FIDELITY
(REGISTERED TRADEMARK)
LOW-PRICED STOCK
FUND
ANNUAL REPORT
JULY 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 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 60 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 61
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:
Through the first seven months of 1997, stock and bond markets
experienced the kind of short-term volatility that can affect them
periodically. The stock market rebounded strongly from its early
spring correction to continue on its record-setting pace, as seen by
the roughly 30% year-to-date gain by the Standard & Poor's 500 Index.
The bond market posted moderate returns over the past seven months, as
positive news on the inflation front helped soften the effects of a
hike in short-term interest rates by the Federal Reserve Board in late
March.
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>
PERIODS ENDED JULY 31, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY LOW-PRICED STOCK 39.45% 165.46% 339.26%
FIDELITY LOW-PRICED STOCK 35.26% 157.50% 326.08%
(INCL. 3% SALES CHARGE)
RUSSELL 2000(REGISTERED TRADEMARK) INDEX 33.39% 130.17% 185.62%
SMALL CAP FUNDS AVERAGE 31.96% 142.17% N/A
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on December 27, 1989. For example, if you had
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. To measure how the fund's
performance stacked up against its peers, you can compare it to the
small cap funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Analytical Services,
Inc. The past one year average represents a peer group of 415 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY LOW-PRICED STOCK 39.45% 21.56% 21.50%
FIDELITY LOW-PRICED STOCK 35.26% 20.82% 21.01%
(INCL. 3% SALES CHARGE)
RUSSELL 2000 INDEX 33.39% 18.14% 14.81%
SMALL CAP FUNDS AVERAGE 31.96% 19.12% 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
$1IMAHDR PRASUN SHR__CHT 19970731 19970814 103550 S00000000000001
Low-Priced Stock Fund 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
1997/02/28 36927.11 24647.71
1997/03/31 36250.79 23484.69
1997/04/30 36200.07 23550.15
1997/05/31 38922.26 26170.10
1997/06/30 40494.70 27291.63
1997/07/31 42608.21 28561.56
IMATRL PRASUN SHR__CHT 19970731 19970814 103553 R000000000000950,000
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 July 31, 1997, the value of the investment would have
grown to $42,608 - a 326.08% 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 $28,562 - a 185.62% 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
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks will
vary. That means if you sell
your shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Moderate economic growth and
subdued inflation helped create
an almost perfect investing
environment for the U.S. stock
market, which posted
exceptionally strong returns for the
12 months that ended July 31,
1997. The Standard & Poor's 500
Index returned 52.14% during the
period - well above its long-term
annual average of about 11%. The
stock market spent much of the
period breaking price and trading
volume records. Solid corporate
earnings, large inflows into mutual
funds, widespread optimism and a
generally favorable interest-rate
backdrop propelled share prices
higher, especially among
large-capitalization stocks.
Concerns in March and April over
higher interest rates and the
possibility of weaker corporate
earnings provided the only
significant pause in the stock
market's upward climb. Higher
interest rates tend to slow
economic growth and increase
borrowing costs. When the Federal
Reserve Board raised a key
short-term interest rate in March,
the stock market - already at
historically high valuations - sold
off sharply through mid-April,
when positive news on the
inflation front emerged. From that
point through the end of the
12-month period, the market
soared ever higher, with the Dow
Jones Industrial Average breaking
through the 8000 mark for the first
time in July on its way to finishing
above 8200 at the end of the
12-month period. The market
broadened to include many small-
and mid-capitalization stocks
during this latest rally.
An interview with Joel Tillinghast, Portfolio Manager of Fidelity
Low-Priced Stock Fund
Q. HOW DID THE FUND PERFORM, JOEL?
A. The fund did well. For the 12 months that ended July 31, 1997, the
fund returned 39.45%. This topped the small-cap funds average, as
tracked by Lipper Analytical Services, which returned 31.96% over the
same period, as well as the Russell 2000 Index, which had a 12-month
return of 33.39% as of July 31, 1997.
Q. WHAT FACTORS INFLUENCED PERFORMANCE?
A. Stock prices rose faster than earnings for both large and small
companies, but particularly for a concentrated group of gigantic
companies such as General Electric and Coca-Cola. The fund holds
mostly small companies, and it was frustrating that many small-cap
stocks - which grew as fast and steadily as the household names -
didn't enjoy similar stock performance. The good news is that small,
steady growth stocks are typically cheaper than their larger
counterparts and this should eventually result in better relative
performance. Within the small-company category, stocks with low
price-to-earnings (P/E) ratios performed better than those with higher
P/E ratios. This helped the fund, as it emphasizes stocks with
moderate P/Es. I'd also point to individual security selection and
strong research as being key contributors to performance.
Q. IN A LARGE-CAP RALLY SUCH AS WE'VE SEEN, IT WOULD SEEM DIFFICULT
FOR A FUND LIKE LOW-PRICED STOCK - WHICH EMPHASIZES SMALLER STOCKS -
TO POST STRONG RETURNS. WHAT WAS YOUR STRATEGY?
A. I tried to find companies that had very strong earnings growth
potential, and also looked for stocks whose valuations wouldn't be as
heavily penalized if earnings projections were missed. By doing our
research and focusing on more moderately valued companies, we can
sometimes offset the risk of earnings disappointments. That's not to
say, however, that I wasn't attracted to some larger-cap stocks. While
the fund invests primarily in smaller stocks, it can invest a portion
of its assets in large-caps. Most of the fund's large-cap holdings are
turnaround stories, such as Canadian National Railway and RJR
Nabisco. Since corporate profits are currently at high levels, it has
become harder to find turnarounds that don't have real business
problems.
Q. WAS THERE A PARTICULAR GROUP WITHIN THE SMALL-CAP UNIVERSE THAT
PRESENTED GOOD BUYING OPPORTUNITIES?
A. From early January through April of this year, we witnessed a
sell-off in the emerging-growth sector of the group. Many investors,
fearing a potential economic slowdown, moved out of the smaller,
aggressive stocks and into steadier, more stable alternatives. As a
result, I found some good opportunities in the emerging-growth area,
particularly with stocks such as Black Box - a networking catalog
reseller - and Medic Computer Systems, a health care information
company.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. Positive contributors included Canadian National Railway and Cole
National. Canadian National Railway continued to prosper as the
company sold off non-essential rail tracks and cut its work force,
while Cole National's acquisition of Pearle Vision Centers provided a
boost to Cole's stock. On the negative side of the ledger, grocery
store chain Food Lion and 3M spin-off Imation registered disappointing
results. Also, I regret that I didn't add more technology stocks, as
the Pacific Stock Exchange Technology Index - a comprehensive measure
of the sector - surged 70% during the period. Unfortunately, much of
this gain came from the larger industry leaders and not the smaller,
low-priced companies.
Q. DID YOU PLAY ANY SECTOR-SPECIFIC STRATEGIES DURING THE PERIOD?
WHICH SECTORS HELPED FUND PERFORMANCE AND WHICH TURNED OUT TO BE
DISAPPOINTING?
A. Sector consideration isn't one of my primary reasons for choosing a
stock; it's more of a residual of individual stock picking. That being
said, two groups that helped fund performance included retail and
health care. Retail stocks performed relatively well as sales in
certain pockets of the industry improved. The fund's positions in
Family Dollar, Cole National and Shoe Carnival added to the fund's
return. Health care stocks did very well - driven mostly by
larger-cap, pharmaceutical-oriented companies, and the fund's stake in
Universal Health contributed to performance. While I wouldn't
characterize the fund's technology positions as being a drag on
performance, I think I could have managed them better for the reasons
I mentioned previously.
Q. FUND ASSETS INCREASED QUITE SIGNIFICANTLY OVER THE PAST SIX MONTHS
- - FROM AROUND $6 BILLION AT THE END OF JANUARY TO THEIR CURRENT LEVEL
OF ABOUT $9 BILLION. WAS IT A CHALLENGE PUTTING THIS "NEW MONEY" TO
WORK?
A. It's always a challenge to find good investment opportunities, but
it was even more challenging considering the across-the-board rise in
stock price valuations. When stock prices reach historically high
levels, as was the case for many issues during the period, it can get
increasingly difficult for a manager to maintain his or her valuation
discipline. In striving to maintain the fund's low-priced focus, I
found a number of good buys overseas. I was particularly attracted to
Ireland, as a strong economy and a favorable pricing environment
translated into some nice buying opportunities. Three of the fund's
top five holdings at the end of the period, in fact, were based in the
United Kingdom. Also, the sell-off in small-cap, emerging growth
stocks that I mentioned earlier turned into a good receptacle for
these cash flows.
Q. FOR THE PURPOSES OF THIS FUND, THE DEFINITION OF "LOW-PRICED" -
WHICH PREVIOUSLY ENCOMPASSED STOCKS PRICED AT OR BELOW $25 AT THE TIME
OF PURCHASE - WILL BE CHANGING TO $35. WHAT IS THE RATIONALE BEHIND
THIS CHANGE AND HOW WILL IT AFFECT THE FUND?
