FIDELITY
(REGISTERED TRADEMARK)
PURITAN(registered trademark)
FUND
SEMIANNUAL REPORT
JANUARY 31, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The managers' 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 45 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 49 Notes to the financial statements.
REPORT OF INDEPENDENT 54 The auditors' opinion.
ACCOUNTANTS
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.
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.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As 1997 begins, the stock and bond markets generally have continued on the
course they followed during the past year. Through January, stocks
maintained their unprecedented climb, with the large companies still
setting the pace. With low, stable interest rates, the bond market has
tended to mirror its historical returns in the mid-single digits.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories 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, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you 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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Fidelity Puritan 14.99% 17.44% 104.66% 216.59%
S&P 500(registered trademark) 24.15% 26.34% 119.87% 288.58%
Lehman Brothers Aggregate Bond 4.94% 3.26% 42.87% 123.02%
Index
Balanced Funds Average 14.23% 14.76% 72.80% 177.35%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, 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
balanced funds average, which reflects the performance of 304 mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc. over
the past six months. These benchmarks reflect reinvestment of dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Puritan 17.44% 15.40% 12.21%
S&P 500 26.34% 17.06% 14.53%
Lehman Brothers Aggregate Bond Index 3.26% 7.40% 8.35%
Balanced Funds Average 14.76% 11.50% 10.68%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.(Note: Lipper calculates average annual total returns by annualizing
each fund's total return, then taking an arithmetic average. This may
produce a slightly different figure than that obtained by averaging the
cumulative total returns and annualizing the result.)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19970131 19970212 150922 S00000000000001
Puritan SP Standard & Poor 500 LB
Aggregate Bond
00004 SP001 LB001
1987/01/31 10000.00 10000.00
10000.00
1987/02/28 10193.55 10395.00
10069.35
1987/03/31 10365.59 10695.42
10023.96
1987/04/30 10301.38 10600.23
9749.09
1987/05/31 10286.84 10692.45
9710.95
1987/06/30 10555.82 11232.42
9844.60
1987/07/31 10855.31 11801.90
9837.04
1987/08/31 11076.70 12242.11
9784.40
1987/09/30 10846.37 11974.01
9576.04
1987/10/31 9244.04 9394.81
9917.10
1987/11/30 8915.29 8620.68
9996.53
1987/12/31 9255.67 9276.71
10132.70
1988/01/31 9817.59 9667.26
10488.89
1988/02/29 10114.61 10117.75
10613.40
1988/03/31 9928.80 9805.11
10513.79
1988/04/30 10067.49 9913.95
10457.05
1988/05/31 10238.82 10000.20
10386.76
1988/06/30 10610.00 10459.21
10637.35
1988/07/31 10634.86 10419.47
10581.56
1988/08/31 10527.11 10065.20
10609.30
1988/09/30 10826.68 10493.98
10849.49
1988/10/31 11003.48 10785.71
11053.74
1988/11/30 10927.71 10631.48
10919.46
1988/12/31 11003.89 10817.53
10931.76
1989/01/31 11547.18 11609.37
11089.05
1989/02/28 11443.70 11320.30
11008.67
1989/03/31 11651.58 11584.06
11056.26
1989/04/30 12045.51 12185.28
11287.63
1989/05/31 12448.19 12678.78
11584.24
1989/06/30 12535.24 12606.51
11936.96
1989/07/31 13227.70 13744.88
12190.70
1989/08/31 13316.47 14014.28
12010.09
1989/09/30 13169.66 13956.82
12071.55
1989/10/31 12775.85 13633.02
12368.79
1989/11/30 13013.97 13911.13
12486.68
1989/12/31 13160.50 14245.00
12520.09
1990/01/31 12603.34 13289.16
12371.32
1990/02/28 12737.83 13460.59
12411.35
1990/03/31 12756.16 13817.30
12420.49
1990/04/30 12444.08 13471.87
12306.70
1990/05/31 13136.51 14785.37
12671.08
1990/06/30 13066.19 14684.83
12874.39
1990/07/31 12947.41 14637.84
13052.48
1990/08/31 12165.42 13314.58
12878.17
1990/09/30 11600.53 12666.16
12984.71
1990/10/31 11399.31 12611.70
13149.57
1990/11/30 12043.22 13426.41
13432.62
1990/12/31 12324.77 13801.01
13641.92
1991/01/31 12877.08 14402.73
13810.56
1991/02/28 13623.73 15432.53
13928.45
1991/03/31 13714.24 15805.99
14024.27
1991/04/30 13828.44 15843.93
14176.20
1991/05/31 14503.25 16528.39
14259.10
1991/06/30 14000.05 15771.39
14251.85
1991/07/31 14484.62 16506.33
14449.49
1991/08/31 14737.45 16897.53
14762.17
1991/09/30 14749.83 16615.34
15061.31
1991/10/31 14963.59 16837.99
15229.00
1991/11/30 14450.56 16159.42
15368.64
1991/12/31 15338.97 18008.06
15825.06
1992/01/31 15469.14 17673.11
15609.77
1992/02/29 15903.06 17902.86
15711.27
1992/03/31 15825.33 17553.75
15622.70
1992/04/30 16342.21 18069.83
15735.54
1992/05/31 16529.17 18158.37
16032.47
1992/06/30 16440.12 17887.81
16253.11
1992/07/31 16941.01 18619.43
16584.71
1992/08/31 16774.04 18237.73
16752.72
1992/09/30 16978.58 18452.93
16951.30
1992/10/31 16850.39 18517.52
16726.56
1992/11/30 17304.86 19148.96
16730.34
1992/12/31 17705.37 19384.50
16996.38
1993/01/31 18209.87 19547.33
17322.30
1993/02/28 18582.23 19813.17
17625.53
1993/03/31 19317.01 20231.23
17698.98
1993/04/30 19681.48 19741.63
17822.22
1993/05/31 19948.76 20270.71
17844.92
1993/06/30 20083.75 20329.49
18168.32
1993/07/31 20378.56 20248.18
18271.08
1993/08/31 20968.17 21015.58
18591.33
1993/09/30 20823.84 20853.76
18642.40
1993/10/31 21365.23 21285.43
18712.06
1993/11/30 21021.91 21083.22
18552.88
1993/12/31 21502.65 21338.33
18653.43
1994/01/31 22458.33 22063.83
18905.28
1994/02/28 22212.58 21465.90
18576.83
1994/03/31 21385.81 20529.99
18118.83
1994/04/30 21620.06 20792.77
17974.15
1994/05/31 21757.86 21133.77
17971.63
1994/06/30 21589.44 20616.00
17931.91
1994/07/31 22131.26 21292.20
18288.10
1994/08/31 22784.23 22165.18
18310.80
1994/09/30 22292.96 21622.14
18041.29
1994/10/31 22554.38 22108.63
18025.22
1994/11/30 21842.75 21303.44
17985.19
1994/12/31 21886.32 21619.37
18109.38
1995/01/31 21782.87 22179.96
18467.77
1995/02/28 22447.88 23044.31
18906.86
1995/03/31 22968.87 23724.35
19022.85
1995/04/30 23430.63 24423.03
19288.57
1995/05/31 23937.08 25399.22
20034.99
1995/06/30 24205.94 25989.24
20181.88
1995/07/31 25015.30 26851.05
20136.80
1995/08/31 25135.21 26918.44
20379.83
1995/09/30 25495.34 28054.40
20578.09
1995/10/31 25085.10 27954.25
20845.71
1995/11/30 25981.54 29181.44
21158.08
1995/12/31 26583.22 29743.47
21455.00
1996/01/31 26958.29 30755.94
21597.48
1996/02/29 27302.11 31041.05
21222.06
1996/03/31 27756.60 31339.97
21074.55
1996/04/30 27772.34 31801.92
20956.03
1996/05/31 27945.43 32622.09
20913.48
1996/06/30 28072.16 32746.38
21194.33
1996/07/31 27532.31 31299.65
21252.32
1996/08/31 27786.36 31959.76
21216.71
1996/09/30 28888.42 33758.45
21586.45
1996/10/31 29589.60 34689.51
22064.62
1996/11/30 31079.60 37311.69
22442.55
1996/12/31 30611.75 36572.55
22233.88
1997/01/31 31659.37 38857.60
22301.97
IMATRL PRASUN SHR__CHT 19970131 19970212 150926 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Puritan Fund on January 31, 1987. As the chart shows, by
January 31, 1997, the value of the investment would have grown to $31,659 -
a 216.59% 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 $38,858 - a 288.58%
increase. If $10,000 was put in the bond index, it would have grown to
$22,302 - a 123.02% 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 MANAGERS' OVERVIEW
An interview with Bettina Doulton (left photo), Lead Portfolio Manager of
Fidelity Puritan Fund, as well as Kevin Grant, manager for fixed-income
investments.
Q. BETTINA, HOW DID THE FUND PERFORM?
B.D. For the six months that ended January 31, 1997, the fund posted a
total return of 14.99%, beating the 14.23% return for the balanced funds
average tracked by Lipper Analytical Services. Given the structure of the
fund - namely its mix of equities and fixed-income securities - performance
typically falls between its two benchmark indices, the Standard & Poor's
500 Index and the Lehman Brothers Aggregate Bond Index. Performance for the
past six months was in line with my expectations; while the fund
outperformed the Lehman Brothers Aggregate Bond Index, which returned
4.94%, it underperformed the very strong S&P 500, which gained 24.15%
during the same six-month period. Over the past 12 months, the fund
returned 17.44%, the balanced funds average returned 14.76%, the Lehman
Brothers Aggregate Bond Index posted a 3.26% return, and the S&P 500
returned 26.34%.
Q. HOW WOULD YOU DESCRIBE THE MARKET ENVIRONMENT DURING THE PAST SIX
MONTHS?
B.D. In a word, outstanding. The favorable combination of moderate U.S.
economic growth, no inflationary pressures - which kept interest rates low
- - better-than-expected corporate earnings and strong cash flows into the
stock market created a very attractive environment. Large U.S.
corporations, many of which have restructured and improved their businesses
in recent years, were particularly rewarded by investors during the period.
In addition to improving on an absolute basis, many of these companies have
become substantially better positioned relative to foreign competitors,
helping U.S. stocks outperform those in many other industrialized
countries. Cyclicals - companies with a high degree of sensitivity to the
economic cycle - generally underperformed during the past six months as the
current U.S. economic expansion continued, but among concerns that it might
stall.
Q. WHAT KEY STRATEGIES HELPED THE FUND BEAT THE LIPPER AVERAGE?
B.D. Since the asset allocation of the fund is typically 60% equities and
40% fixed-income securities, our general strategy is to add value through
security selection within both the bond and stock portfolios. This approach
clearly benefited performance during the past six months. In particular, my
concentration on larger-capitalization finance, energy and drug stocks -
precisely those areas that were among the best performers recently - was
very helpful. Another helpful strategy was my underemphasis of the large
utilities sector, which markedly underperformed as investors became
concerned about how ongoing deregulation would affect electric and
telecommunications utilities. Overall, the equity portion of the fund
slightly underperformed the S&P 500, but this was largely because I chose
to underweight the often-volatile technology sector, which was by far the
strongest sector during the period. I should note, however, that given the
conservative, income-driven objective of Puritan Fund, it's typically
difficult to justify much more technology exposure than the fund had during
the period.
Q. COULD YOU EXPAND ON A COUPLE OF THOSE LARGE-CAP STOCKS THAT DELIVERED
EXCEPTIONAL PERFORMANCE?
B.D. Absolutely. Let's start with finance - the fund's largest sector at
21.5% of investments - an area where I found compelling value and strong
business prospects in selected companies. My confidence in a number of
these stocks was bolstered by my belief that we're in the latter stages of
the current economic expansion, historically a good time to invest in this
sector. Also, while financial stocks have a certain degree of interest rate
sensitivity, it's important to note that my investments were
company-specific, and didn't reflect an outlook on the direction of
interest rates. Particularly exciting were the diversified financials and
banks, including BankAmerica, whose returns I believe should improve as a
result of its recent cost reductions and balance sheet restructuring. In
addition to financials, I found some exceptional opportunities in drug
stocks, such as Bristol-Myers Squibb. Many drug firms continued to deliver
strong, sustainable earnings growth in recent quarters, based on new
product development and robust unit volume growth - helped in part by
higher drug utilization rates among managed care providers. Increasingly,
managed care providers have opted for cost-effective drug therapies rather
than more expensive hospital procedures as part of their efforts to reduce
overall health care costs.
Q. WERE THERE ANY STOCKS THAT DISAPPOINTED YOU?
B.D. Yes, in fact one of my disappointments was a drug firm, Pharmacia &
Upjohn. This company was formed just over a year ago when Swedish drug firm
Pharmacia merged with U.S.-based Upjohn. Unfortunately, the synergies that
I expected to develop from the merger proved more difficult to attain than
I had envisioned initially, partially because of issues relating to
disparate management information systems and company cultures. Partly as a
result of these issues, the company's most recent quarterly earnings came
in below expectations, causing the stock to decline. Another frustrating
stock was Wal-Mart, the large discount retailer. Despite the company's
exciting new super-store concept that expands their stores to include
grocery items, the stock underperformed amid a sluggish retail environment
and persistent industry overcapacity.
Q. WHAT WERE SOME OF THE OTHER INVESTING THEMES YOU PURSUED WITH EQUITIES?
B.D. In general, I concentrated on companies with competitive advantages or
catalysts for positive change, including dominant market positions, cost
structure reductions, new products and outstanding shareholder-friendly
management. Given some or all of these fundamentals, a rigorous financial
analysis tells me whether the story can translate into strong earnings and
free cash flow. As I mentioned earlier, this led me to focus on a number of
larger-cap stocks, since they appeared best positioned to deliver the most
sustainable earnings within the current environment. Restructuring stories
remained a central theme because regardless of where we are in the economic
cycle, companies often benefit from self-help actions. In line with this
theme, I recently added Unilever, the large consumer products company, to
the portfolio. Under the direction of a new CEO, this company focused on
improving its relatively lackluster returns by eliminating underperforming
businesses and reinvesting in growth opportunities. Also, a new
compensation system - with performance-related bonuses - has better aligned
management and shareholder interests.
Q. TURNING TO YOU, KEVIN, HOW HAVE YOU STRUCTURED THE BOND PORTION OF THE
PORTFOLIO?
K.G. I've maintained an interest rate posture in line with the overall bond
market as measured by the Lehman Brothers Aggregate Bond Index. That being
said, through much of the past year I overweighted the bond portfolio with
mortgage-backed securities and corporate bonds because they offered a yield
advantage and presented opportunities for price appreciation. At the very
end of the period, I sold off a significant amount of the mortgage-backed
position to take profits.
Q. WHY DID THE MORTGAGE-BACKED SECURITIES PERFORM WELL? AND WHAT'S YOUR
OUTLOOK?
K.G. By historical standards, interest rates have been reasonably stable
because the economic environment has been steady. The bond market has been
priced for stability. Because mortgages are, in a sense, planned
volatility, they performed well in this kind of stable investing climate.
Going forward, I'll keep the fund's interest rate sensitivity in line with
that of the overall market. I'll probably look to sell off some of the
fund's corporate positions to take advantage of their price appreciation,
and continue to underweight mortgages.
Q. LOOKING AT THE BIG PICTURE, BETTINA, WHAT'S YOUR OUTLOOK FOR THE NEXT
SIX MONTHS?
B.D. In terms of the overall U.S. economy, I believe it's likely there will
be more of the same - moderate growth and low inflation - although the
duration of the current economic expansion already has exceeded most other
post-war expansions. In light of this and the diminishing opportunities for
companies to achieve large benefits from restructuring, I believe it's
going to be increasingly difficult for companies to sustain strong internal
profit growth. As a result, market share gains, globalization, improved
productivity, capital redeployment and execution will be the critical
success factors. In addition, I expect mergers and acquisitions to
accelerate as companies seek to bolster market positions and exploit both
cost-reducing and revenue-enhancing synergies. Given the scenario I just
outlined, I think it's quite probable the same stocks that recently have
been market leaders - larger-cap financials, drugs and consumer nondurables
- - will continue to outperform. While I'm fairly optimistic regarding the
stock market in general, one of the largest potential risks I can envision
is a rise in interest rates. Given its recent rhetoric, the Federal Reserve
Board could increase short-term rates to deflate what some members believe
is an overheated stock market, or to respond to indications of higher
inflation.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGERS' 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.
FUND NUMBER: 004
TRADING SYMBOL: FPURX
START DATE: April 16, 1947
SIZE: as of January 31,
1997, more than $19.0 billion
MANAGER: Bettina Doulton,
since 1996; manager,
several other Fidelity funds;
joined Fidelity in 1986; Kevin
Grant, since 1996; manager,
several other Fidelity funds;
joined Fidelity in 1993
(checkmark)
BETTINA DOULTON ON HER
SELL DISCIPLINE:
"There are really two separate
cases to consider regarding
selling a stock: either the
stock has met my valuation
target, or its fundamentals -
business prospects -
become disappointing. My
sell decisions for those stocks
that do well tend to be
somewhat evolutionary, since
I may come to recognize new
positive factors that upgrade
my outlook for a company.
For instance, if a company
meets my expectations but
continues to execute
perfectly, or develops an
exciting new product - giving
it the potential to be revalued
- - then I may need to raise
my target level. On the other
hand, my sell decision is
clearly triggered when
company fundamentals
deteriorate or fail to develop
as expected - or when better
investment opportunities
arise."
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JANUARY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Philip Morris Companies, Inc. 2.9 3.9
Citicorp 2.7 2.0
General Electric Co. 2.3 3.0
BankAmerica Corp. 2.0 1.6
AlliedSignal, Inc. 1.9 1.7
TOP FIVE BOND ISSUERS AS OF JANUARY 31, 1997
(WITH MATURITIES MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE ISSUERS
6 MONTHS AGO
U.S. Treasury 7.0 8.8
Federal National Mortgage Association 3.6 5.0
Government National Mortgage 3.2 4.7
Association
State of Israel 0.9 0.9
Federal Home Loan Mortgage 0.6 0.4
Corporation
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO
Finance 21.5 15.2
Nondurables 8.1 6.7
Energy 7.6 10.0
Health 6.4 5.5
Industrial Machinery & Equipment 6.2 6.0
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1997 * AS OF JULY 31, 1996 **
Row: 1, Col: 1, Value: 4.5
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 33.1
Row: 1, Col: 4, Value: 31.4
Row: 1, Col: 5, Value: 30.0
Row: 1, Col: 1, Value: 3.8
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 34.0
Row: 1, Col: 4, Value: 31.0
Row: 1, Col: 5, Value: 30.0
Stocks 61.7%
Bonds 33.1%
Convertible
securities 0.7%
Short-term
investments 4.5%
FOREIGN
INVESTMENTS 9.7%
Stocks 61.3%
Bonds 34.0%
Convertible
securities 0.9%
Short-term
investments 3.8%
FOREIGN
INVESTMENTS 9.1%
*
**
INVESTMENTS JANUARY 31, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 60.9%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 2.9%
AEROSPACE & DEFENSE - 1.8%
Boeing Co. 854,726 $ 91,563
Lockheed Martin Corp. 1,655,700 152,324
Rockwell International Corp. 955,400 62,818
Sundstrand Corp. 939,600 40,285
346,990
DEFENSE ELECTRONICS - 0.5%
Raytheon Co. 2,287,200 104,925
SHIP BUILDING & REPAIR - 0.6%
General Dynamics Corp. 1,467,300 103,628
Newport News Shipbuilding, Inc. 129,480 2,072
105,700
TOTAL AEROSPACE & DEFENSE 557,615
BASIC INDUSTRIES - 4.2%
CHEMICALS & PLASTICS - 3.3%
Air Products & Chemicals, Inc. 1,335,400 95,314
du Pont (E.I.) de Nemours & Co. 1,136,100 124,545
Monsanto Co. 3,224,000 122,109
Nalco Chemical Co. 1,139,100 40,438
Olin Corp. 813,200 29,783
Praxair, Inc. 2,408,800 111,708
Union Carbide Corp. 1,951,600 88,554
Witco Corp. 673,600 20,040
632,491
METALS & MINING - 0.3%
Aluminum Co. of America 813,100 56,104
Martin Marietta Materials, Inc. 300,000 7,987
64,091
PAPER & FOREST PRODUCTS - 0.6%
Kimberly-Clark Corp. 1,092,500 106,519
TOTAL BASIC INDUSTRIES 803,101
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONGLOMERATES - 3.5%
AlliedSignal, Inc. 5,205,300 $ 365,672
Textron, Inc. 213,500 20,790
Tyco International Ltd. 1,530,300 87,418
United Technologies Corp. 2,629,400 183,401
657,281
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
Masco Corp. 785,600 27,103
DURABLES - 1.8%
AUTOS, TIRES, & ACCESSORIES - 0.7%
Eaton Corp. 744,300 52,101
General Motors Corp. 150,000 8,850
Johnson Controls, Inc. 775,700 66,710
127,661
CONSUMER DURABLES - 0.8%
Minnesota Mining & Manufacturing Co. 1,849,100 157,636
CONSUMER ELECTRONICS - 0.3%
Newell Co. 1,555,800 51,341
TOTAL DURABLES 336,638
ENERGY - 6.7%
ENERGY SERVICES - 1.2%
Baker Hughes, Inc. 1,283,000 50,037
Halliburton Co. 450,000 32,569
Schlumberger Ltd. 1,207,200 134,150
216,756
OIL & GAS - 5.5%
British Petroleum PLC:
Ord. 10,987,71 129,377
ADR 2,450,540 347,058
Exxon Corp. 620,900 64,341
Harcor Energy, Inc. (warrants) (a) 165,000 165
Mobil Corp. 826,300 108,452
Pennzoil Co. 100,000 6,238
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Royal Dutch Petroleum Co.:
Ord. 148,200 $ 25,931
ADR 1,392,300 241,564
Texaco, Inc. 558,000 59,078
Total SA:
Class B 290,700 25,011
sponsored ADR 353,200 15,232
USX-Marathon Group 314,600 8,376
Unocal Corp. 451,135 19,003
1,049,826
TOTAL ENERGY 1,266,582
FINANCE - 14.8%
BANKS - 8.4%
Bank of Boston Corp. 2,267,629 161,569
BankAmerica Corp. 3,323,900 371,030
Bankers Trust New York Corp. 484,200 41,157
Chase Manhattan Corp. 1,940,700 179,515
Citicorp 4,408,000 512,981
National City Corp. 1,374,162 62,353
NationsBank Corp. 2,499,300 269,924
1,598,529
CREDIT & OTHER FINANCE - 2.0%
American Express Co. 5,625,627 350,898
Associates First Capital Corp. 191,000 9,287
Beneficial Corp. 250,400 16,839
Household International, Inc. 26 3
377,027
FEDERAL SPONSORED CREDIT - 2.8%
Federal Home Loan Mortgage Corporation 9,958,000 301,230
Federal National Mortgage Association 5,642,150 222,864
524,094
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - 1.6%
Allstate Corp. 2,307,522 $ 151,720
ITT Hartford Group, Inc. 1,010,400 74,138
Loews Corp. 709,100 70,112
Travelers Group, Inc. (The) 266,667 13,967
309,937
SECURITIES INDUSTRY - 0.0%
ECM Corp. LP (h) 6,318 632
TOTAL FINANCE 2,810,219
HEALTH - 6.3%
DRUGS & PHARMACEUTICALS - 6.1%
American Home Products Corp. 2,316,600 146,815
Bristol-Myers Squibb Co. 1,994,600 253,314
Merck & Co., Inc. 2,211,700 200,712
Novartis AG (Reg.) (a) 18,600 21,279
Pharmacia & Upjohn, Inc. 3,605,930 134,321
Pfizer, Inc. 950,000 88,231
Schering-Plough Corp. 498,600 37,707
SmithKline Beecham PLC ADR 3,837,100 277,230
1,159,609
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
Baxter International, Inc. 650,000 29,981
TOTAL HEALTH 1,189,590
HOLDING COMPANIES - 0.1%
CINergy Corp. 343,900 11,865
SDW Holdings Corp. (warrants) (a) 1,970 10
11,875
INDUSTRIAL MACHINERY & EQUIPMENT - 5.6%
ELECTRICAL EQUIPMENT - 3.7%
Emerson Electric Co. 1,083,900 107,035
General Electric Co. 4,288,700 441,736
General Signal Corp. 1,791,600 81,070
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Grainger (W.W.), Inc. 615,800 $ 47,571
Westinghouse Electric Corp. 800,000 14,700
692,112
INDUSTRIAL MACHINERY & EQUIPMENT - 0.7%
Cooper Industries, Inc. 2,067,894 89,178
Harnischfeger Industries, Inc. 1,180,800 52,398
141,576
POLLUTION CONTROL - 1.2%
Browning-Ferris Industries, Inc. 3,635,700 118,160
WMX Technologies, Inc. 2,838,500 103,960
222,120
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,055,808
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.0%
Benedek Communications Corp. (warrants) (a) 51,900 156
CS Wireless Systems, Inc. (a)(h) 5,494 -
156
ENTERTAINMENT - 0.0%
Cedar Fair LP (depositary unit) 150,000 5,513
Live Entertainment, Inc. (a)(g):
$2.00 (warrants) 256,000 13
$2.72 (warrants) 244,705 12
5,538
LEISURE DURABLES & TOYS - 0.0%
IHF Capital, Inc. (a)(h):
Series H (warrants) 10,225 1,687
Series I (warrants) 5,050 278
1,965
LODGING & GAMING - 0.0%
Bally Gaming International, Inc. (warrants) (a) 135,000 203
Motels of America, Inc. (a) 3,000 105
308
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - 0.3%
Knight-Ridder, Inc. 394,100 $ 15,123
McGraw-Hill, Inc. 925,300 46,034
61,157
TOTAL MEDIA & LEISURE 69,124
NONDURABLES - 7.5%
BEVERAGES - 0.5%
Anheuser-Busch Companies, Inc. 2,204,000 93,670
FOODS - 0.8%
Flowers Industries, Inc. 692,200 14,795
General Mills, Inc. 1,128,200 76,436
Heinz (H.J.) Co. 720,100 28,984
Kellogg Co. 230,100 16,021
Nabisco Holdings Corp. Class A 449,100 17,178
153,414
HOUSEHOLD PRODUCTS - 3.3%
Clorox Co. 570,800 67,710
Procter & Gamble Co. 1,965,200 226,981
Renaissance Cosmetics, Inc. unit (h) 10,000 10,200
Unilever PLC Ord. 2,157,500 48,285
Unilever NV:
Ord. 150,000 24,827
ADR 1,547,000 254,482
632,485
TOBACCO - 2.9%
Philip Morris Companies, Inc. 4,572,680 543,577
TOTAL NONDURABLES 1,423,146
RETAIL & WHOLESALE - 1.8%
APPAREL STORES - 0.0%
Footstar, Inc. (a) 308,139 6,972
Lamonts Apparel, Inc. (a) 50,220 5
Lamonts Apparel, Inc. (warrants) (a) 92,674 -
6,977
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
DRUG STORES - 0.5%
CVS Corp. 1,070,300 $ 46,290
Rite Aid Corp. 1,029,100 41,164
87,454
GENERAL MERCHANDISE STORES - 1.2%
Dayton Hudson Corp. 473,700 17,823
Sears, Roebuck & Co. 417,000 20,016
Wal-Mart Stores, Inc. 7,650,300 181,695
219,534
GROCERY STORES - 0.0%
Food 4 Less Holdings, Inc. (warrants) (a)(g) 14,206 170
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Barry's Jewelers, Inc. (warrants) (a) 4,797 -
Town & Country Jewelry Manufacturing Corp. Class A (a) 234,694 74
Toys "R" Us, Inc. (a) 898,600 22,465
22,539
TOTAL RETAIL & WHOLESALE 336,674
SERVICES - 0.4%
PRINTING - 0.4%
Deluxe Corp. 2,075,600 63,825
Donnelley (R.R.) & Sons Co. 171,700 5,366
69,191
SERVICES - 0.0%
Block (H&R), Inc. 330,100 9,779
TOTAL SERVICES 78,970
TECHNOLOGY - 2.8%
COMMUNICATIONS EQUIPMENT - 0.1%
Hyperion Telecommunications, Inc. (warrants) (a)(h) 19,970 399
Lucent Technologies, Inc. 250,000 13,563
13,962
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 1.4%
Exide Electronics Group, Inc. (warrants) (a)(h) 4,180 $ 189
International Business Machines Corp. 672,300 105,719
Pitney Bowes, Inc. 2,825,240 162,804
268,712
ELECTRONICS - 0.5%
Thomas & Betts Corp. 2,172,350 101,829
PHOTOGRAPHIC EQUIPMENT - 0.8%
Eastman Kodak Co. 1,796,200 155,820
TOTAL TECHNOLOGY 540,323
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.0%
Viad Corp. 196,600 3,096
RAILROADS - 0.5%
Burlington Northern Santa Fe Corp. 1,137,200 99,506
TRUCKING & FREIGHT - 0.2%
Consolidated Freightways, Inc. 1,259,200 31,952
TOTAL TRANSPORTATION 134,554
UTILITIES - 1.4%
CELLULAR - 0.0%
Intercel, Inc. (warrants) (a) 25,856 194
Microcell Telecommunications, Inc. (a):
(warrants) 129,680 2,188
(conditional warrants) 129,680 81
2,463
ELECTRIC UTILITY - 0.2%
Allegheny Power System, Inc. 244,700 7,493
American Electric Power Co., Inc. 49,600 2,052
DPL, Inc. 6,000 147
Edison International 650,000 13,894
El Paso Electric Co. (a) 4,800 35
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
GPU, Inc. 100,000 $ 3,350
Ohio Edison Co. 257,800 5,962
Portland General Corp. 133,900 5,256
38,189
GAS - 0.4%
Consolidated Natural Gas Co. 893,500 49,701
El Paso Natural Gas Co. 60,208 3,244
Enron Corp. 625,100 25,785
78,730
TELEPHONE SERVICES - 0.8%
Ameritech Corp. 673,800 40,260
BCE, Inc. 965,100 48,610
MCI Communications Corp. 1,036,000 36,390
Nextlink Communications, Inc. unit (h) 264,092 13,238
138,498
TOTAL UTILITIES 257,880
TOTAL COMMON STOCKS
(Cost $9,014,498) 11,556,483
PREFERRED STOCKS - 1.3%
CONVERTIBLE PREFERRED STOCKS - 0.5%
ENERGY - 0.2%
OIL & GAS - 0.2%
Occidental Petroleum Corp. $3.875 (h) 339,500 20,412
Tosco Financing Trust $2.875 (h) 219,300 12,062
32,474
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Loral Space & Communications Ltd. $3.00 (h) 300,000 $ 16,313
Westinghouse Electric Corp. $1.30 (h) 86,300 1,423
17,736
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.0%
Benedek Communications Corp. 15% 51,900 5,501
LODGING & GAMING - 0.2%
Host Marriott Financial Trust $3.375 (h) 534,900 29,888
TOTAL MEDIA & LEISURE 35,389
RETAIL & WHOLESALE - 0.0%
APPAREL STORES - 0.0%
TJX Companies, Inc., Series E, $7.00 63,000 13,545
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Town & Country Corp. pay-in-kind 3,625 2
TOTAL RETAIL & WHOLESALE 13,547
TOTAL CONVERTIBLE PREFERRED STOCKS 99,146
NONCONVERTIBLE PREFERRED STOCKS - 0.8%
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd., Series 1, adj. rate 242,100 791
FINANCE - 0.1%
BANKS - 0.0%
California Federal Preferred Capital Corp. 9 1/8% 71,280 1,764
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - CONTINUED
SAVINGS & LOANS - 0.1%
California Federal Bank FSB 11 1/2% 59,929 $ 6,907
Chevy Chase Capital Corp., Series A, $5.1875 28,000 1,477
8,384
TOTAL FINANCE 10,148
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp. 8% (g) 2,581 2,006
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.5%
American Radio System pay-in-kind 11 3/8% (h) 68,498 6,833
Cablevision Systems Corp., Series H, $11.75 pay-in-kind 98,618 9,393
Chancellor Radio Broadcasting Co., Series A (a) 64,300 7,362
PanAmSat Corp. 12 3/4% pay-in-kind 23,430 28,350
Time Warner, Inc., Series M, 10 1/4% pay-in-kind 36,008 39,339
91,277
PUBLISHING - 0.1%
K-III Communications Corp.:
Series B, $11.625 pay-in-kind 13,592 1,380
Series D, $200 161,300 15,969
17,349
TOTAL MEDIA & LEISURE 108,626
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Renaissance Cosmetics, Inc. pay-in-kind 14% (h) 350 313
TECHNOLOGY - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.1%
ICG Holdings, Inc. 14 1/4% pay-in-kind 13,220 14,806
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - 0.0%
ELECTRIC UTILITY - 0.0%
Entergy Gulf States, Inc.:
Series A adj. rate 37,296 $ 3,646
$9.96 44,488 4,566
8,212
TOTAL NONCONVERTIBLE PREFERRED STOCKS 144,902
TOTAL PREFERRED STOCKS
(Cost $225,176) 244,048
CORPORATE BONDS - 15.5%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) (C) AMOUNT (000S)
CONVERTIBLE BONDS - 0.2%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Cooper Industries, Inc. 7.05%, 1/1/15 A3 $ 26,962 28,849
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
GST Telecommunications, Inc.
