements have
been prepared in conformity with generally accepted accounting principles
which permit management to make certain estimates and assumptions at the
date of the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Debt securities for which quotations are readily
available are valued by a pricing service at their market values as
determined by their most recent bid prices in the principal market (sales
prices if the principal market is an exchange) in which such securities are
normally traded. Equity securities for which 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
market quotations are not readily available are valued at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities
maturing within sixty days of their purchase date are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
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, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, foreign currency transactions, passive foreign
investment companies (PFIC), market discount, capital loss carryforwards,
and losses deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation
between net investment income and realized and unrealized gain (loss).
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
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. Dividends declared on
securities sold short are recorded on the ex-dividend date, and included as
an expense of the fund.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Buying futures, writing
puts, and buying calls tend to increase the fund's exposure to the
underlying instrument. Selling futures, buying puts, and writing calls tend
to decrease the fund's exposure to the underlying instrument, or hedge
other fund investments. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the
2. OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
absence of a sale, the last offering price. Options traded over-the-counter
are valued using dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $209,437,892 and $263,182,367, respectively, of which U.S.
government and government agency obligations aggregated $62,041,753 and
$64,433,315, respectively.
The market value of futures contracts opened and closed during the period
amounted to $17,143,523 and $22,226,826, 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 .2500% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .45%. For
the period, the management fee was equivalent to an annual rate of .76% of
average net assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research (Far East) Inc., Fidelity International Investment
Advisors (FIIA), and Fidelity Investments Japan Ltd. In addition, 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 account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annual rate of .35%
of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 $35,229 for the period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the period for
which loans were outstanding amounted to $1,779,000 and $1,653,000,
respectively. The weighted average interest rate was 6.20%.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$21,153 under this arrangement.
In addition, the fund has entered into an arrangement with its transfer
agent whereby interest earned on uninvested cash balances was used to
offset a portion of the fund's expenses. During the period, the fund's
transfer agent fees were reduced by $5,876, 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, 1996, 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 three years in the period 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, 1996 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 Global Balanced Fund as of July 31,
1996, 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 three years in the period 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 11, 1996
DISTRIBUTIONS
A total of 26.23% 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 72% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
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
William J. Hayes, Vice President
Richard R. Mace, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
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 Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