A. The purpose is to reset the definition to keep pace with the stock
market. Since the $25 definition was set in March 1992, most U.S.
stock indexes are up more than 100%. With more and more stocks rising
out of the $0-25 range in the market's advance, the fund's investment
universe has actually been shrinking as a percentage of the market. As
of July 31, less than half of the market value of the Russell 2000
Index - the fund's primary benchmark - was priced at $25 or less,
compared to about 70% in March 1992 when the market was lower.
Adjusting the low-priced definition to $35 will return the fund's
universe to roughly its size as of March 1992, and restore some of the
flexibility that had been lost over the years. Stocks priced $35 or
below currently constitute approximately 25% of the overall market.
Q. WHAT'S YOUR OUTLOOK?
A. In terms of market fundamentals, we could be in for more of the
same. Valuations on a market wide basis remain high and corporate
profits have been positive for quite some time. I don't see anything
on the near horizon that could upset these
conditions. In terms of the fund itself, I've been attracted to
earnings growth within the technology sector and may increase my
exposure there in the next few months.
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.
JOEL TILLINGHAST DISCUSSES
NEW ISSUANCE:
"The number of initial public
offerings slowed somewhat
compared to previous periods, but
was still relatively high. It can be
difficult to devote the analytical
time to these start-ups, but I did
find some good prospects. The
JOURNAL REGISTER, which
operates newspapers in western
Massachusetts and
Connecticut, showed good profit
margins and cash flows. Also,
several insurance companies that
converted from mutual ownership
to stock ownership - including
SCPIE and Farm Family Holdings
- - caught my attention. Spin-offs
were also an attractive area,
including Footstar - a footwear
retailer - and Viad, a travel
services firm."
NOTE TO SHAREHOLDERS:
The fund normally invests at
least 65% of its total assets in
low-priced common and
preferred stocks. The definition of
low-priced stocks for this purpose
will be changing, from stocks
priced at or below $25 per share
to stocks priced at or below $35
per share (at time of purchase).
This change will take effect with
the fund's September 26, 1997,
prospectus.
FUND FACTS
GOAL: to increase the value of
the fund's shares by investing
mainly in low-priced common
stocks ($35 or less at time
of purchase)
FUND NUMBER: 316
TRADING SYMBOL: FLPSX
START DATE: December 27, 1989
SIZE: as of July 31, 1997,
more than $8.6 billion
MANAGER: Joel Tillinghast, since
1989; analyst for natural
gas, personal care products,
appliance and tobacco
industries, 1986-1989;
joined Fidelity in 1986
(checkmark)
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JULY 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
CANADIAN NATIONAL RAILWAY CO. 0.9 1.0
HYDER PLC 0.8 0.9
YORKSHIRE WATER PLC 0.8 0.9
GALLAHER GROUP PLC SPONSORED ADR 0.8 0.0
KING WORLD PRODUCTIONS, INC. 0.8 0.9
VIAD CORP. 0.8 0.4
UICI 0.7 0.8
UNIVERSAL HEALTH SERVICES, INC. CLASS B 0.7 0.7
DUN & BRADSTREET CORP. 0.7 0.8
DALLAS SEMICONDUCTOR CORP. 0.7 0.6
</TABLE>
TOP FIVE MARKET SECTORS AS OF JULY 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 13.6 15.1
TECHNOLOGY 11.2 9.4
HEALTH 6.5 6.6
RETAIL & WHOLESALE 6.3 6.1
DURABLES 6.1 5.1
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JULY 31, 1997 * AS OF JANUARY 31, 1997 **
ROW: 1, COL: 1, VALUE: 17.9
ROW: 1, COL: 2, VALUE: 0.0
ROW: 1, COL: 3, VALUE: 0.0
ROW: 1, COL: 4, VALUE: 0.0
ROW: 1, COL: 5, VALUE: 40.0
ROW: 1, COL: 6, VALUE: 42.1
STOCKS 78.1%
BONDS 0.3%
SHORT-TERM
INVESTMENTS 21.6%
FOREIGN
INVESTMENTS 20.0%
STOCKS 82.1%
BONDS 0.0%
SHORT-TERM
INVESTMENTS 17.9%
FOREIGN
INVESTMENTS 20.6%
ROW: 1, COL: 1, VALUE: 21.0
ROW: 1, COL: 2, VALUE: 0.0
ROW: 1, COL: 3, VALUE: 1.6
ROW: 1, COL: 4, VALUE: 28.0
ROW: 1, COL: 5, VALUE: 49.6
*
**
INVESTMENTS JULY 31, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 81.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.9%
AEROSPACE & DEFENSE - 0.4%
Allied Research Corp. (a)(d) 452,110 $ 4,521
Aviall, Inc. (a) 100,000 1,494
Doncasters PLC sponsored ADR 54,000 1,404
Gulfstream Aerospace Corp. (a) 83,000 2,210
ML Holdings PLC Class L 250,000 180
Primex Technologies, Inc. (d) 354,000 10,974
Transtechnology Corp. (d) 397,200 9,955
30,738
DEFENSE ELECTRONICS - 0.3%
BEI Electronics, Inc. 20,600 247
Diagnostic Retrieval Systems, Inc. (a)(d) 448,700 5,076
Ducommun, Inc. (a)(d) 444,300 15,162
Flir Systems, Inc. (a)(d) 484,000 9,861
30,346
SHIP BUILDING & REPAIR - 0.2%
Newport News Shipbuilding, Inc. 661,200 13,596
TOTAL AEROSPACE & DEFENSE 74,680
BASIC INDUSTRIES - 3.8%
CHEMICALS & PLASTICS - 0.9%
AEP Industries, Inc. (a) 211,289 5,229
Albright & Wilson PLC 200,000 505
CFC International, Inc. (a)(d) 396,200 3,467
Courtaulds PLC Ord. 100,000 514
Gundle/SLT Environmental, Inc. (a) 140,800 651
International Specialty Products, Inc. (a) 1,677,500 24,743
Landec Corp. (a) 399,000 2,220
Lydall, Inc. (a) 87,200 2,049
Martin Color-Fi, Inc. (a)(d) 380,600 2,902
Mississippi Chemical Corp. 240,900 5,119
Spartech Corp. 1,089,100 16,745
Stimsonite Corp. (a) 200,000 1,225
Sybron Chemical Industry Corp. (a)(d) 361,100 8,035
Synergistics Industries Ltd. Class A (non-vtg.) (a)(d) 450,000 2,938
76,342
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - 0.9%
Cold Metal Products, Inc. (a)(d) 536,300 $ 3,184
Kentucky Electric Steel, Inc. (a)(d) 277,500 1,665
Roanoke Electric Steel Corp. 7,800 143
Samuel Manu-Tech, Inc. 450,000 9,713
Slater Steel, Inc. 250,000 2,948
Steel of West Virginia, Inc. (a)(d) 663,000 6,713
TriMas Corp. 1,869,100 54,554
78,920
METALS & MINING - 0.7%
AFC Cable Systems, Inc. (a) 281,000 8,044
Acier Leroux, Inc. Class B (a) 125,000 382
Acier Leroux, Inc. Class B (a)(f) 200,000 611
Beijer & Alma Industri & Handel AB 58,700 1,402
Brush Wellman, Inc. 232,200 5,297
Cable Design Technology Corp. (a) 151,300 5,154
Chase Industries, Inc. (a) 98,400 2,454
Draka Holding NV 3,000 130
Elkem ASA 100,000 1,985
Essex International, Inc. 250,000 8,312
Fimalac SA (Fin Marc de Lacharriere) 19,629 1,644
Major Drilling Group International, Inc. (a) 250,000 4,716
Metaleurop SA (a) 403,163 6,062
Metaleurop SA warrants 2/4/00 (a) 315,190 869
Nordic Aluminum OY 25,000 237
PK Cables OY 75,000 1,161
Special Metals Corp. (d) 376,000 6,768
Superior Telecom, Inc. (a) 275,700 8,305
Titanium Metals Corp. (a) 67,900 2,173
65,706
PACKAGING & CONTAINERS - 0.5%
Owens-Illinois, Inc. (a) 880,000 30,360