0%, 12/15/05 (d)(h) - 40 31
TOTAL CONVERTIBLE BONDS 28,880
NONCONVERTIBLE BONDS - 15.3%
AEROSPACE & DEFENSE - 0.4%
AEROSPACE & DEFENSE - 0.4%
Lockheed Martin Corp. 7.20%, 5/1/36 A3 74,700 76,649
RHI Holdings, Inc. 11 7/8%, 3/1/99 B2 2,090 2,090
78,739
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
AEROSPACE & DEFENSE - CONTINUED
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, Inc. (h):
8 5/8%, 12/1/06 Ba2 $ 370 $ 381
9 1/4%, 12/1/06 B1 1,690 1,753
2,134
TOTAL AEROSPACE & DEFENSE 80,873
BASIC INDUSTRIES - 0.8%
CHEMICALS & PLASTICS - 0.3%
Atlantis Group, Inc. 11%, 2/15/03 B2 5,630 5,855
Foamex-JPS Automotive LP/Foamex JPS Capital
Corp. 0%, 7/1/04 (d) Caa 2,400 2,136
Foamex LP/Foamex Capital Corp.:
9 1/2%, 6/1/00 B1 320 327
11 7/8%, 10/1/04 B3 3,530 3,812
Freedom Chemical Co.
10 5/8%, 10/15/06 (h) B3 13,600 14,382
Methanex Corp. yankee
8 7/8%, 11/15/01 A2 25,455 27,270
Sterling Chemicals Holdings, Inc.
11 3/4%, 8/15/06 B3 8,720 9,243
63,025
IRON & STEEL - 0.0%
AK Steel Corp. 9 1/8%, 12/15/06 (h) Ba2 4,890 5,000
WCI Steel, Inc. 10%, 12/1/04 (h) B1 2,330 2,400
7,400
METALS & MINING - 0.1%
Commonwealth Aluminum Corp.
10 3/4%, 10/1/06 B2 4,250 4,463
Kaiser Aluminum & Chemical Corp.
12 3/4%, 2/1/03 B2 2,380 2,576
Renco Metals, Inc. 11 1/2%, 7/1/03 B2 3,420 3,574
10,613
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
PACKAGING & CONTAINERS - 0.1%
Crown Cork & Seal, Inc. 5 7/8%, 4/15/98 Baa1 $ 15,250 $ 15,224
Crown Packaging Holdings Ltd.
0%, 11/1/03 (d) Ca 8,160 2,448
17,672
PAPER & FOREST PRODUCTS - 0.3%
Chesapeake Corp.:
10 3/8%, 10/1/00 Baa3 2,700 3,012
9 7/8%, 5/1/03 Baa3 10,000 11,348
Crown Paper Co. 11%, 9/1/05 B3 1,120 1,030
Doman Industries Ltd. yankee 8 3/4%, 3/15/04 Ba3 11,300 10,679
Great Northern Nekoosa Corp.
9 1/8%, 2/1/98 Baa2 7,800 8,013
Repap Wisconsin, Inc.:
9 1/4%, 2/1/02 B2 1,010 1,010
9 7/8%, 5/1/06 Caa 7,030 6,925
Repap New Brunswick, Inc. yankee
10 5/8%, 4/15/05 B3 6,140 6,062
SD Warren Co., Series B, 12%, 12/15/04 B1 2,640 2,878
Stone Container Corp. 11 7/8%, 8/1/16 B1 2,850 2,936
53,893
TOTAL BASIC INDUSTRIES 152,603
CONGLOMERATES - 0.1%
Jordan Industries, Inc.:
10 3/8%, 8/1/03 B3 10,540 10,487
0%, 8/1/05 (d) Caa 8,830 7,241
17,728
CONSTRUCTION & REAL ESTATE - 0.1%
CONSTRUCTION - 0.1%
McDermott (J. Ray) SA 9 3/8%, 7/15/06 B1 7,490 7,827
WCI Communities LP 17%, 7/24/98 (g) - 15,000 15,000
22,827
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Delco Remy International, Inc.
10 5/8%, 8/1/06 (h) B2 $ 1,280 $ 1,357
Lear Corp. 9 1/2%, 7/15/06 B1 4,650 4,859
6,216
HOME FURNISHINGS - 0.1%
Interlake Corp. 12 1/8%, 3/1/02 B3 9,370 9,815
Knoll, Inc. 10 7/8%, 3/15/06 B3 4,100 4,500
14,315
TEXTILES & APPAREL - 0.2%
Dan River, Inc. 10 1/8%, 12/15/03 B3 3,340 3,432
Levi Strauss & Co. 6.80%, 11/1/03 (h) Baa2 30,210 30,128
33,560
TOTAL DURABLES 54,091
ENERGY - 0.7%
ENERGY SERVICES - 0.2%
Petroliam Nasional BHD yankee (h):
6 7/8%, 7/1/03 A1 15,120 15,116
7 1/8%, 8/15/05 A1 27,050 27,051
42,167
OIL & GAS - 0.5%
Flores & Rucks, Inc. 9 3/4%, 10/1/06 B3 6,110 6,492
Forcenergy, Inc. 9 1/2%, 11/1/06 B2 760 798
Harcor Energy, Inc. 14 7/8%, 7/15/02 B3 6,530 7,575
Husky Oil Ltd. yankee 6 7/8%, 11/15/03 Baa3 13,990 13,848
KCS Energy, Inc. 11%, 1/15/03 B1 3,140 3,407
Norcen Energy Resources Ltd. yankee
7 3/8%, 5/15/06 Baa3 11,500 11,604
Occidental Petroleum Corp. 8 1/2%, 11/9/01 Baa2 5,900 6,303
Ras Laffan Liquid Natural Gas Co. Ltd. yankee
8.29%, 3/15/14 (h) A3 44,540 44,714
Vintage Petroleum, Inc. 8 5/8%, 2/1/09 B1 170 169
94,910
TOTAL ENERGY 137,077
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 6.6%
ASSET-BACKED SECURITIES - 1.4%
Airplanes Pass Through Trust Class D
10 7/8%, 3/15/19 Ba2 $ 8,380 $ 9,281
Capital Equipment Receivables Trust
6.11%, 7/15/99 Aaa 76,770 76,746
Chase Manhattan Grantor Trust:
6.61%, 9/15/02 Aaa 37,278 37,569
6.76%, 9/15/02 A3 9,763 9,836
Chevy Chase Auto Receivables Trust:
6.60%, 12/15/02 Aaa 17,175 17,288
5.90%, 7/15/03 Aaa 39,060 38,986
Ford Credit Grantor Trust
5.90%, 10/15/00 Aaa 12,060 12,049
General Motors Acceptance Corp. Grantor
Trust 1995-A, 7.15%, 3/15/00 Aaa 6,711 6,781
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 1,569 1,566
Premier Auto Trust:
4.90%, 12/15/98 Aaa 538 535
4.95%, 2/2/99 A2 1,470 1,459
Sears Credit Account Master Trust II
6 1/2%, 10/15/03 Aaa 34,060 34,294
Standard Credit Card Master Trust I:
4.85%, 3/7/99 A2 7,800 7,793
7.65%, 2/15/00 A2 3,800 3,856
Union Federal Savings Bank Grantor Trust
8.20%, 1/10/01 Baa 1,005 1,019
259,058
BANKS - 2.6%
ABN Amro Bank NV
6 5/8%, 10/31/01 Aa3 28,500 28,459
Bank of New York Institutional Capital Trust A
7.78%, 10/1/26 (h) A1 50,000 48,473
BankBoston Capital Trust I
7 3/4%, 12/15/26 (h) Baa1 37,000 35,825
Banponce Financial Corp.:
6.66%, 3/26/01 A3 10,000 9,974
6 3/4%, 8/9/01 A3 18,240 18,211
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Capital One Bank:
6.74%, 5/31/99 Baa3 $ 14,195 $ 14,267
7.20%, 7/19/99 Baa3 22,000 22,350
Corporacion Andina De Fomento yankee
7 1/4%, 4/30/98 (h) Baa2 5,900 5,978
First Chicago Institutional Capital B
7 3/4%, 12/1/26 (h) A1 34,000 32,870
First Fidelity Bancorp. 8 1/2%, 4/1/98 A2 7,485 7,678
First Maryland Bancorp 10 3/8%, 8/1/99 Baa1 8,345 9,068
First Security Corp. 6 7/8%, 11/15/06 A3 25,000 24,336
First USA Bank 6 1/2%, 12/23/99 Baa3 29,500 29,393
Firstar Corp. 7.15%, 9/1/00 A3 11,970 12,075
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 3,520 3,626
HSBC Americas, Inc. 7%, 11/1/06 Baa1 24,500 24,112
Hartford National Corp. 9.85%, 6/1/99 A3 2,000 2,137
Kansallis-Osake-Pankki 10%, 5/1/02 A3 5,285 6,011
Korea Development Bank yankee
6 1/4%, 5/1/00 A1 6,000 5,949
Manufacturers Hanover Corp.
8 1/2%, 2/15/99 A2 160 167
Manufacturers Hanover Trust
euro 5.5625%, 4/30/97 (i) A1 500 500
Merchants National Corp. 9 7/8%, 10/1/99 A2 6,850 7,395
Merita Bank Ltd. yankee 6 1/2%, 1/15/06 A3 16,000 15,220
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 16,530 17,013
Midlantic Corp.:
9 7/8%, 12/1/99 A3 18,227 19,765
9.20%, 8/1/01 A3 11,550 12,488
Nationsbank Corp. 5 1/8%, 9/15/98 A1 2,000 1,969
Provident Bank 6 1/8%, 12/15/00 A3 27,500 27,027
Shawmut National Corp. 8 5/8%, 12/15/99 A3 7,440 7,820
Signet Banking Corp.:
5 5/8%, 5/15/97 (i) Baa2 2,640 2,635
5.8125%, 4/15/98 (i) Baa2 6,210 6,187
9 5/8%, 6/1/99 Baa2 7,500 7,978
Signet Bank 7.80%, 9/15/06 Baa1 12,500 12,891
Summit Bancorp. 8 5/8%, 12/10/02 BBB- 6,750 7,288
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Union Planters National Bank
6.81%, 8/20/01 A3 $ 13,000 $ 13,065
United Virginia Bankshares, Inc.
8 5/8%, 4/15/98 Baa1 1,522 1,561
501,761
CREDIT & OTHER FINANCE - 2.1%
AT&T Capital Corp.:
6%, 11/13/98 Baa3 6,000 5,977
6.02%, 12/4/98 Baa3 40,260 40,088
Ahmanson Capital Trust I
8.36%, 12/1/26 (h) Baa3 15,500 15,633
Associates Corp. of North America
6 1/2%, 9/9/98 Aa3 50,000 50,275
CIT Group Holdings, Inc. 6 1/4%, 9/30/99 Aa3 45,890 45,823
Chase Capital I 7.67%, 12/1/26 A1 42,000 40,873
Chrysler Financial Corp.:
6.80%, 5/26/98 A3 5,000 5,051
6 3/8%, 1/28/00 A3 29,710 29,741
Finova Capital Corp. 6.14%, 11/2/98 Baa1 1,880 1,877
First Securities Capital I
8.41%, 12/15/26 (h) A3 18,730 19,142
Fleet Mortgage Group, Inc. 6 1/2%, 6/15/00 A2 3,900 3,883
Ford Motor Credit Co.:
5 5/8%, 3/3/97 A1 1,250 1,248
euro 8 5/8%, 1/24/00 A1 7,250 7,640
General Electric Capital Corp.
6.94%, 4/13/09 (e) Aaa 25,630 25,960
General Motors Acceptance Corp.:
5 3/8%, 3/9/98 A3 2,700 2,684
8 5/8%, 6/15/99 A3 6,400 6,717
8%, 10/1/99 A3 6,200 6,439
6.65%, 5/24/00 A3 5,950 5,975
Greyhound Financial Corp. 6.95%, 1/28/98 Baa2 2,000 2,017
HMC Acquisition Properties, Inc. 9%, 12/15/07 Ba3 17,230 17,488
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Imperial Credit Industries, Inc.
9 7/8%, 1/15/06 (h) B1 $ 800 $ 821
MCN Investment Corp. 5.84%, 2/1/99 Baa2 11,820 11,714
Wells Fargo Capital C 7.73%, 12/1/26 (h) A1 59,000 57,320
404,386
INSURANCE - 0.3%
SunAmerica, Inc.:
6.20%, 10/31/99 Baa1 21,500 21,388
Series 2, 6.20%, 10/31/99 Baa1 27,000 26,953
48,341
SAVINGS & LOANS - 0.2%
First Nationwide Holdings, Inc.
9 1/8%, 1/15/03 Ba3 1,930 1,985
First Nationwide Parent Holdings Ltd.
12 1/2%, 4/15/03 B3 20,050 22,306
First Nationwide Escrow Corp.
10 5/8%, 10/1/03 (h) Ba3 7,590 8,235
Great Western Financial Corp.
6 3/8%, 7/1/00 Baa1 1,330 1,321
Home Savings of America 6%, 11/1/00 A3 10,500 10,231
44,078
SECURITIES INDUSTRY - 0.0%
ECM Corp. extendible 14%, 6/1/02 (h) - 607 668
TOTAL FINANCE 1,258,292
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Wright Medical Technology, Inc.
10 3/4%, 7/1/00 B3 4,510 4,589
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - 0.1%
Columbia/HCA Healthcare Corp.
6 1/2%, 3/15/99 A2 $ 13,120 $ 13,172
Tenet Healthcare Corp.:
8%, 1/15/05 Ba1 3,490 3,490
8 5/8%, 1/15/07 Ba3 1,410 1,429
18,091
TOTAL HEALTH 22,680
HOLDING COMPANIES - 0.0%
Gray Communications Systems, Inc.
10 5/8%, 10/1/06 B3 5,040 5,355
Veritas Holding yankee 9 5/8%, 12/15/03 (h) BB- 840 857
6,212
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.2%
Magnetek, Inc. 10 3/4%, 11/15/98 B1 14,580 15,163
Motors & Gears, Inc. 10 3/4%, 11/15/06 (h) B3 9,850 10,146
Omnipoint Corp.:
11 5/8%, 8/15/06 (h) B3 2,450 2,554
11 5/8%, 8/15/06 B2 5,240 5,463
33,326
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Goss Graphic System, Inc. 12%, 10/15/06 B2 1,790 1,875
International Knife & Saw, Inc.
11 3/8%, 11/15/06 (h) B3 870 898
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 B1 2,790 2,895
10 3/4%, 11/1/03 B3 8,019 8,310
13,978
POLLUTION CONTROL - 0.0%
Allied Waste of North America, Inc.
10 1/4%, 12/1/06 (h) B3 1,100 1,168
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 48,472
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 1.7%
BROADCASTING - 0.7%
Adelphia Communications Corp.
12 1/2%, 5/15/02 B3 $ 3,970 $ 4,084
Benedek Communications Corp.
0%, 5/15/06 (d) - 5,500 3,341
Comcast UK Cable Partners Ltd. 0%, 11/15/07 B2 2,370 1,659
CS Wireless Systems, Inc. 0%, 3/1/06 (d) Caa 19,980 6,993
Diamond Cable Communications PLC yankee
0%, 12/15/05 (d) B3 8,240 5,747
Granite Broadcasting Corp.:
10 3/8%, 5/15/05 B3 2,670 2,730
9 3/8%, 12/1/05 B3 1,500 1,448
Jacor Communications Co. 9 3/4%, 12/15/06 B2 660 675
Lenfest Communications, Inc.:
8 3/8%, 11/1/05 Ba3 1,570 1,507
10 1/2%, 6/15/06 B2 1,120 1,187
NWCG Holdings Corp. 0%, 6/15/99 Caa 12,505 10,582
Olympus Communciation LP/Olympus Capital
Corp. 10 5/8%, 11/15/06 (h) B1 3,730 3,842
Peoples Choice TV Corp. unit
0%, 6/1/04 (d) Caa 10,780 4,528
SFX Broadcasting, Inc. 10 3/4%, 5/15/06 B3 1,780 1,878
TCI Communication, Inc. 6.82%, 9/15/10 Ba1 26,000 25,972
Telewest PLC 0%, 10/1/07 (d) B1 3,570 2,463
Time Warner, Inc.:
6.85%, 1/15/26 Ba1 19,000 18,459
7 3/4%, 6/15/05 Ba1 22,000 22,210
UIH Australia/PAC, Inc., Series B,
0%, 5/15/06 (d) B2 19,510 9,950
United International Holdings, Inc.:
0%, 11/15/99 B3 820 590
Series B, 0%, 11/15/99 B3 890 641
130,486
ENTERTAINMENT - 0.2%
Alliance Gaming Corp. 12 7/8%, 6/30/03 B2 8,340 9,049
AMF Group, Inc., Series B:
0%, 3/15/06 (d) B2 9,350 6,475
10 7/8%, 3/15/06 B2 8,025 8,667
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - CONTINUED
Cinemark USA, Inc. 9 5/8%, 8/1/08 B2 $ 2,370 $ 2,411
Viacom, Inc. 8%, 7/7/06 B1 14,690 14,194
40,796
LEISURE DURABLES & TOYS - 0.2%
Coleman Holdings 0%, 5/27/98 B3 5,730 5,013
ICON Health and Fitness, Inc. 13%, 7/15/02 B3 12,820 14,423
IHF Holdings, Inc. 0%, 11/ 15/04 (d) Caa 10,225 8,282
ICON Fitness Corp. 0%, 11/15/06 (h) - 2,530 1,379
29,097
LODGING & GAMING - 0.4%
American Skiing Co. 12%, 7/15/06 B3 5,980 6,144
Casino America, Inc. 12 1/2%, 8/1/03 B1 680 668
Circus Circus Enterprises, Inc. 7%, 11/15/36 Baa2 15,700 15,237
Grand Casinos, Inc. 10 1/8%, 12/1/03 Ba3 20,053 20,504
HMH Properties, Inc. 9 1/2%, 5/15/05 Ba3 18,160 18,750
Hollywood Casino Corp. 12 3/4%, 11/1/03 B2 900 878
Horseshoe Gaming LLC 12 3/4%, 9/30/00 B1 10,735 11,728
Wyndham Hotel Corp. 10 1/2%, 5/15/06 B2 430 454
74,363
PUBLISHING - 0.1%
Hollinger International Publishing, Inc.
9 1/4%, 2/1/06 B1 4,905 4,930
News America Holdings, Inc.:
gtd. 9 1/8%, 10/15/99 Baa3 10,000 10,650
8 5/8%, 2/1/03 Baa3 3,805 4,085
19,665
RESTAURANTS - 0.1%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa1 2,820 2,601
Host Marriott Travel Plazas, Inc.
9 1/2%, 5/15/05 B1 15,390 15,929
18,530
TOTAL MEDIA & LEISURE 312,937
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - 0.6%
FOODS - 0.4%
ConAgra, Inc. 7 1/8%, 10/1/26 Baa1 $ 20,725 $ 21,048
Dart and Kraft Finance NV gtd.
7 3/4%, 11/30/98 A2 7,239 7,411
International Home Foods, Inc.
10 3/8%, 11/1/06 (h) B2 6,150 6,381
Ralcorp Holdings, Inc. 8 3/4%, 9/15/04 Ba1 18,000 19,560
Specialty Foods Corp.:
10 1/4%, 8/15/01 B3 3,015 2,864
11 1/8%, 10/1/02 B3 6,250 6,063
63,327
HOUSEHOLD PRODUCTS - 0.1%
Revlon Worldwide Corp. secured 0%, 3/15/98 B3 21,700 19,557
TOBACCO - 0.1%
Philip Morris Companies, Inc. 6.95%, 6/1/06 A2 20,550 20,759
TOTAL NONDURABLES 103,643
RETAIL & WHOLESALE - 0.5%
APPAREL STORES - 0.2%
Lamonts Apparel, Inc.
10 1/4%, 11/1/99 pay-in-kind (b)(h) - 3,082 123
Mothers Work, Inc. 12 5/8%, 8/1/05 B3 12,150 12,636
Specialty Retailers, Inc.:
10%, 8/15/00 B1 7,370 7,665
11%, 8/15/03 B3 5,110 5,366
Series D, 11%, 8/15/03 B- 10,000 10,500
36,290
GENERAL MERCHANDISE STORES - 0.1%
Dayton Hudson Corp. 6.80%, 10/1/01 Baa1 24,000 23,987
Pantry, Inc. 12%, 11/15/00 B2 3,370 3,404
27,391
GROCERY STORES - 0.2%
Food 4 Less Holdings, Inc.
0%, 7/15/05 (d) Caa 9,730 6,762
Penn Traffic Co.:
10 1/4%, 2/15/02 B2 3,160 2,449
8 5/8%, 12/15/03 B2 750 570
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - CONTINUED
Penn Traffic Co.: - continued
10 3/8%, 10/1/04 B2 $ 1,350 $ 1,046
11 1/2%, 4/15/06 B2 540 429
Pueblo Xtra International, Inc. 9 1/2%, 8/1/03 B2 10,365 9,782
Star Markets, Inc. 13%, 11/1/04 B3 6,610 7,437
28,475
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Guitar Center Management Co., Inc.
11%, 7/1/06 B2 2,230 2,386
Town & Country Corp. 11 1/2%, 9/15/97 B3 1,370 1,274
3,660
TOTAL RETAIL & WHOLESALE 95,816
SERVICES - 0.2%
PRINTING - 0.1%
Sullivan Graphics, Inc. 12 3/4%, 8/1/05 Caa 7,880 7,723
SERVICES - 0.1%
Celestica International, Inc. yankee
10 1/2%, 12/31/06 (h) B2 1,240 1,333
Orion Network System, Inc.:
0%, 1/15/07 unit (d) B2 14,170 7,847
11 1/4%, 1/15/07 unit B2 8,920 8,953
Outsourcing Solutions, Inc.
11%, 11/1/06 (h) B3 2,190 2,321
20,454
TOTAL SERVICES 28,177
TECHNOLOGY - 1.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Echostar Satellite Broadcasting Corp.
0%, 3/15/04 (d) Caa 18,380 12,866
Hyperion Telecommunications, Inc., Series B,
0%, 4/15/03 (d) - 19,970 11,583
24,449
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 0.7%
Bell & Howell Co. 0%, 3/1/05 (d) B3 $ 12,755 $ 9,566
Comdisco, Inc.:
7 1/4%, 4/15/98 Baa1 20,205 20,457
6.35%, 8/7/98 Baa1 13,200 13,235
6.70%, 8/6/99 Baa1 6,750 6,792
9.28%, 6/5/00 Baa2 2,000 2,160
9.30%, 6/27/00 Baa2 2,000 2,167
9 1/4%, 7/6/00 Baa2 7,625 8,240
6 3/8%, 11/30/01 Baa1 24,500 24,067
9 1/2%, 1/28/02 Baa2 2,580 2,874
Dictaphone Corp. 11 3/4%, 8/1/05 B3 13,480 11,188
Exide Electronics Group, Inc.
11 1/2%, 5/15/06 B3 4,180 4,473
Unisys Corp.:
10 5/8%, 10/1/99 B1 2,250 2,329
12%, 4/15/03 B1 12,640 13,651
11 3/4%, 10/15/04 B1 2,360 2,542
123,741
ELECTRONICS - 0.3%
Motorola, Inc. 6 1/2%, 9/1/25 Aa3 30,050 29,677
Texas Instruments, Inc. 6 7/8%, 7/15/00 A3 32,100 32,484
62,161
TOTAL TECHNOLOGY 210,351
TRANSPORTATION - 0.4%
AIR TRANSPORTATION - 0.3%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 3,500 3,542
9 1/2%, 7/15/98 Baa3 5,690 5,927
Atlas Air, Inc. 12 1/4%, 12/1/02 Ba3 4,810 5,339
Delta Air Lines, Inc. 8 1/4%, 12/27/07 (e) Baa3 20,130 22,423
United Airlines pass through trust
7.27%, 1/30/13 Baa1 12,130 11,715
US Air, Inc. pass through trust
8 5/8%, 9/1/98 B1 3,000 3,038
51,984
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - CONTINUED
RAILROADS - 0.1%
Burlington Northern Santa Fe Corp.
7.29%, 6/1/36 Baa2 $ 22,430 $ 22,861
Transtar Holdings LP/Transtar Capital Corp.
0%, 12/15/03 (d) B- 9,742 7,696
30,557
TOTAL TRANSPORTATION 82,541
UTILITIES - 1.4%
CELLULAR - 0.7%
Arch Communications Group, Inc.
0%, 3/15/08 (d) B3 19,750 10,616
Intercel, Inc. 0%, 5/1/06 (d) B2 8,720 5,581
Microcell Telecommunications, Inc.
0%, 6/1/06 (d) B3 32,420 17,831
Millicom International Cellular SA
0%, 6/1/06 (d) B3 59,270 38,822
Mobile Telecommunications Technologies Corp.
13 1/2%, 12/15/02 B3 7,500 7,200
360 Degrees Communications Co.:
7 1/8%, 3/1/03 Ba2 18,000 17,863
7 1/2%, 3/1/06 Ba2 30,000 29,902
USA Mobile Communications, Inc. II
9 1/2%, 2/1/04 B2 1,270 1,167
128,982
ELECTRIC UTILITY - 0.2%
AES China Generating Ltd. yankee
10 1/8%, 12/15/06 Ba3 3,360 3,494
British Columbia Hydro & Power Authority yankee
12 1/2%, 1/15/14 Aa2 8,660 9,960
Texas Utilities Electric Co.:
1st Mtg. & Collateral Trust 7 1/8%, 6/1/97 Baa1 3,000 3,013
6 3/8%, 8/1/97 Baa1 2,000 2,005
9 1/2%, 8/1/99 Baa1 2,000 2,140
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
United Illuminating Co.:
7 3/8%, 1/15/98 Baa3 $ 4,000 $ 4,030
9.76%, 1/2/06 Baa3 11,074 11,533
Virginia Electric & Power Co. 6.35%, 6/8/98 A3 10,000 10,044
46,219
GAS - 0.2%
Kern River Funding Corp.
6.72%, 9/30/01 (h) A3 20,000 19,926
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa2 20,650 23,197
43,123
TELEPHONE SERVICES - 0.3%
Brooks Fiber Properties, Inc.
0%, 11/1/06 (d)(h) - 1,350 861
GST USA, Inc. 0%, 12/15/05 (d) - 10,020 6,237
Intermedia Communications, Inc.
0%, 5/15/06 (d) B3 9,990 6,693
MFS Communications, Inc. (d):
0%, 1/15/04 Ba3 7,030 6,151
0%, 1/15/06 Ba3 18,715 13,779
Pagemart, Inc. 0%, 11/1/03 (d) - 13,940 11,291
Shared Technologies Fairchild
Communications Corp. 0%, 3/1/06 (d) Caa 9,370 7,872
52,884
TOTAL UTILITIES 271,208
TOTAL NONCONVERTIBLE BONDS 2,905,528
TOTAL CORPORATE BONDS
(Cost $2,904,972) 2,934,408
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 8.9%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
U.S. TREASURY OBLIGATIONS - 7.0%
9 1/8%, 5/15/99 Aaa $ 56,160 $ 59,854
6 3/4%, 6/30/99 Aaa 215,950 219,526
7 3/4%, 12/31/99 Aaa 45,000 46,990
6 7/8%, 3/31/00 Aaa 2,275 2,321
10 3/4%, 5/15/03 Aaa 11,840 14,480
12 3/8%, 5/15/04 Aaa 13,178 17,656
11 5/8%, 11/15/04 Aaa 72,568 95,143
7%, 7/15/06 Aaa 337,000 348,217
11 3/4%, 2/15/10 (callable) Aaa 139,740 184,239
12 3/4%, 11/15/10 (callable) Aaa 36,507 51,304
13 7/8%, 5/15/11 Aaa 21,940 32,865
12%, 8/15/13 (callable) Aaa 48,550 68,857
9%, 11/15/18 Aaa 44,960 55,659
8 7/8%, 2/15/19 Aaa 114,205 139,847
TOTAL U.S. TREASURY OBLIGATIONS 1,336,958
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.9%
Federal Agricultural Mortgage Corporation:
7.01%, 8/10/03 Aaa 1,040 1,064
7.01%, 8/10/04 Aaa 1,340 1,358
7.04%, 8/10/05 Aaa 5,100 5,177
Federal Farm Credit Bank 8.06%, 1/4/05 Aaa 3,500 3,769
Federal Home Loan Bank:
5.77%, 2/3/04 Aaa 3,920 3,719
6 3/4%, 4/5/04 Aaa 14,000 14,046
7.56%, 9/1/04 Aaa 1,340 1,407
8.195%, 12/22/04 Aaa 10,000 10,889
Federal Home Loan Mortgage Corporation
7.14%, 7/31/02 Aaa 300 301
Federal National Mortgage Association
4 7/8%, 10/15/98 (callable) Aaa 5,000 4,899
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 5,976 6,380
Class 2-E, 9.40%, 5/15/02 Aaa 19,009 20,331
Class T-2, 9 5/8%, 5/15/02 Aaa 23,213 24,803
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
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 $ 1,682 $ 1,696
Series 1994-F, 8.187%, 12/15/04 Aaa 5,197 5,474
Series 1995-B, 6.13%, 6/15/04 Aaa 2,921 2,868
Guaranteed Trade Trust Certificates (assets of Trust
guaranteed by U.S. Government through
Export-Import Bank):
Series 1992-A, 7.02%, 9/1/04 Aaa 4,108 4,201
Series 1994-A, 7.39%, 6/26/06 Aaa 13,705 14,134
Israel Export Trust Certificates
(assets of Trust guaranteed by U.S. Government
through Export-Import Bank) Series 1994-1,
6.88%, 1/26/03 Aaa 5,887 5,958
Overseas Private Investment Corp.