Peak International, Ltd. 95,700 1,543
Silgan Holdings, Inc. 210,600 7,753
39,656
PAPER & FOREST PRODUCTS - 0.8%
ABT Building Products Corp. (a)(d) 580,100 12,327
Clondalkin Group PLC unit 620,000 5,510
Deltic Timber Corp. 438,500 11,922
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Editoriale la Repubblica SPA 25,000 $ 42
Enso OY Class R 1,500,000 13,679
Mercer International, Inc. (SBI) 34,700 338
Metsa-Serla Ltd. Class B 2,975,000 25,935
Rolland, Inc. 125,000 1,134
St Laurent Paperboard, Inc. (a) 75,000 1,322
72,209
TOTAL BASIC INDUSTRIES 332,833
CONSTRUCTION & REAL ESTATE - 3.9%
BUILDING MATERIALS - 1.7%
Aggregate Industries PLC (a) 10,568,876 7,802
American Precision Industries, Inc. 125,200 2,575
American Woodmark Corp. 223,600 3,242
Bird Corp. (a) 190,900 788
Centex Construction Products, Inc. 844,300 24,485
Chart Industries, Inc. 311,450 5,528
Devcon International Corp. (a) 217,700 1,007
Domco, Inc. 700,000 9,141
Domco, Inc. warrants 11/6/98 (a) 125,000 680
Drew Industries, Inc. (a)(d) 1,070,800 15,058
Emco Ltd. (a) 250,000 2,784
Engineered Support Systems, Inc. 79,500 1,431
Kaynar Technologies, Inc. 97,700 2,259
Mark IV Industries, Inc. 1,723,180 42,972
Patrick Industries, Inc. (d) 465,000 8,893
Polynorm NV Ord. 15,000 1,420
Polypipe PLC 750,000 2,448
Raytech Corp. (a)(d) 289,600 1,828
Shelter Components Corp. (d) 536,600 7,512
Velan, Inc. (sub-vtg.) (a)(f) 123,000 2,186
Yips Hang Cheung Holdings Ltd. 2,000,000 284
144,323
CONSTRUCTION - 1.8%
AAF Industries PLC (a)(d) 1,250,000 308
Amec PLC Ord. 1,100,000 2,671
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - CONTINUED
Beazer Homes USA, Inc. (a) 67,300 $ 1,224
Belmont Homes, Inc. (a)(d) 735,250 6,433
Bouygues Offshore SA sponsored ADR 665,600 9,984
Continental Homes Holding Corp. (d) 699,300 15,909
Crossman Communities, Inc. (a)(d) 610,600 15,265
D.R. Horton, Inc. 40,000 480
Engle Homes, Inc. (d) 692,900 8,228
M/I Schottenstein Homes, Inc. (a)(d) 880,000 12,210
Monaco Coach Corp. (a) 270,400 6,963
NCC AB Class B Free shares 150,000 1,707
Oriole Homes Corp.:
Class A (a) 91,000 751
Class B (a)(d) 276,800 2,284
Oy Saunatec Ltd. 50,000 529
Robertson Ceco Corp. (a) 456,900 3,769
Schult Homes Corp. (d) 448,320 7,734
Selmer AS 400,000 4,403
Southern Energy Homes, Inc. (a)(d) 1,391,900 14,267
Swan Hill Group PLC 2,000,000 2,821
Tay Homes PLC (d) 2,000,000 4,035
Technip SA (f) 50,000 6,308
U.S. Home Corp. (a)(d) 600,645 19,971
Volker Wessels Stevin NV 200,000 6,143
Washington Homes, Inc. (a)(d) 501,400 1,912
Yit-Yhtymae OY 150,000 1,915
158,224
ENGINEERING - 0.2%
EIS Group PLC ORD 250,000 956
MYR Group, Inc. (d) 259,700 5,129
URS Corp. (a)(d) 781,878 11,239
17,324
REAL ESTATE - 0.1%
Echelon International Corp. (a)(d) 369,400 7,896
FRM Nexus, Inc. (a)(d) 104,433 313
Kennedy Wilson, Inc. (a)(d) 98,500 1,601
9,810
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Banyan Strategic Land Trust (SBI) (d) 991,750 $ 4,463
Ocwen Asset Investment Corp. 88,000 2,167
Sunstone Hotel Investors, Inc. 47,000 658
7,288
TOTAL CONSTRUCTION & REAL ESTATE 336,969
DURABLES - 6.1%
AUTOS, TIRES, & ACCESSORIES - 2.8%
Autocam Corp. (d) 539,682 6,206
AutoZone, Inc. (a) 1,100,000 31,487
Aviation Sales Co. (a) 405,300 8,967
Castle Energy Corp. (d) 988,750 12,607
Collins Industries, Inc. 128,600 964
Cook (D.C.) Holdings PLC 1,000,000 763
Custom Chrome, Inc. (a)(d) 526,100 8,746
Deflecta-Shield Corp. (a) 109,600 1,028
Discount Auto Parts, Inc. (a) 93,500 1,917
Durakon Industries, Inc. (a)(d) 651,800 6,111
ESCO Electronics Corp. (trust receipt) 238,200 3,633
Excel Industries, Inc. (d) 962,000 19,420
Federal Screw Works (d) 108,800 5,440
Gentex Corp. (a) 208,900 4,726
Hahn Automotive Warehouse, Inc. 173,585 1,042
Intermet Corp. 849,500 14,335
Jason, Inc. 7,500 47
Kwik-Fit Holdings PLC Class L 350,000 1,665
Lund International Holdings, Inc. (a) 84,600 1,036
Mercury Air Group (d) 689,240 4,222
Monro Muffler Brake, Inc. (d) 705,119 11,899
Peugeot SA Ord. 25,000 2,888
R&B Inc. 10,000 89
Republic Automotive Parts, Inc. (a) 59,000 885
Strattec Security Corp. (a) 30,600 604
Superior Industries International, Inc. 458,000 12,423
Sylea SA 5,000 480
TBC Corp. (a)(d) 1,984,700 16,870
Transpro, Inc. (d) 660,925 6,237
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Travel Ports of America (a) 84,270 $ 274
Uni Select, Inc. (d) 620,800 7,544
World Fuel Services Corp. (d) 803,804 17,885
Wynn's International, Inc. (d) 1,103,125 33,094
245,534
CONSUMER DURABLES - 0.6%
Aristocrat Leisure Ltd. 567,000 1,124
Asko Class A 600,000 11,162
Beijer AG (G&L), Series B 100,000 1,288
Carclo Engineering Group PLC 250,000 759
Libbey, Inc. (d) 767,300 28,582
Mikasa, Inc. 511,000 6,803
Portmeirion Potteries Holdings PLC Class L 125,000 994
50,712
CONSUMER ELECTRONICS - 0.5%
Fossil, Inc. (a)(d) 920,900 20,490
Koss Corp. (a)(d) 326,500 2,938
LG Electronics, Inc. GDR (non-vtg) 396,200 2,318
Movado Group, Inc. (d) 473,875 13,742
Tag-Heuer International SA sponsored ADR (a) 199,500 3,217
Tulikivi OY Series A 35,000 664
43,369
HOME FURNISHINGS - 0.6%
BMTC Group, Inc. Class A (sub-vtg.) (b)(d) 375,000 3,673
Beter Bed Holding NV 77,884 1,576
Bush Industries, Inc. Class A 463,400 11,353
Carpetright PLC 350,000 3,026
Chromcraft Revington, Inc. (a) 79,200 2,138
Dorel Industries, Inc.:
Class A (multi-vtg.) (a)(f) 125,000 2,195
Class B (sub-vtg.) (a)(d)(f) 675,000 11,998
Falcon Products, Inc. 26,400 350
Ladd Furniture, Inc. 25,000 389
Rowe Furniture Corp. 596,000 4,656
Shelby Williams Industries, Inc. 137,800 2,119
Winsloew Furniture, Inc. (a)(d) 479,700 5,996
49,469
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - 1.6%
American Materials and Technologies Corp. (The) (a) 202,000 $ 1,060
Berisford (S.W.) PLC 100,000 243
Boss (Hugo) AG 500 619
Carli Gry International AS (Reg.) 147,700 8,962
Carli Gry International AS (Reg.) (f) 41,500 2,518
Concord Fabrics, Inc.:
Class A (a)(d) 226,300 1,528
Class B (a) 65,100 439
Conso Products Co. (a)(d) 705,550 8,555
Crown Crafts, Inc. 265,800 3,007
Culp, Inc. 135,000 2,346
Dawson International PLC Ord Class L 100,000 113
Deckers Outdoor Corp. (a) 296,200 2,073
Decorator Industries, Inc. (d) 302,332 2,872
Designer Holdings Ltd. (a) 617,300 4,475
Dewhirst (IJ) Group PLC Ord. 1,250,000 4,552
Donna Karan International, Inc. 50,000 700
Dyersburg Corp. (d) 1,207,500 12,905
Galey & Lord, Inc. (a)(d) 685,000 11,559
Guilford Mills, Inc. 270,000 5,839
Hampshire Group Ltd. (a) 181,200 2,809
Intimate Brands, Inc. Class A 745,000 17,182
Lassila & Tikahoja OY 50,000 3,921
Nautica Enterprises, Inc. (a) 792,700 21,799
Novel Denim Holdings Ltd. 4,800 108