6.726%, 9/15/10 - 30,000 29,680
Private Export Funding Corp. secured
6.86%, 4/30/04 Aaa 3,518 3,563
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
7 3/4%, 4/1/98 Aaa 1,263 1,280
4 7/8%, 9/15/98 Aaa 11,520 11,325
7 3/4%, 11/15/99 Aaa 31,010 32,184
6 3/8%, 8/15/01 Aaa 10,945 10,931
8%, 11/15/01 Aaa 39,490 41,972
6 1/4%, 8/15/02 Aaa 23,011 22,740
6 1/8%, 3/15/03 Aaa 7,210 7,039
5 5/8%, 9/15/03 Aaa 19,160 18,227
6 5/8%, 2/15/04 Aaa 3,530 3,506
7 5/8%, 8/15/04 Aaa 8,330 8,710
5.89%, 8/15/05 Aaa 6,910 6,520
8 1/2%, 4/1/06 Aaa 9,580 10,411
U.S. Housing & Urban Development
8.27%, 8/1/03 Aaa 11,375 12,380
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 352,942
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,698,816) 1,689,900
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 7.0%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.3%
5 1/2%, 11/1/98 to 7/1/03 Aaa $ 22,338 $ 21,355
7%, 9/1/98 to 7/1/01 Aaa 29,197 29,433
8%, 10/1/16 to 7/1/26 Aaa 8,031 8,250
59,038
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.5%
5 1/2%, 8/1/02 to 5/1/26 Aaa 342,129 323,083
6%, 3/1/01 to 5/1/26 Aaa 251,817 238,647
6 1/2%, 1/1/24 to 4/1/26 Aaa 82,651 78,948
7 1/2%, 8/1/07 to 2/1/27 Aaa 16,141 16,254
8%, 6/1/07 Aaa 109 113
8 1/2%, 1/1/09 to 7/1/21 Aaa 93 98
10%, 8/1/17 Aaa 127 139
657,282
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 3.2%
6%, 9/15/08 to 4/15/26 Aaa 33,716 32,821
6 1/2%, 6/15/02 to 8/15/25 Aaa 27,692 26,533
7%, 10/15/17 to 4/15/26 Aaa 211,213 207,759
7 1/2%, 8/15/21 to 11/15/25 Aaa 177,904 178,930
8%, 4/15/00 to 11/15/25 Aaa 118,204 121,573
8 1/2%, 11/15/05 to 5/15/26 Aaa 8,858 9,300
9%, 3/15/10 to 1/15/25 Aaa 1,997 2,131
9 1/2%, 7/15/09 to 11/15/24 Aaa 2,728 2,956
10%, 11/15/09 to 1/15/26 Aaa 19,416 21,351
11%, 3/15/10 to 5/15/19 Aaa 3,672 4,159
607,513
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $1,324,321) 1,323,833
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.4%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
Federal Home Loan Mortgage Corporation:
planned amortization class:
Series 1645 Class ZA, 5 1/2%, 4/15/05 Aaa $ 12,816 $ 12,488
Series 1727 Class D, 6 1/2%, 8/15/14 Aaa 20,000 20,075
sequential pay Series 1838 Class A,
6 1/2%, 12/15/02 Aaa 18,403 18,454
Federal National Mortgage Association planned
amortization class Series 1993-129 Class D,
6.10%, 6/25/05 Aaa 24,500 24,339
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $75,139) 75,356
COMMERCIAL MORTGAGE SECURITIES - 0.8%
ACP Mortgage LP floater Series E,
7.387%, 2/28/28 (h)(i) BB 2,181 1,784
American Southwest Financial Securities
Series 1994-C2 Class B2, 12.79%,
12/25/01 (h) - 3,250 3,136
Berkeley Federal Bank & Trust FSB Series 1994
Class 1-B, 7.9038%, 8/1/24 (h) - 9,080 6,470
CBA Mortgage Corp. Series 1993-C1 Class E,
7.9611%, 12/25/03 (h)(i) Ba2 3,169 2,864
CBM Funding Corp. sequential pay
Series 1996-1B Class A1, 7.55%, 7/1/99 AA 1,513 1,531
CS First Boston Mortgage Securities Corp.:
Series 1995-AEWI Class E,
10.0197%, 11/25/97 (h)(i) - 3,000 2,689
Series 1994-CFB1 Class E,
7.7393%, 1/25/28 (h)(i) Ba2 2,660 2,287
Series 1994-M1 Class E,
12.60%, 2/15/02 (h) - 2,910 2,903
Series 1995-AEWI Class A-1,
6.665%, 11/25/27 Aaa 4,018 4,022
Series 1995-WF1 Class A-2,
6.648%, 12/21/27 Aaa 31,981 31,321
Series 1996-1B Class C, 7.86%, 2/1/08 BBB 12,500 12,396
DLJ Mortgage Acceptance Corp.
Series 1993-MF12 Class B-2,
10.10%, 9/18/03 (h) - 2,800 2,618
Equitable Life Assurance Society of the
United States Series 1996-1 Class C1,
7.52%, 5/15/06 (h) A2 6,000 6,191
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
General Motors Acceptance Corp. Commercial
Mortgage Securities, Inc. Series 1996-C1
Class F, 7.86%, 11/15/06 (h) Ba3 $ 2,500 $ 2,158
Lehman Structured Securities Corp. Series 1996-1
Class E-2, 7.995%, 6/25/26 BB 2,472 2,290
Lennar Central Partners LP Series 1995-1 Class F,
11.70%, 5/15/05 (h) - 2,400 2,410
Merrill Lynch Mortgage Investments, Inc.
Series 1995 Class C2-E, 8.15%, 6/15/21 (h) Ba3 2,365 2,194
Morgan Stanley Capital One, Inc.
Series 1996-MBL1 Class E, 8.661%,
5/25/21 (h) - 3,930 3,527
Mortgage Capital Funding, Inc. Series 1996-MC1
Class G, 7.15%, 7/15/28 (h) BB 4,000 3,365
Oregon Commercial Mortgage, Inc.
Series 1995 Class E, 9.8452%, 6/25/26 (h)(i) BB 3,208 2,994
Penn Mutual Life Insurance Co. (The)
Series 1996-PML Class K, 7.90%,
11/15/26 (h) - 6,500 3,835
Phoenix Real Estate Securities, Inc. Series 1993
Class D-1, 8 1/4%, 11/25/23 (h) Ba2 3,500 3,255
Resolution Trust Corp.:
Series 1995-C1 Class A-4A, 6 1/4%, 2/25/27 Aaa 3,439 3,435
Series 1995-C2 Class D, 7%, 5/25/27 Baa2 3,952 3,841
Structured Asset Securities Corp.:
Series 1992-M1 Class C, 7.05%, 11/25/02 B2 3,200 2,720
Series 1993-C1 Class A-1, 6.60%, 10/25/24 AA+ 1,723 1,720
Series 1993-C1 Class E,
6.60%, 10/25/24 (h) B 3,249 1,266
Series 1995-C1 Class A1-A,
7 3/8%, 9/25/24 Aaa 4,081 4,110
Series 1995-C1 Class E,
7 3/8%, 9/25/24 (h) BB 7,896 6,397
Series 1995-C4 Class A1A, 6.90%, 6/25/26 Aaa 5,791 5,774
Series 1996-CFL Class E, 7 3/4%, 2/25/28 BB+ 11,188 10,957
Series 1996-CFL Class F,
7 3/4%, 2/25/28 (h) - 1,000 927
SML, Inc. Series 1994-C1 Class C,
9.20%, 9/18/99 (g) - 2,450 1,629
Whitehall Partners Series 1995-C1 Class E,
8.01%, 7/20/25 (h) - 8,892 8,770
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $154,088) 157,786
FOREIGN GOVERNMENT OBLIGATIONS (J) - 0.6%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
Manitoba Province yankee:
6%, 10/15/97 A1 $ 5,000 $ 5,008
6 3/8%, 10/15/99 A1 25,795 25,859
6 3/4%, 3/1/03 A1 5,000 5,014
Ontario Province yankee:
7 3/4%, 6/4/02 Aa3 6,000 6,322
15 3/4%, 3/15/12 Aa3 9,400 10,089
Quebec Province yankee (e):
6.86%, 4/15/26 A2 16,750 16,469
7.22%, 7/22/36 A2 45,000 46,877
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $114,491) 115,638
SUPRANATIONAL OBLIGATIONS - 0.1%
African Development Bank:
6 3/4%, 7/30/99 Aa1 10,200 10,276
9.30%, 7/1/00 Aa1 15,000 16,200
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $26,709) 26,476
CASH EQUIVALENTS - 4.5%
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.56%, dated
1/31/97 due 2/3/97 $ 2,407 2,406
SHARES
Taxable Central Cash Fund (f) 847,267,509 847,268
TOTAL CASH EQUIVALENTS
(Cost $849,674) 849,674
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $16,387,884) $ 18,973,602
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. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.39%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
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
Food 4 Less Holdings, Inc.
(warrants) 12/30/92 $ 428
Live Entertainment, Inc.:
$2.00 (warrants) 3/23/93 $ 230
$2.72 (warrants) 3/23/93 $ 241
SML, Inc. Series 1994-C1
Class C, 9.20%,
9/18/99 8/11/94 $ 1,593
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 $604,974,000 or 3.2% of net
assets.
9. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
10. Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 23.5% AAA, AA, A 21.3%
Baa 3.5% BBB 6.3%
Ba 1.4% BB 1.2%
B 3.1% B 3.2%
Caa 0.4% 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
both S&P and Moody's amounted to 0.6%. FMR has determined that unrated debt
securities that are lower quality account for 0.4% of the total value of
investment in securities.
INCOME TAX INFORMATION
At January 31, 1997, the aggregate cost of investment securities for income
tax purposes was $16,407,052,000. Net unrealized appreciation aggregated
$2,566,550,000, of which $2,685,423,000 related to appreciated investment
securities and $118,873,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JANUARY 31, 1997
ASSETS
Investment in securities, at value (including repurchase $ 18,973,602
agreements of $2,406) (cost $16,387,884) -
See accompanying schedule
Cash 527
Receivable for investments sold 208,647
Receivable for fund shares sold 18,785
Dividends receivable 19,643
Interest receivable 92,166
Other receivables 95
TOTAL ASSETS 19,313,465
LIABILITIES
Payable for investments purchased $ 228,841
Payable for fund shares redeemed 27,910
Accrued management fee 7,037
Other payables and accrued expenses 4,151
TOTAL LIABILITIES 267,939
NET ASSETS $ 19,045,526
Net Assets consist of:
Paid in capital $ 16,250,291
Undistributed net investment income 61,095
Accumulated undistributed net realized gain (loss) on 148,478
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 2,585,662
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 1,068,310 shares outstanding $ 19,045,526
NET ASSET VALUE, offering price and redemption price per $17.83
share ($19,045,526 (divided by) 1,068,310 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1997
INVESTMENT INCOME $ 138,746
Dividends (including $113 received from affiliated issuers)
Interest (including income on securities loaned of $248) 264,284
TOTAL INCOME 403,030
EXPENSES
Management fee $ 40,708
Transfer agent fees 19,007
Accounting and security lending fees 523
Non-interested trustees' compensation 168
Custodian fees and expenses 341
Registration fees 576
Audit 116
Legal 44
Interest 34
Miscellaneous 82
Total expenses before reductions 61,599
Expense reductions (1,353) 60,246
NET INVESTMENT INCOME 342,784
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain (loss) of 231,841
$454 on sales of investments in affiliated issuers)
Foreign currency transactions 499 232,340
Change in net unrealized appreciation (depreciation) on:
Investment securities 1,924,809
Assets and liabilities in foreign currencies (51) 1,924,758
NET GAIN (LOSS) 2,157,098
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 2,499,882
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JULY 31,
JANUARY 31, 1996
1997
INCREASE (DECREASE) IN NET ASSETS
Operations $ 342,784 $ 545,081
Net investment income
Net realized gain (loss) 232,340 1,872,741
Change in net unrealized appreciation (depreciation) 1,924,758 (942,495)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,499,882 1,475,327
FROM OPERATIONS
Distributions to shareholders (346,475) (504,777)
From net investment income
From net realized gain (1,497,696) (389,349)
TOTAL DISTRIBUTIONS (1,844,171) (894,126)
Share transactions 1,708,565 4,041,699
Net proceeds from sales of shares
Reinvestment of distributions 1,763,463 843,928
Cost of shares redeemed (1,780,930) (3,154,783)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,691,098 1,730,844
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,346,809 2,312,045
NET ASSETS
Beginning of period 16,698,717 14,386,672
End of period (including undistributed net investment $ 19,045,526 $ 16,698,717
income of $61,095 and $64,786, respectively)
OTHER INFORMATION
Shares
Sold 99,641 234,833
Issued in reinvestment of distributions 109,644 49,609
Redeemed (103,940) (183,230)
Net increase (decrease) 105,345 101,212
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JULY 31,
ENDED JANUARY
31,
1997 1996 1995 1994 E 1993 H 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 17.34 $ 16.69 $ 15.93 $ 16.59 $ 15.22 $ 13.75
beginning of period
Income from Investment
Operations
Net investment .33 I .64 .42 .46 .72 .88 D
income
Net realized and 2.04 1.00 1.53 .88 2.14 1.37
unrealized gain
(loss)
Total from investment 2.37 1.64 1.95 1.34 2.86 2.25
operations
Less Distributions
From net investment (.34) (.55) (.44) (.51) (.80) (.78)
income
From net realized (1.54) (.44) (.75) (1.49) (.69) -
gain
Total distributions (1.88) (.99) (1.19) (2.00) (1.49) (.78)
Net asset value, $ 17.83 $ 17.34 $ 16.69 $ 15.93 $ 16.59 $ 15.22
end of period
TOTAL RETURN B, C 14.99% 10.06% 13.03% 8.60% 20.29% 16.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 19,046 $ 16,699 $ 14,387 $ 10,899 $ 7,828 $ 5,578
period (in millions)
Ratio of expenses to .68% A .74% .77% .80% .74% .64%
average net assets
Ratio of expenses to .66% A, .72% .77% .79% .74% .64%
average net assets F F F
after expense
reductions
Ratio of net investment 3.77% A 3.44% 3.50% 4.00% 4.89% 6.23%
income to average
net assets
Portfolio turnover rate 93% A 139% 76% 74% 76% 102%
Average commission $ .0446
rate G
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. 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 7 OF NOTES TO FINANCIAL STATEMENTS). G FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. H AS OF AUGUST 1,
1992, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING. I NET
INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1997
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. 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. 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. 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 with
remaining maturities of sixty days or less for which quotations are not
readily available 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
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,
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. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. 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, futures and options
transactions, foreign currency transactions, passive foreign investment
companies (PFIC), defaulted bonds, market discount, partnerships,
non-taxable dividends and losses deferred due to wash sales and futures and
options. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income 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.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
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 foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
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 &
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities, and may be
utilized by the fund as an additional cash management option. Dividends
from the Cash Fund are declared daily and paid monthly from net interest
income. Income distributions received by the fund are recorded as interest
income.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a delayed delivery 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. With respect to
purchase commitments, the fund identifies securities as segregated in its
custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under the
contract.
OPTIONS. The fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in interest rates and currency values.
Writing puts and buying calls tend to increase the fund's exposure to the
underlying instrument. 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.
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.
2. OPERATING POLICIES -
CONTINUED
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 $18,830,000 or
0.1% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $7,974,378,000 and $7,996,930,000, respectively, of which U.S.
government and government agency obligations aggregated $2,201,973,000 and
$2,505,754,000, 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 .15%. For
the period, the management fee was equivalent to an annualized rate of .45%
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 Company, Inc. (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 annualized 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 $1,418,000 for the period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, there were no
loans outstanding.
6. 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 $63,171,000 and $48,728,000, respectively. The
weighted average interest rate was 6.2%.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$774,000 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 $18,000 and $561,000,
respectively, under these arrangements.
8. 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
Roadway Express, Inc. $ - $ 3,553 $ 113 $ -
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 January 31,
1997, and the related statement of operations for the six months then
ended, the statements of changes in net assets for the six months then
ended and for the year ended July 31, 1996 and the financial highlights for
the six months ended January 31, 1997 and for each of the five years in the
period ended July 31, 1996. 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 January 31, 1997 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 January 31, 1997,
the results of its operations for the six months then ended, the changes in
its net assets for the six months then ended and for the year ended July
31, 1996, and the financial highlights for the six months ended January 31,
1997 and for each of the five years in the period ended July 31, 1996, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 12, 1997
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate the
service, and on your first call, the system will help you create a personal
identification number (PIN) for security.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
1
For quotes.*
2
For account balances and holdings.
3
To review orders and mutual
fund activity.
4
To change your PIN.
5
To speak to a Fidelity representative.
*
0
BY PC
Fidelity's Web site on the Internet provides a wide range of information,
including daily financial news, fund performance, interactive planning
tools and news about Fidelity products and services.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at 1-800-544-7272
for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to manage
your investments via your PC.
* 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.
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
Bettina Doulton, Vice President
Kevin Grant, 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 *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
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
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
FIDELITY
(REGISTERED TRADEMARK)
GLOBAL BALANCED
FUND
SEMIANNUAL REPORT
JANUARY 31, 1997
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.
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
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As 1997 begins, the stock and bond markets generally have continued on the
course they followed during the past year. Through January, stocks
maintained their unprecedented climb, with the large companies still
setting the pace. With low, stable interest rates, the bond market has
tended to mirror its historical returns in the mid-single digits.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories 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, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you 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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Fidelity Global Balanced 6.92% 7.42% 45.82%
Morgan Stanley Capital International 11.18% 12.81% 77.89%
World Index
Salomon Brothers World Government 0.44% 2.11% 36.78%
Bond Index, Unhedged
Global Flexible Portfolio Funds Average 12.04% 13.09% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on 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 of 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
77 mutual funds with similar objectives tracked by Lipper Analytical
Services, Inc. over the past six months. These benchmarks reflect
reinvestment of dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1997 PAST 1 LIFE OF
YEAR FUND
Fidelity Global Balanced 7.42% 9.88%
Morgan Stanley Capital International 12.81% 15.48%
World Index
Salomon Brothers World Government 2.11% 8.14%
Bond Index, Unhedged
Global Flexible Portfolio Funds Average 13.09% n/a
AVERAGE ANNUAL RETURNS take the fund's cumulative return and show you what
would have happened if the fund had performed at a constant rate each year.
(Note: Lipper calculates average annual total returns by annualizing each
fund's total return, then taking an arithmetic average. This may produce a
slightly different figure than that obtained by averaging the cumulative
total returns and annualizing the result.)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970131 19970303 122830 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
1996/08/31 13669.58 16180.44
13671.78
1996/09/30 13983.70 16810.61
13727.28
1996/10/31 14048.69 16924.63
13984.13
1996/11/30 14676.93 17869.73
14168.42
1996/12/31 14614.74 17580.19
14053.86
1997/01/31 14581.92 17788.76
13678.18
IMATRL PRASUN SHR__CHT 19970131 19970303 122833 R00000000000051
$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 January 31, 1997, the value of the
investment would have grown to $14,582 - a 45.82% 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 $17,789 - a 77.89% increase,
and the Salomon Brothers World Government Bond Index, Unhedged, would have
grown to $13,678 - a 36.78% 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. Such factors as
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
An interview with Richard Mace, Portfolio Manager of Fidelity Global
Balanced Fund
Q. RICK, HOW DID THE FUND PERFORM?
A. For the six months that ended January 31, 1997, the fund had a return of
6.92%. The fund compares its performance to three measures: a bond index,
an equity index and a peer group of competitor funds. The fund outperformed
its bond-related benchmark - the Salomon Brothers World Government Bond
Index, Unhedged - which had a six-month return of 0.44%. On the other hand,
the fund lagged its equity-related benchmark - the Morgan Stanley Capital
International World Index - which produced an 11.18% return. The global
flexible portfolio funds average had a six-month return of 12.04% as of
January 31, 1997, according to Lipper Analytical Services. For the 12
months that ended January 31, 1997, the fund provided a return of 7.42%,
while the Salomon Brothers and Morgan Stanley indexes had returns of 2.11%
and 12.81% respectively. The Lipper peer group returned 13.09% over the
same period.
Q. IN TERMS OF PERFORMANCE, CAN YOU ISOLATE ANY FACTORS THAT PLAYED
IMPORTANT ROLES OVER THE LAST SIX MONTHS?
A. One of the key developments during the period was the continued strength
of the U.S. dollar. As a result, foreign-denominated securities were
adversely affected. The overall performance of the fund's Japanese
investments hurt as well. On a positive note, the portfolio was tilted more
toward equities than bonds, which reflected my belief that equities offered
better value. This strategy was beneficial to the fund.
Q. WHAT WERE SOME OF THE MORE SIGNIFICANT CHANGES YOU MADE TO THE PORTFOLIO
OVER THE COURSE OF THE PERIOD?
A. I continued to sell Japanese stocks in order to keep the fund
underweighted in that region relative to its Morgan Stanley Index. I've
placed the proceeds from these sales in European cyclical stocks - stocks
that typically benefit from a strong economy. This strategy has been
effective in moving the fund into undervalued European equities that I
believe have appealing risk/reward profiles. It also has limited the fund's
exposure to the negative effects of the weak Japanese yen and the subpar
performance of the Japanese stock market as a whole. Japan's economy got
off to a good start at the beginning of the period but then fizzled.
Q. DOES THIS MEAN YOU HAD A NEGATIVE VIEW ON JAPAN?
A. No, not at all. In fact, I cemented the fund's position in what I
consider my value holdings in Japan. These are companies that I feel could
benefit from the weak yen, the recent Japanese economic revival, world
economic growth and solid managements intent on raising the value of their
businesses. I only invest with conviction, and I believed in the fund's
remaining Japanese holdings. Some examples included Toyota, Honda and
broad-based export companies, such as Canon.
Q. BASED ON YOUR INVESTMENTS DURING THE PERIOD, YOU SAW OPPORTUNITIES IN
EUROPE . . .
A. Six months ago, I saw great potential in Europe. Stocks were generally
undervalued, there was the possibility of economic recovery and some
companies were taking steps to raise shareholder value. Some stocks have
appreciated and realized their underlying value. Economic growth has come,
although not as universally as I would have hoped. Additionally, many more
corporate managements have been proactive in growing the value of their
existing businesses by restructuring their balance sheets, selling off
poor-performing subsidiaries and redeploying excess cash more efficiently.
Q. WHAT SPECIFIC TYPES OF COMPANIES DID YOU FAVOR IN EUROPE?
A. As I said before, I looked for cyclical names - particularly in the
energy sector. I believed many European energy stock prices did not reflect
rising oil prices and were consequently discounting lower oil prices that
never came to fruition. Some energy stocks in the fund were Total, Royal
Dutch Petroleum, Shell Transport & Trading and British Petroleum. I also
liked what I consider to be European value holdings, including Veba,
Alcatel and Volvo. In general, we saw good performance from automotive
stocks and exporters.
Q. MANY OF THE FUND'S CANADIAN HOLDINGS ARE RELATIVELY NEW TO THE
PORTFOLIO. WHAT WAS THE STORY THERE?
A. Many Canadian oil and gas, natural resources and bank stocks were
attractively valued during the period. Stocks such as Canadian Natural
Resources and Inco performed well.
Q. DID YOU HAVE ANY DISAPPOINTMENTS?
A. One would be the overall weakness of the Japanese market. I consider
another to be the legal and government impediments to recognizing
shareholder value in Europe. For example, it's not yet legal in many
European countries for corporations to buy back stock, even though many
corporate managements have indicated an interest in doing so. I also
continue to be disappointed by the problems that arise from partial
government ownership of companies.
Q. WHAT'S YOUR OUTLOOK?
A. I'm hopeful that economic recoveries that have begun in Europe and Japan
will continue. I think a key to a company's stock price will be the
company's shareholder-friendly attitude, as reflected in stock buybacks or
other forms of proactive management. Therefore, I will try
to position the fund in companies that could benefit from economic growth
and that are focused on providing returns for shareholders.
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 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
FUND NUMBER: 334
TRADING SYMBOL: FGBLX
START DATE: February 1, 1993
SIZE: as of January 31,
1997, more than $72 million
MANAGER: Richard Mace,
since 1996; manager,
Fidelity International Value
Fund, since 1994; manager
Fidelity Overseas, Fidelity
Advisor Overseas, VIP:
Overseas, Fidelity Advisor
Annuity Overseas funds,
since 1996; joined Fidelity in
1987
(checkmark)
RICK MACE DISCUSSES THREE
INVESTING THEMES FOR THE
FUND:
"I've positioned the fund to try
to take advantage of three
worldwide themes. First, a
trend of foreign companies
pursuing increased
shareholder value is an
important element.
Companies that manage their
businesses with the intent of
increasing the return on
capital invested fall into this
category, as do companies that
are getting rid of their poorly
performing businesses and
focusing on their stronger
ones. Additionally, more and
more companies, both abroad
and in the U.S., are spinning
off businesses or doing stock
buybacks. The second theme
is my belief that foreign
economies are improving.
Generally speaking, this is very
true throughout Europe; there
are lots of incremental
indications that economies
are on the upswing. The fund's
emphasis on cyclical stocks
reflects my belief that
economic growth will
accelerate. The third and final
theme is the strength of the
dollar. Many of the fund's
domestic holdings, such as oil
and automotive companies,
benefited from the strong
dollar during the second half
of 1996."
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JANUARY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Pechiney SA Class A (France) 1.4 1.0
American Express Co. 1.2 0.8
(United States of America)
Alcatel Alsthom Compagnie General 1.1 1.0
d'Electricite SA (France)
Lehman Brothers Holdings, Inc. 1.0 0.7
(United States of America)
Veba AG Ord. (Germany) 0.9 1.1
TOP FIVE BOND ISSUERS AS OF JANUARY 31, 1997
(WITH MATURITIES MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE ISSUERS
6 MONTHS AGO
U.S. Treasury 20.4 23.9
German Federal Republic 3.9 3.4
United Kingdom, Great Britain & 1.6 1.3
Northern Ireland
Swedish Kingdom 1.2 0.9
French Government 1.1 0.9
TOP FIVE COUNTRIES AS OF JANUARY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE COUNTRIES
6 MONTHS AGO
United States of America 40.8 44.2
Japan 12.5 15.2
France 7.9 6.4
United Kingdom 7.5 5.3
Germany 6.9 6.0
TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY,
INDICATING WHERE THE FUND IS EXPOSED
TO POTENTIAL POLITICAL AND CREDIT RISKS.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1997 * AS OF JULY 31, 1996 **
Row: 1, Col: 1, Value: 3.5
Row: 1, Col: 2, Value: 1.7
Row: 1, Col: 3, Value: 28.9
Row: 1, Col: 4, Value: 35.9
Row: 1, Col: 5, Value: 30.0
Stocks 65.9%
Bonds 28.9%
Convertible
securities 1.7%
Short-term
investments 3.5%
FOREIGN
INVESTMENTS 59.1%
Stocks 60.6%
Bonds 32.5%
Convertible
securities 2.5%
Short-term
investments 4.4%
FOREIGN
INVESTMENTS 55.8%
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
*
**
INVESTMENTS JANUARY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 65.1%
SHARES VALUE (NOTE 1)
AUSTRALIA - 1.1%
Aberfoyle Ltd. 40,700 $ 107,045
CSR Ltd. 50,000 166,955
Pasminco Ltd. 20,000 35,068
QNI Ltd. 96,500 183,181
Western Mining Holdings Ltd. 50,730 311,713
803,962
BELGIUM - 0.1%
Credit Communal Holding/Dexia (c) 1,000 95,200
BRAZIL - 1.0%
Multicanal Participacoes SA sponsored ADR (a) 4,000 55,500
Telebras PN (Pfd. Reg.) 5,589,100 486,915
Telecomunicacoes de Minas Gerais SA (Telemig) (a) 1,693,100 204,056
746,471
CANADA - 3.2%
Alcan Aluminium Ltd. 3,700 130,745
Alliance Communications Corp. Class B (non-vtg.) (a) 4,000 38,603
BCE, Inc. 5,200 261,920
Bre-X Minerals Ltd. (a) 3,400 55,276
Bresea Resources Ltd. (a) 20,000 172,228
Bro-X Minerals Ltd. 600 869
Canada Occidental Petroleum Ltd. 3,600 67,080
Canadian Natural Resources Ltd. (a) 5,300 151,086
Canwest Global Communications Corp. (sub-vtg.) 20,200 269,923
Cominco Ltd. (a) 4,500 123,603
Greenstone Resources Ltd. (a) 12,000 144,761
Inco Ltd. 10,000 340,002
Noranda, Inc. 1,200 28,640
Renaissance Energy Ltd. (a) 4,600 160,157
TVI Pacific, Inc. 157,000 118,882
Ulster Petroleums Ltd. (a) 30,000 236,071
2,299,846
DENMARK - 0.6%
Den Danske Bank Group AS 1,400 115,840
International Service Systems AS, Series B 6,500 157,077
Unidanmark AS Class A 2,300 125,154
398,071
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
EMERGING MARKETS - 0.1%
GT Global Developing Markets Fund 3,900 $ 44,850
Morgan Stanley Asia-Pacific Fund, Inc. 1,500 14,438
Templeton Dragon Fund, Inc. 1,000 15,625
74,913
FINLAND - 0.4%
Huhtamaki Ord. 4,000 179,435
Metsa-Serla Ltd. Class B 13,200 96,256
UPM-Kymmene Corp. (a) 1,500 29,250
304,941
FRANCE - 6.8%
Alcatel Alsthom Compagnie Generale d'Electricite SA 8,000 792,408
Axa SA 1,200 79,169
Axime SA Ex Segin (a)(c) 1,500 191,143
Canal Plus SA 900 192,282
Compagnie de Saint Gobain 800 123,055
Credit Commercial de France Ord. 2,000 89,905
Credit Local de France SA 1,700 152,101
Elf Aquitaine SA sponsored ADR 6,400 310,400
Eramet SA 5,000 253,773
Group Axime (a) 100 12,743
Groupe Danone 700 108,179
Lafarge Coppee SA 800 48,253
Michelin SA (Compagnie Generale des Etablissements) Class B 8,883 509,137
Nationale Elf Aquitaine 1,600 155,300
Pechiney SA Class A 24,439 988,162
Paribas SA (Cie Financiere) Class A 1,200 82,053
Rhone Poulenc SA Class A 500 16,647
Societe Generale Class A 1,300 149,444
Total SA Class B 6,082 523,277
Usinor Sacilor 7,000 99,449
Valeo SA 100 6,579
4,883,459
GERMANY - 2.5%
Allianz Versich Holdings Ord. (Reg.) (a) 13 24,128
BASF AG 5,500 197,879
Bayer AG 2,400 90,522
Buderus AG 250 117,180
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GERMANY - CONTINUED
Continental Gummi-Werke AG 4,200 $ 79,847
Daimler-Benz AG Ord. 1,600 113,958
Degussa AG 100 42,270
Lufthansa 2,000 26,854
Dresdner Bank AG Ord. 500 16,015
Karstadt AG 100 30,211
Mannesmann AG Ord. 100 38,724
Metallgesellschaft AG Ord. (a) 4,400 88,591
New Germany Fund, Inc. (The) 2,100 27,563
Veba AG Ord. 12,300 678,245
Volkswagen AG 400 186,903
1,758,890
HONG KONG - 0.8%
HSBC Holdings PLC 4,000 93,172
Hutchison Whampoa Ltd. Ord. 20,000 150,983
Peregrine Investments Holdings Ltd. 100,000 178,083
Peregrine Investments Holdings Ltd. (warrants) (a) 10,000 3,549
Wharf Holdings Ltd. (c) 30,000 135,498
561,285
INDONESIA - 0.1%
Matahari Putra Prima PT (For. Reg.) 49,000 62,371
IRELAND - 0.2%
Tullow Oil PLC (a) 70,000 110,458
ITALY - 1.6%
Credito Italiano Ord. 153,000 208,682
Eni Spa 54,800 304,956
Mondadori Arnoldo Editore Spa 4,000 34,171
Pirelli Spa Ord. 70,300 156,319
Stet (Societa Finanziaria Telefonica) Spa Ord. 45,000 222,062
Telecom Italia Spa 35,400 102,056
Telecom Italia Mobile Spa 35,500 105,449
1,133,695
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - 12.1%
Acom Co. Ltd. 7,000 $ 283,620
Akita Bank Ltd. 19,000 102,487
Aisin Seiki Co. Ltd. 10,000 145,763
Amway Japan Ltd. 3,000 96,599
Aoyama Trading Co. Ord. 5,500 142,222
Bank of Tokyo-Mitsubishi Ltd. 22,000 322,490
Canon, Inc. 24,000 507,947
Denso Corp. 10,000 204,233
Daito Trust Construction Co. 30,000 289,055
Fuji Photo Film Co. Ltd. 16,000 484,888
Fujitsu Ltd. 5,000 50,235
Hitachi Maxell Ltd. 12,000 251,997
Honda Motor Co. Ltd. 13,000 347,937
Hoya Corp. 6,000 239,644
Hitachi Construction Machinery Co. Ltd. 22,000 190,233
Jusco Co. Ltd. 4,000 111,669
Komatsu Ltd. Ord. 30,000 211,233
Melco Inc. 3,000 89,928
Minebea Co. Ltd. 30,000 239,150
Minolta Camera Co. Ltd. 20,000 114,469
NKK Corp. (a) 35,000 70,905
NEC Corp. 5,000 58,470
Namco Ltd. 7,000 191,386
Nichiei Co. Ltd. 4,000 282,961
Nintendo Co. Ltd. Ord. 4,300 281,874
Nippon Denwa Shisetsu Ord. 7,000 55,341
Nippon Computer Systems Corp. 10,000 105,411
Nomura Securities Co. Ltd. 10,000 127,646
Orix Corp. 8,000 339,949
Rohm Co. Ltd. 4,000 261,879
Sakura Bank Ltd. 20,000 113,646
Sankyo Co. Ltd. 5,000 130,116
Shinko Electric Industries Co. Ltd. 8,000 288,561
Shiseido Co. Ltd. 6,000 69,670
Sony Corp. 3,000 202,092
TDK Corp. 4,000 255,621
Takashimaya Co. Ltd. 1,000 9,553
Takeda Chemical Industries Ltd. 17,000 334,596
Toyota Motor Corp. 21,000 541,299
Tokyo Electron Ltd. 5,000 179,939
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Uni Charm Corp. Ord. 4,000 $ 94,540
Uny Co. Ltd. 10,000 153,998
World Co. Ltd. 2,000 73,293
York Benimaru Co. 3,000 80,046
8,728,591
MALAYSIA - 0.1%
Arab Malaysian Corp. BHD 7,000 37,734
MEXICO - 0.3%
Gruma SA Class B sponsored ADR (a)(c) 1,750 38,938
Tubos De Acero De Mexico ADR (a) 10,000 175,000
213,938
NETHERLANDS - 3.3%
AKZO Nobel NV 500 70,233
DSM NV 1,600 149,715
EVC International NV 2,000 55,643
ING Groep NV 7,000 263,598
KBB NV Ord. 1,000 63,468
KLM Royal Dutch Airlines NV (NY Reg.) 400 12,000
Koninklijke Hoogovens NV 600 24,681
Koninklijke KNP BT NV 600 13,204
New Holland NV (a) 5,100 112,200
Philips Electronics NV:
(warrants) (a) 6,000 128,131
(bearer) 5,800 233,223
Royal Dutch Petroleum Co. Ord. 3,200 559,909
Unilever NV Ord. 2,000 331,033
Vendex International NV 400 17,345
Vendex International NV (c) 7,500 325,219
2,359,602
NETHERLANDS ANTILLES - 0.1%
Schlumberger Ltd. 900 100,013
NORWAY - 1.7%
Braathens Safe (a) 12,500 149,358
Den Norske Bank AS Class A Free shares 49,900 205,413
Dyno Industrier AS (a) 5,000 127,966
Elkem ASA 4,600 72,339
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NORWAY - CONTINUED
Fokus Bank AS 17,400 $ 128,768
Norsk Hydro AS ADR 2,500 140,625
Saga Petroleum AS Class B 8,200 144,124
Smedvig AS 5,000 121,413
Smedvig AS, Series B (a) 2,500 60,129
Selmer AS 1,900 77,042
1,227,177
PERU - 0.1%
Compania de Minas Buenaventura SA Class B sponsored ADR 5,000 79,375
PORTUGAL - 0.1%
Telecel Comunicacoes Pessoais SA (a) 1,000 71,329
SOUTH AFRICA - 0.3%
Gencor Ltd. (Reg.) 12,000 46,842
JCI Ltd. 14,000 137,390
184,232
SPAIN - 1.1%
Acerinox SA (Reg.) 700 89,533
Asturiana del Zinc SA 1,500 16,700
Asturiana del Zinc SA (c) 10,000 111,331
Banco Bilbao Vizcaya SA Ord. (Reg.) 2,400 145,617
Banco de Santander SA Ord. (Reg.) 1,400 90,794
FOCSA (Fomento Construcciones y Contratas SA) 300 26,828
Tabacalera SA, Series A 7,400 333,807
814,610
SWEDEN - 3.8%
ABB AB, Series B 300 37,860
Astra AB Class A Free shares 6,000 285,917
Assi Doman AB Free shares 3,000 73,652
Bure Investment AB (c) 4,000 58,480
Electrolux AB 3,300 198,446
Esselte AB Class B Free shares 6,200 162,475
Forcenergy AB Class B Free shares 10,000 128,959
Nordbanken AB 7,100 230,127
Scania AB Class B 8,600 217,065
Skandia Foersaekrings AB 7,000 188,267
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - CONTINUED
Svenska Cellulosa AB (SCA) Class B Ord. 4,000 $ 80,272
Svenska Handelsbanken 4,300 111,795
Swedish Match Co. 40,600 137,193
Svedala Industri Free shares 15,000 267,918
Volvo AB Class B 23,800 567,890
2,746,316
SWITZERLAND - 1.8%
Credit Suisse Group (Reg.) 4,300 441,657
Julius Baer Holding AG 100 104,080
Nestle SA (Reg.) 100 108,435
Novartis AG (Reg.) (a) 500 572,021
Roche Holding AG (participation certificates) 10 87,752
Sulzer AG (Reg.) 20 13,456
1,327,401
UNITED KINGDOM - 5.9%
Asda Group PLC 50,000 96,921
BAT Industries PLC Ord. 6,000 46,474
Bass PLC Ord. 5,700 77,252
Benson's Crisps PLC 175,000 102,328
Blue Circle Industries PLC 22,500 140,035
British Aerospace PLC 3,900 79,222
British Petroleum PLC Ord. 23,593 277,800
Caradon PLC 62,500 262,328
Cookson Group PLC 102,000 411,778
Glaxo Holdings PLC 12,900 206,451
Granada Group PLC 23,200 333,754
Grand Metropolitan PLC 2,100 15,543
Ladbroke Group PLC Ord. 23,200 85,297
Lloyds TSB Group PLC 30,000 230,688
Lucas Varity PLC (a) 8,000 26,657
Monument Oil and Gas PLC Class L (a) 41,200 59,402
National Grid Co. PLC 52,300 174,272
Perkins Foods PLC 68,700 79,241
Redland PLC Ord. 25,000 136,170
Rentokil Group PLC 19,800 145,434
Rugby Group PLC 30,000 50,944
Shell Transport & Trading Co. PLC (Reg.) 31,500 542,982
SmithKline Beecham PLC Ord. 27,046 387,350
Unigate PLC 15,000 109,216
Unilever PLC Ord. 7,500 167,850
4,245,389
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - 15.9%
Alumax, Inc. (a) 5,403 $ 189,105
Aluminum Co. of America 300 20,700
American Express Co. 13,500 842,063
American Standard Companies, Inc. (a) 10,000 406,250
Anheuser-Busch Companies, Inc. 6,300 267,750
Baker Hughes, Inc. 7,500 292,500
Berkley (W.R.) Corp. 6,800 328,100
Burlington Resources, Inc. 10,300 512,425
CSX Corp. 2,500 121,250
Chrysler Corp. 10,000 348,750
Consolidated Freightways Corp. 6,000 52,500
Consolidated Freightways, Inc. 12,000 304,500
Dresser Industries, Inc. 16,500 558,938
du Pont (E.I.) de Nemours & Co. 3,800 416,575
Eaton Corp. 7,500 525,000
First Chicago NBD Corp. 5,000 285,625
Fort Howard Corp. (a) 10,000 317,500
Genentech, Inc. special (a) 3,800 208,525
International Business Machines Corp. 3,000 471,750
Kaiser Aluminum Corp. (a) 1,400 18,025
Lehman Brothers Holdings, Inc. 22,600 714,725
Liberty Property Trust (SBI) 1,400 36,050
Limited, Inc. (The) 11,000 188,375
Living Centers of America, Inc. (a) 800 23,200
MCI Communications Corp. 8,500 298,563
Masco Corp. 16,100 555,450
National Mercantile Bancorp. (warrants) (a) 2,403 -
Newell Co. 17,000 561,000
Quaker Oats Co. 4,000 153,500
Rite Aid Corp. 5,000 200,000
Silicon Graphics, Inc. (a) 10,000 273,750
Stewart & Stevenson Services, Inc. 5,000 124,375
Tenet Healthcare Corp. (a) 10,000 270,000
Teradyne, Inc. (a) 10,000 308,750
Toys "R" Us, Inc. (a) 10,000 250,000
UST, Inc. 11,000 338,250
Wal-Mart Stores, Inc. 21,000 498,750
Western Atlas, Inc. (a) 2,000 135,750
11,418,319
TOTAL COMMON STOCKS
(Cost $42,926,406) 46,787,588
PREFERRED STOCKS - 2.2%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 1.4%
JAPAN - 0.4%
AJL participating trust 15,000 $ 253,125
UNITED STATES OF AMERICA - 1.0%
Kaiser Aluminum Corp. $0.97 35,100 416,813
Occidental Petroleum Corp. $3.00 4,900 328,913
745,726
TOTAL CONVERTIBLE PREFERRED STOCKS 998,851
NONCONVERTIBLE PREFERRED STOCKS - 0.8%
GERMANY - 0.5%
Volkswagen AG 1,000 365,883
ITALY - 0.3%
Stet (Societa Finanziaria Telefonica) Spa 37,500 147,116
Telecom Italia Mobile Spa de Risp 55,000 93,438
240,554
TOTAL NONCONVERTIBLE PREFERRED STOCKS 606,437
TOTAL PREFERRED STOCKS
(Cost $1,447,895) 1,605,288
CONVERTIBLE BONDS - 0.3%
MOODY'S PRINCIPAL
RATINGS AMOUNT (B)
BERMUDA - 0.3%
MBL International Finance of Bermuda
3%, 11/30/02 (Cost $277,225) Aa2 $ 240,000 235,800
GOVERNMENT OBLIGATIONS - 28.9%
FRANCE - 1.1%
French Government OAT 5 1/2%, 4/25/04 Aaa FRF 4,200,000 773,878
GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
GERMANY - 3.9%
German Federal Republic 6 5/8%, 7/9/03 Aaa DEM 4,250,000 $ 2,797,452
ITALY - 0.7%
Italian Republic 10 1/2%, 9/1/05 Aa3 ITL 700,000,000 524,918
SWEDEN - 1.2%
Swedish Kingdom 10 1/4%, 5/5 /03 Aa1 SEK 5,000,000 831,684
UNITED KINGDOM - 1.6%
United Kingdom, Great Britain &
Northern Ireland 9 1/2%, 4/18/05 Aaa GBP 650,000 1,176,181
UNITED STATES OF AMERICA - 20.4%
U.S. Treasury Obligations:
7 7/8%, 8/15/01 Aaa 1,640,000 1,743,517
12 3/4%, 11/15/10 (callable) Aaa 880,000 1,236,673
13 7/8%, 5/15/11 Aaa 1,980,000 2,965,981
8 1/8%, 8/15/19 Aaa 1,300,000 1,482,208
7 1/4%, 2/15/23 Aaa 1,350,000 1,388,597
6 1/4%, 8/15/23 Aaa 2,225,000 2,054,654
7 1/2%, 11/15/24 Aaa 1,335,000 1,437,208
7 5/8%, 2/15/25 Aaa 1,560,000 1,705,517
6 7/8%, 8/15/25 Aaa 665,000 666,350
14,680,705
TOTAL GOVERNMENT OBLIGATIONS
(Cost $21,533,557) 20,784,818
CASH EQUIVALENTS - 3.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.55%, dated
1/31/97 due 2/3/97 $ 2,474,144 2,473,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $68,658,083) $ 71,886,494
CURRENCY ABBREVIATIONS
GBP - British pound
FRF - French franc
DEM - German deutsche mark
ITL - Italian lira
SEK - Swedish krona
LEGEND
1. Non-income producing
2. Principal amount is stated in United States dollars unless otherwise
noted.
3. 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 $955,809 or 1.3% of net
assets.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 29.2% AAA, AA, A 29.2%
Baa 0.0% BBB 0.0%
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%
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Basic Industries 8.5%
Cash Equivalents 3.5
Construction & Real Estate 2.8
Durables 7.5
Energy 8.4
Finance 10.8
Government Obligations 28.9
Health 3.8
Industrial Machinery &
Equipment 3.5
Media & Leisure 2.0
Nondurables 3.9
Precious Metals 1.4
Retail & Wholesale 3.7
Technology 5.1
Transportation 1.0
Utilities 3.9
Others (individually less than 1%) 1.3
100.0%
INCOME TAX INFORMATION
At January 31, 1997, the aggregate cost of investment securities for income
tax purposes was $68,692,740. Net unrealized appreciation aggregated
$3,193,754, of which $6,088,310 related to appreciated investment
securities and $2,894,556 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 JANUARY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 71,886,494
agreements of $2,473,000) (cost $68,658,083) -
See accompanying schedule
Cash 409
Receivable for investments sold 661,259
Receivable for fund shares sold 45,128
Dividends receivable 89,737
Interest receivable 623,623
TOTAL ASSETS 73,306,650
LIABILITIES
Payable for investments purchased $ 425,875
Payable for fund shares redeemed 423,344
Accrued management fee 46,795
Other payables and accrued expenses 81,757
TOTAL LIABILITIES 977,771
NET ASSETS $ 72,328,879
Net Assets consist of:
Paid in capital $ 85,158,057
Distributions in excess of net investment income (55,139)
Accumulated undistributed net realized gain (loss) on (15,985,440)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 3,211,401
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 5,426,655 shares outstanding $ 72,328,879
NET ASSET VALUE, offering price and redemption price per $13.33
share ($72,328,879 (divided by) 5,426,655 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 369,346
Dividends
Interest 1,034,251
TOTAL INCOME 1,403,597
EXPENSES
Management fee $ 306,036
Transfer agent fees 158,053
Accounting fees and expenses 31,297
Non-interested trustees' compensation 348
Custodian fees and expenses 53,387
Registration fees 15,571
Audit 44,267
Legal 225
Miscellaneous 1,156
Total expenses before reductions 610,340
Expense reductions (4,661) 605,679
NET INVESTMENT INCOME 797,918
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,107,478
Foreign currency transactions 2,363 1,109,841
Change in net unrealized appreciation (depreciation) on:
Investment securities 3,575,849
Assets and liabilities in foreign currencies (29,529) 3,546,320
NET GAIN (LOSS) 4,656,161
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 5,454,079
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED JANUARY JULY 31,
31, 1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 797,918 $ 3,408,536
Net investment income
Net realized gain (loss) 1,109,841 6,896,195
Change in net unrealized appreciation (depreciation) 3,546,320 (5,043,765)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 5,454,079 5,260,966
FROM OPERATIONS
Distributions to shareholders from net investment income (2,871,844) (479,379)
Share transactions 15,333,640 56,434,636
Net proceeds from sales of shares
Reinvestment of distributions 2,728,595 452,937
Cost of shares redeemed (36,100,215) (122,715,801)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (18,037,980) (65,828,228)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (15,455,745) (61,046,641)
NET ASSETS
Beginning of period 87,784,624 148,831,265
End of period (including under (over) distribution of net $ 72,328,879 $ 87,784,624
investment income of $(55,139) and $2,018,787,
respectively)
OTHER INFORMATION
Shares
Sold 1,165,121 4,439,802
Issued in reinvestment of distributions 214,095 35,497
Redeemed (2,751,267) (9,683,927)
Net increase (decrease) (1,372,051) (5,208,628)
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JULY 31, FEBRUARY 1, 1993
ENDED JANUARY (COMMENCEMENT
31, 1997 OF
OPERATIONS) TO
JULY 31,
(UNAUDITED 1996 1995 1994 E 1993
)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.91 $ 12.40 $ 11.99 $ 11.98 $ 10.00
of period
Income from Investment
Operations
Net investment income .13 D .31 .28 .32 D .15
Net realized and .74 .25 .13 .25 1.91
unrealized gain (loss)
Total from investment .87 .56 .41 .57 2.06
operations
Less Distributions
From net investment (.45) (.05) - (.15) (.08)
income
From net realized gain - - - (.11) -
In excess of net - - - (.20) -
realized gain
Return of capital - - - (.10) -
Total distributions (.45) (.05) - (.56) (.08)
Net asset value, end of $ 13.33 $ 12.91 $ 12.40 $ 11.99 $ 11.98
period
TOTAL RETURN B, C 6.92% 4.52% 3.42% 4.58% 20.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 72,329 $ 87,785 $ 148,831 $ 313,246 $ 84,157
(000 omitted)
Ratio of expenses to 1.49% A 1.39% 1.34% 1.68% 2.12% A
average net assets
Ratio of expenses to 1.47% A, 1.36% 1.33% 1.67% F 2.12% A
average net assets after F F F
expense reductions
Ratio of net investment 1.94% A 2.94% 4.68% 2.56% 4.02% A
income to average net
assets
Portfolio turnover rate 58% A 189% 242% 226% 172% A
Average commission rate G $ .0095
</TABLE>
ANNUALIZED
TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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).
NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
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.
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).
FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1997 (Unaudited)
9. 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. 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. 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. 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 with
remaining maturities of sixty days or less for which quotations are not
readily available 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
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, 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. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. 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.
Distributions in excess of net investment income and accumulated
undistributed net realized gain (loss) on investments and foreign currency
transactions may include temporary book and tax basis differences that will
reverse in a subsequent period. Any taxable income or gain remaining at
fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
10. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
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 foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
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
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
(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.
11. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $22,245,710 and $38,669,212, respectively, of which U.S.
government and government agency obligations aggregated $0 and $3,184,281,
respectively.
12. 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 annualized rate of .75%
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 Investment 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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (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 annualized rate of
.38% of average net assets.
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR,
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 $6,346 for the period.
13. 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
$4,556 under this arrangement.
In addition, the fund has entered into an arrangement with its custodian
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
fees were reduced by $105 under this arrangement.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate the
service, and on your first call, the system will help you create a personal
identification number (PIN) for security.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
1
For quotes.*
2
For account balances and holdings.
3
To review orders and mutual
fund activity.
4
To change your PIN.
5
To speak to a Fidelity representative.
*
0
BY PC
Fidelity's Web site on the Internet provides a wide range of information,
including daily financial news, fund performance, interactive planning
tools and news about Fidelity products and services.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at 1-800-544-7272
for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to manage
your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity 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 *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
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
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
FIDELITY
(REGISTERED TRADEMARK)
BALANCED
FUND
SEMIANNUAL REPORT
JANUARY 31, 1997
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 35 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 39 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
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
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As 1997 begins, the stock and bond markets generally have continued on the
course they followed during the past year. Through January, stocks
maintained their unprecedented climb, with the large companies still
setting the pace. With low, stable interest rates, the bond market has
tended to mirror its historical returns in the mid-single digits.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories 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, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you 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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Fidelity Balanced 15.19% 11.46% 57.51% 166.99%
S&P 500(registered trademark) 24.15% 26.34% 119.87% 288.58%
Lehman Brothers Aggregate 4.94% 3.26% 42.87% 123.02%
Bond Index
Balanced Funds Average 14.23% 14.76% 72.80% 177.35%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or 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 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 304 mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc. over
the past six months. These benchmarks reflect reinvestment of dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Balanced 11.46% 9.51% 10.32%
S&P 500 26.34% 17.06% 14.53%
Lehman Brothers Aggregate 3.26% 7.40% 8.35%
Bond Index
Balanced Funds Average 14.76% 11.50% 10.68%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year. (Note: Lipper calculates average annual total returns by annualizing
each fund's total return, then taking an arithmetic average. This may
produce a slightly different figure than that obtained by averaging the
cumulative total returns and annualizing the result.)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19960731 19960814 160549 S00000000000001
Fidelity Balanced Fund SP Standard & Poor 500 LB
Aggregate Bond
00304 SP001 LB001
1987/01/31 10000.00 10000.00
10000.00
1987/02/28 10261.93 10395.00
10069.35
1987/03/31 10430.99 10695.42
10023.96
1987/04/30 10176.12 10600.23
9749.09
1987/05/31 10128.92 10692.45
9710.95
1987/06/30 10337.92 11232.42
9844.60
1987/07/31 10480.84 11801.90
9837.04
1987/08/31 10614.23 12242.11
9784.40
1987/09/30 10433.77 11974.01
9576.04
1987/10/31 9550.39 9394.81
9917.10
1987/11/30 9403.15 8620.68
9996.53
1987/12/31 9691.37 9276.71
10132.70
1988/01/31 10150.01 9667.26
10488.89
1988/02/29 10439.16 10117.75
10613.40
1988/03/31 10347.26 9805.11
10513.79
1988/04/30 10428.18 9913.95
10457.05
1988/05/31 10468.64 10000.20
10386.76
1988/06/30 10886.11 10459.21
10637.35
1988/07/31 10824.54 10419.47
10581.56
1988/08/31 10773.24 10065.20
10609.30
1988/09/30 11030.77 10493.98
10849.49
1988/10/31 11197.27 10785.71
11053.74
1988/11/30 11093.21 10631.48
10919.46
1988/12/31 11220.61 10817.53
10931.76
1989/01/31 11603.49 11609.37
11089.05
1989/02/28 11518.41 11320.30
11008.67
1989/03/31 11646.18 11584.06
11056.26
1989/04/30 12023.60 12185.28
11287.63
1989/05/31 12293.19 12678.78
11584.24
1989/06/30 12476.80 12606.51
11936.96
1989/07/31 12968.44 13744.88
12190.70
1989/08/31 13044.92 14014.28
12010.09
1989/09/30 13055.15 13956.82
12071.55
1989/10/31 13099.40 13633.02
12368.79
1989/11/30 13298.55 13911.13
12486.68
1989/12/31 13432.07 14245.00
12520.09
1990/01/31 12935.89 13289.16
12371.32
1990/02/28 13030.40 13460.59
12411.35
1990/03/31 13136.73 13817.30
12420.49
1990/04/30 12957.10 13471.87
12306.70
1990/05/31 13388.20 14785.37
12671.08
1990/06/30 13447.76 14684.83
12874.39
1990/07/31 13484.17 14637.84
13052.48
1990/08/31 12913.73 13314.58
12878.17
1990/09/30 12702.76 12666.16
12984.71
1990/10/31 12641.21 12611.70
13149.57
1990/11/30 13084.33 13426.41
13432.62
1990/12/31 13369.58 13801.01
13641.92
1991/01/31 13922.98 14402.73
13810.56
1991/02/28 14551.84 15432.53
13928.45
1991/03/31 14830.18 15805.99
14024.27
1991/04/30 15072.25 15843.93
14176.20
1991/05/31 15556.40 16528.39
14259.10
1991/06/30 15273.55 15771.39
14251.85
1991/07/31 15673.45 16506.33
14449.49
1991/08/31 16034.65 16897.53
14762.17
1991/09/30 16171.12 16615.34
15061.31
1991/10/31 16532.86 16837.99
15229.00
1991/11/30 16238.11 16159.42
15368.64
1991/12/31 16950.16 18008.06
15825.06
1992/01/31 16950.16 17673.11
15609.77
1992/02/29 17197.21 17902.86
15711.27
1992/03/31 17087.58 17553.75
15622.70
1992/04/30 17295.96 18069.83
15735.54
1992/05/31 17615.49 18158.37
16032.47
1992/06/30 17560.25 17887.81
16253.11
1992/07/31 17982.04 18619.43
16584.71
1992/08/31 18080.45 18237.73
16752.72
1992/09/30 18205.54 18452.93
16951.30
1992/10/31 18118.29 18517.52
16726.56
1992/11/30 18161.92 19148.96
16730.34
1992/12/31 18296.95 19384.50
16996.38
1993/01/31 18698.91 19547.33
17322.30
1993/02/28 19205.09 19813.17
17625.53
1993/03/31 19817.54 20231.23
17698.98
1993/04/30 20450.02 19741.63
17822.22
1993/05/31 20781.32 20270.71
17844.92
1993/06/30 20797.71 20329.49
18168.32
1993/07/31 21071.76 20248.18
18271.08
1993/08/31 21756.90 21015.58
18591.33
1993/09/30 21547.38 20853.76
18642.40
1993/10/31 21722.83 21285.43
18712.06
1993/11/30 21340.05 21083.22
18552.88
1993/12/31 21824.12 21338.33
18653.43
1994/01/31 22410.87 22063.83
18905.28
1994/02/28 22019.70 21465.90
18576.83
1994/03/31 21115.93 20529.99
18118.83
1994/04/30 20934.89 20792.77
17974.15
1994/05/31 20967.81 21133.77
17971.63
1994/06/30 20751.52 20616.00
17931.91
1994/07/31 21149.31 21292.20
18288.10
1994/08/31 21348.21 22165.18
18310.80
1994/09/30 21198.10 21622.14
18041.29
1994/10/31 20947.73 22108.63
18025.22
1994/11/30 20647.29 21303.44
17985.19
1994/12/31 20664.35 21619.37
18109.38
1995/01/31 20664.35 22179.96
18467.77
1995/02/28 21118.32 23044.31
18906.86
1995/03/31 21473.51 23724.35
19022.85
1995/04/30 21694.19 24423.03
19288.57
1995/05/31 22101.59 25399.22
20034.99
1995/06/30 22342.81 25989.24
20181.88
1995/07/31 22669.11 26851.05
20136.80
1995/08/31 22720.63 26918.44
20379.83
1995/09/30 22925.74 28054.40
20578.09
1995/10/31 22717.33 27954.25
20845.71
1995/11/30 23359.94 29181.44
21158.08
1995/12/31 23743.98 29743.47
21455.00
1996/01/31 23954.73 30755.94
21597.48
1996/02/29 23515.67 31041.05
21222.06
1996/03/31 23326.15 31339.97
21074.55
1996/04/30 23397.21 31801.92
20956.03
1996/05/31 23557.10 32622.09
20913.48
1996/06/30 23735.97 32746.38
21194.33
1996/07/31 23178.96 31299.65
21252.32
1996/08/31 23448.48 31959.76
21216.71
1996/09/30 24210.85 33758.45
21586.45
1996/10/31 24992.43 34689.51
22064.62
1996/11/30 26210.24 37311.69
22442.55
1996/12/31 25961.28 36572.55
22233.88
1997/01/31 26698.81 38857.60
22301.97
IMATRL PRASUN SHR__CHT 19960731 19960814 160556 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Balanced Fund on January 31, 1987. As the chart shows, by
January 31, 1997, the value of the investment would have grown to $26,699 -
a 166.99% 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 $38,858 - a 288.58%
increase, and the bond index, would have grown to $22,302 - a 123.02%
increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks or bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Stephen Petersen, Portfolio Manager of Fidelity Balanced
Fund
Q. STEVE, HOW DID THE FUND PERFORM?
A. It was a mixed bag. For the six-month and one-year periods that ended
January 31, 1997, the fund returned 15.19% and 11.46%, respectively. For
the same six-month and one-year periods, the Lehman Brothers Aggregate Bond
Index returned 4.94% and 3.26%, respectively, while the Standard & Poor's
500 Index returned 24.15% and 26.34%, respectively. Additionally, the
balanced funds average, as tracked by Lipper Analytical Services, was
14.23% for the past six months and 14.76% for the past one year.
Q. WHY DO YOU THINK THE FUND OUTPERFORMED ITS PEER GROUP OF BALANCED FUNDS
OVER THE PAST SIX MONTHS BUT UNDERPERFORMED THEM OVER THE YEAR?
A. During the first few months of the year, the fund was under different
management. I took over management of the fund late in March 1996, and it
went through a transition period of several months when it continued to
underperform. However, in the past six months, the fund performed
relatively well against its peer group of balanced funds. I believe there
were two reasons for its strong performance during this period. First, the
fund had a relatively heavy weighting in common stocks versus bonds
compared to the average balanced fund. As a result, it took advantage of
the very strong U.S. stock market, which was up about 24%, instead of being
hurt by the bond market, which was up only 3%-4% over the same period. The
strong stock market performance also accounts for why the S&P 500 Index -
which includes only equities - outperformed the fund, and the Lehman
Brothers Index - which includes only bonds - underperformed it.
Q. AND THE SECOND REASON?
A. It's clear that the fund benefited from owning more stock in
large-capitalization companies, such as General Electric and Philip Morris,
than most of its peers. These investments paid off because large-cap stocks
outperformed the rest of the U.S. stock market throughout the period.
Q. WHY HAVE YOUR TOP SECTORS AND TOP HOLDINGS REMAINED LARGELY UNCHANGED
OVER THE PERIOD?
A. Most of the fund's heavily weighted sectors - finance, energy and
nondurables - as well as its top individual holdings have continued to
perform well and remain relatively attractive compared to most stocks and
bonds. In fact, my attempts to more fully diversify the fund with some
smaller holdings may have actually hindered it somewhat. Still, I consider
diversification to be important in the fund's long-term performance.
Q. OVER THE PERIOD, FINANCE REMAINED THE FUND'S TOP MARKET SECTOR. WHY WAS
IT SO ATTRACTIVE?
A. The underlying fundamentals of the finance sector - which made up over
22% of the fund's total investments - continued to look good. This is
largely due to the strength of banks, consumer finance businesses and
insurance companies. They went through a fair amount of restructuring over
the past few years that really paid off in terms of performance. One
example of a bank that benefited from restructuring is one of my larger
holdings, NationsBank, which has concentrated on buying other banks and
consolidating its businesses.
Q. ON THE OTHER HAND, WERE THERE ANY DISAPPOINTING SECTORS?
A. Yes. Utilities underperformed the market. The sector was disappointing
largely because telephone and electric utilities were negatively affected
by concerns about deregulation, which is expected to take place in the next
couple of years. To the market, deregulation or open competition usually
means lower prices. And lower prices can mean smaller profits for utilities
because of their large fixed costs, such as copper telephone wires and huge
electric power plants.
Q. HOW DID YOU STRUCTURE THE FUND'S BOND COMPONENT OVER THE PAST SIX
MONTHS?
A. In light of the strength of the stock market and the economy over the
past five or six years, interest rates have come down and spreads - the
difference between what
Treasuries and non-Treasuries yield - have narrowed among different risk
classes. That means that riskier bonds pay only a little more than low-risk
bonds, such as Treasuries. So, investors are not being paid enough to take
on additional risk. As a result, the fund focused primarily on fairly
conservative bond investments, such as U.S. government securities and
government agency securities. The fund also invested in what I would call
unique asset classes within the bond market, including asset-backed
securities.
Q. ANY REGRETS OVER THE PAST SIX MONTHS?
A. Sure. I wish I had owned more technology stocks - which proved to be the
market winners over the period - especially stocks of such companies as
Intel or Microsoft. Given that the fund follows an equity-income style of
management, these types of stocks generally don't fall within its
investment universe.
Q. WHAT'S YOUR OUTLOOK FOR THE INVESTING ENVIRONMENT?
A. I don't expect any major market changes. That is, the overall economic
environment appears to be reasonably good, and I anticipate relatively slow
but steady earnings growth. Inflation doesn't look like a major issue, and
I don't sense that interest rates will increase all that significantly over
the next six to 12 months. As a result, I don't think we'll see much change
in bond yields.
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.
NOTE TO SHAREHOLDERS: Kevin Grant became manager of the fund's fixed-income
investments on February 3, 1997, after the period ended. Mr. Grant manages
several Fidelity and Spartan fixed-income funds; he joined Fidelity in
1993. Prior to joining Fidelity, Mr. Grant was vice president and chief
mortgage strategist at Morgan Stanley for three years.
FUND FACTS
GOAL: seeks high income
with preservation of capital
by investing in a broadly
diversified portfolio of
high-yielding equity and debt
securities
TRADING SYMBOL: FBALX
FUND NUMBER: 304
START DATE: November 6, 1986
SIZE: As of January
31, 1997, more than $3.8
billion
MANAGER: Stephen
Petersen, since 1996;
manager, Fidelity
Equity-Income Fund, since
1993; VIP Equity-Income
Fund, since January 1997;
various institutional
accounts, since 1987; joined
Fidelity in 1980
(checkmark)
STEPHEN PETERSEN ON THE
FUND'S HOLDINGS IN THE ENERGY
SECTOR:
"The fund's energy sector
holdings - 10.5% of the
fund's total investments at the
end of the period - were
mostly in large multi-national
energy companies, such as
British Petroleum and Royal
Dutch Petroleum. These
companies all have
undergone significant
restructuring programs over
the past five years. They've
streamlined operations, rid
themselves of unprofitable
businesses and concentrated
on the energy businesses they
know best, which has resulted
in better performance. In 1996,
the sector outlook further
improved as energy prices
rose because global energy
demand increased.
"In addition, as these energy
companies have become
more efficient, they've also
become more prudent about
not holding large inventories.
This way they were better
positioned to profit from rising
energy demand. Finally,
natural gas, especially in the
United States, rallied during
the period. It was this
confluence of factors that
caused energy stock prices to
move up quite dramatically
over the past six months."