Quaker Fabric Corp. (a) 252,000 5,292
Tandy Brands Accessories, Inc. (a) 270,800 3,250
Tultex Corp. (a) 1,087,100 6,183
Worldtex Corp. (a)(d) 1,395,200 9,679
144,588
TOTAL DURABLES 533,672
ENERGY - 3.1%
ENERGY SERVICES - 1.4%
Akita Drilling Ltd. Class A (non-vtg.) (d) 750,000 7,182
Aztec Manufacturing Co. (d) 585,000 9,908
Carbo Ceramics, Inc. 702,700 19,851
Computalog Ltd. (a) 300,000 4,353
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Dawson Geophysical Co. (a) 160,900 $ 2,997
Dreco Energy Services Ltd. Class A (a) 214,600 11,696
Key Energy Group, Inc. (a) 455,600 9,681
Pe Ben Oilfield Services Ltd. (a)(d) 312,000 1,200
Petroleum Helicopters, Inc. (d) 204,300 3,320
Petroleum Helicopters, Inc. (non-vtg.) (d) 302,000 4,455
Powell Industries, Inc. (a)(d) 811,000 13,381
RPC Energy Services, Inc. (a)(d) 1,081,500 20,954
Santa Fe International Corp. 162,000 6,683
Superior Energy Services, Inc. (a)(d) 1,167,300 6,566
122,227
OIL & GAS - 1.7%
Adams Resources and Energy, Inc. (a) 181,200 2,650
Alamco, Inc. (a)(d) 465,300 7,270
Australian Oil & Gas Corp. Ltd. (d) 3,706,000 5,546
Beau Canada Exploration Ltd. (a) 600,000 1,437
CEC Resources Ltd. (a)(d) 117,530 602
Cabot Oil & Gas Corp. Class A 118,100 2,428
CAL Dive International, Inc. 5,600 149
Columbus Energy Corp. (a)(d) 330,782 2,626
ConVest Energy Corp. (a)(d) 531,500 4,385
Crown Central Petroleum Corp. Class A (a) 49,800 974
Dailey Petroleum Services Corp. 34,000 298
Edisto Resources Corp. 109,000 1,015
ENEX Resources Corp. (d) 144,300 1,407
Fletcher Challenge Ltd. 1,650,000 5,675
Foremost Industries, Inc. (a)(d) 467,100 4,914
Giant Industries, Inc. 190,000 3,254
Gulf Island Fabrication, Inc. 45,000 1,598
Hallwood Consolidated Resources Corp. (a) 35,950 2,373
Markwest Hydrocarbon, Inc. (a) 396,500 5,848
Maynard Oil Co. (a) 192,100 2,545
Monterey Resources, Inc. 220,537 3,363
Novus Petroleum Ltd. 3,002,542 11,194
Penn West Petroleum Ltd. (a) 100,000 1,241
Petsec Energy Ltd. sponsored ADR 25,000 559
Petro-Canada 246,000 4,435
Petroleum Development Corp. (a)(d) 962,500 5,895
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Premier Oil PLC 13,700,000 $ 10,000
Resource America, Inc. Class A 150,000 5,700
Saga Petroleum AS:
Class A 200,000 3,983
Class B 400,000 7,286
Santa Fe Energy Resources, Inc. (a) 500,000 4,313
Swift Energy Co. (a)(d) 955,000 23,099
Torch Energy Royalty Trust unit (d) 636,000 6,757
Ulster Petroleums Ltd. (a)(f) 100,000 976
145,795
TOTAL ENERGY 268,022
FINANCE - 13.5%
BANKS - 5.1%
Banca Popolare di Milano 1,000,000 5,620
Banca Popolare de Bresica 250,000 1,496
Bank of Ireland, Inc. 601,088 7,330
Bank of Montreal 1,000,000 41,680
Bank of The Ozarks, Inc. 103,000 1,880
Bank of Scotland 100,000 729
Bank Atlantic Bancorp, Inc. 317,500 5,199
Bergens Skillingsbank 308,800 3,156
Cathay Bancorp, Inc. 125,800 3,177
Colonial Bancgroup, Inc. 223,400 6,171
Corus Bankshares, Inc. 50,000 1,650
Credit Lyonnais (a) 10,000 552
Credito Italiano Ord. 2,000,000 3,947
Den Danske Bank Group AS 275,000 29,054
Dexia France 125,000 12,382
Den Norske Bank AS Class A Free shares 5,000,000 21,031
Den Norske Bank AS (f) 1,000,000 4,206
FPB Bank Holding Co. Ltd. 3,000,000 1,802
First Mutual Savings Bank 32,710 711
Firstbank Puerto Rico (d) 1,500,000 41,719
Fokus Bank AS 335,000 2,766
GBC Bancorp California (d) 501,700 21,824
Gronlandsbanken AS 20,000 585
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
HUBCO, Inc. 225,000 $ 7,284
Jyske Bank AS (Reg.) 150,000 13,513
Laurentian Bank 150,000 3,145
MIDT Bank AS (a) 3,550 114
National Bank of Canada 3,579,600 46,746
Nordlandsbanken AS 75,000 1,685
Nordbanken AB 800,000 26,368
Nordbanken AB (f) 107,000 3,527
Okobank Class A 254,000 4,262
Ringkjobing Bank 5,000 1,007
Societe Generale Class A 60,000 7,918
SouthTrust Corp. 784,600 36,974
Spar Nord Holding 35,000 1,599
Swedbank Class A 139,284 3,058
Sparbanken Sverige Ab Class A (f) 173,000 3,798
Sparebanken Norway primary shares certificates 675,000 20,166
Sparebanken More 49,286 1,195
Sparebanken Rogala Capital certificates 10,000 270
Sparebanken Rana Grunnfondsbevis (d) 30,000 600
Sterling Bancorp 89,300 1,792
Sumitomo Bank California 370,600 11,396
Summit Holdings Southeast, Inc. (d) 300,000 5,813
Svenska Handelsbanken 200,000 6,179
Syd-Sonderjylland Holding 360,000 17,115
Unidanmark AS Class A 50,000 2,984
Wing Hang Bank Ltd. 250,000 1,495
448,670
CLOSED END INVESTMENT COMPANY - 0.0%
Americas Growth Fund, Inc. (a) 37,900 104
CREDIT & OTHER FINANCE - 1.5%
ACC Consumer Finance Corp. (a) 62,000 1,062
Aames Financial Corp. 300,000 6,431
Amagerbanken AS 25,000 1,249
Colonial Ltd. (a) 1,007,600 2,654
Compagnie Financiere de Credit Industriel et Commercial SA (a) 25,000
1,666
Connor Clark Ltd.:
unit (f) 189,125 4,322
Class A (non-vtg.) (f) 189,125 1,441
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Consumer Portfolio Services, Inc. (a) 230,000 $ 3,105
Credia Co. Ltd. 51,900 1,050
Equitilink Ltd. 1,000,000 486
FIH AS Class B 600,000 14,991
First Financial Caribbean Corp. 426,500 15,567
Intrum Justitia NV (Reg.) 1,900,000 2,649
JCG Holdings Ltd. 6,000,000 5,658
Life Financial Corp. 11,900 222
London Forfaiting Co. 150,000 1,011
Long Beach Financial Corp. 200,000 2,300
Manhattan Card Co. Ltd. 3,002,000 1,260
New Century Financial Corp. 138,300 2,524
Nissin Co. Ltd. 50,000 1,386
North American Mortgage Co. (d) 1,200,700 32,269
Paragon Group of Companies PLC Class L 1,100,000 2,923
Perpetual PLC 140,000 5,914
SoPaF Spa (Societa Partecipazioni Finanziare) 50,000 38
Surrey Metro Savings Credit Union (non-vtg.) (d) 550,000 4,589
WSFS Financial Corp. (a) 583,500 8,825
Wilshire Financial Services Group, Inc. (a) 94,000 1,727
127,319
INSURANCE - 5.9%
Allmerica Financial Corp. 296,000 13,098
American Indemnity Financial Corp. (d) 163,700 2,046
Amerus Life Holdings, Inc. 822,600 22,827
Amvestors Financial Corp. 537,600 12,096
Blanch E.W. Holdings, Inc. 338,500 9,626
Centris Group, Inc. 292,300 6,540
Commerce Group, Inc. 1,315,000 34,272
FBD Holdings PLC 5,000 19
FBL Financial Group, Inc. Class A 185,200 6,355
FPIC Insurance Group, Inc. (a) 151,000 3,775
Farm Family Holdings, Inc. (a)(d) 525,300 15,858
Financial Industries Corp. 15,000 206
First Central Financial Corp. (d) 579,000 398
Fishers International PLC 200,000 57
Fremont General Corp. 900,000 38,475
Fructivie SA 3,027 334
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Gainsco, Inc. (d) 1,354,100 $ 12,441
Healthcare Recoveries, Inc. 235,000 4,289
Heath (CE) 500,000 1,148
Intercontinental Life Corp. (a)(d) 424,700 8,600
Lambert Fenchurch Group PLC 1,000,000 2,165