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JANUARY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Philip Morris Companies, Inc. 2.0 2.2
General Electric Co. 2.0 1.7
Allstate Corp. 1.8 1.7
American Express Co. 1.8 1.2
British Petroleum PLC Ord. 1.6 1.3
TOP FIVE BOND ISSUERS AS OF JANUARY 31, 1997
(WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE ISSUERS
6 MONTHS AGO
U.S. Treasury 13.0 13.8
Federal National Mortgage Association 5.8 8.3
Government National Mortgage Association 1.5 1.8
Ford Motor Credit Co. 0.7 0.7
Chrysler Financial Corp. 0.7 0.6
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Finance 22.5 17.8
Energy 10.5 11.1
Utilities 6.7 6.7
Nondurables 5.5 5.4
Industrial Machinery & Equipment 5.4 5.4
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1997 * AS OF JULY 31, 1996 **
Row: 1, Col: 1, Value: 1.3
Row: 1, Col: 2, Value: 4.3
Row: 1, Col: 3, Value: 33.9
Row: 1, Col: 4, Value: 60.5
Stocks 55.8%
Bonds 36.4%
Convertible
securities 5.6%
Short-term
investments 2.2%
FOREIGN
INVESTMENTS 11.4%
Stocks 60.5%
Bonds 33.9%
Convertible
securities 4.3%
Short-term
investments 1.3%
FOREIGN
INVESTMENTS 12.3%
Row: 1, Col: 1, Value: 2.2
Row: 1, Col: 2, Value: 5.6
Row: 1, Col: 3, Value: 36.4
Row: 1, Col: 4, Value: 55.8
*
**
INVESTMENTS JANUARY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 60.5%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.6%
AEROSPACE & DEFENSE - 1.3%
Boeing Co. 33,376 $ 3,575
Gulfstream Aerospace Corp. (a) 82,200 1,901
Harsco Corp. 111,600 7,826
Lockheed Martin Corp. 235,100 21,629
Northrop Grumman Corp. 130,000 10,156
Rockwell International Corp. 98,400 6,470
51,557
DEFENSE ELECTRONICS - 0.2%
Raytheon Co. 165,000 7,569
SHIP BUILDING & REPAIR - 0.1%
Newport News Shipbuilding, Inc. 103,180 1,651
TOTAL AEROSPACE & DEFENSE 60,777
BASIC INDUSTRIES - 4.3%
CHEMICALS & PLASTICS - 1.5%
Air Products & Chemicals, Inc. 35,800 2,555
AKZO Nobel NV 26,200 3,680
DSM NV 15,100 1,413
Dow Chemical Co. 85,000 6,556
du Pont (E.I.) de Nemours & Co. 197,400 21,640
Ethyl Corp. 253,300 2,216
Great Lakes Chemical Corp. 144,300 6,223
IMC Global, Inc. 56,200 2,143
Imperial Chemical Industries PLC ADR 29,900 1,469
Millenium Chemicals, Inc. 213,642 4,246
Witco Corp. 203,800 6,063
58,204
IRON & STEEL - 0.0%
Inland Steel Industries, Inc. 68,100 1,302
METALS & MINING - 1.8%
Alcan Aluminium Ltd. 169,700 5,997
Alumax, Inc. (a) 427,416 14,960
Aluminum Co. of America 321,300 22,170
Inco Ltd. 80,000 2,720
Kaiser Aluminum Corp. (a) 166,200 2,140
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
Pechiney SA Class A 251,161 $ 10,155
Phelps Dodge Corp. 28,900 2,019
Reynolds Metals Co. 156,620 9,456
69,617
PACKAGING & CONTAINERS - 0.2%
Tupperware Corp. 112,200 5,259
PAPER & FOREST PRODUCTS - 0.8%
Boise Cascade Corp. 81,900 2,826
Champion International Corp. 178,400 7,471
Fort Howard Corp. (a) 50,500 1,603
Georgia-Pacific Corp. 44,500 3,276
International Paper Co. 92,600 3,785
Weyerhaeuser Co. 280,400 12,758
31,719
TOTAL BASIC INDUSTRIES 166,101
CONGLOMERATES - 1.5%
AlliedSignal, Inc. 266,100 18,694
American Standard Companies, Inc. (a) 257,900 10,477
Brascan Ltd. Class A 598,400 13,682
GenCorp, Inc. 173,800 3,389
Textron, Inc. 114,400 11,140
United Technologies Corp. 38,400 2,678
60,060
CONSTRUCTION & REAL ESTATE - 1.0%
BUILDING MATERIALS - 0.3%
Dexter Corp. 155,000 4,689
Masco Corp. 200,000 6,900
11,589
CONSTRUCTION - 0.1%
Lennar Corp. 103,000 2,742
ENGINEERING - 0.0%
EG&G, Inc. 78,100 1,660
REAL ESTATE - 0.0%
Fastighets AB Tornet 104,620 1,313
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Arden Realty Group, Inc. 19,000 $ 508
Equity Residential Properties Trust (SBI) 230,200 9,899
First Industrial Realty Trust, Inc. 210,900 6,116
Liberty Property Trust (SBI) 129,100 3,324
Macerich Co. 89,800 2,470
Weeks Corp. 35,200 1,272
23,589
TOTAL CONSTRUCTION & REAL ESTATE 40,893
DURABLES - 4.3%
AUTOS, TIRES, & ACCESSORIES - 3.5%
Bayerische Motoren Werke (BMW) AG 7,300 4,674
Chrysler Corp. 774,800 27,021
Cummins Engine Co., Inc. 43,000 2,263
Dana Corp. 67,500 2,202
Eaton Corp. 157,500 11,025
General Motors Corp. 452,700 26,709
Genuine Parts Co. 8,200 362
Goodyear Tire & Rubber Co. 95,600 5,210
Johnson Controls, Inc. 127,400 10,956
Michelin SA (Compagnie Generale
des Etablissements) Class B 35,600 2,040
Modine Manufacturing Co. 140,700 4,010
Snap-on Tools Corp. 371,050 13,822
Standard Products Co. 45,600 1,020
Toyota Motor Corp. 300,000 7,733
Volkswagen AG 12,600 5,887
Volvo AB Class B 518,500 12,372
137,306
CONSUMER DURABLES - 0.0%
Swedish Match Co. 288,500 975
CONSUMER ELECTRONICS - 0.4%
Maytag Co. 289,500 5,935
Whirlpool Corp. 195,500 9,946
15,881
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - 0.4%
Burlington Industries, Inc. (a) 67,200 $ 806
Kellwood Co. 294,700 6,557
Stride Rite Corp. 183,400 2,201
Unifi, Inc. 137,600 4,197
13,761
TOTAL DURABLES 167,923
ENERGY - 8.9%
ENERGY SERVICES - 1.2%
Baker Hughes, Inc. 89,100 3,475
Schlumberger Ltd. 405,000 45,006
48,481
OIL & GAS - 7.7%
Amerada Hess Corp. 83,800 4,944
Amoco Corp. 163,600 14,233
Atlantic Richfield Co. 182,500 24,136
British Petroleum PLC:
Ord. 5,326,493 62,718
ADR 359,736 50,948
Burlington Resources, Inc. 107,100 5,328
Exxon Corp. 62,500 6,477
Kerr-McGee Corp. 78,900 5,424
Mobil Corp. 113,000 14,831
Occidental Petroleum Corp. 288,300 7,352
Phillips Petroleum Co. 202,500 8,935
Royal Dutch Petroleum Co. ADR 171,000 29,669
Santa Fe Energy Resources, Inc. (a) 408,700 6,079
Total SA Class B 357,867 30,790
USX-Marathon Group 525,400 13,989
Unocal Corp. 291,953 12,299
298,152
TOTAL ENERGY 346,633
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 15.7%
BANKS - 5.7%
Bank of Boston Corp. 194,732 $ 13,875
Bank of New York Co., Inc. 374,100 13,701
BankAmerica Corp. 192,300 21,465
Canadian Imperial Bank of Commerce 214,600 9,622
Chase Manhattan Corp. 166,500 15,401
Citicorp 108,800 12,662
Comerica, Inc. 217,700 12,436
Credit Communal Holding/Dexia (e) 21,700 2,066
Credit Local de France SA 15,996 1,431
Den Danske Bank Group AS 49,370 4,085
Den Norske Bank AS (e) 1,727,600 7,112
Den Norske Bank AS Class A Free shares 140,000 576
First Bank System, Inc. 232,400 17,662
First Tennessee National Corp. 78,900 3,195
HSBC Holdings PLC 178,301 4,153
National Bank of Canada 1,140,700 12,067
NationsBank Corp. 265,800 28,706
Norwest Corp. 243,900 11,616
Royal Bank of Canada 480,000 17,745
Sparbanken Sverige AB Class A (e) 468,200 7,426
Sparebanken Norway primary shares certificates 175,000 5,558
222,560
CREDIT & OTHER FINANCE - 3.3%
American Express Co. 1,104,600 68,899
Beneficial Corp. 137,700 9,260
Edper Group Limited, (The) Class A (ltd. vtg.) 376,100 5,933
First Chicago NBD Corp. 491,000 28,048
Household International, Inc. 135,000 13,382
Sakura Finance Bermuda Trust sponsored ADR (e) 70 2,979
128,501
FEDERAL SPONSORED CREDIT - 1.4%
Federal National Mortgage Association 1,387,800 54,818
INSURANCE - 4.3%
Aetna, Inc. 169,800 13,414
Allstate Corp. 1,078,700 70,925
American Bankers Insurance Group, Inc. 270,000 14,985
American Financial Group, Inc. 233,700 8,442
General Re Corp. 63,100 10,191
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Highlands Insurance Group, Inc. (a) 190,000 $ 4,346
ITT Hartford Group, Inc. 335,000 24,581
Provident Companies, Inc. 88,600 4,352
Providian Corp. 75,000 4,041
Reliastar Financial Corp. 234,354 13,007
168,284
SAVINGS & LOANS - 0.4%
Washington Mutual, Inc. 288,100 15,647
SECURITIES INDUSTRY - 0.6%
Bear Stearns Companies, Inc. 155,000 4,650
First Marathon Inc. Class A (non-vtg.) 350,000 4,599
Lehman Brothers Holdings, Inc. 299,600 9,475
Nomura Securities Co. Ltd. 191,000 2,438
21,162
TOTAL FINANCE 610,972
HEALTH - 1.8%
DRUGS & PHARMACEUTICALS - 1.4%
Bristol-Myers Squibb Co. 153,900 19,545
Pharmacia & Upjohn, Inc. 355,100 13,227
Schering-Plough Corp. 220,800 16,698
Takeda Chemical Industries Ltd. 198,000 3,897
53,367
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
Allegiance Corp. 190,620 4,885
Bausch & Lomb, Inc. 99,700 3,377
Baxter International, Inc. 40,700 1,877
10,139
MEDICAL FACILITIES MANAGEMENT - 0.1%
Foundation Health Corp. (a) 50,000 1,663
Health Systems International, Inc. (a) 149,000 3,855
Transitional Hospitals Corp. 4,029 37
5,555
TOTAL HEALTH 69,061
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HOLDING COMPANIES - 0.2%
CINergy Corp. 190,000 $ 6,555
U.S. Industries, Inc. (a) 58,000 1,965
8,520
INDUSTRIAL MACHINERY & EQUIPMENT - 5.0%
ELECTRICAL EQUIPMENT - 2.6%
Alcatel Alsthom Compagnie Generale d'Electricite SA 71,144 7,047
Emerson Electric Co. 47,000 4,641
General Electric Co. 739,300 76,148
Omron Corp. 401,000 6,506
Westinghouse Electric Corp. 382,900 7,036
101,378
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
Caterpillar, Inc. 94,600 7,343
Cooper Industries, Inc. 157,900 6,809
Goulds Pumps, Inc. 30,800 720
Harnischfeger Industries, Inc. 37,300 1,655
Ingersoll-Rand Co. 181,900 8,299
Keystone International, Inc. 270,400 5,307
Parker-Hannifin Corp. 149,700 6,456
Regal-Beloit Corp. 49,200 935
Stewart & Stevenson Services, Inc. 91,100 2,266
Tenneco, Inc. 98,400 3,936
TRINOVA Corp. 47,500 1,829
45,555
POLLUTION CONTROL - 1.2%
Browning-Ferris Industries, Inc. 529,900 17,222
Safety Kleen Corp. 172,600 2,783
WMX Technologies, Inc. 619,600 22,693
Zurn Industries, Inc. 168,200 4,058
46,756
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 193,689
MEDIA & LEISURE - 1.3%
BROADCASTING - 0.0%
Evergreen Media Corp. Class A (a) 23,400 725
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - 0.2%
Viacom, Inc. (a):
Class A 4,400 $ 150
Class B (non-vtg.) 212,000 7,261
7,411
LEISURE DURABLES & TOYS - 0.2%
Brunswick Corp. 82,900 2,083
Hasbro, Inc. 130,300 5,147
Outboard Marine Corp. 181,100 3,011
10,241
LODGING & GAMING - 0.3%
ITT Corp. (a) 184,100 10,517
PUBLISHING - 0.5%
ACNielsen Corp. (a) 226,900 3,715
Cognizant Corp. 111,600 3,585
Dow Jones & Co., Inc. 28,100 1,113
Dun & Bradstreet Corp. 111,600 2,678
Harcourt General, Inc. 56,800 2,570
Hollinger International, Inc. Class A 97,900 1,126
Houghton Mifflin Co. 19,800 1,072
McGraw-Hill, Inc. 25,500 1,269
Mondadori Arnoldo Editore Spa 150,300 1,284
18,412
RESTAURANTS - 0.1%
Darden Restaurants, Inc. 364,100 2,640
TOTAL MEDIA & LEISURE 49,946
NONDURABLES - 4.1%
BEVERAGES - 0.1%
PepsiCo, Inc. 140,700 4,907
FOODS - 0.7%
General Mills, Inc. 180,900 12,256
Kellogg Co. 50,000 3,481
Ralston Purina Co. 122,400 9,624
25,361
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.6%
Dial Corp. 53,700 $ 738
Premark International, Inc. 201,800 4,641
Rubbermaid, Inc. 413,400 9,560
Tambrands, Inc. 108,900 4,465
Unilever PLC Ord. 145,200 3,250
22,654
TOBACCO - 2.7%
BAT Industries PLC:
Ord. 416,066 3,223
sponsored ADR 55,000 873
Dimon, Inc. 102,600 2,437
Philip Morris Companies, Inc. 650,780 77,361
RJR Nabisco Holdings Corp. 486,800 15,943
Universal Corp. 190,000 5,890
105,727
TOTAL NONDURABLES 158,649
PRECIOUS METALS - 0.1%
Newmont Mining Corp. 91,100 3,633
RETAIL & WHOLESALE - 2.5%
APPAREL STORES - 0.4%
Charming Shoppes, Inc. (a) 122,300 581
Footstar, Inc. (a) 55,679 1,260
Limited, Inc. (The) 394,000 6,747
Payless ShoeSource, Inc. (a) 182,880 6,858
15,446
DRUG STORES - 0.2%
CVS Corp. 193,400 8,365
GENERAL MERCHANDISE STORES - 1.4%
Coles Myer Ltd. 320,217 1,211
Dayton Hudson Corp. 136,900 5,151
May Department Stores Co. (The) 128,800 5,732
Sears, Roebuck & Co. 322,800 15,494
Wal-Mart Stores, Inc. 1,148,500 27,277
54,865
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 0.5%
Tandy Corp. 177,300 $ 8,023
Toys "R" Us, Inc. (a) 368,200 9,205
17,228
TOTAL RETAIL & WHOLESALE 95,904
SERVICES - 0.6%
LEASING & RENTAL - 0.2%
GATX Corp. 159,300 7,786
PRINTING - 0.3%
Donnelley (R.R.) & Sons Co. 190,300 5,947
Ennis Business Forms, Inc. 56,700 617
Moore Corporation Ltd. 99,900 2,099
New England Business Service, Inc. 129,300 2,683
11,346
SERVICES - 0.1%
Block (H&R), Inc. 120,600 3,573
Jostens, Inc. 114,500 2,362
5,935
TOTAL SERVICES 25,067
TECHNOLOGY - 1.3%
COMMUNICATIONS EQUIPMENT - 0.1%
Lucent Technologies, Inc. 68,154 3,697
COMPUTER SERVICES & SOFTWARE - 0.0%
NCR Corp. (a) 8,493 322
Sabre Group Holdings, Inc. Class A (a) 15,100 406
728
COMPUTERS & OFFICE EQUIPMENT - 0.5%
Digital Equipment Corp. (a) 102,500 3,844
International Business Machines Corp. 111,800 17,581
21,425
ELECTRONICS - 0.3%
AMP, Inc. 152,900 6,231
Nitto Denko Corp. 276,000 3,818
10,049
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
PHOTOGRAPHIC EQUIPMENT - 0.4%
Eastman Kodak Co. 117,800 $ 10,219
Fuji Photo Film Co. Ltd. 52,000 1,576
Polaroid Corp. 74,200 3,265
15,060
TOTAL TECHNOLOGY 50,959
TRANSPORTATION - 0.4%
AIR TRANSPORTATION - 0.2%
Viad Corp. 364,600 5,742
RAILROADS - 0.2%
Burlington Northern Santa Fe Corp. 102,900 9,004
TOTAL TRANSPORTATION 14,746
UTILITIES - 5.9%
ELECTRIC UTILITY - 1.8%
Allegheny Power System, Inc. 110,800 3,393
American Electric Power Co., Inc. 263,200 10,890
Central Maine Power Co. 84,900 945
CILCORP, Inc. 32,900 1,267
DQE, Inc. 55,000 1,574
DPL, Inc. 190,000 4,655
Entergy Corp. 330,800 8,890
Illinova Corp. 223,400 5,892
National Grid Co. PLC 723,800 2,412
Northeast Utilities 229,800 3,016
PECO Energy Co. 100,000 2,300
PG&E Corp. 202,000 4,596
Pinnacle West Capital Corp. 200,000 6,325
Unicom Corp. 48,000 1,134
Veba AG Ord. 218,600 12,054
69,343
GAS - 1.2%
El Paso Natural Gas Co. 9,151 493
Enron Corp. 64,000 2,640
MCN Corp. 225,000 7,284
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - CONTINUED
Nova Corp. 577,400 $ 5,487
Pacific Enterprises 427,000 12,863
PanEnergy Corp. 145,900 6,730
Questar Corp. 295,000 11,542
47,039
TELEPHONE SERVICES - 2.9%
AT&T Corp. 68,900 2,713
ALLTEL Corp. 68,500 2,201
Ameritech Corp. 358,400 21,414
BCE, Inc. 147,900 7,450
Bell Atlantic Corp. 244,500 16,443
BellSouth Corp. 307,400 13,641
Frontier Corp. 181,400 3,968
MCI Communications Corp. 92,000 3,232
Manitoba Telecom Services, Inc. (a) 94,600 987
NYNEX Corp. 412,300 20,873
SBC Communications, Inc. 279,800 15,354
Telus Corp. 217,400 3,123
WorldCom, Inc. (a) 2,213 56
111,455
TOTAL UTILITIES 227,837
TOTAL COMMON STOCKS
(Cost $1,991,912) 2,351,370
CONVERTIBLE PREFERRED STOCKS - 3.3%
BASIC INDUSTRIES - 0.2%
METALS & MINING - 0.2%
Kaiser Aluminum Corp. $0.97 550,400 6,536
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Federal Mogul Corp. $1.9375 (e) 47,200 3,121
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 0.4%
OIL & GAS - 0.4%
Occidental Petroleum Corp. $3.00 124,500 $ 8,357
Santa Fe Energy Resources, Inc. $0.732 424,300 5,410
Tosco Financing Trust $2.875 (e) 13,900 765
Unocal Capital Trust $3.125 41,500 2,412
16,944
FINANCE - 0.4%
BANKS - 0.1%
NationsBank Corp. $1.75 depositary shares 73,700 4,477
INSURANCE - 0.1%
Aetna, Inc. Class C $4.758 66,200 5,180
SECURITIES INDUSTRY - 0.2%
Merrill Lynch & Co, Inc. $2.3906 72,700 2,872
Salomon, Inc. $2.03 117,400 3,786
Salomon, Inc. $3.484 11,900 729
7,387
TOTAL FINANCE 17,044
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Loral Space & Communications Ltd. $3.00 (e) 57,800 3,143
MEDIA & LEISURE - 0.3%
ENTERTAINMENT - 0.2%
Time Warner Financing Trust $1.24 150,700 5,915
LEISURE DURABLES & TOYS - 0.0%
Tyco Toys, Inc. $0.4125 depositary shares 58,900 589
LODGING & GAMING - 0.0%
Host Marriott Financial Trust $3.375 (e) 17,400 972
PUBLISHING - 0.1%
Hollinger International, Inc. $0.95 289,600 3,258
TOTAL MEDIA & LEISURE 10,734
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - 1.3%
FOODS - 0.1%
Dole Food Automatic Common Exchange Security
Trust $2.7475 61,300 $ 2,375
TOBACCO - 1.2%
RJR Nabisco Holdings Corp. depositary shares $.6012 6,984,400 46,272
TOTAL NONDURABLES 48,647
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 10,700 2,301
GENERAL MERCHANDISE STORES - 0.1%
K mart Financing I $3.875 109,000 5,559
TOTAL RETAIL & WHOLESALE 7,860
TECHNOLOGY - 0.0%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Wang Labs, Inc. $3.25 (e) 24,500 1,305
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
Trans World Airlines, Inc. $4.00 (e) 39,400 818
UTILITIES - 0.3%
CELLULAR - 0.2%
AirTouch Communications, Inc. Class B $1.74 242,200 6,721
TELEPHONE SERVICES - 0.1%
Worldcom, Inc. 8%, depositary shares 71,700 6,354
TOTAL UTILITIES 13,075
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $123,751) 129,227
CORPORATE BONDS - 11.1%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
CONVERTIBLE BONDS - 1.0%
ENERGY - 0.6%
ENERGY SERVICES - 0.1%
Baker Hughes, Inc. 0%, 5/5/08 A2 $ 3,510 $ 2,777
OIL & GAS - 0.5%
Pennzoil Co.:
6 1/2%, 1/15/03 Baa3 8,440 13,335
4 3/4%, 10/1/03 Baa3 4,270 4,953
18,288
TOTAL ENERGY 21,065
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.1%
MBL International Finance of Bermuda
3%, 11/30/02 Aa2 4,830 4,745
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
POLLUTION CONTROL - 0.1%
WMX Technologies, Inc. 2%, 1/24/05 A2 5,080 5,029
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Hilton Hotels Corp. 5%, 5/15/06 Baa2 1,580 1,706
RETAIL & WHOLESALE - 0.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Home Depot, Inc. 3 1/4%, 10/1/01 A1 4,510 4,375
TOTAL CONVERTIBLE BONDS 36,920
NONCONVERTIBLE BONDS - 10.1%
AEROSPACE & DEFENSE - 0.1%
Lockheed Martin Corp. 7.70%, 6/15/08 A3 3,500 3,637
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Daimler-Benz Capital AG 4 1/8%,
7/5/03 unit A1 $ 8,670 $ 6,852
TEXTILES & APPAREL - 0.2%
Levi Strauss & Co. 7%, 11/1/06 (e) Baa2 10,000 9,878
TOTAL DURABLES 16,730
ENERGY - 0.6%
ENERGY SERVICES - 0.4%
Petroliam Nasional BHD yankee (e):
6 7/8%, 7/1/03 A1 9,420 9,418
7 1/8%, 10/18/06 A+ 7,000 7,022
16,440
OIL & GAS - 0.2%
Husky Oil Ltd. yankee 6 7/8%, 11/15/03 Baa3 4,000 3,960
Ras Laffan Liquid Natural Gas Co. Ltd.
7.628%, 9/15/06 (e) A3 2,850 2,865
6,825
TOTAL ENERGY 23,265
FINANCE - 6.3%
ASSET-BACKED SECURITIES - 0.8%
Discover Card Master Trust I 6.90%, 2/16/00 A2 4,500 4,523
Green Tree Financial Corp. 6.10%, 4/15/27 Aaa 4,420 4,403
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 826 825
Premier Auto Trust:
4.90%, 12/15/98 Aaa 403 401
8.05%, 4/4/00 Aaa 3,450 3,527
6%, 5/6/00 Aaa 3,920 3,919
Standard Credit Card Master Trust I:
5 1/2%, 9/7/98 participation certificate A2 2,800 2,794
4.85%, 3/7/99 A2 5,200 5,195
7.65%, 2/15/00 A2 2,300 2,334
Union Federal Savings Bank Grantor Trust:
7.275%, 10/10/00 Baa2 872 874
8.20%, 1/10/01 Baa2 603 611
29,406
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - 2.1%
ABN Amro Bank NV
6 5/8%, 10/31/01 Aa3 $ 6,750 $ 6,740
Banponce Corp.:
5 3/4%, 3/1/99 A3 1,620 1,595
6.378%, 4/8/99 A3 2,980 2,966
8.327%, 2/1/27 Baa1 7,150 7,150
Banponce Financial Corp.:
6.88%, 6/16/00 A3 2,500 2,517
6.69%, 9/21/00 A3 500 500
6 3/4%, 8/9/01 A3 770 769
Capital One Bank 7.20%, 7/19/99 Baa3 18,000 18,287
Corporacion Andina De Fomento:
euro 7 1/4%, 4/30/98 Baa3 800 811
yankee 7 1/4%, 4/30/98 (e) Baa2 5,900 5,978
Firstar Corp. 7.15%, 9/1/00 A3 6,210 6,264
KeyCorp 7 1/2%, 6/15/06 A2 3,600 3,682
Merita Bank Ltd. yankee 6 1/2%, 1/15/06 A3 1,000 951
Midland American Capital Corp. gtd.
12 3/4%, 11/15/03 A1 590 652
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 4,500 4,631
Signet Bank 7.80%, 9/15/06 Baa1 4,000 4,125
Signet Banking Corp. 9 5/8%, 6/1/99 Baa2 4,469 4,754
Union Planters National Bank
6.81%, 8/20/01 A3 4,000 4,020
Zions Bancorporation 8 5/8%, 10/15/02 Baa1 6,000 6,509
82,901
CREDIT & OTHER FINANCE - 2.8%
AT&T Capital Corp.:
6.02%, 12/1/98 Baa3 7,500 7,469
6.16%, 12/3/99 Baa3 2,750 2,728
BCH Cayman Islands Ltd. yankee
7.70%, 7/15/06 A3 2,000 2,058
Chase Capital I 7.67%, 12/1/26 A1 10,000 9,732
Chrysler Financial Corp.:
5.74%, 1/11/99 A3 5,000 4,954
5 5/8%, 1/15/99 A3 15,000 14,846
6 3/8%, 1/28/00 A3 7,230 7,238
Finova Capital Corp. 6.12%, 5/28/02 Baa1 5,000 4,847
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
First Securities Capital I
8.41%, 12/15/26 (e) A3 $ 4,000 $ 4,088
Ford Motor Credit Co.:
euro 8 5/8%, 1/24/00 A1 3,766 3,968
5.73%, 2/23/00 A1 4,500 4,410
6.20%, 3/12/01 A1 20,000 19,692
General Electric Capital Corp.
6.94%, 4/13/09 (d) Aaa 7,000 7,090
General Motors Acceptance Corp.
6.65%, 5/24/00 A3 5,000 5,021
Greyhound Financial Corp. 6.95%, 1/28/98 Baa2 1,250 1,261
Keycorp Institutional Capital A
7.826%, 12/1/26 (e) Aa 5,000 4,873
Secured Finance, Inc. secured
9.05%, 12/15/04 Aaa 1,500 1,682
Union Acceptance Corp. 7.075%, 7/10/02 Baa2 1,381 1,381
107,338
INSURANCE - 0.4%
Executive Risk Capital Trust 8.675%, 2/1/27 (e) Baa3 10,000 10,000
SunAmerica, Inc. 6.20%, 10/31/99 Baa1 5,500 5,471
15,471
SAVINGS & LOANS - 0.2%
Great West Financial Trust II 8.206%, 2/1/27 Baa2 8,000 7,983
TOTAL FINANCE 243,099
HEALTH - 0.1%
MEDICAL FACILITIES MANAGEMENT - 0.1%
Columbia/HCA Healthcare Corp.
6 7/8%, 7/15/01 A3 3,000 3,030
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc. 6 1/4%, 4/1/99 A1 8,500 8,491
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.2%
TCI Communications, Inc. 6.82%, 9/15/10 (f) Ba1 $ 5,000 $ 4,994
Tele-Communications, Inc. 7 3/8%, 2/15/00 Ba1 3,750 3,785
8,779
LODGING & GAMING - 0.3%
Circus Circus Enterprises, Inc.:
6.45%, 2/1/06 Baa2 1,000 942
7%, 11/15/36 Baa2 4,000 3,882
Mirage Resorts, Inc. 7 1/4%, 10/15/06 Baa2 6,000 6,005
10,829
PUBLISHING - 0.1%
News America Holdings, Inc. 8 5/8%, 2/1/03 Baa3 4,180 4,488
RESTAURANTS - 0.0%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa1 1,400 1,292
TOTAL MEDIA & LEISURE 25,388
NONDURABLES - 0.1%
FOODS - 0.1%
Dart and Kraft Finance NV gtd.
7 3/4%, 11/30/98 A2 3,750 3,839
Ralcorp Holdings, Inc. 8 3/4%, 9/15/04 Ba1 1,000 1,087
4,926
RETAIL & WHOLESALE - 0.1%
GENERAL MERCHANDISE STORES - 0.1%
Dayton Hudson Corp. 6.40%, 2/15/03 Baa1 1,000 972
J.C. Penney, Inc. 6.90%, 8/15/26 A2 1,000 1,008
1,980
TECHNOLOGY - 0.6%
COMPUTERS & OFFICE EQUIPMENT - 0.6%
Comdisco, Inc.:
9.45%, 6/8/00 Baa2 6,000 6,511
9.30%, 6/27/00 Baa2 3,750 4,062
6 3/8%, 11/30/01 Baa1 12,000 11,788
22,361
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - 0.5%
AIR TRANSPORTATION - 0.5%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 $ 2,030 $ 2,055
9 1/2%, 7/15/98 Baa3 4,000 4,167
Delta Air Lines, Inc.:
9 7/8%, 5/15/00 Baa3 2,000 2,168
equip. trust cert. 8.54%, 1/2/07 Baa1 867 919
Delta Air Lines, Inc. pass thru trust:
9 7/8%, 4/30/08 Baa1 4,936 5,568
10 1/2%, 4/30/16 Baa1 2,000 2,436
United Airlines pass through trust
7.27%, 1/30/13 Baa1 2,730 2,637
19,950
UTILITIES - 0.5%
CELLULAR - 0.1%
360 Degrees Communications Co.
7 1/8%, 3/1/03 Ba2 5,750 5,706
ELECTRIC UTILITY - 0.1%
Gulf States Utilities Co. 1st mtg.
6 3/4%, 10/1/98 Baa3 1,000 1,006
Israel Electric Corp. Ltd. yankee
7 1/4%, 12/15/06 (e) A3 3,000 2,974
Texas Utilities Electric Co. 9 1/2%, 8/1/99 Baa1 1,000 1,070
5,050
GAS - 0.3%
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa2 8,700 9,773
TOTAL UTILITIES 20,529
TOTAL NONCONVERTIBLE BONDS 393,386
TOTAL CORPORATE BONDS
(Cost $429,143) 430,306
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 15.3%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
U.S. TREASURY OBLIGATIONS - 13.0%
6 1/8%, 3/31/98 Aaa $ 63,300 $ 63,577
7 3/4%, 12/31/99 Aaa 121,159 126,479
10 3/4%, 5/15/03 Aaa 10,186 12,457
12 3/8%, 5/15/04 Aaa 8,739 11,709
7%, 7/15/06 Aaa 111,663 115,379
11 3/4%, 2/15/10 (callable) Aaa 73,985 97,545
9%, 11/15/18 Aaa 59,750 73,969
6%, 2/15/26 Aaa 1,780 1,592
502,707
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.3%
Federal Agricultural Mortgage Corp.:
7.01%, 2/10/05 Aaa 1,530 1,551
7.04%, 8/10/05 Aaa 2,400 2,436
Federal Home Loan Bank:
6.365%, 4/9/01 Aaa 5,000 5,009
7.36%, 7/1/04 Aaa 2,990 3,105
7.46%, 9/9/04 Aaa 1,540 1,609
7.87%, 10/20/04 Aaa 6,400 6,832
Federal Home Loan Mortgage Corporation:
8.065%, 1/27/05 Aaa 4,500 4,850
6.783%, 8/18/05 Aaa 3,660 3,663
Federal National Mortgage Association
7.49%, 3/2/05 Aaa 10,000 10,458
6.85%, 8/22/05 Aaa 1,000 1,007
Financing Corporation:
0%, 3/26/04 Aaa 4,200 2,623
0%, 5/11/05 - 2,031 1,167
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 2,815 3,008
Class 1-C, 9 1/4%, 11/15/01 Aaa 2,433 2,598
(assets of Trust guaranteed by U.S. Government
through Export-Import Bank):
Series 1992-A, 7.02%, 9/1/04 Aaa 2,852 2,917
Series 1994-A, 7.39%, 6/26/06 Aaa 4,114 4,243
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 884 891
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Private Export Funding Corp. secured
6.86%, 4/30/04 Aaa $ 1,808 $ 1,831
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
7 3/4%, 4/1/98 Aaa 932 944
7 3/4%, 11/15/99 Aaa 8,448 8,768
8%, 11/15/01 Aaa 3,440 3,656
6 1/4%, 8/15/02 Aaa 4,896 4,838
5.89%, 8/15/05 Aaa 4,527 4,271
U.S. Housing & Urban Development
8.27%, 8/1/03 Aaa 6,270 6,824
89,099
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $590,256) 591,806
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 7.1%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.1%
7%, 9/1/98 to 7/1/01 Aaa 3,372 3,400
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 5.5%
5 1/2%, 11/1/08 to 5/1/11 Aaa 21,350 20,179
6%, 12/1/00 to 6/1/26 Aaa 48,824 45,668
6 1/2%, 7/1/08 to 5/1/26 Aaa 57,144 54,634
7%, 11/1/22 to 5/1/26 Aaa 49,808 47,984
7 1/2%, 6/1/07 to 11/1/26 Aaa 21,587 21,654
8%, 9/1/17 to 11/1/25 Aaa 24,838 25,360
215,479
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.5%
7 1/2%, 7/15/25 to 4/15/26 Aaa 48,276 48,395
8%, 1/15/17 to 8/15/25 Aaa 1,651 1,689
9%, 7/15/16 to 2/15/25 Aaa 5,841 6,206
9 1/2%, 7/15/09 to 11/15/24 Aaa 1,485 1,605
57,895
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $274,770) 276,774
COMMERCIAL MORTGAGE SECURITIES - 0.7%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
Equitable Life Assurance Society of the United States:
sequential pay Series 174
Class A1, 7.24%, 5/15/06 (e) Aaa $ 7,100 $ 7,326
commercial Series 174 1996-1 (e):
Class B1, 7.33%, 5/15/06 Aa2 4,000 4,123
Class C1, 7.52%, 5/15/06 A2 4,000 4,128
Oregon Commercial Mortgage, Inc. Series 1995-1
Class A, 7.15%, 6/25/23 (e)(f) AAA 3,092 3,098
Resolution Trust Corp. commercial Series 1995-C1
Class A4-A, 6 1/4%, 2/25/27 Aaa 1,293 1,291
Structured Asset Securities Corp. commercial Series:
1993-C1 Class A-1, 6.60%, 10/25/24 AA+ 1,132 1,131
1995-C1 Class A1-A, 7 3/8%, 9/25/24 AAA 2,010 2,024
Wells Fargo Capital Markets Apartment Financing
Trust 6.56%, 12/29/05 (e) Aaa 4,500 4,514
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $26,865) 27,635
FOREIGN GOVERNMENT OBLIGATIONS - 0.6%
Ontario Province yankee 15 3/4%, 3/15/12 Aa3 5,000 5,367
Quebec Province yankee 7.22%,
7/22/36 (d) A2 15,000 15,626
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $21,027) 20,993
SUPRANATIONAL OBLIGATIONS - 0.1%
African Development Bank 7 3/4%, 12/15/01
(Cost $2,979) Aa1 3,000 3,146
CASH EQUIVALENTS - 1.3%
SHARES
Taxable Central Cash Fund (b)
(Cost $51,814) 51,814,088 51,814
PURCHASED OPTIONS - 0.0%
EXPIRATION DATE/ UNDERLYING FACE VALUE
STRIKE PRICE AMOUNT AT VALUE (NOTE 1)
(000S) (000S)
J. Aron and Co. OTC Put Option
on 2,044,000,000 Japanese Yen Mar. 97/
(Cost $133) 112 $ 16,851 $ 1,343
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,512,650) $ 3,884,414
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.39%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
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 $109,992,000 or 2.8% 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 28.9% AAA, AA, A 27.4%
Baa 5.0% BBB 5.8%
Ba 0.4% BB 0.6%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by both S&P and Moody's amounted to 0%.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 87.7%
United Kingdom 3.3
Canada 3.0
France 1.3
Netherlands 1.1
Others (individually less than 1%) 3.6
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1997, the aggregate cost of investment securities for income
tax purposes was $3,513,836,000. Net unrealized appreciation aggregated
$370,578,000, of which $418,835,000 related to appreciated investment
securities and $48,257,000 related to depreciated investment securities.
At July 31, 1996, the fund had a capital loss carryforward of approximately
$20,053,000, 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) JANUARY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $3,512,650) - $ 3,884,414
See accompanying schedule
Cash 119
Receivable for investments sold 97,387
Receivable for fund shares sold 4,636
Dividends receivable 6,503
Interest receivable 18,256
Other receivables 6
TOTAL ASSETS 4,011,321
LIABILITIES
Payable for investments purchased $ 105,603
Payable for fund shares redeemed 13,138
Accrued management fee 1,457
Other payables and accrued expenses 1,021
Collateral on securities loaned, at value 6,626
TOTAL LIABILITIES 127,845
NET ASSETS $ 3,883,476
Net Assets consist of:
Paid in capital $ 3,449,918
Undistributed net investment income 23,761
Accumulated undistributed net realized gain (loss) on 38,124
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 371,673
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 268,258 shares outstanding $ 3,883,476
NET ASSET VALUE, offering price and redemption price per $14.48
share ($3,883,476 (divided by) 268,258 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 35,662
Dividends
Interest (including income on securities loaned of $40) 51,947
TOTAL INCOME 87,609
EXPENSES
Management fee $ 9,015
Transfer agent fees 5,441
Accounting and security lending fees 437
Non-interested trustees' compensation 19
Custodian fees and expenses 126
Registration fees 42
Audit 45
Legal 10
Interest 66
Miscellaneous 25
Total expenses before reductions 15,226
Expense reductions (306) 14,920
NET INVESTMENT INCOME 72,689
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 61,703
Foreign currency transactions 904 62,607
Change in net unrealized appreciation (depreciation) on:
Investment securities 423,683
Assets and liabilities in foreign currencies 719 424,402
NET GAIN (LOSS) 487,009
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 559,698
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JULY 31,
JANUARY 31, 1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 72,689 $ 193,431
Net investment income
Net realized gain (loss) 62,607 111,252
Change in net unrealized appreciation (depreciation) 424,402 (186,087)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 559,698 118,596
FROM OPERATIONS
Distributions to shareholders from net investment income (101,516) (211,267)
Share transactions 364,938 1,055,217
Net proceeds from sales of shares
Reinvestment of distributions 98,233 203,684
Cost of shares redeemed (1,060,137) (2,214,260)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (596,966) (955,359)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (138,784) (1,048,030)
NET ASSETS
Beginning of period 4,022,260 5,070,290
End of period (including undistributed net investment $ 3,883,476 $ 4,022,260
income of $23,761 and $52,588, respectively)
OTHER INFORMATION
Shares
Sold 26,540 79,220
Issued in reinvestment of distributions 7,309 15,438
Redeemed (77,431) (166,917)
Net increase (decrease) (43,582) (72,259)
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JULY 31,
ENDED
JANUARY 31, 1997
(UNAUDITED) 1996 1995 1994 E 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 12.90 $ 13.20 $ 12.76 $ 13.84 $ 12.79 $ 12.15
beginning of period
Income from Investment
Operations
Net investment .25 D .57 .62 .25 .62 .62
income
Net realized and 1.68 (.27) .27 (.17) 1.45 1.07
unrealized gain
(loss)
Total from investment 1.93 .30 .89 .08 2.07 1.69
operations
Less Distributions
From net investment (.35) (.60) (.45) (.25) (.66) (.60)
income
From net realized gain - - - (.50) (.36) (.45)
In excess of net - - - (.41) - -
realized gain
Total distributions (.35) (.60) (.45) (1.16) (1.02) (1.05)
Net asset value, $ 14.48 $ 12.90 $ 13.20 $ 12.76 $ 13.84 $ 12.79
end of period
TOTAL RETURN B, C 15.19% 2.25% 7.19% .37% 17.18 14.73
% %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 3,883 $ 4,022 $ 5,070 $ 5,390 $ 3,599 $ 1,366
period (in millions)
Ratio of expenses to .76% A .82% .91% 1.02% .93 .96
average net assets % %
Ratio of expenses to .74% A, .79% .90% 1.01% .93 .96
average net assets F F F F % %
after expense
reductions
Ratio of net investment 3.61% A 4.12% 5.33% 4.09% 5.07 5.68
income to average net % %
assets
Portfolio turnover rate 47% A 247% 269% 157% 162 242
% %
Average commission $ .0373
rate G
</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 8 OF NOTES TO FINANCIAL
STATEMENTS). D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. 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 8 OF NOTES TO FINANCIAL STATEMENTS). G FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1997 (Unaudited)
14. 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. 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. 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. 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 with
remaining maturities of sixty days or less for which quotations are not
readily available 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
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,
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 funds are informed of the
ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. 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 paydown
gains/losses on certain securities, futures and options transactions,
foreign currency transactions, market discount, partnerships, non-taxable
dividends, 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.
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.
15. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
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 foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
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
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities, and may be
utilized by the fund as an additional cash management option. Dividends
from the Cash Fund are declared daily and paid monthly from net interest
income. Income distributions received by the fund are recorded as interest
income.
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.
OPTIONS. The fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in interest rates and currency values.
Writing puts and buying calls tend to increase the fund's exposure to the
underlying instrument. 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 of any open options at
period end 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.
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.
2. OPERATING POLICIES - CONTINUED
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).
16. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $945,666,000 and $1,517,328,000, respectively, of which U.S.
government and government agency obligations aggregated $423,218,000 and
$623,473,000, respectively.
17. 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 .15%. For
the period, the management fee was equivalent to an annualized rate of .45%
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 Company, Inc. (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 annualized rate of
.27% 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 $206,000 for the period.
18. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, the value of the
securities loaned and the value of collateral amounted to $6,474,000 and
$6,626,000, respectively.
19. 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 $69,809,000 and $40,001,000,
respectively. The weighted average interest rate was 5.66%. Interest
expense includes $63,000 paid under the interfund lending program.
20. 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 $11,940,000 and $8,353,000,
respectively. The weighted average interest rate was 5.63%. Interest
expense includes $3,000 paid under the bank borrowing program.
21. 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
$132,000 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 $7,000 and $167,000,
respectively, under these arrangements.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate the
service, and on your first call, the system will help you create a personal
identification number (PIN) for security.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
1
For quotes.*
2
For account balances and holdings.
3
To review orders and mutual
fund activity.
4
To change your PIN.
5
To speak to a Fidelity representative.
*
0
BY PC
Fidelity's Web site on the Internet provides a wide range of information,
including daily financial news, fund performance, interactive planning
tools and news about Fidelity products and services.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at 1-800-544-7272
for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to manage
your investments via your PC.
* 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)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 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)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
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
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4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
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8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Stephen R. Petersen, 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 *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
William O. McCoy *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
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
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
FIDELITY
(REGISTERED TRADEMARK)
LOW-PRICED STOCK
FUND
SEMIANNUAL REPORT
JANUARY 31, 1997
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 42 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 46 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
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
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As 1997 begins, the stock and bond markets generally have continued on the
course they followed during the past year. Through January, stocks
maintained their unprecedented climb, with the large companies still
setting the pace. With low, stable interest rates, the bond market has
tended to mirror its historical returns in the mid-single digits.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories 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, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you 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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JANUARY 31, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Fidelity Low-Priced Stock 19.47% 26.94% 139.63% 276.33%
Fidelity Low-Priced Stock 15.89% 23.14% 132.44% 265.04%
(incl. 3% sales charge)
Russell 2000(registered trademark) Index 17.97% 18.95% 95.12% 152.60%
Small Company Growth Funds 17.04% 23.71% 99.85% n/a
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on December 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 430 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. over the past six months. Both benchmarks reflect
reinvestment of dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Low-Priced Stock 26.94% 19.10% 20.51%
Fidelity Low-Priced Stock 23.14% 18.38% 19.99%
(incl. 3% sales charge)
Russell 2000 Index 18.95% 14.31% 13.93%
Small Company Growth Funds Average 23.71% 14.60% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year. (Note: Lipper calculates average annual total returns by annualizing
each fund's total return, then taking an arithmetic average. This may
produce a slightly different figure than that obtained by averaging the
cumulative total returns and annualizing the result.)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970131 19970212 150435 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
1996/08/31 31724.05 22655.23
1996/09/30 32717.98 23540.59
1996/10/31 33317.40 23177.78
1996/11/30 35082.34 24132.80
1996/12/31 36098.62 24765.26
1997/01/31 36504.41 25260.19
IMATRL PRASUN SHR__CHT 19970131 19970212 150438 R00000000000089
$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 current maximum 3% sales charge was paid. As the
chart shows, by January 31, 1997, the value of the investment would have
grown to $36,504 - a 265.04% 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 $25,260 - a 152.60% 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. JOEL, HOW DID THE FUND PERFORM?
A. The fund did well. For the six months that ended January 31, 1997, the
fund provided a return of 19.47%. This topped the small company growth
funds average, which returned 17.04% over the same period, according to
Lipper Analytical Services. The fund's return also outpaced that of the
Russell 2000 Index - a common proxy of small-cap stocks - which had a
six-month return of 17.97%. For the 12 months that ended January 31, 1997,
the fund returned 26.94%. The Lipper group and Russell 2000 had returns of
23.71% and 18.95%, respectively, over the same time period.
Q. CAN YOU POINT TO ANY FACTORS OR TRENDS THAT INFLUENCED THE FUND'S
PERFORMANCE DURING THE PERIOD?
A. The portfolio benefited from significant gains realized by several of
its larger holdings, as well as from being well-represented in some of the
better-performing sectors. Stocks such as Herbalife, a diet product
manufacturer, and Quantum, which makes disk drives, performed exceptionally
well. In addition, the fund's largest sector stake was in finance, one of
the top-performing sectors during the period. In terms of the overall
market, the period was characterized by the superior performance of large
capitalization stocks, but there were pockets in the small-cap stock market
that thrived. I'm particularly pleased that the fund did so well amidst a
backdrop that wasn't entirely favorable to small-cap stocks.
Q. HOW DOES A FUND THAT INVESTS IN LOW-PRICED STOCKS - SPECIFICALLY $25 OR
LESS - MANAGE TO PERFORM WELL IN A PERIOD OF RISING STOCK PRICES?
A. It certainly makes it more difficult. With many stock prices rising past
$25, the universe of available companies gets reduced. Fortunately, there
were hundreds of initial public offerings and dozens of spin-offs of
smaller companies by larger companies during the period. This increased
activity created new opportunities. The climb in stock prices partly
reflected low interest rates, which are especially beneficial to smaller
companies since they tend to rely heavily on borrowed capital.
Q. CAN YOU GIVE US A PROFILE OF THE TYPES OF STOCKS THAT FALL INTO THE
FUND'S INVESTING UNIVERSE?
A. The fund's strategy of investing in the "$25 and under" universe
generally leads me to small companies, large company turnarounds and
foreign stocks. A good portion of the companies I invest in are young and
still developing. Other companies have fallen from grace but are showing
signs of improvement. A good example of this was Westinghouse, a stock
which the fund owned at the end of the period. Westinghouse's strength was
always its broadcasting business, but the company had become unfocused. The
company has begun selling off its weaker businesses and has recommited
itself to broadcasting, as evidenced by its merger with Infinity
Broadcasting. Foreign stocks can occasionally offer more attractive
valuations, but I'm careful to avoid currency risk exposure. In doing so, I
try to focus my investments on countries or regions where currencies are
more closely linked to the dollar, such as Canada, Britain and Scandinavia.
Q. THE FUND'S POSITIONS IN HEALTH INSURANCE-RELATED STOCKS ROSE SOMEWHAT
DURING THE PERIOD. WHAT WAS BEHIND THIS?
A. We saw an increase in health insurance company demutualizations that
made for new investing opportunities. When a company demutualizes, it is
essentially issuing stock and transferring ownership from its policyholders
to its stockholders. Demutualization often results in favorable management
changes. Because companies were solely responsible to their policyholders,
they didn't have the pressure to produce good financial results. With
stockholders owning the company, that philosophy generally changes for the
better. The fund bought several of these stocks, including Trigon
Healthcare, which is the Virginia Blue Cross health insurance company,
SCPIE, a medical malpractice insurance firm based in California and Farm
Family Holdings, which insures farmers in the northeast.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WERE THERE ANY DETRACTORS?
A. In addition to Quantum and Herbalife, which I mentioned earlier, the
fund's positions in Dallas Semiconductor, the Bank of Montreal and Ethan
Allen, a furniture manufacturer, contributed positively. The most painful
disappointment during the period involved a consumer finance company.
Mercury Finance had been a rapid grower, but accounting irregularities were
disclosed during the period. The company restated earnings twice during the
period, and now it's difficult to gauge the reliability of those numbers.
I've since sold the stock and taken my losses.
Q. HOW DID SOME OF THE FUND'S TOP HOLDINGS PERFORM?
A. Canadian National Railway did quite well during the period. The company
has continued to modernize its locomotive fleet and has improved its
on-time service. American Business Information, a company that sells
mailing lists for business-to-business marketing, also had a good period.
On the negative side, the fund's position in Atlantic Richfield stock,
which is convertible to Lyondell Petrochemical shares, stayed somewhat flat
in a rising stock market.
Q. WHAT'S YOUR OUTLOOK, JOEL?
A. From a near-term perspective, I don't see what can happen in the economy
to disturb the favorable market conditions we've seen. The conditions have
been perfect. The fund took in substantial amounts of money in January, so
I'll be scouring different areas to put that money to work. Profit growth
accelerated during the fourth quarter of 1996 and since profits drive stock
prices, that's a trend I'll continue to monitor.
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: to increase the value
of the fund's shares by
investing mainly in low-priced
common stocks ($25 or
less at time of purchase)
FUND NUMBER: 316
TRADING SYMBOL: FLPSX
START DATE: December 27,
1989
SIZE: as of January 31,
1997, more than $6.3 billion
MANAGER: Joel Tillinghast,
since 1989; analyst for
natural gas, personal care
products, appliance and
tobacco industries,
1986-1989; joined Fidelity in
1986
(checkmark)
JOEL TILLINGHAST'S SECTOR
REPORT CARD:
ENERGY: "Energy stocks
enjoyed a nice stretch from
August through December,
but then hit a snag in January
when gas prices came
tumbling down. Some of the
fund's better-performing
stocks were in this sector, but
I reshuffled my holdings
because I felt some of the
stocks reflected different
views on the sustainable level
of gas and oil prices. On a
related note, I added to the
fund's airline-related stocks
when oil prices went down.
Airlines tend to benefit from
lower fuel costs."
RETAIL: "After a horrible
Christmas season in 1995, I
assumed Christmas 1996 had
to be better. It was, but only
for certain retailers.
Companies that focused on
cleaning out old inventories
generally performed well.
Overall, though, retailing was
a mixed bag."
TECHNOLOGY: "Parts of the
tech market surged after its
dip in July. As the need for
memory storage space
increased, companies
specializing in that area were
in demand. Software stocks
did quite well, too, but there
weren't enough opportunities
in my investment range.
Semiconductor and
networking stocks had a
much more uneven recovery."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Canadian National Railway Co. 1.0 0.8
Quantum Corp. 1.0 0.5
Yorkshire Water PLC Ord. 0.9 1.0
Hyder PLC 0.9 1.2
King World Productions, Inc. 0.9 1.1
Bank of Montreal 0.9 1.2
UICI 0.8 0.9
Dun & Bradstreet Corp. 0.8 0.0
Herbalife International, Inc. 0.7 0.6
American Business Information, Inc. 0.7 0.7
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO
Finance 15.1 16.5
Technology 9.4 8.5
Health 6.6 6.1
Retail & Wholesale 6.1 7.2
Media & Leisure 5.7 4.7
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1997* AS OF JULY 31, 1996**
Row: 1, Col: 1, Value: 21.6
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 38.0
Row: 1, Col: 4, Value: 40.1
Row: 1, Col: 1, Value: 17.0
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 40.1
Row: 1, Col: 4, Value: 40.6
Stocks 78.1%
Bonds 0.3%
Short-term
investments 21.6%
FOREIGN
INVESTMENTS 20.0%
Stocks 82.1%
Bonds 0.5%
Short-term
investments 17.4%
FOREIGN
INVESTMENTS 21.2%
*
*
*
INVESTMENTS JANUARY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 77.1%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.6%
AEROSPACE & DEFENSE - 0.3%
Allied Research Corp. (a)(c) 442,610 $ 3,734
Aviall, Inc. 275,500 3,134
Gulfstream Aerospace Corp. (a) 83,000 1,919
Sturm Ruger & Co., Inc. 138,900 2,640
Transtechnology Corp. (c) 367,000 7,432
18,859
DEFENSE ELECTRONICS - 0.1%
Doncasters PLC sponsored ADR 42,000 825
Ducommun, Inc. (a) 25,000 534
ESCO Electronics Corp. (trust receipt) 20,000 227
Flir Systems, Inc. (a)(c) 310,900 4,508
6,094
SHIP BUILDING & REPAIR - 0.2%
Celsius Industrier AB Class B (a) 25,000 452
Newport News Shipbuilding, Inc. 579,000 9,264
9,716
TOTAL AEROSPACE & DEFENSE 34,669
BASIC INDUSTRIES - 3.7%
CHEMICALS & PLASTICS - 1.1%
AEP Industries, Inc. (a)(c) 316,289 16,761
ACETO Corp. (c) 350,000 4,594
CFC International, Inc. (a) 127,000 1,810
EVC International NV (e) 25,000 696
General Chemical Group, Inc. 100,000 2,050
Gundle/SLT Environmental, Inc. (a) 176,400 1,588
International Specialty Products, Inc. (a) 255,200 3,318
Landec Corp. (a) 402,200 3,067
Lydall, Inc. (a) 62,100 1,452
Lyondell Petrochemical Co. 500,000 11,750
Martin Color-Fi, Inc. (a) 213,500 1,548
Mississippi Chemical Corp. 175,000 4,397
Primex Technologies, Inc. (a)(c) 277,000 5,367
Spartech Corp. 840,400 9,139
Stimsonite Corp. (a) 259,100 1,652
Synergistics Industries Ltd. Class A (non-vtg.) (a) 450,000 2,288
71,477
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - 0.8%
Cold Metal Products, Inc. (a)(c) 536,300 $ 3,285
Intermetco Ltd. (c) 201,700 1,168
Kentucky Electric Steel, Inc. (a)(c) 277,500 1,873
Samuel Manu-Tech, Inc. 422,800 6,120
Slater Steel, Inc. 325,000 3,498
Steel of West Virginia, Inc. (a)(c) 663,000 4,310
TriMas Corp. 1,291,500 28,736
UNR Industries, Inc. 109,600 815
49,805
METALS & MINING - 0.4%
Acier Leroux, Inc. (a):
Class B 125,000 453
Class B (e) 200,000 728
Cookson Group PLC 50,000 202
Elkem ASA 300,000 4,718
Kaiser Aluminum Corp. (a) 154,100 1,984
Lindberg Corp. 183,500 1,652
Major Drilling Group International, Inc. (a) 225,000 2,213
Metaleurop SA (a) 287,973 3,175
Superior Telecom, Inc. (a) 275,700 6,617
Titanium Metals Corp. (a) 105,900 3,111
24,853
PACKAGING & CONTAINERS - 0.4%
Cristaleria Espanola SA 5,000 411
Owens-Illinois, Inc. (a) 1,139,000 27,051
27,462
PAPER & FOREST PRODUCTS - 1.0%