Lasalle Re Holdings Ltd. 270,800 9,038
Life USA Holding, Inc. (a)(d) 1,941,600 28,639
MFC Bancorp Ltd. 300,200 2,289
MMI Companies, Inc. (d) 699,100 19,225
NY Magic, Inc. 154,500 3,515
National Mutual Asia Ltd. 100,000 106
National Western Life Insurance Co. Class A (a) 130,500 11,321
Old Guard Group, Inc. 60,000 1,020
PXRE Corp. (d) 727,063 22,403
Pembridge, Inc. (a) 400,000 3,961
Penn-America Group, Inc. 211,350 3,831
Philadelphia Consolidated Holding Corp. (a) 137,500 5,397
Protective Life Corp. 595,000 30,271
Providian Financial Corp. 468,900 18,375
RLI Corp. 163,600 6,135
Renaissance Re Holdings Ltd. 35,100 1,516
SCPIE Holdings, Inc. (d) 688,600 18,162
Seibels Bruce Group, Inc. (a)(d) 252,500 2,146
Sphere Drake Holdings 808,900 7,078
Stewart Information Services Corp. (d) 606,600 13,838
Symons Inernational Group, Inc. (a) 340,900 6,392
Terra Nova Holdings Ltd. 329,500 7,661
Titan Holdings, Inc. 385,972 9,456
UICI (a) 1,953,000 61,031
Unico America Corporation (d) 326,000 3,627
Unionamerica Holdings PLC sponsored ADR (d) 843,600 18,928
509,986
SAVINGS & LOANS - 0.8%
Andover Bancorp., Inc. 122,320 3,884
Banca Populare di Novara 135,000 542
Bank United Corp. Class A 275,000 10,381
Bankers Corp. 387,500 11,092
Crazy Woman Creek Bancorp., Inc. 30,000 413
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - CONTINUED
Dime Financial Corp. (a) 17,500 $ 473
First Home Bancorp., Inc. 86,666 1,733
Independence Federal Savings Bank (d) 119,500 1,673
Iroquois Bancorp., Inc. 107,400 2,739
MAF Bancorp., Inc. 197,031 6,699
Poncebank (d) 474,500 9,549
Primary Bank (a) 34,725 877
Sovereign Bancorp., Inc. 500,000 7,922
Virginia First Financial Corp. (d) 320,000 7,560
Warren Bancorp., Inc. (d) 363,900 6,550
72,087
SECURITIES INDUSTRY - 0.2%
Charles JW Financial Services, Inc. (a) 148,300 1,316
Harvey Norman Holdings Ltd. 100,000 607
Jackson Hewitt, Inc. (a) 31,500 736
London Pacific Group Ltd. 2,642,900 8,931
Norvestia OY Class B 246,000 4,262
15,852
TOTAL FINANCE 1,174,018
HEALTH - 6.5%
DRUGS & PHARMACEUTICALS - 1.1%
Apothekers Cooperatie OPG 10,000 343
Astra AB sponsored ADR Series A 500,000 9,125
BioReliance Corp. 4,600 82
Chattem Inc. (a) 254,700 4,394
Herbalife International, Inc. (d) 2,121,300 46,934
Natural Alternatives International, Inc. (a)(d) 359,400 2,606
Nature's Sunshine Products, Inc. 776,400 15,916
Technilab Pharma, Inc. (a) 300,000 1,915
Twinlab Corp. 610,000 13,801
Weider Nutrition International, Inc. Class A 235,000 4,318
99,434
MEDICAL EQUIPMENT & SUPPLIES - 3.1%
ADAC Laboratories 110,000 2,145
Allegiance Corp. 1,250,000 39,063
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Ballard Medical Products (d) 2,062,600 $ 43,701
Bio-Rad Laboratories, Inc. Class A (a) 343,750 9,754
Biomet, Inc. 2,500,000 49,844
Cardiovascular Dynamics, Inc. 4,800 44
Conmed Corp. (a) 605,400 10,367
Cooper Companies, Inc. 54,100 1,515
Depuy, Inc. (a) 737,800 18,030
Exactech, Inc. (a) 34,200 222
HPSC, Inc. (a)(d) 317,500 1,786
Haemonetics Corp. (a) 678,700 12,259
Invacare Corp. 250,000 5,281
Isomedix, Inc. 48,400 842
Laser Industries Ltd. Ord. (a)(d) 761,100 13,129
Lunar Corp. (a) 56,400 1,142
Medstone International, Inc. (a)(d) 315,400 3,154
OEC Medical Systems, Inc. (a)(d) 1,000,000 17,125
Orthofix International (a)(d) 779,100 8,278
OY Tamro AB (f) 25,000 166
Protocol Systems, Inc. (a) 25,000 219
Respironics, Inc. (a) 100,000 2,588
Sofamor/Danek Group, Inc. (a) 224,300 10,079
Sullivan Dental Products, Inc. (a) 333,000 7,076
Utah Medical Products, Inc. (a)(d) 675,000 5,400
Vital Signs, Inc. 96,300 1,685
Wesley Jessen Visioncare, Inc. 45,000 1,136
266,030
MEDICAL FACILITIES MANAGEMENT - 2.3%
Advocat, Inc. (a)(d) 531,600 6,579
American Homepatient, Inc. (a) 142,500 2,850
Arbor Health Care Co. (a) 148,400 5,695
Clinic Holdings Ltd. 500,000 482
Compdent Corp. (a) 355,900 7,719
Corvel Corp. (a) 10,000 304
Foundation Health Systems, Inc. Class A (a) 450,000 14,569
Horizon Mental Health Management, Inc. (a) 191,050 4,848
Multicare Companies, Inc. (a) 75,000 2,053
Quest Diagnostics, Inc. (a)(d) 1,867,275 32,444
Ramsay Health Care, Inc. (a) 195,000 926
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
Rehabcare Corp. (a)(d) 348,062 $ 11,486
Res-Care, Inc. (a)(d) 800,000 17,100
Rotech Medical Corp. (a) 607,500 11,476
Syncor International Corp. 60,000 848
Trigon Healthcare, Inc. 485,900 11,570
United America Healthcare Corp. (a) 204,700 1,407
Universal Health Services, Inc. Class B (a) 1,500,000 60,937
Value Health, Inc. (a) 252,800 5,056
198,349
TOTAL HEALTH 563,813
HOLDING COMPANIES - 0.4%
DCC PLC 2,500,000 15,296
Fonciere Financiere et Part SA 25,000 1,061
Marine Wendel SA 74,976 7,826
Perry Group 350,000 1,016
Siparex (Societe de Particiations dans les Enterprises
Regionales en Expansion) 80,849 1,578
Union Assurancesfederale SA 50,000 5,284
VT Holding AS Class B 50,000 1,806
33,867
INDUSTRIAL MACHINERY & EQUIPMENT - 3.0%
ELECTRICAL EQUIPMENT - 0.9%
Bairnco Corp. 102,700 937
Blick PLC Class L 200,000 722
C&D Technologies, Inc. 14,300 543
Cherry Corp. Class A (a) 106,000 1,563
Choride Group PLC 400,000 226
Cobra Electronics Corp. 130,000 796
Communications Systems, Inc. (d) 703,500 12,575
Corsair Communications, Inc. 2,800 55
Emcee Broadcast Products, Inc. (a) 178,500 502
Electro Rent Corp. (a) 143,500 4,144
General Semiconductor, Inc. 67,500 1,029
Holophane Corp. (a) 463,900 10,786
IEC Electronics Corp. (a) 149,400 2,241
Juno Lighting, Inc. 495,000 7,858
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Mas Technology Ltd. 104,600 $ 2,118
NovAtel, Inc. 95,000 641
Rofin Sinar Technologies, Inc. (a) 177,600 3,219
Siebe, PLC 250,000 4,511
Twentsche Kabel Holding NV 25,704 1,408
Valley Forge Corp. (d) 267,900 6,497
Vertex Communications Corp. (a)(d) 425,100 11,159
Woodhead Industries, Inc. 339,000 6,441
79,971
INDUSTRIAL MACHINERY & EQUIPMENT - 2.1%
AG Associates, Inc. (a) 264,500 1,951
Astec Industries, Inc. 55,000 815
CPAC, Inc. (a)(d) 733,800 8,255
Columbus McKinnon Corp. 311,100 6,183
Control Devices, Inc. (a) 200,000 2,900
EDAC Technologies Corp. (a) 163,900 492
Farr Co. (a)(d) 367,048 5,873
Gardner Denver Machinery, Inc. (a) 317,200 10,785
Gehl Co. (a)(d) 501,700 9,783
Hardinge, Inc. 303,700 10,098
IDEX Corp. 368,400 12,940
K-Tron International, Inc. (a) 42,800 567
Kaydon Corp. 170,800 10,814
KCI (Konecranes International) 32,000 1,284
KCI (Konecranes International) (f) 118,000 4,734
Laperriere & Verreault Inc. (a) 50,000 174
Lawson Products, Inc. 85,000 2,231
Molins PLC 25,000 214
New Holland NV 850,000 24,384
Oilgear Co. 23,600 413
Powerscreen International PLC 3,125,000 32,807
Regal-Beloit Corp. 791,000 22,395
SkyJack, Inc. (a) 25,000 336
Specialty Equipment Companies, Inc. (a) 155,300 2,349
Speizman Industries, Inc. (a)(d) 200,000 1,050
T B Wood's Corp. (d) 417,800 6,319
Twin Disc, Inc. (d) 157,600 4,561
184,707
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 0.0%
MFRI, Inc. (a) 24,500 $ 245
Met-Pro Corp. 43,500 696
NSC Corp. (d) 550,400 1,514
Weston (Roy F.), Inc. Class A (a)(d) 393,800 1,132
3,587
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 268,265
MEDIA & LEISURE - 5.4%
BROADCASTING - 1.3%
Ackerley Communications, Inc. 5,000 66
BET Holdings, Inc. Class A (a) 445,300 17,812
Canwest Global Communications Corp.:
(sub-vtg.) 1,395,006 22,772
(non-vtg.) 180,000 2,938
Capital Radio PLC 359,000 2,868
Cogeco, Inc. (d) 988,400 7,386
Cogeco Cable, Inc. (d) 719,400 6,289
Cox Radio, Inc. Class A (a) 247,100 6,023
Matav-Cable System Media Ltd. sponsored ADR (a) 276,500 5,703
Metro Networks, Inc. (a) 163,000 5,277
Moffat Communications Ltd. 425,000 8,294
Premier Choix Tvec, Inc. Class A (d) 200,600 4,075
Prime Television Ltd. 1,001,767 2,399
Publishing & Broadcasting Ltd. 700,000 4,347
P4 Radio Hele Norge SA 80,000 619
Radiomutuel, Inc. Class A 175,000 1,809
Radio Pacific 284,250 684
Scottish Radio Holdings, Inc. 150,000 824
Scottish Television PLC 100,000 1,093
Southern Cross Broadcasting Australia Ltd. 255,742 1,110
TCA Cable TV, Inc. 195,900 7,395
Tele-Metropole, Inc. Class B (a) 220,000 3,815
TV 4 AB Class A 20,000 350
113,948
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - 1.3%
Airtours PLC 200,000 $ 3,850
All American Communications, Inc. (d) 900,900 16,442
All American Communications, Inc. Class B (non-vtg.) (a) 194,400
3,038
Compagnie des Alpes 25,000 605
European Leisure PLC 225,000 472
Granada Group PLC 100,000 1,378
King World Productions, Inc. 1,675,000 67,628
Scientific Games Holdings Corp. (a) 328,300 5,889
Sydney Aquarium Ltd. 250,000 733
Television & Media Services Ltd. 1,750,000 1,702
Vaughns, Inc. (a) 164,600 1,152
Viacom, Inc. Class A (a) 207,400 6,339
Viacom, Inc. Class B (non-vtg.) (a) 142,600 4,403
113,631
LEISURE DURABLES & TOYS - 0.0%
Hamleys PLC 25,000 114
Suunto OY 25,000 273
387
LODGING & GAMING - 0.3%
Choice Hotels Skandanavia ASA (a) 25,000 95
Colonial Downs Holdings, Inc. Class A 50,000 419
Jurys Hotel Group PLC 643,400 3,852
Rica Hotel OG Restaurantkiede ASA 40,000 304
Rio Hotel & Casino, Inc. (a) 335,100 5,906
Riviera Holdings Corp. (a) 147,200 1,950
Ryan Hotels Ltd. 3,200,000 2,729
Sands Regent (a) 123,572 309
Sholodge, Inc. (a) 259,800 4,157
Scandic Hotels AB (a) 25,000 416
Scandic Hotels AB (a)(f) 144,000 2,396
Tourism Assets Holdings Ltd. 200,000 195
22,728
PUBLISHING - 1.1%
Adscene Group PLC Class L 150,000 258
Aamulehti Yhtyma Oy, Series II (f) 15,000 506
ACNielsen Corp. (a) 181,300 3,898
A-Pressen AS, Series A 25,000 606
CMP Media, Inc. Class A 4,200 114
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - CONTINUED
EMAP PLC 175,000 $ 2,210
Edipresse SA, Lausanne 1,000 232
Editoriale L'Espresso SPA 25,000 94
Fine Art Developments PLC Class L 1,400,000 6,407
Gibson Greetings, Inc. (a) 363,200 8,217
International Business Communications Holdings PLC Class L 925,000
5,736
Ilkka OY II 10,000 317
Independent Newspapers:
Ltd. 50,000 260
PLC 450,000 2,637
Johnston Press PLC 350,000 1,122
Journal Register Co. (d) 1,110,300 19,708
Kauppakaari OY 50,000 520
Nation Publishing Group (For. Reg.) 50,000 60
Pacific Magazine & Print Ltd. 200,000 483
Reader's Digest Association, Inc. (The) Class A (non-vtg.) 75,000
1,870
Roto Smeets De Boer NV 50,000 2,753
Rural Press Ltd. 100,000 323
Schibsted AS, Series B 275,000 4,937
Sterling Publishing Group PLC Class L (a) 1,000,000 263
Talentum OY Class B (d) 500,000 5,699
Telemedia, Inc. Class A (a) 50,000 191
VLT AB Class B 52,000 696
WSOY (Werner Soderstrom Osakeyhito) Class B (d) 750,000 25,305
Wegener Tijil NV 76,250 1,712
World Color Press, Inc. (a) 25,600 733
97,867
RESTAURANTS - 1.4%
ARK Restaurants Corp. (a)(d) 200,000 2,050
Benihana, Inc. (a) 20,000 243
Benihana, Inc. Class A (a) 8,000 85
Bertucci's, Inc. (a)(d) 699,900 4,374
Boston Chicken, Inc. (a) 401,300 5,242
Break For The Border Group PLC Class L 812,500 626
Buffets, Inc. (a) 580,000 5,637
Consolidated Products, Inc. (a) 733,200 13,060
Elxsi Corp. (a)(d) 286,000 2,002
IHOP Corp. (a)(d) 778,600 24,721
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
M Corp, Inc. (a)(d) 272,500 $ 544
Morton's Restaurant Group, Inc. (a) 109,300 2,295
Nathans Famous, Inc. (a)(d) 335,500 1,111
Restaurant Brands NZ Ltd. (a) 2,025,000 3,173
Ryan's Family Steak Houses, Inc. (a) 700,000 6,038
Sbarro, Inc. 629,100 16,946
Sonic Corp. (a)(d) 1,355,900 30,338
Tele Pizza SA (a) 10,000 570
Wendy's International, Inc. 100,000 2,444
121,499
TOTAL MEDIA & LEISURE 470,060
NONDURABLES - 4.7%
AGRICULTURE - 0.2%
IAWS Group PLC 1,050,000 3,595
IAWS Group PLC Class A (Reg.) 332,400 1,172
Nutreco Holding NV (a) 125,000 2,705
Scheid Vineyards, Inc. Class A 25,000 275
Sylvan Foods Holdings, Inc. (a)(d) 621,900 7,152
14,899
BEVERAGES - 0.0%
Cadbury-Schweppes PLC Ord. 125,000 1,211
Todhunter International, Inc. (a) 179,800 1,573
2,784
FOODS - 0.4%
Benson's Crisps PLC 1,900,000 1,091
Devro PLC 100,000 641
Eskimo Pie Corp. 35,500 444
Hazlewood Foods PLC Ord. 100,000 210
Imperial Holly Corp. 9,800 133
Laennen Tehtaat OY 50,000 666
Man (ED&F) Group PLC 100,000 320
Perkins Foods PLC 250,000 349
Raision Tehtaat Class V 70,108 7,710
Riviana Foods, Inc. 690,700 12,605
Sardus AB (a) 198,000 1,511
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
FOODS - CONTINUED
Smucker (J.M.) Co. 68,200 $ 1,645
Thorn Apple Valley, Inc. (a) 282,900 5,092
Western Beef, Inc. (a)(d) 376,000 3,713
36,130
HOUSEHOLD PRODUCTS - 2.0%
Alberto-Culver Co. Class A 403,000 9,647
Alfin, Inc. (a) 195,300 122
American Safety Razor Co. (a)(d) 1,209,300 22,372
BeautiControl Cosmetics, Inc. (d) 566,500 5,594
Carson, Inc. Class A 50,000 594
DSG International Ltd. (a)(d) 799,000 11,785
Del Laboratories, Inc. 228,100 8,668
Helen of Troy Corp. (a)(d) 1,360,700 42,182
IWP International 400,000 1,748
IWP International (UK Reg.) 800,000 3,543
Jean Philippe Fragrances, Inc. (a)(d) 767,400 5,372
Mayborn Group PLC 50,000 139
Mcbride PLC 275,000 641
Nutramax Products, Inc. (a)(d) 538,500 7,808
Oriflame International SA 398,700 3,107
Playtex Products, Inc. (a) 1,339,000 12,804
Premark International, Inc. 1,000,000 31,563
Stephan Co. (d) 412,200 4,766
York Group, Inc. 165,000 3,217
Zotefoams PLC Class L 125,000 396
176,068
TOBACCO - 2.1%