ABT Building Products Corp. (a) 204,400 5,161
Deltic Timber Corp. 406,300 10,005
Enso OY Class R 1,950,000 15,658
Mail-Well, Inc. (a) 445,400 7,962
Metsa-Serla Ltd. Class B 3,000,000 21,876
Specialty Paperboard, Inc. (a) 25,000 575
61,237
TOTAL BASIC INDUSTRIES 234,834
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONGLOMERATES - 0.3%
Bibby & Sons PLC 2,405,000 $ 5,125
GenCorp, Inc. 190,700 3,719
Kysor Industrial Corp. 97,200 3,596
Mark IV Industries, Inc. 93,000 2,197
Quixote Corp. (c) 423,700 3,813
18,450
CONSTRUCTION & REAL ESTATE - 3.7%
BUILDING MATERIALS - 1.4%
American Woodmark Corp. 286,000 5,220
Bardon Group PLC 14,068,876 8,170
Bird Corp. (a) 166,900 960
Centex Construction Products, Inc. 832,800 16,342
Chart Industries, Inc. 86,600 1,754
Dahl International AB (a) 25,000 490
Dahl International AB (a)(e) 165,000 3,232
Devcon International Corp. (a) 217,700 1,279
Domco, Inc. 700,000 7,171
Domco, Inc. (warrants) (a) 125,000 334
Drew Industries, Inc. (a)(c) 478,200 11,955
Emco Ltd. (a) 350,000 2,520
Kevco, Inc. (a)(c) 336,000 4,746
Patrick Industries, Inc. (c) 617,500 9,185
Polypipe PLC 300,000 1,192
RMC Industries, Inc. (a) 50,000 751
Raytech Corp. (a)(c) 270,800 1,693
Shelter Components Corp. (c) 762,725 8,676
Velan, Inc. (sub-vtg.) (a)(e) 173,000 2,697
Watsco, Inc. Class B 28,270 855
89,222
CONSTRUCTION - 2.0%
AAF Industries PLC (a)(c) 1,250,000 561
Belmont Homes, Inc. (a)(c) 697,650 6,540
Bouygues Offshore SA sponsored ADR (a) 247,000 3,211
Cavco Industries, Inc. (a)(c) 215,950 5,626
Continental Homes Holding Corp. (c) 699,300 15,035
Crossman Communities, Inc. (a)(c) 610,600 10,838
Engle Homes, Inc. (c) 629,200 5,506
M/I Schottenstein Homes, Inc. (a)(c) 864,600 8,970
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - CONTINUED
Monaco Coach Corp. (a) 181,900 $ 3,320
Oriole Homes Corp. (a):
Class A 91,000 671
Class B (c) 276,800 1,972
Oy Saunatec Ltd. 25,000 282
Robertson Ceco Corp. (a) 402,500 3,119
Schult Homes Corp. (c) 367,200 7,849
Selmer AS 120,100 4,870
Southern Energy Homes, Inc. (a)(c) 840,500 10,927
Swan Hill Group PLC 2,500,000 3,685
Technip SA (e) 80,000 8,387
Tay Homes PLC (c) 2,000,000 4,710
U.S. Home Corp. (a) 555,645 14,238
Volker Stevin NV 66,400 6,293
Washington Homes, Inc. (a)(c) 358,200 1,657
Zaring Homes, Inc. (a) 84,500 824
129,091
ENGINEERING - 0.1%
EG & G, Inc. 7,600 162
Harding Lawson Associates Group, Inc. (a) 75,000 516
URS Corp. (a)(c) 574,778 5,891
6,569
REAL ESTATE - 0.1%
Echelon International Corp. (a) 283,100 5,167
FRM Nexus, Inc. (c) 104,433 313
Kennedy Wilson, Inc. (a)(c) 93,500 935
6,415
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Banyan Strategic Land Trust (SBI) (c) 991,750 4,230
Home Properties of NY, Inc. 75,000 1,800
Sunstone Hotel Investors, Inc. 47,000 629
6,659
TOTAL CONSTRUCTION & REAL ESTATE 237,956
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 5.1%
AUTOS, TIRES, & ACCESSORIES - 1.9%
Autocam Corp. (c) 533,382 $ 6,533
Cook (D.C.) Holdings PLC 455,800 416
Custom Chrome, Inc. (a)(c) 425,300 8,187
Deflecta-Shield Corp. (a) 102,600 1,000
Durakon Industries, Inc. (a)(c) 651,800 9,451
Excel Industries, Inc. 418,900 6,912
Federal Screw Works (c) 108,800 4,352
Hahn Automotive Warehouse, Inc. 166,909 1,252
Intermet Corp. 89,000 1,368
Kwik-Fit Holdings PLC Class L 150,000 541
Lund International Holdings, Inc. (a)(c) 220,000 2,475
Manitou BF SA 11,000 1,412
Mercury Air Group (c) 540,392 4,120
Monro Muffler Brake, Inc. (a)(c) 676,304 12,512
Peugeot SA Ord. 35,000 3,751
Strattec Security Corp. (a) 28,100 485
Superior Industries International, Inc. 500,000 11,750
TBC Corp. (a)(c) 1,236,100 9,271
Transpro, Inc. (c) 605,925 5,681
Travel Ports of America (a) 79,500 214
Uni Select, Inc. (c) 620,800 6,383
World Fuel Services Corp. (c) 803,804 17,282
Wynn's International, Inc. 460,425 9,324
124,672
CONSUMER DURABLES - 0.7%
Aristocrat Leisure Ltd. 1,067,000 2,577
ASKO Class A 80,000 6,060
Beijer AG (G&L), Series B (c) 310,000 4,276
Finnveden Invest AB Class B Free shares 100,000 1,876
Libbey, Inc. (c) 767,300 22,539
Mikasa, Inc. (a) 500,000 5,125
York Group, Inc. 150,000 3,263
45,716
CONSUMER ELECTRONICS - 0.4%
Fossil, Inc. (a)(c) 737,500 9,495
Koss Corp. (a) 77,500 901
LG Electronics, Inc. GDR (non-vtg.) 396,200 1,704
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - CONTINUED
Movado Group, Inc. (c) 379,100 $ 8,482
Tag-Heuer International SA sponsored ADR (a) 229,000 3,149
23,731
HOME FURNISHINGS - 0.9%
Ameriwood Industries International, Inc. (a) 68,000 697
BMTC Group, Inc. Class A (sub-vtg.) 150,000 919
Beter Bed Holding NV 16,194 280
Bush Industries, Inc. Class A 453,700 8,223
Carpetright PLC 135,000 1,298
Chromcraft Revington, Inc. (a) 89,900 2,506
DMI Furniture, Inc. (a) 93,000 273
Dorel Industries, Inc. (a)(e):
Class A (multi-vtg.) 125,000 1,694
Class B (sub-vtg.) (c) 775,000 10,644
Ethan Allen Interiors, Inc. 249,600 10,951
Falcon Products, Inc. 305,170 4,463
Mity-Lite, Inc. (a) 48,500 582
Roberds, Inc. (a) 61,600 508
Rowe Furniture Corp. 185,500 1,646
Shermag, Inc. (a) 75,000 754
Stanley Furniture Co., Inc. (a)(c) 250,000 6,250
Winsloew Furniture, Inc. (a) 265,600 2,955
54,643
TEXTILES & APPAREL - 1.2%
American Materials and Technologies Corp. (The) 72,500 364
Carli Gry International AS (Reg.) (a) 162,700 8,306
Carli Gry International AS (Reg.) (a)(e) 66,500 3,395
Concord Fabrics, Inc. (a):
Class A (c) 226,300 1,414
Class B 65,100 399
Conso Products Co. (a)(c) 483,350 6,102
Crown Crafts, Inc. 1,200 13
Culp, Inc. 160,000 2,580
Dawson International PLC Ord. Class L 100,000 122
Deckers Outdoor Corp. (a) 225,700 1,523
Decorator Industries, Inc. (c) 241,866 2,630
Designer Holdings Ltd. (a) 579,200 8,181
Donnkenny, Inc. (a) 167,500 775
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Dyersburg Corp. 448,500 $ 3,083
G-III Apparel Group Ltd. (a) 20,000 70
Galey & Lord, Inc. (a) 528,600 9,647
Hartmarx Corp. 108,500 637
Lassila & Tikahoja OY 30,000 2,028
Maxwell Shoe Co., Inc. Class A (a) 26,200 193
Puma AG (a) 35,000 1,092
Superior Surgical Manufacturing, Inc. (c) 482,400 6,693
Tandy Brands Accessories, Inc. (a) 210,500 1,842
Tultex Corp. (a) 331,700 2,322
Weber International AG, Gerry (a) 200 8
Worldtex Corp. (a)(c) 1,395,200 13,778
Yue Yuen Industrial Holdings Ltd. 600,000 232
77,429
TOTAL DURABLES 326,191
ENERGY - 3.7%
ENERGY SERVICES - 1.3%
Akita Drilling Ltd. Class A (non-vtg.) 788,150 6,553
Aztec Manufacturing Co. (c) 599,500 6,145
Carbo Ceramics, Inc. 478,400 9,927
Computalog Ltd. (a)(c) 450,000 6,097
Dawson Geophysical Co. (a)(c) 209,900 2,676
Dreco Energy Services Ltd. Class A (a)(c) 364,600 14,037
Key Energy Group, Inc. (a)(c) 573,000 8,237
Pe Ben Oilfield Services Ltd. (a)(c) 302,000 930
Petroleum Helicopters, Inc. (c) 204,300 3,728
Petroleum Helicopters, Inc. (non-vtg.) 302,000 5,059
Powell Industries, Inc. (a) 510,500 7,211
RPC Energy Services, Inc. (a) 542,900 8,211
Superior Energy Services, Inc. (a) 846,500 3,968
UTI Energy Corp. (a) 19,800 658
83,437
OIL & GAS - 2.4%
Adams Resources and Energy, Inc. (a) 137,900 2,137
Alamco, Inc. (a)(c) 465,300 6,921
Australian Oil & Gas Corp. Ltd. (a)(c) 3,706,000 3,701
Beau Canada Exploration Ltd. (a) 400,000 888
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Belco Oil & Gas Corp. (a) 142,200 $ 3,786
Belden & Blake Corp. (a) 343,000 9,004
CEC Resources Ltd. (a)(c) 126,330 616
Cabot Oil & Gas Corp. Class A 143,100 2,612
Castle Energy Corp. (a)(c) 988,750 11,618
Columbus Energy Corp. (a)(c) 277,526 2,810
ConVest Energy Corp. (a) 355,900 2,069
Cube Energy Corp. (a)(c) 271,600 2,016
Dailey Petroleum Services Corp. (a) 34,000 357
Discovery West Corp. (a) 200,000 318
ENEX Resources Corp. (c) 144,300 1,551
Fletcher Challenge Ltd. 1,000,000 2,913
Foremost Industries, Inc. (a)(c) 447,500 3,854
Giant Industries, Inc. 428,700 6,109
Hallwood Consolidated Resources Corp. (a) 35,950 2,894
Lynx Energy Services Corp. Class B (a) 150,000 1,269
Markwest Hydrocarbon, Inc. (a)(c) 266,600 3,866
Maynard Oil Co. (a) 176,100 2,928
McFarland Energy, Inc. (a) 174,300 2,157
Monterey Resources, Inc. (a) 147,800 2,291
Novus Petroleum Ltd. 3,602,542 8,514
Petro-Canada 200,000 3,185
Petro-Canada 2nd Installment Receipt (f) 146,000 1,864
Petroleum Development Corp. (a)(c) 995,000 4,851
Premier Oil PLC 13,100,000 8,604
Resource America, Inc. Class A 150,000 3,206
Saga Petroleum AS:
Class A 200,000 3,854
Class B 400,000 7,030
Swift Energy Co. (a) 524,959 19,161
Titan Exploration, Inc. (a) 129,000 1,629
Torch Energy Royalty Trust Unit (c) 569,200 6,475
Ulster Petroleums Ltd. (a)(e) 100,000 787
Western Gas Resources, Inc. 200,000 3,925
YPF Sociedad Anonima sponsored ADR representing
Class D shares 95,000 2,648
154,418
TOTAL ENERGY 237,855
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 15.1%
BANKS - 6.2%
Banca Popolare di Milano 600,000 $ 3,541
Bank of Ireland, Inc. 501,088 4,744
Bank of Montreal 1,600,000 55,351
Bank Atlantic Bancorp, Inc. 627,237 8,546
Bergens Skillingsbank 175,000 1,862
CVB Financial Corp. 29,920 557
Cathay Bancorp., Inc. 62,100 1,289
Colonial Bancgroup, Inc. 166,300 6,922
Corus Bankshares, Inc. 175,000 5,731
Credit Lyonnais (a) 7,700 235
Credito Italiano Ord. 1,250,000 1,705
CLF-Dexia 125,000 11,184
Den Danske Bank Group AS 281,500 23,292
Den Norske Bank AS (e) 1,000,000 4,116
Den Norske Bank AS Class A Free shares 5,200,000 21,406
First Empire State Corp. 20,000 5,965
First Mutual Savings Bank 50,400 1,014
Firstbank Puerto Rico (c) 1,505,400 39,893
Fokus Bank AS 890,000 6,586
Fokus Bank AS (e) 317,300 2,348
Foreningsbanken AB Class A Ord. 400,000 2,091
GBC Bancorp (c) 501,700 16,180
Gronlandsbanken AS 10,000 547
HSBC Holdings PLC 51,507 1,200
HUBCO, Inc. 424,873 10,569
International Bank of Asia Ltd. 1,500,000 1,045
Jyske Bank AS (Reg.) 75,000 5,750
National Australia Bank Ltd. 250,000 3,021
National Bank of Canada 1,000,000 10,579
Nordlandsbanken AS 100,000 2,236
Nordbanken AB 800,000 25,930
Nordbanken AB (e) 107,000 3,468
Okobank Class A (a) 225,000 3,410
Oriental Financial Group, Inc. 197,680 4,300
Ringkjobing Bank 4,000 653
SouthTrust Corp. 784,600 29,619
Sparbanken Sverige Ab Class A (e) 473,000 7,502
Sparebanken Norway primary shares certificates 675,000 21,438
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Sparebanken More (a) 39,286 $ 1,024
Sparebanken Rana Grunnfondsbevis 10,000 248
Stadshypotek, Series A (e) 50,000 1,303
Sumitomo Bank 345,600 9,677
Svenska Handelsbanken 200,000 5,200
Syd-Sonderjylland Holding 355,000 15,113
Union Bank of Hong Kong 1,250,000 1,718
Unidanmark AS Class A 100,000 5,441
395,549
CREDIT & OTHER FINANCE - 0.9%
ACC Consumer Finance Corp. (a) 62,000 674
Amagerbanken AS 25,000 934
Equitilink Ltd. 746,102 375
FIH AS Class B 303,500 7,092
First Financial Caribbean Corp. 401,500 10,439
Granite Financial, Inc. (a)(c) 80,000 980
Greenpoint Financial Corp. 185,000 10,083
Homeside, Inc. 58,000 870
Investors Financial Services Corp. 62,200 1,780
Intrum Justitia NV (Reg.) 825,000 1,454
JCG Holdings Ltd. 3,457,000 3,078
London Forfaiting Co. 100,000 538
Moneygram Payment Systems, Inc. (a) 200,000 2,700
National Auto Finance Co. 52,000 501
National Home Loans Holding PLC 850,000 2,043
Perpetual PLC 140,000 5,786
Surrey Metro Savings Credit Union (non-vtg.) 353,600 3,412
WSFS Financial Corp. 25,000 294
Wilshire Financial Services Group, Inc. (a)(c) 119,000 2,053
55,086
INSURANCE - 6.1%
Acmat Corp. Class A (a) 126,958 1,841
Allmerica Financial Corp. 296,000 10,841
American Indemnity Financial Corp. (c) 194,000 2,425
Amerus Life Holdings, Inc. (c) 205,000 4,049
Amvestors Financial Corp. 215,500 3,502
Amwest Insurance Group, Inc. 138,250 1,694
Arbatax International, Inc. (a) 200,200 1,241
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Blanch E.W. Holdings, Inc. 279,000 $ 6,278
Capitol American Financial Corp. 179,800 6,540
Commerce Group, Inc. 1,340,000 32,495
FBL Financial Group, Inc. Class A 154,400 3,648
FPIC Insurance Group, Inc. (a) 117,500 1,718
Farm Family Holdings, Inc. (a)(c) 426,400 9,807
First Central Financial Corp. (c) 595,000 2,454
Fructivie SA 5,086 568
Fremont General Corp. 873,500 26,205
Frontier Insurance Group, Inc. 270,270 10,676
Gainsco, Inc. (c) 1,679,600 15,326
GCR Holdings Ltd. 1,075,000 25,128
Guarantee Life Companies, Inc. 114,450 2,346
Heath (CE) 200,000 306
Home State Holdings, Inc. (a) 200,000 1,550
Integon Corp. 470,500 6,528
Intercontinental Life Corp. (a)(c) 418,300 5,961
Kingsway Financial Services, Inc. (a) 100,000 1,191
Lloyd Thompson Group PLC 600,000 1,961
Life USA Holding, Inc. (a)(c) 1,370,500 14,733
Life RE Corp. 37,100 1,614
Lowndes Lambert Group Holdings PLC 250,000 429
MMI Companies, Inc. 103,200 3,122
Merchants Group, Inc. 125,100 2,314
Midland Financial Group, Inc. 160,000 1,410
NY Magic, Inc. 153,500 2,821
National Western Life Insurance Co. Class A (a) 130,500 11,386
Nelson Hurst PLC 115,000 263
PXRE Corp. (c) 727,063 19,267
Pembridge, Inc. (a) 400,000 3,474
Penn-America Group, Inc. 70,200 1,351
Philadelphia Consolidated Holding Corp. (a) 137,500 3,713
Protective Life Corp. 595,000 23,577
Providian Corp. 32,100 1,729
RLI Corp. 260,700 9,125
Riscorp, Inc. (a) 106,000 411
SCPIE Holding, Inc. 334,400 7,022
Security-Connecticut Corp. 187,800 7,207
Stewart Information Services Corp. (c) 536,000 11,122
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Symons International Group, Inc. (a)(c) 192,900 $ 3,086
Terra Nova Holdings Ltd. 179,000 3,535
Titan Holdings, Inc. 290,969 4,837
UICI (a) 1,791,000 53,506
Unico America Corporation 195,500 2,077
Unionamerica Holdings PLC sponsored ADR 606,600 10,009
389,419
SAVINGS & LOANS - 1.5%
Andover Bancorp., Inc. 217,320 6,180
Bank United Corp. Class A 325,000 8,816
Coastal Bancorp, Inc. (c) 393,099 9,778
Collective Bancorp., Inc. 788,900 27,118
Crazy Woman Creek Bancorp., Inc. (c) 76,000 998
Eagle Financial Corp. 100,000 2,900
First Home Bancorp., Inc. 80,000 1,780
Independence Federal Savings Bank (c) 119,500 1,120
Iroquois Bancorp., Inc. 107,400 1,933
MAF Bancorp., Inc. 138,254 4,778
Poncebank (c) 500,800 10,204
Primary Bank (a) 42,225 739
Sovereign Bancorp., Inc. 998,425 13,978
Virginia First Financial Corp. 268,500 3,491
Warren Bancorp., Inc. (c) 363,900 5,731
99,544
SECURITIES INDUSTRY - 0.4%
BHC Financial, Inc. 316,400 5,756
Charles JW Financial Services, Inc. (a) 85,200 1,022
London Pacific Group Ltd. 850,000 2,982
Raymond James Financial, Inc. 484,800 15,635
25,395
TOTAL FINANCE 964,993
HEALTH - 6.6%
DRUGS & PHARMACEUTICALS - 1.2%
Herbalife International, Inc. (c) 1,920,000 47,760
ICN Pharmaceuticals, Inc. 321,500 7,395
Natural Alternatives International, Inc. (a)(c) 514,400 4,437
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Nature's Sunshine Products, Inc. 390,400 $ 6,930
Santen Pharmaceutical Co. Ord. 27,500 510
Twinlab Corp. (a)(c) 660,000 9,488
76,520
MEDICAL EQUIPMENT & SUPPLIES - 3.1%
Allegiance Corp. 858,900 22,009
Arterial Vascular Engineering, Inc. (a) 157,500 2,067
Ballard Medical Products (c) 1,443,700 28,152
Biomet, Inc. 2,500,000 38,750
Bio-Rad Laboratories, Inc. Class A (a) 387,750 12,406
Cochlear Limited 50,000 138
Conmed Corp. (a) 250,000 4,844
Depuy, Inc. (a)(c) 875,000 16,406
Exactech, Inc. (a) 61,500 546
HPSC, Inc. (a)(c) 352,500 2,159
Haemonetics Corp. (a)(c) 1,400,000 23,100
Invivo Corp. (a) 55,200 752
Laser Industries Ltd. Ord. (a)(c) 610,100 6,559
Moore Medical Corp. (a)(c) 288,600 2,922
OEC Medical Systems, Inc. (a)(c) 1,016,000 17,526
Orthofix International (a) 368,900 2,951
OY Tamro AB (e) 25,000 156
Sofamor/Danek Group, Inc. (a) 224,300 9,252
Utah Medical Products, Inc. (a)(c) 675,000 7,763
Vital Signs, Inc. 111,300 2,629
201,087
MEDICAL FACILITIES MANAGEMENT - 2.3%
America Service Group, Inc. (a) 76,300 991
Arbor Health Care Co. (a) 70,900 1,564
Clinic Holdings Ltd. 500,000 554
Health Systems International, Inc. (a) 565,000 14,619
Horizon Mental Health Management, Inc. (a) 151,050 2,769
Integrated Living communities, Inc. (a) 90,000 495
Meadowbrook Insurance Group, Inc. 1,500 34
Quest Diagnostics, Inc. (a) 1,281,475 20,183
Quorum Health Group, Inc. (a) 100,100 2,890
Ramsay Health Care, Inc. 10,000 36
Rehabcare Corp. (a)(c) 436,000 9,265
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
Res-Care, Inc. (a) 1,500 $ 30
Rightchoice Managed Care, Inc. Class A (a) 100,000 1,450
Rotech Medical Corp. (a) 750,000 12,938
Sierra Health Services, Inc. (a) 324,700 8,889
TheraTx, Inc. (a) 297,300 3,568
Trigon Healthcare, Inc. 407,300 7,232
Universal Health Services, Inc. Class B (a)(c) 1,564,100 45,359
Vivra, Inc. (a) 90,000 2,745
Wellpoint Health Networks, Inc. 250,000 8,250
143,861
TOTAL HEALTH 421,468
HOLDING COMPANIES - 0.3%
DCC PLC 1,250,000 5,766
Forvaltnings AB Ratos Class B Free shares 25,000 845
Fonciere Financiere et Part SA 25,000 881
Marine Wendel SA 74,976 7,237
Perry Group 150,000 493
Queensway Financial Holdings Ltd. (a)(e) 150,000 2,673
SIPAREX (Societe de Particiations dans les Enterprises
Regionales en Expansion) 57,077 1,269
19,164
INDUSTRIAL MACHINERY & EQUIPMENT - 2.7%
ELECTRICAL EQUIPMENT - 0.6%
Alcatel Alsthom sponsored ADR 125,000 2,576
Blick PLC Class L 100,000 517
Charter Power Systems, Inc. 18,100 624
Cherry Corp. Class A (a) 22,000 311
Choride Group PLC 200,000 125
Emcee Broadcast Products, Inc. (a) 178,500 870
Holophane Corp. (a) 100,500 2,010
IEC Electronics Corp. (a) 65,500 508
Juno Lighting, Inc. 260,000 3,998
Reflectone, Inc. (a)(c) 205,500 4,110
Rofin Sinar Technologies, Inc. (a) 100,000 1,188
Sigmatron International, Inc. (a) 34,500 742
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Spirax-Sarco Engineering PLC 25,000 $ 280
Transcrypt International, Inc. 150,000 1,313
Twentsche Kabel Holding NV 35,704 1,766
Valley Forge Corp. (c) 229,200 2,980
Vertex Communications Corp. (a)(c) 425,100 9,033
Westinghouse Electric Corp. 100,000 1,838
Woodhead Industries, Inc. 2,500 40
34,829
INDUSTRIAL MACHINERY & EQUIPMENT - 2.0%
AG Associates, Inc. (a) 264,500 1,686
BT Industries AB 150,000 2,917
CPAC, Inc. (a)(c) 733,800 9,906
Columbus McKinnon Corp. 416,100 7,646
Control Devices, Inc. (a)(c) 200,000 2,425
EDAC Technologies Corp. (a)(c) 235,000 411
Farr Co. (a)(c) 203,599 3,716
Fedders Corp. Class A 219,750 1,319
Gardner Denver Machinery, Inc. (a) 398,200 6,371
Gehl Co. (a) 245,700 2,611
Geveke NV 25,000 929
Hardinge, Inc. 303,700 7,820
Hein-Werner Corp. (c) 188,685 1,392
JLG Industries, Inc. 75,000 1,425
K-Tron International, Inc. (a) 32,600 350
Kaydon Corp. 170,800 7,558
KCI (Konecranes International) (a) 50,000 1,536
KCI (Konecranes International) (a)(e) 118,000 3,626
Molins PLC 100,000 1,497
New Holland NV (a) 775,000 17,050
Oilgear Co. 18,600 284
P&F Industries, Inc. Class A (a) 10,100 58
Park Ohio Industries, Inc. (a) 72,507 1,119
Powerscreen International PLC 2,400,000 22,146
RDO Equipment Co. Class A 49,000 864
Regal-Beloit Corp. 896,800 17,039
Speizman Industries, Inc. (a)(c) 185,000 1,318
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Stewart & Stevenson Services, Inc. 27,600 $ 687
T B Wood's Corp. 221,900 2,469
Thermo Fibergen, Inc. (a) 33,000 297
Thermo Fibergen, Inc. (rights) (a) 33,000 109
Varlen Corp. 120,203 2,314
130,895
POLLUTION CONTROL - 0.1%
Chempower, Inc. (a)(c) 654,200 3,925
MFRI, Inc. (a) 49,000 384
NSC Corp. (c) 550,400 1,376
Sevenson Environmental Services, Inc. 80,300 1,265
Weston (Roy F.), Inc. Class A (a) 393,800 1,477
8,427
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 174,151
MEDIA & LEISURE - 5.7%
BROADCASTING - 1.3%
Austereo Ltd. 4,084,201 6,258
BET Holdings, Inc. Class A (a) 445,300 11,689
Border Television PLC Class L 50,000 280
Canwest Global Communications Corp.:
(sub-vtg.) 1,420,006 18,975
(non-vtg.) 180,000 2,419
Capital Radio PLC 159,000 1,383
Cogeco, Inc. 425,000 2,477
Cogeco Cable, Inc. (c) 300,000 2,082
Cox Radio, Inc. Class A (a) 313,300 5,757
Matav-Cable System Media Ltd. sponsored ADR (a) 251,500 3,883
Metro Networks, Inc. (a) 20,500 482
Moffat Communications Ltd. 350,000 5,067
Premier Choix Tvec, Inc. Class A (c) 200,600 4,155
Prime Television Ltd. 660,664 1,133
Publishing & Broadcasting Ltd. 750,000 3,888
P4 Radio Hele Norge SA (a) 50,000 470
Radiomutuel, Inc. Class A 122,000 827
Radio Pacific 150,000 331
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Southern Cross Broadcasting Australia Ltd. 156,313 $ 620
TCA Cable TV, Inc. 195,900 5,901
Tele-Metropole, Inc. Class B (a) 220,000 2,907
TV 4 AB Class A 40,000 905
WIC (Western International Communications) Ltd. Class B 25,000 427
82,316
ENTERTAINMENT - 1.0%
Airtours PLC 200,000 2,804
Filmes Lusomundo (a) 25,000 249
King World Productions, Inc. (a) 1,441,000 56,379
Medialink Worldwide, Inc. 75,000 759
Scientific Games Holdings Corp. 32,600 746
Sydney Aquarium Ltd. 250,000 743
Television & Media Services Ltd. 1,500,000 1,281
Toolex Alpha NV (a) 23,000 256
Tottenham Hotspur PLC Class L 35,000 348
Vaughns, Inc. (a) 172,500 1,186
64,751
LEISURE DURABLES & TOYS - 0.2%
Arctic Cat, Inc. 29,400 307
Champion Enterprises, Inc. (a) 269,800 5,261
ERO, Inc. (a) 157,800 1,361
Rexhall Industries, Inc. (a) 44,825 297
Suunto OY 25,000 302
Toy Biz, Inc. Class A (a) 50,000 981
Varsity Spirit Corp. (c) 439,750 6,486
14,995
LODGING & GAMING - 0.2%
Homegate Hospitality, Inc. (a) 50,000 431
Rio Hotel & Casino, Inc. (a) 300,000 4,913
Riviera Holdings Corp. (a) 142,200 1,991
Ryan Hotels Ltd. 1,000,000 673
Sands Regent (c) 286,072 751
Sholodge, Inc. (a) 228,800 2,817
Scandic Hotels AB (a)(e) 144,000 2,363
Supertel Hospitality, Inc. (a) 39,500 380
14,319
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - 1.8%
Adscene Group PLC Class L 150,000 $ 348
Aamulehti Yhtynae Oy:
Series II 19,000 701
Series II (e) 25,000 921
ACNielsen Corp. (a) 421,166 6,897
A-Pressen AS, Series A 25,000 705
Cognizant Corp. 313,500 10,071
Culturecom Holdings Ltd. (a) 500,000 13
Dun & Bradstreet Corp. 2,039,800 48,955
EMAP PLC 10,000 127
Edipresse SA, Lausanne 1,000 204
Fine Art Developments PLC Class L 300,000 1,177
International Business Communications Holdings
PLC Class L 375,000 1,826
Independent Newspapers:
Ltd. 50,000 237
PLC 250,000 1,262
Kauppakaari Oy (a) 50,000 666
VNU Ord. 100,000 1,940
Nation Publishing Group (For. Reg.) 50,000 143
Nelson Thomas, Inc. 200,000 2,775
Perskor Groep Beperk 45,000 1,382
Sadlier (William H.), Inc. 8,000 72
Schibsted AS, Series B 225,000 4,995
Sterling Publishing Group PLC Class L (a) 1,000,000 449
Talentum Oy Class B (c) 500,000 4,814
Torstar Corp. Class B 25,000 595
VLT AB Class B 10,000 129
Wegener Tijil NV 12,250 1,211
WSOY (Werner Soderstrom) Class B (c) 750,000 18,742
World Color Press, Inc. 103,000 2,034
113,391
RESTAURANTS - 1.2%
ARK Restaurants Corp. (a)(c) 225,100 3,264
Break For The Border Group PLC Class L 100,000 104
Brinker International, Inc. (a) 109,300 1,189
Buffets, Inc. (a) 905,000 7,240
Consolidated Products, Inc. (a) 611,820 10,324
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
Elxsi Corp. (a)(c) 286,000 $ 1,859
IHOP Corp. (a)(c) 600,000 14,775
M Corp, Inc. (a)(c) 272,500 607
Morton's Restaurant Group, Inc. (a) 84,000 1,355
Nathans Famous, Inc. (a)(c) 298,000 1,155
Ryan's Family Steak Houses, Inc. (a) 616,700 4,779
Sbarro, Inc. 728,300 18,663
Sonic Corp. (a) 406,500 8,282
Tele Pizza SA (a) 10,000 429
74,025
TOTAL MEDIA & LEISURE 363,797
NONDURABLES - 3.4%
AGRICULTURE - 0.1%
IAWS Group PLC Class A (Reg.) 250,000 721
Sylvan Foods Holdings, Inc. (a)(c) 631,900 7,978
8,699
BEVERAGES - 0.1%
Coors (Adolph) Co. Class B 105,800 1,971
Todhunter International, Inc. (a) 179,800 1,528
3,499
FOODS - 0.5%
Cultor OY, Series 1 10,000 512
Earthgrains Co. 75,000 3,497
Eskimo Pie Corp. 42,500 553
Man (E D & F) Group PLC 350,000 976
Raision Tehtaat Class V 75,108 6,477
Riviana Foods, Inc. 690,000 12,075
Thorn Apple Valley, Inc. (a)(c) 481,100 7,577
Western Beef, Inc. (a) 191,500 2,561
34,228
HOUSEHOLD PRODUCTS - 1.8%
Alfin, Inc. (a) 497,900 777
Allou Health & Beauty Care, Inc. Class A (a) 100,100 651
American Safety Razor Co. (a)(c) 963,900 14,096
BeautiControl Cosmetics, Inc. (c) 458,000 8,244
DSG International Ltd. (a)(c) 799,000 10,986
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - CONTINUED
FRIATEC AG Keramik-und Kunststoffwerke 25,000 $ 473
Helen of Troy Corp. (a)(c) 1,360,700 32,317
IWP International 100,000 429
IWP International (UK Reg.) 725,000 3,020
Jean Philippe Fragrances, Inc. (a)(c) 774,900 5,037
Mcbride PLC 100,000 224
Nutramax Products, Inc. (a)(c) 538,500 6,462
Oriflame International SA 398,700 3,181
Playtex Products, Inc. (a) 1,418,800 12,947
Premark International, Inc. 543,300 12,496
Stephan Co. (c) 412,200 5,719
117,059
TOBACCO - 0.9%
BAT Industries PLC Ord. 4,000,000 30,983
Dimon, Inc. 81,000 1,924
Standard Commercial Corp. 385,540 7,566
UST, Inc. 431,200 13,259
W.D. & H.O. Wills Holdings Ltd. (a) 300,700 548
54,280
TOTAL NONDURABLES 217,765
PRECIOUS METALS - 0.5%
Industrias Penoles SA 4,700,000 19,841
Orogen Minerals Ltd. (a) 1,000,000 2,226
Orogen Minerals Ltd. GDR (a)(e) 342,000 7,567
Prime Resources Group, Inc. 25,000 178
Richmont Mines, Inc. (a) 457,700 1,784
31,596
RETAIL & WHOLESALE - 6.1%
APPAREL STORES - 1.0%
Baker (J.), Inc. (c) 710,100 4,881
Buckle, Inc. (The) (a) 196,400 5,475
Chateau Stores of Canada Ltd. Class A (c) 192,900 788
Claire's Stores, Inc. 507,425 7,231
Designs, Inc. (a) 246,500 1,479
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Dress Barn, Inc. (a) 419,400 $ 6,710
Footstar, Inc. (a) 590,304 13,356
Frederick's of Hollywood Class B 166,600 708
Gantos, Inc. (a) 200,000 525
Gymboree Corp. 123,100 2,831
ICC International PLC (For. Reg.) 50,000 232
Kenneth Cole Productions, Inc. Class A 26,800 519
One Price Clothing Stores, Inc. (a)(c) 970,600 3,154
Pantorama Industries, Inc. (a) 100,000 68
Ross Stores, Inc. 252,100 10,336
S & K Famous Brands, Inc. (a)(c) 417,400 4,174
San Francisco Boutiques, Inc. Class B (sub-vtg.) (a) 125,000 603
Shoe Carnival, Inc. (a) 527,500 2,638
65,708
DRUG STORES - 0.5%
CVS Corp. 69,100 2,988
Jean Coutu Group, Inc. Class A (c) 1,860,000 17,191
Vitalink Pharmacy Services, Inc. (a) 353,800 8,580
28,759
GENERAL MERCHANDISE STORES - 2.0%
Algonquin Mercantile Corp. 49,700 218
Casey's General Stores, Inc. 83,300 1,468
Duckwall-Alto Stores, Inc. (a) 129,700 1,702
Family Dollar Stores, Inc. 1,353,700 28,428
Freds, Inc. Class A 112,600 1,025
Lechters, Inc. (a)(c) 1,350,000 5,316
Mac Frugals Bargains Closeouts, Inc. (a)(c) 1,505,500 34,627
99 Cents Only Stores (a)(c) 241,200 4,161
Service Merchandise Co., Inc. (a) 1,900,000 7,838
Stein Mart, Inc. (a) 700,600 14,100
Wal-Mart Stores, Inc. 1,350,000 32,063
130,946
GROCERY STORES - 0.7%
Food Lion, Inc. Class A 2,304,000 19,727
Marsh Supermarkets, Inc. Class A 46,200 676
Somerfield PLC 1,050,000 2,860
Riser Foods, Inc. Class A (c) 661,500 22,078
Whittard of Chelsea PLC (a) 50,000 168
45,509
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 1.8%
Betterware PLC 540,000 $ 951
Blair Co. 408,900 8,331
Brookstone, Inc. (a)(c) 754,600 6,131
CML Group, Inc. 245,600 798
Coldwater Creek, Inc. 3,000 54
Cole National Corp. Class A (a)(c) 1,100,000 31,350
Fabri-Centers of America, Inc. (a):
Class A (c) 476,100 7,618
Class B (non-vtg.) 682,800 10,242
Farepak PLC 100,000 694
Finlay Enterprises, Inc. (a) 275,600 4,065
Flying Flowers Ltd. Unit 29,166 93
Heiton Holdings Ltd. 100,000 164
Land's End, Inc. (a) 269,200 7,639
Little Switzerland, Inc. (a) 99,200 490
North West Company, Inc. 100,000 817
Old American Stores, Inc. (a)(c) 339,500 1,655
Partridge Fine Arts PLC 200,000 218
Piercing Pagoda, Inc. (a) 37,200 809
Rex Stores Corp. (a) 170,000 1,381
Sound Advice, Inc. (a)(c) 360,400 608
Sound Advice, Inc. (warrants) (a) 11,205 -
Transmedia Network, Inc. 368,200 1,979
Waban, Inc. (a) 934,700 25,354
Wolohan Lumber Co. 106,500 1,385
112,826
TRADING COMPANIES - 0.1%
Hagemeyer NV 116,938 9,277
TOTAL RETAIL & WHOLESALE 393,025
SERVICES - 2.8%
ADVERTISING - 0.2%
ADVO, Inc. 252,300 3,280
American List Corp. (c) 443,180 10,470
Ariely Advertising Ltd. 112,000 371
More O'Ferrall PLC 275,000 2,974
Shandwick Ord. 50,000 49
17,144
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
EDUCATIONAL SERVICES - 0.1%
Coutts Consulting Group PLC Class L 200,000 $ 176
Educational Medical, Inc. (a) 18,000 214
Strayer Education, Inc. 235,000 6,169
6,559
LEASING & RENTAL - 0.1%
Aaron Rents, Inc. Class B 177,500 1,996
Alrenco, Inc. 16,500 188
Mitcham Industries, Inc. (a)(c) 264,000 2,277
Rent-Way, Inc. 2,500 32