BAT Industries PLC Ord. 2,500,000 21,120
Gallaher Group PLC sponsored ADR (a) 4,072,100 73,043
Gallaher Group PLC 12,000,000 54,132
RJR Nabisco Holdings Corp. 500,000 16,406
Standard Commercial Corp. (d) 895,300 14,772
179,473
TOTAL NONDURABLES 409,354
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
PRECIOUS METALS - 0.4%
Orogen Minerals Ltd. 1,000,000 $ 2,955
Orogen Minerals Ltd. GDR (f) 300,000 8,775
Prime Resources Group, Inc. 100,000 827
Richmont Mines, Inc. (a) 482,700 1,646
Industrias Penoles SA 4,700,000 21,023
35,226
RETAIL & WHOLESALE - 6.3%
APPAREL STORES - 2.0%
Baker (J.), Inc. (d) 783,600 6,857
Buckle, Inc. (The) (a) 500,000 11,875
Chateau Stores of Canada Ltd. Class A (d) 192,900 1,295
Claire's Stores, Inc. 1,248,525 26,843
Club Monaco, Inc. (a) 150,000 1,453
Dress Barn, Inc. (a) 913,400 19,866
Footstar, Inc. (a) 1,502,104 40,181
Frederick's of Hollywood Class A 48,300 290
Frederick's of Hollywood Class B 239,700 1,438
Gymboree Corp. (a) 1,081,400 25,683
ICC International PLC (For. Reg.) 50,000 141
Kenneth Cole Productions, Inc. Class A (a)(d) 438,400 6,686
One Price Clothing Stores, Inc. (a)(d) 970,600 3,276
Pantorama Industries, Inc. (a) 100,000 76
Ross Stores, Inc. 504,200 15,945
S&K Famous Brands, Inc. (a)(d) 481,900 6,024
San Francisco Boutiques, Inc. Class B (sub-vtg.) (a)(d) 125,000 970
Shirmax Fashions Ltd. (a) 266,000 917
Shoe Carnival, Inc. (a) 277,500 2,810
172,626
APPLIANCE STORES - 0.0%
Hirsch International Corp. Class A (a) 10,000 217
DRUG STORES - 0.3%
Jean Coutu Group, Inc. Class A (d) 1,861,000 22,615
Vitalink Pharmacy Services, Inc. (a) 200,000 3,688
26,303
GENERAL MERCHANDISE STORES - 1.7%
Algonquin Mercantile Corp. 49,700 198
Allders PLC 300,000 1,073
BJS Wholesale Club, Inc. 1,009,700 29,912
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Duckwall-Alto Stores, Inc. (a) 59,600 $ 782
Family Dollar Stores, Inc. 894,900 19,427
Homebase, Inc. 1,234,700 10,804
Lechters, Inc. (a)(d) 1,200,000 4,950
MacFrugals Bargains Closeouts, Inc. (a)(d) 1,505,500 43,754
99 Cents Only Stores (a) 300,000 9,750
North West Co. Fund Trust unit 608,300 6,399
Service Merchandise Co., Inc. (a) 1,700,000 5,737
Stein Mart, Inc. (a) 450,000 13,219
146,005
GROCERY STORES - 0.4%
Asda Group PLC 250,000 586
Budgens PLC 100,000 73
Food Lion, Inc. Class A 3,761,800 27,038
Hemkopskedjan AB Series B (a) 200,000 1,951
Iceland Group PLC 167,300 255
Ingles Markets, Inc. Class A 130,600 1,796
Marsh Supermarkets, Inc. Class A 51,700 776
Metro Richelieu, Inc. Class A 50,000 599
Somerfield PLC 1,500,000 4,798
Watson & Philip PLC Class L 25,000 177
Whittard of Chelsea PLC 100,000 326
38,375
RETAIL & WHOLESALE, MISCELLANEOUS - 1.9%
Betterware PLC 600,000 886
Blair Co. 408,900 6,670
Brookstone, Inc. (a)(d) 754,600 6,697
Cole National Corp. Class A (a)(d) 965,400 41,693
Fabri-Centers of America, Inc.:
Class A (a)(d) 460,600 12,004
Class B (non-vtg) (a)(d) 716,500 16,032
Farepak PLC 100,000 743
Finlay Enterprises, Inc. (a) 275,600 4,616
Finish Line, Inc. Class A 784,000 10,584
Flying Flowers Ltd. unit 250,000 1,571
Friedmans, Inc. Class A (a) 573,500 8,818
Gulf South Medical Supply, Inc. (a) 104,600 2,589
Heiton Holdings Ltd. 1,201,600 2,626
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Land's End, Inc. (a) 200,000 $ 5,925
Little Switzerland, Inc. (a) 99,200 701
Old American Stores, Inc. (a)(d) 274,000 171
Partridge Fine Arts PLC 200,000 240
Piercing Pagoda, Inc. (a)(d) 566,700 16,434
Rex Stores Corp. (a) 170,000 1,615
Sound Advice, Inc. (a)(d) 362,800 680
Sound Advice, Inc. warrants 6/14/99 (a) 11,205 -
Viking Office Products, Inc. (a) 1,028,500 20,634
Wolohan Lumber Co. 129,000 1,677
163,606
TOTAL RETAIL & WHOLESALE 547,132
SERVICES - 4.3%
ADVERTISING - 0.3%
ADVO, Inc. (a) 387,400 7,022
Ariely Advertising Ltd. 112,000 406
Metromail Corp. (a) 625,000 12,539
More Group PLC 300,000 2,903
Shandwick Ord. 750,000 517
23,387
EDUCATIONAL SERVICES - 0.1%
Coutts Consulting Group PLC Class L 300,000 172
Educational Medical, Inc. 7,000 47
Strayer Education, Inc. 215,000 8,063
8,282
LEASING & RENTAL - 0.2%
Aaron Rents, Inc. Class B 420,700 6,258
Alrenco, Inc. (a) 250,000 3,656
Globe Business Resources, Inc. (a) 85,000 1,317
Hanover Compressor Co. 43,200 1,045
Mitcham Industries, Inc. (a) 264,000 3,861
Rent-Way, Inc. (a) 116,500 1,733
17,870
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
PRINTING - 1.0%
Adare Printing Group PLC 475,454 $ 5,069
Devon Group, Inc. (a)(d) 630,600 25,382
Graphic Industries, Inc. (d) 722,000 9,657
Paris Corp. (a) 164,500 288
Pubco Corp. (a)(d) 194,700 1,728
Reynolds & Reynolds Co. Class A 1,625,000 31,484
Unidigital, Inc. (a) 37,700 283
Valassis Communications, Inc. (a) 400,000 11,225
85,116
SERVICES - 2.7%
BA Merchant Services, Inc. Class A (a) 799,200 15,235
Barbers Hairstyling for Men, Inc. (a) 12,750 89
Borg Warner Security Corp. (a) 575,200 9,958
Caldwell Partners International Class A (non-vtg.) 600,000 2,873
Candle Australia Ltd. (a) 150,009 226
Concord Career Colleges, Inc. (a) 250,000 406
Corporate Services Group PLC 100,000 297
Craig (Jenny), Inc. (a)(d) 1,140,600 7,770
Dun & Bradstreet Corp. 2,200,000 59,400
EMIS (European Marketing Information Services NV) 50,000 198
Failure Group, Inc. (a) 21,400 155
Fugro NV 80,100 2,232
Firstservice Corp. (a) 10,000 82
Halma PLC ORD 750,000 2,134
ICTS International NV (a) 150,000 1,219
LCS Industries, Inc. 92,200 1,395
Lamalie Associates, Inc. 95,900 1,966
Lawyers Title Corp. (d) 891,200 19,272
Mail Boxes Etc. (a) 267,700 7,362
Morgan & Banks Ltd. 650,000 4,766
NFO Research, Inc. (a) 90,200 2,165
OroAmerica, Inc. (a)(d) 414,200 1,760
Pittston Co.:
(Brinks Group) 278,200 9,685
(Burlington Group) 886,100 21,931
Programming & Systems, Inc. (a)(d) 313,300 -
RCM Technologies, Inc. (a) 150,000 1,650
Railtrack PLC Class L 1,000,000 13,016
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Rentokil Initial PLC 5,250,000 $ 18,731
Right Management Consultants, Inc. (a)(d) 659,400 6,429
Seattle FilmWorks, Inc. (a)(d) 909,000 12,044
Speedy Muffler King, Inc. (a) 101,600 486
Stanley Technology Group, Inc. (a) 275,000 2,025
TSB International, Inc. (a) 125,000 580
Thomas Group (a)(d) 364,900 4,379
Unifirst Corp. Massachusetts 25,700 604
Winston Resources, Inc. (a) 27,000 110
Zebra Technologies Corp. Class A (a) 148,700 4,638
237,268
TOTAL SERVICES 371,923
TECHNOLOGY - 11.2%
COMMUNICATIONS EQUIPMENT - 0.6%
Alcatel Alsthom Compagnie Generale d'Electricite SA
sponsored ADR 250,000 6,750
Aspect Telecommunications Corp. (a) 68,300 1,444
Brooktrout Technology, Inc. (a) 137,800 1,404
Circuit Systems, Inc. (a) 158,500 822