4,493
PRINTING - 0.4%
Adare Printing Group PLC 75,000 739
Cadmus Communications Corp. 22,000 352
Devon Group, Inc. (a)(c) 630,600 17,972
Graphic Industries, Inc. (c) 589,000 5,743
Paris Corp. (a) 164,500 319
Pubco Corp. (a) 164,000 1,189
Unidigital, Inc. (a) 50,000 256
26,570
SERVICES - 2.0%
Access Plus PLC 10,000 18
Barbers Hairstyling for Men, Inc. (a) 12,750 91
Barefoot, Inc. 428,000 6,841
Borg Warner Security Corp. (a) 252,900 2,814
Caldwell Partners International Class A (non-vtg.) 600,000 2,895
CEGEDIM SA 2,470 217
Concord Career Colleges, Inc. (a) 250,000 203
Cornell Corrections, Inc. (a) 93,500 1,005
Craig (Jenny), Inc. (a)(c) 1,154,100 11,830
EMIS (European Marketing Information Services NV) 25,000 187
Firstservice Corp. (a) 10,000 51
Forensic Technologies International Corp. (a) 7,500 54
Fugro NV (a) 80,100 1,480
ICTS Holland Production BV (a) 150,000 1,500
Insurance Auto Auctions, Inc. (a) 118,800 1,158
LCS Industries, Inc. 58,000 856
Lawyers Title Corp. (c) 619,800 14,333
Mail Boxes Etc. (a) 85,000 1,604
Morgan & Banks Ltd. 500,000 2,401
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Olsten Corp. 50,000 $ 881
OroAmerica, Inc. (a)(c) 384,700 1,827
Page (Michael) Group PLC Class L 250,000 1,878
Pittston Co.:
(Brinks Group) 278,200 7,859
(Burlington Group) (c) 1,163,000 23,407
Programming & Systems, Inc. (a)(c) 313,300 -
Railtrack Group PLC (e) 1,750,000 10,681
Rentokil Group PLC 500,000 3,673
Right Management Consultants, Inc. (a)(c) 639,400 13,427
Seattle Film Works, Inc. 80,000 1,420
Sophus Berendsen AS, Series B 15,000 2,017
Speedy Muffler King, Inc. (a) 150,000 1,169
Staffmark, Inc. (a) 200,400 2,605
Stanley Technology Group, Inc. (a) 75,000 401
TSB International, Inc. (a) 75,000 384
Thomas Group (a)(c) 364,900 2,874
Zebra Technologies Corp. Class A (a) 113,900 3,018
127,059
TOTAL SERVICES 181,825
TECHNOLOGY - 9.1%
COMMUNICATIONS EQUIPMENT - 0.4%
Amper SA (Reg.) 100,000 2,017
Circuit Systems, Inc. (a) 83,000 384
Communications Systems, Inc. 455,000 6,541
Dycom Industries, Inc. (a) 125,800 1,415
IPC Information Systems, Inc. (a)(c) 831,100 12,882
Larscom, Inc. Class A (a) 25,000 300
Microlog Corp. (a) 25,000 150
Napco Security Systems, Inc. (a) 194,800 804
Norstan, Inc. (a) 235,800 3,950
28,443
COMPUTER SERVICES & SOFTWARE - 4.0%
Alternative Resources Corp. (a) 100,000 1,463
American Business Information, Inc. (a)(c) 2,045,550 45,769
Ark AS 192,000 1,776
Auto Info, Inc. (a) 369,500 1,039
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Award Software International, Inc. (a)(c) 100,000 $ 1,450
BA Merchant Services, Inc. Class A (a)(c) 735,000 11,852
BancTec, Inc. (a)(c) 1,117,300 21,648
Black Box Corp. (a) 686,200 25,733
Boole & Babbage, Inc. (a) 398,237 10,155
Broadway & Seymour, Inc. (a) 5,000 57
Business Objects SA sponsored ADR (a) 347,500 4,995
Cimatron Ltd. 7,500 41
Computer Power Group Ltd. 350,000 1,001
Computer Data Systems, Inc. (c) 578,200 17,924
Computervision Corp. (a) 175,000 1,313
Coreco, Inc. (a)(e) 134,500 649
Data Systems & Software (a) 330,000 1,856
Edusoft Ltd. (a) 134,500 404
Eidos PLC sponsored ADR (a) 100,000 1,500
Enea Data AB, Series B Free shares (c) 110,000 2,996
Equitrac Corp. (a)(c) 219,400 2,688
GSE Systems, Inc. (a)(c) 331,600 2,984
Gateway Data Sciences Corp. (a) 87,000 1,109
GEAC Computer Ltd. (a) 250,000 5,902
Government Technology Services, Inc. (a)(c) 670,000 3,853
Group 1 Software, Inc. (a) 165,400 1,158
Hartco Enterprises, Inc. 50,000 262
Intentia International AB Class B (a)(e) 30,000 416
Intersolv, Inc. (a) 312,000 3,120
Lanoptics Ltd. (Reg.) (a) 4,600 35
Learning Co., Inc. (a) 408,800 5,161
Merkantildata 25,000 609
Metro Information Services, Inc. 2,000 38
Metromail Corp. (a) 73,200 1,510
Misys PLC Ord. 201,600 3,536
Mysoftware Co. (a)(c) 420,700 1,341
New Dimension Software Ltd. (a) 451,700 5,082
Orcad, Inc. (a)(c) 532,200 3,925
Ozemail Ltd. sponsored ADR (a) 210,000 2,520
PC-Systemer Norge AS (a) 50,000 740
Quickturn Design Systems, Inc. (a) 155,000 3,139
Rainbow Technologies, Inc. (a)(c) 607,300 11,159
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
SEEC, Inc. 11,300 $ 119
SPSS, Inc. (a) 236,200 7,558
Smith Micro Software, Inc. (a) 90,800 465
Software Spectrum, Inc. (a) 35,700 848
Softdesk, Inc. (a) 183,000 2,585
Symantec Corp. 193,200 3,089
Symix Systems, Inc. (a) 163,000 1,650
TALX Corp. (a) 40,000 350
TECNOST Spa 500,000 1,149
Template Software, Inc. 21,000 305
TT Teito Oy 200,000 15,977
Unicomp, Inc. (a)(c) 606,800 4,020
Wall Data, Inc. 85,000 1,615
253,638
COMPUTERS & OFFICE EQUIPMENT - 1.9%
Advanced Logic Research, Inc. (a) 209,900 2,337
Bell & Howell Co. 141,800 3,191
Control Data Systems, Inc. 62,600 1,064
Creative Technology Corp. Ltd. 145,300 2,061
Cybex Corp. (a) 172,900 3,112
EMC Corp. (a) 400,600 15,173
Exabyte Corp. (a) 202,800 2,205
General Scanning, Inc. (a) 102,500 1,217
Genicom Corp. (a) 530,000 2,385
International Imaging Materials, Inc. (a)(c) 620,000 13,950
Kentek Information Systems, Inc. 197,000 1,157
Nam Tai Electronics, Inc. 62,700 623
Performance Technologies, Inc. (a) 168,000 2,184
Pomeroy Computer Resources, Inc. (a) 38,000 1,197
Printronix, Inc. (a) 145,100 2,285
Quantum Corp. (a) 1,661,300 63,129
Southern Electronics Corp. (a)(c) 713,000 6,595
123,865
ELECTRONIC INSTRUMENTS - 0.5%
Aeroflex, Inc. (a) 120,800 544
ASECO Corp. (a) 131,140 1,393
BTU International, Inc. (a)(c) 444,800 1,640
Credence Systems Corp. (a) 110,000 2,475
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - CONTINUED
DSP Technology, Inc. (a)(c) 160,800 $ 925
Elscint Ltd. (a)(c) 1,022,200 8,433
Hurco Companies, Inc. (a) 250,928 1,443
Lam Research Corp. (a) 222,500 8,983
Life Sciences International PLC 500,000 1,049
Mesa Laboratories, Inc. (a) 87,900 527
Reliability, Inc. (a)(c) 236,000 1,682
29,094
ELECTRONICS - 2.1%
Align Rite International, Inc. (a)(c) 248,700 3,171
AVX Corp. 22,800 542
Bergman & Beving AB Class B Free shares 300,000 10,757
Continental Circuits Corp. (a) 71,400 946
Corcom, Inc. (a)(c) 272,600 1,976
DH Technology, Inc. (a)(c) 440,800 7,576
Dallas Semiconductor Corp. (c) 1,525,000 40,222
Electroglas, Inc. (a) 33,100 650
Esterline Technologies Corp. 36,500 963
Griffon Corp. (a)(c) 2,235,300 31,015
HEI, Inc. (a)(c) 347,500 3,866
Integrated Circuit Systems, Inc. (a) 75,000 1,144
Integrated Device Technology, Inc. (a) 246,100 2,584
International Rectifier Corp. 54,200 860
Kingboard Chemical Holdings Ltd. 1,000,000 230
Merix Corporation (a) 10,000 189
Micro Linear Corp. (a) 253,000 3,257
Pioneer Standard Electronics, Inc. 15,000 229
Quality Semiconductor, Inc. (a) 226,900 1,758
Smartflex Systems, Inc. (a) 187,000 3,086
Sterling Electronics Corp. 105,650 1,492
Taitron Components, Inc. Class A (a) 303,000 909
Tower Semiconductor Ltd. (a) 324,600 3,571
Video Display Corp. (a) 178,500 803
Wongs Industrial International 5,000,000 1,678
Zilog, Inc. (a) 400,000 10,150
133,624
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
PHOTOGRAPHIC EQUIPMENT - 0.2%
Imation Corp. (a) 535,100 $ 15,585
Wescam, Inc. (a) 100,000 364
15,949
TOTAL TECHNOLOGY 584,613
TRANSPORTATION - 3.5%
AIR TRANSPORTATION - 1.4%
America West Holding Corp. Class B (a) 598,500 8,902
ASA Holdings, Inc. 1,373,900 30,913
CHC Helicopter Corp. Class A 270,000 1,303
Helikopter Services AS 175,110 2,835
Midwest Express Holdings, Inc. (a)(c) 490,300 18,693
Qantas Airways Ltd. sponsored ADR (e) 22,400 386
Transat AT, Inc. (a) 450,000 3,641
Viad Corp. 1,591,400 25,065
91,738
RAILROADS - 1.0%
Canadian National Railway Co. 1,600,000 63,606
SHIPPING - 0.1%
Saevik Supply AS (a) 350,000 4,641
TRUCKING & FREIGHT - 1.0%
Air Express International Corp. 478,500 15,161
Arnold Industries, Inc. 1,157,000 16,198
Cannon Express, Inc. Class A (a)(c) 271,200 2,170
Goodfellow, Inc. 75,000 356
Hub Group, Inc. Class A (a) 102,500 2,768
Landair Services, Inc. (a) 158,200 1,582
Landstar System, Inc. (a) 78,100 1,855
Mark VII, Inc. (a) 156,000 4,680
Marten Transport Ltd. (a)(c) 293,900 3,564
MTL, Inc. (a)(c) 357,000 7,899
Old Dominion Freight Lines, Inc. (a) 320,000 3,240
USFreightways Corp. 262,600 6,663
66,136
TOTAL TRANSPORTATION 226,121
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 4.2%
CELLULAR - 0.6%
Boston Communications Group, Inc. (a) 358,200 $ 2,060
Century Telephone Enterprises, Inc. 1,000,000 31,375
Palmer Wireless, Inc. (a) 132,700 1,377
Rural Cellular Corp. Class A (a) 100,000 975
Vodafone Group PLC 300,000 1,302
37,089
ELECTRIC UTILITY - 0.6%
Central Maine Power Co. 236,500 2,631
Central Vermont Public Service Corp. 27,100 332
Gas Y Electricidad 20,000 1,075
National Grid Co. PLC 10,000,000 33,322
Northeast Utilities 77,700 1,020
Northern Ireland Electric PLC 247,900 1,481
Scottish Power PLC ADR 100,000 601
Scottish Hydro-Electric PLC Ord. 100,000 572
41,034
GAS - 0.6%
Aquila Gas Pipeline Corp. 1,050,900 15,632
Southwestern Energy Co. 754,300 11,503
USX-Delhi Group (c) 744,300 12,095
39,230
TELEPHONE SERVICES - 0.2%
Atlantic Tele-Network, Inc. (a) 196,700 2,459
Davel Communications Group, Inc. (a)(c) 413,500 7,443
Viatel, Inc. (a) 47,900 359
10,261
WATER - 2.2%
Anglian Water PLC Ord. 900,000 9,124
Hyder PLC 4,500,002 58,753
Severn Trent PLC Ord. 1,000,000 11,262
South West Water PLC Ord. 400,000 4,321
Thames Water PLC Ord. 150,000 1,624
Yorkshire Water PLC Ord. 5,000,039 59,114
144,198
TOTAL UTILITIES 271,812
TOTAL COMMON STOCKS
(Cost $3,833,578) 4,940,285
PREFERRED STOCKS - 1.0%
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - 0.9%
CONSTRUCTION & REAL ESTATE - 0.0%
CONSTRUCTION - 0.0%
U.S. Home Corp. (a) 45,000 $ 1,142
ENERGY - 0.7%
OIL & GAS - 0.7%
Atlantic Richfield Co. $2.23 1,774,100 40,804
Goodrich Petroleum Corp., Series A 80,200 622
41,426
NONDURABLES - 0.2%
TOBACCO - 0.2%
RJR Nabisco Holdings Corp. depositary shares 2,000,000 13,250
RETAIL & WHOLESALE - 0.0%
GENERAL MERCHANDISE STORES - 0.0%
Venture Stores, Inc. $3.25 20,700 349
TOTAL CONVERTIBLE PREFERRED STOCKS 56,167
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
Dyckerhoff AG (non-vtg.) 10,000 2,899
DURABLES - 0.0%
TEXTILES & APPAREL - 0.0%
Weber (Gerry) International AG 15,600 647
FINANCE - 0.0%
BANKS - 0.0%
Banco Ambro Veneto 900,000 1,877
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
MEDIA & LEISURE - 0.0%
PUBLISHING - 0.0%
Seat Spa (a) 3,000,000 $ 753
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Telecom Italia Mobile Spa de Risp 1,500,000 2,549
TOTAL NONCONVERTIBLE PREFERRED STOCKS 8,725
TOTAL PREFERRED STOCKS
(Cost $62,892) 64,892
CONVERTIBLE BONDS - 0.3%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Mercury Air Group, Inc. 7 3/4%, 2/1/06 B- $ 500 505
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Park Ohio Industries, Inc. 7 1/4%, 6/15/04 (d) - 2,000 1,950
TECHNOLOGY - 0.3%
COMPUTERS & OFFICE EQUIPMENT - 0.3%
Quantum Corp. 5%, 3/1/03 (e) B2 10,000 17,725
TOTAL CONVERTIBLE BONDS
(Cost $12,593) 20,180
CASH EQUIVALENTS - 21.6%
MATURITY VALUE (NOTE 1)
AMOUNT (000S) (000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.55%, dated
1/31/97 due 2/3/97 $ 116,010 $ 115,956
SHARES
Taxable Central Cash Fund (b) 1,269,341,717 1,269,342
TOTAL CASH EQUIVALENTS
(Cost $1,385,298) 1,385,298
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $5,294,361) $ 6,410,655
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.39%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
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 $98,160,000 or 1.5% of net
assets.
6. Purchased on an installment basis. Market value reflects only those
payments made through January 31, 1997. The remaining installment
aggregating CAD 620,500 is due 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 80.0%
United Kingdom 5.3
Canada 4.8
Finland 1.6
Norway 1.6
Sweden 1.2
Denmark 1.1
Others (individually less than 1%) 4.4
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1997, the aggregate cost of investment securities for income
tax purposes was $5,294,775,000. Net unrealized appreciation aggregated
$1,115,880,000, of which $1,257,666,000 related to appreciated investment
securities and $141,786,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER SHARE AMOUNTS) JANUARY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 6,410,655
agreements of $115,956) (cost $5,294,361) -
See accompanying schedule
Cash 1,126
Receivable for investments sold 30,708
Receivable for fund shares sold 34,016
Dividends receivable 5,561
Interest receivable 5,304
Redemption fees receivable 13
Other receivables 72
TOTAL ASSETS 6,487,455
LIABILITIES
Payable for investments purchased $ 102,761
Payable for fund shares redeemed 9,105
Accrued management fee 3,835
Other payables and accrued expenses 1,717
TOTAL LIABILITIES 117,418
NET ASSETS $ 6,370,037
Net Assets consist of:
Paid in capital $ 5,187,115
Undistributed net investment income 4,811
Accumulated undistributed net realized gain (loss) on 61,991
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 1,116,120
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 295,074 shares outstanding $ 6,370,037
NET ASSET VALUE and redemption price per share $21.59
($6,370,037 (divided by) 295,074 shares)
Maximum offering price per share (100/97.00 of $21.59) $22.26
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 29,082
Dividends (including $3,946 received from affiliated
issuers)
Interest 24,624
53,706
Less foreign taxes withheld (1,792)
TOTAL INCOME 51,914
EXPENSES
Management fee $ 16,258
Basic fee
Performance adjustment 2,952
Transfer agent fees 5,373
Accounting fees and expenses 410
Non-interested trustees' compensation 15
Custodian fees and expenses 288
Registration fees 762
Audit 34
Legal 12
Miscellaneous 18
Total expenses before reductions 26,122
Expense reductions (322) 25,800
NET INVESTMENT INCOME 26,114
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain of 123,161
$7,663 on sales of investments in affiliated issuers)
Foreign currency transactions 146 123,307
Change in net unrealized appreciation (depreciation) on:
Investment securities 712,876
Assets and liabilities in foreign currencies (429) 712,447
NET GAIN (LOSS) 835,754
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 861,868
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JULY 31,
JANUARY 31, 1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 26,114 $ 51,737
Net investment income
Net realized gain (loss) 123,307 426,340
Change in net unrealized appreciation (depreciation) 712,447 (121,876)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 861,868 356,201
FROM OPERATIONS
Distributions to shareholders (53,737) (37,877)
From net investment income
From net realized gain (357,058) (204,731)
TOTAL DISTRIBUTIONS (410,795) (242,608)
Share transactions 1,909,375 1,468,403
Net proceeds from sales of shares
Reinvestment of distributions 402,041 237,135
Cost of shares redeemed (411,368) (748,770)
Redemption fees 374 900
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,900,422 957,668
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,351,495 1,071,261
NET ASSETS
Beginning of period 4,018,542 2,947,281
End of period (including undistributed net investment $ 6,370,037 $ 4,018,542
income of $4,811 and $35,638, respectively)
OTHER INFORMATION
Shares
Sold 92,076 75,258
Issued in reinvestment of distributions 20,739 12,697
Redeemed (19,984) (38,819)
Net increase (decrease) 92,831 49,136
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JULY 31,
ENDED JANUARY
31, 1997
(UNAUDITED) 1996 1995 1994 E 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 19.87 $ 19.25 $ 17.62 $ 17.19 $ 14.94 $ 12.63
beginning of period
Income from Investment
Operations
Net investment .11 D .26 .20 .06 .15 .11
income
Net realized and 3.51 1.83 3.57 2.15 2.88 2.93
unrealized gain
(loss)
Total from investment 3.62 2.09 3.77 2.21 3.03 3.04
operations
Less Distributions
From net investment (.24) (.23) (.09) (.16) (.10) (.15)
income
From net realized (1.66) (1.24) (2.05) (1.62) (.69) (.60)
gain
Total distributions (1.90) (1.47) (2.14) (1.78) (.79) (.75)
Redemption fees added - - - - .01 .02
to paid in capital
Net asset value, $ 21.59 $ 19.87 $ 19.25 $ 17.62 $ 17.19 $ 14.94
end of period
TOTAL RETURN B, C 19.47% 11.50% 23.81% 13.67% 21.32% 25.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 6,370 $ 4,019 $ 2,947 $ 2,167 $ 2,116 $ 928
period (in millions)
Ratio of expenses to 1.04% A 1.05% 1.12% 1.14% 1.12% 1.20%
average net assets
Ratio of expenses to 1.02% A, 1.04% 1.11% 1.13% 1.12% 1.20%
average net assets F F F F
after expense
reductions
Ratio of net investment 1.04% A 1.46% 1.31% .51% 1.00% 1.27%
income to average
net assets
Portfolio turnover rate 39% A 79% 65% 54% 47% 82%
Average commission $ .0238
rate G
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. 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 5 OF
NOTES TO FINANCIAL STATEMENTS). G FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION
RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX
OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1997 (Unaudited)
22. 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 with remaining maturities
of sixty days or less for which quotations are not readily available 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
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, 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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
the fund is informed of the ex-dividend date. Non-cash dividends included
in dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of such
taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
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.
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.
23. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
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 foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC),
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current
income by investing in U.S. Treasury securities and repurchase agreements
for these securities, and may be utilized by the fund as an additional cash
management option. Dividends from the Cash Fund are declared daily and paid
monthly from net interest income. Income distributions received by the fund
are recorded as interest income.
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 $1,950,000 or 0%
of net assets.
24. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,667,020,000 and $804,557,000, respectively.
25. 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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% of the fund's average net
assets over the performance period) based on the fund's investment
performance as compared to the appropriate index over a specified period of
time. For the period, the management fee was equivalent to an annualized
rate of .76% of average net assets after the performance adjustment.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the fund, received sales
charges of $3,818,000 on sales of shares of the fund.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (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 annualized rate of
.21% 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 $397,000 for the period.
26. 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
$287,000 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 $10,000 and $25,000,
respectively, under these arrangements.
27. 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
Aaf Industries PLC $ - $ - $ - $ 561
Aep Industries, Inc. - - - 16,761
ACETO Corp. - 1,262 77 4,594
Alamco, Inc. - - - 6,921
Align rite International, Inc. 306 - - 3,171
Allied Research Corp. 61 - - 3,734
Allou Health & Beauty Care Inc.
Class A - 1,048 - -
America Safety Razor Co. 4,320 - - 14,096
America Service Group, Inc. - 58 - -
American Business Information, Inc. - 520 - 45,769
American Indemnity Financial Corp. - - 29 2,425
American List Corp. 178 77 264 10,470
Amerus Life Holdings, Inc. - - - 4,049
Amwest Insurance Group, Inc. - 166 - -
ARK Restaurants Corp. 24 - - 3,264
Autocam Corp. 1,212 - 10 6,533
Australian Oil & Gas Corp. Ltd. 1,041 - - 3,701
Award Software International, Inc. - - - 1,450
Aztec Manufacturing Co. 234 11 - 6,145
Bank Atlantic Bancorp, Inc. - - - -
Bank United Corp. Class A - - - -
Banyan Short Term Income Trust (SBI) - - - -
Banyan Strategic Land Trust (SBI) - - 198 4,230
Ba Merchant Services, Inc. Class A 408 - - 11,852
BTU International, Inc. 169 - - 1,640
Baker (J.), Inc. 74 - - 4,881
Ballard Medical Products 843 - - 28,152
BancTec, Inc. 1,556 - - 21,648
BeautiControl Cosmetics, Inc. 1,130 - 43 8,244
Beijer AG (G&L), Series B - - - 4,276
Belmont Homes, Inc. 1,332 - - 6,540
Black Box Corp. - 698 - -
Brookstone, Inc. 148 - - 6,131
Bush Industries, Inc. Class A 2,607 3,237 34 -
Cannon Express, Inc. Class A - - - 2,170
Castle Energy Corp. - - - 11,618
Cavco Industries, Inc. - 92 - 5,626
CEC Resources Ltd. - - - 616
Celebrity, Inc. - 211 - -
Cpac, Inc. 3,407 - - 9,906
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Chateau Stores of Canada Ltd.
Class A $ 205 $ - $ 18 $ 788
Chempower, Inc. - 112 - 3,925
Circuit Systems, Inc. - 428 - -
Coastal Bancorp, Inc. 206 1,891 88 9,778
Cogeco Cable, Inc. - - 23 2,082
Cold Metal Products, Inc. - - - 3,285
Cole National Corp. Class A - - - 31,350
Columbus Energy Corp. - - - 2,810
Columbus McKinnon Corp. - - - -
Communications Systems, Inc. - 732 40 -
Computalog Ltd. 662 448 - 6,097
Computer Data Systems, Inc. 176 - 69 17,924
Concord Fabrics, Inc. Class A - - - 1,414
Conso Products Co. 65 - - 6,102
Continental Homes Holding Corp. 4,971 - 70 15,035
Control Devices, Inc. - - - 2,425
Corcom, Inc. - 40 - 1,976
Craig (Jenny), Inc. 2,322 4,633 - 11,830
Crazy Woman Creek Bancorp., Inc. - 254 18 998
Crossman Communities, Inc. 4,100 - - 10,838
Custom Chrome, Inc. 4,431 2,248 - 8,187
Cube Energy Corp. - - - 2,016
Dh Technology, Inc. 1,478 591 - 7,576
Dsp Technology, Inc. - - - 925
Dsg International Ltd. 1,199 - - 10,986
Dallas Semiconductor Corp. 3,959 317 87 40,222
Davel Communications Group, Inc. - 512 - 7,443
Dawson Geophysical Co. - - - 2,676
Decorator Industries, Inc. - - 34 2,630
Depuy, Inc. 2,353 - - 16,406
Devon Group, Inc. 1,978 - - 17,972
Dorel Industries, Inc. Class B (sub-vtg.) 523 - - 10,644
Dreco Energy Services Ltd. Class A - 682 - 14,037
Drew Industries, Inc. 1,265 - - 11,955
Durakon Industries, Inc. - - - 9,451
EDAC Technologies Corp. - - - 411
Elscint Ltd. 1,714 - - 8,433
Elxsi Corp. 257 - - 1,859
Enea Data AB, Series B Free shares - 136 - 2,996
Engle Homes, Inc. 1,271 - 39 5,506
ENEX Resources Corp. - - 22 1,551
Equitrac Corp. 16 - - 2,688
Fabri-centers of America, Inc.
Class A 371 - - 7,618
Farm Family Holdings, Inc. 3,076 - - 9,807
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Farr Co. $ 216 $ - $ - $ 3,716
Federal Screw Works - - 109 4,352
Firstbank Puerto Rico - 948 305 39,893
First Central Financial Corp. - - 36 2,454
Flir Systems, Inc. 626 - - 4,508
FRM Nexus, Inc. - - - 313
Foremost Industries, Inc. 1,213 129 - 3,854
Fossil, Inc. 883 - - 9,495
Fyi, Inc. - 1,060 - -
Gainsco, Inc. 3,925 2,288 55 15,326
Gbc Bancorp 61 - 100 16,180
Gehl Co. - 82 - -
Genicom Corp. - 574 - -
Government Technology Services, Inc. 23 - - 3,853
Granite Financial, Inc. - - - 980
Griffon Corp. 7,337 - - 31,015
Graphic Industries, Inc. - - 21 5,743
Gse Systems, Inc. - - - 2,984
Haemonetics Corp. - 2,237 - 23,100
Hei, Inc. 1,353 - - 3,866
Hein-Werner Corp. - - - 1,392
Helen Of Troy Corp. 332 - - 32,317
Herbalife International, Inc. 7,450 5,312 338 47,760
Home State Holdings, Inc. - 158 - -
Hpsc, Inc. - - - 2,159
Ihop Corp. 2,612 - - 14,775
Ilc Technology, Inc. - 793 - -
Independence Federal Savings Bank - - - 1,120
Intercontinental Life Corp. 1,332 - - 5,961
Intermetco Ltd. - 256 - 1,168
International Imaging Materials, Inc. 3,892 - - 13,950
International Jenson, Inc. - 5,009 - -
Ipc Information Systems, Inc. 1,020 - - 12,882
Jean Coutu Group, Inc. Class A 3,797 - 53 17,191
Jean Philippe Fragrances, Inc. - - - 5,037
Kennedy wilson, Inc. 58 - - 935
Kentucky Electric Steel, Inc. - - - 1,873
Kentek Information Systems, Inc. - - 4 -
Kevco, Inc. 3,168 - - 4,746
Key Energy Group, Inc. - - - 8,237
Laser Industries Ltd. Ord. 709 - - 6,559
Lawyers Title Corp. 46 - 62 14,333
Lechters, Inc. - 813 - 5,316
Libbey, Inc. - - 115 22,539
Life USA Holding, Inc. 3,259 - - 14,733
Lund International Holdings, Inc. - - - 2,475
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
M corp, Inc. $ - $ - $ - $ 607
M/I Schottenstein Homes, Inc. 72 - - 8,970
Mac Frugals Bargains Closeouts, Inc. 1,140 2,032 - 34,627
Markwest Hydrocarbon, Inc. 2,701 - - 3,866
Marten Transport Ltd. - - - 3,564
Mercury Air Group - - 14 4,120
Midwest Express Holdings, Inc. - 326 - 18,693
Mitcham Industries, Inc. 197 - - 2,277
Monro Muffler Brake, Inc. 4,636 - - 12,512
Moore Medical Corp. - 21 - 2,922
Mtl, Inc. 2,368 - - 7,899
Movado Group, Inc. - - 23 8,482
Mysoftware Co. 662 - - 1,341
Nathans Famous, Inc. 225 - - 1,155
Natural Alternatives International, Inc. 472 155 - 4,437
Nsc Corp. 37 - 82 1,376
Nutramax Products, Inc. 769 - - 6,462
99 Cents Only Stores 137 - - 4,161
Oec Medical Systems, Inc. 5,042 426 - 17,526
Old American Stores, Inc. - 510 - 1,655
One Price Clothing Stores, Inc. - - - 3,154
Orcad, Inc. 2,052 - - 3,925
Oriole Homes Corp. Class B - - - 1,972
OroAmerica, Inc. - - - 1,827
Patrick Industries, Inc. - - 49 9,185
Pe Ben Oilfield Services Ltd. - - - 930
Petroleum Development Corp. - 235 - 4,851
Petroleum Helicopter, Inc. 884 - 10 3,728
Pittston Co. (Burlington Group) 2,148 - 68 23,407
Poncebank - 1,039 169 10,204
Premier Choix Tvec, Inc. Class A - - 25 4,155
Primex Technologies, Inc. 422 - - 5,367
Programming & Systems, Inc. - - - -
PXRE Corp. 710 - - 19,267
Quality Semiconductor, Inc. - 1,336 - -
Quixote Corp. 88 140 52 3,813
Rainbow Technologies, Inc. 3,137 - - 11,159
Raytech Corp. 39 - - 1,693
Reflectone, Inc. - - - 4,110
Regal-beloit Corp. - 1,385 131 -
Rehabcare Corp. 175 - - 9,265
Reliability, Inc. 77 - - 1,682
Right Management Consultants, Inc. 896 - - 13,427
Rightchoice Managed Care, Inc.
Class A - 1,780 - -
Riser Foods, Inc. Class A 329 531 81 22,078
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Rli Corp. $ - $ 1,831 $ 67 $ -
S & K Famous Brands, Inc. 409 - - 4,174
Sands Regent - - - 751
Schult Homes Corp. 3,505 - 29 7,849
Sevenson Environmental Services, Inc. - - - -
Shelter Components Corp. 605 - 22 8,676
Sound Advice, Inc. - 55 - 608
Southern Electronics Corp. 2,117 - - 6,595
Southern Energy Homes, Inc. 371 - - 10,927
Speizman Industries, Inc. 36 - - 1,318
Stanley Furniture Co., Inc. - - - 6,250
Steel Of West Virginia, Inc. - - - 4,310
Stephan Co. - - 16 5,719
Stewart Information Services Corp. 104 - 64 11,122
Superior Energy Services, Inc. - - - -
Superior Surgical Manufacturing, Inc. 769 - 90 6,693
Sylvan Foods Holdings, Inc. - - - 7,978
Symons International Group, Inc. 518 - - 3,086
Talentum Oy Class B 325 - - 4,814
Tay Homes PLC - - 172 4,710
Tbc Corp. - - - 9,271
Thomas Group 448 366 - 2,874
Thorn Apple Valley, Inc. - - - 7,577
Torch Energy Royalty Trust Unit 1,478 - - 6,475
Transpro, Inc. 2,103 - 24 5,681
Transport Holdings, Inc. Class A - - - -
Transtechnology Corp. 1,073 - 42 7,432
Twinlab Corp. 1,916 - - 9,488
Uni Select, Inc. 355 - 46 6,383
Unicomp, Inc. 875 - - 4,020
Unidigital, Inc. - - - -
Unionamerica Holdings PLC
sponsored ADR - - - -
UICI 233 - - -
Universal Health Services, Inc.
Class B 2,632 3,371 - 45,359
Urs Corp. 1,291 - - 5,891
Usx-Delhi Group - 1,120 79 12,095
Utah Medical Products, Inc. 1,033 2,411 - 7,763
Valley Forge Corp. - - 28 2,980
Varsity Spirit Corp. - - 35 6,486
Vaughns, Inc. 134 216 - -
Vertex Communications Corp. - - - 9,033
Warren Bancorp., Inc. 753 - 40 5,731
Washington Homes, Inc. 30 - - 1,657
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Weston (Roy F.), Inc. Class A $ - $ - $ - $ -
Wilshire Financial Services Group, Inc. 152 - - 2,053
World Fuel Services Corp. - - 121 17,282
Worldtex Corp. 2,515 - - 13,778
Wsoy (Werner Soderstrom) Class B - 491 - 18,742
York Group, Inc. - - 6 -
Totals $ 154,155 $ 59,840 $ 3,946 $ 1,612,398
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 *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
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
TechnoQuant(trademark) Growth Fund
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