Dycom Industries, Inc. (a) 159,600 2,833
IPC Information Systems, Inc. (a)(d) 760,800 12,173
Microlog Corp. (a) 182,500 844
Napco Security Systems, Inc. (a) 171,100 727
Network General Corp. (a) 800,000 13,000
Norstan, Inc. (a) 446,000 7,805
Olicom A/S (a) 115,000 2,530
Trans Lux Corp. 2,000 27
50,359
COMPUTER SERVICES & SOFTWARE - 4.8%
Advanced Communication Systems, Inc. 100,000 950
Alternative Resources Corp. (a) 99,900 2,223
American Business Information, Inc. (a)(d) 2,000,000 53,500
Applied Microsystems Corp. (a) 77,600 650
Award Software International, Inc. 262,000 2,685
BancTec, Inc. (a)(d) 1,398,600 34,178
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Black Box Corp. (a)(d) 1,200,000 $ 43,800
Boole & Babbage, Inc. (a)(d) 1,108,037 28,809
Business Objects SA sponsored ADR (a) 397,500 2,683
Cimatron Ltd. (a) 85,500 427
CI Technologies Group Ltd. 1,000,000 1,811
Computer Power Group Ltd. 578,256 1,752
Computer Data Systems, Inc. (d) 623,600 18,240
Coreco, Inc. (a)(f) 84,500 610
Data Research Associates, Inc. (a)(d) 319,500 3,914
Data Systems & Software (a)(d) 453,500 2,834
Desktop Data, Inc. 75,600 803
EIS International, Inc. 53,400 541
Edusoft Ltd. (a) 210,400 1,315
Enea Data AB, Series B Free shares (d) 110,000 2,656
Equitrac Corp. (a)(d) 304,400 4,414
FDP Corp. 115,000 920
FactSet Research Systems, Inc. (a) 210,100 5,765
Fiserv, Inc. (a) 180,000 8,640
GSE Systems, Inc. (a)(d) 329,100 1,645
Galileo International, Inc. 28,800 760
Gateway Data Sciences Corp. (a)(d) 232,000 899
GEAC Computer Ltd. (a) 200,000 8,924
Government Technology Services, Inc. (a) 200,000 1,037
Group 1 Software, Inc. (a) 165,400 1,075
Hartco Enterprises, Inc. 200,000 1,342
Informix Corp. (a) 500,000 5,656
JBA Holdings PLC 25,000 344
Kewill Systems PLC 190,000 1,995
Learning Co., Inc. (The) (a) 318,100 4,155
MARC, Inc. 56,200 1,205
MPSI Systems, Inc. 5,000 27
Mapix, Inc. (a) 107,000 1,043
Medic Computer Systems, Inc. (a) 675,000 18,225
Melita International Corp. (d) 175,000 1,662
Microsoft Corp. (a) 250,000 35,375
Misys PLC Ord. 201,600 5,027
Mysoftware Co. (a)(d) 420,700 789
New Dimension Software Ltd. (a)(d) 616,600 10,713
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Orcad, Inc. (a)(d) 643,100 7,396
Ovid Technologies, Inc. (a) 80,000 780
Ozemail Ltd. sponsored ADR (a) 198,500 1,315
Project Software & Development, Inc. (a) 50,000 1,056
Qualix Group, Inc. (d) 258,200 1,275
Rainbow Technologies, Inc. (a)(d) 824,500 15,975
SPSS, Inc. (a) 300,300 9,535
SPS Transaction Services, Inc. 39,600 859
Smith Micro Software, Inc. (a) 162,000 446
Sherwood Computers Services PLC Class L 130,000 576
Symantec Corp. (a) 1,250,000 30,078
Symix Systems, Inc. (a) 75,000 1,041
Tecnost Spa 1,000,000 1,673
TT Teito OY 160,000 13,948
Vestcom International, Inc. (d) 206,000 3,425
Viewlogic Systems, Inc. 10,000 147
Walsh International, Inc. (a) 177,000 1,593
417,136
COMPUTERS & OFFICE EQUIPMENT - 1.6%
Advanced Digital Information Corp. (a) 299,300 5,350
Amplicon, Inc. 24,200 702
Bell & Howell Co. (a) 181,800 5,602
Control Data Systems, Inc. (a) 62,600 1,264
Creative Technology Corp. Ltd. (a) 306,400 6,243
Cybex Corp. (a) 276,400 6,634
Eltron International, Inc. (a) 142,300 4,260
Fore Systems, Inc. (a) 310,000 4,979
Galileo Technology Ltd. 3,300 80
General Scanning, Inc. (a) 125,000 2,250
Genicom Corp. (a)(d) 1,101,400 10,050
International Imaging Materials, Inc. (a)(d) 585,900 13,915
Intest Corp. (d) 227,000 2,071
Kentek Information Systems, Inc. 254,600 2,228
Kronos, Inc. (a) 112,900 2,766
Nam Tai Electronics, Inc. 298,700 8,065
Performance Technologies, Inc. (a) 188,500 3,346
Pomeroy Computer Resources, Inc. (a) 123,400 3,949
Quantum Corp. (a) 1,138,600 33,090
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Quixote Corp. (d) 423,700 $ 3,390
Scan-Optics, Inc. 130,000 975
Silicon Graphics, Inc. 411,400 10,285
Southern Electronics Corp. (a)(d) 716,600 10,928
142,422
ELECTRONIC INSTRUMENTS - 0.6%
Aeroflex, Inc. (a) 78,500 437
ASECO Corp. (a) 131,140 1,943
BTU International, Inc. (a)(d) 459,800 2,012
DSP Technology, Inc. (a)(d) 160,800 884
Elscint Ltd. (a)(d) 1,169,000 10,083
Hurco Companies, Inc. (a) 259,028 1,554
Lam Research Corp. (a) 201,300 10,644
Mesa Laboratories, Inc. (a) 87,900 472
Modern Controls, Inc. 56,200 829
ORBIT/FR, Inc. (d) 149,600 1,739
Reliability, Inc. (a)(d) 303,000 7,878
Thermo Optek Corp. (a) 74,000 1,064
Wireless Telecom Group, Inc. 575,400 6,761
X-Rite, Inc. 236,500 4,759
51,059
ELECTRONICS - 3.3%
Actel Corp. (a) 450,000 8,662
Align Rite International, Inc. (a)(d) 440,000 6,930
Apollo Electronics Co. Ltd. 4,000 57
ASM Pacific Technology Ltd. 2,666,000 2,445
Atmel Corp. (a) 650,000 22,181
Audiovox Corp. Class A (a) 658,200 5,142
Benchmarq Microelectronics, Inc. (a) 265,900 5,983
Bergman & Beving AB Class B Free shares 300,000 11,258
Continental Circuits Corp. (a)(d) 608,950 11,266
Corcom, Inc. (a)(d) 362,600 3,626
DH Technology, Inc. (a)(d) 440,800 9,698
Dallas Semiconductor Corp. (d) 1,475,000 57,617
Diodes, Inc. 52,200 577
Griffon Corp. (a)(d) 2,859,500 41,820
Integrated Circuit Systems, Inc. (a) 20,800 549
Kingboard Chemical Holdings Ltd. 3,440,000 1,922
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Methode Electronics, Inc. Class A 400,000 $ 8,300
Micro Linear Corp. (a)(d) 1,175,000 10,060
Microsemi Corp. (a)(d) 870,800 12,028
Pioneer Standard Electronics, Inc. 446,000 6,300
Quality Semiconductor, Inc. (a) 200,000 2,650
Siliconix, Inc. (a) 3,300 127
Sterling Electronics Corp. 54,750 654
Taitron Components, Inc. Class A (a)(d) 393,900 1,329
Tower Semiconductor Ltd. (a) 300,000 5,325
Techtronic Industries Co. Ord. 2,000,000 506
Varitronix International Ltd. 1,500,000 2,461
Video Display Corp. (a)(d) 313,700 1,568
Wongs Industrial International 5,250,000 2,442
Wongs International Holdings warrants 5/31/00 (a) 1,000,000 109
Zilog, Inc. (a)(d) 2,009,200 48,723
292,315
PHOTOGRAPHIC EQUIPMENT - 0.3%
Imation Corp. (a) 1,000,000 24,562
TOTAL TECHNOLOGY 977,853
TRANSPORTATION - 4.1%
AIR TRANSPORTATION - 1.9%
America West Holding Corp. Class B (a) 1,192,400 16,470
ASA Holdings, Inc. (d) 1,945,000 54,946
CHC Helicopter Corp. Class A 370,000 3,194
Comair Holdings, Inc. 238,100 6,414
Kitty Hawk, Inc. 50,300 906
Midwest Express Holdings, Inc. (a)(d) 648,750 16,178
National Express Group PLC Class L 50,000 392
Transat AT, Inc. (a) 350,000 2,603
Viad Corp. 3,500,000 66,281
167,384
RAILROADS - 0.9%
Canadian National Railway Co. 1,500,000 77,919
Varlen Corp. 120,203 3,772
81,691
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
SHIPPING - 0.1%
Ocean Wilsons Holding PLC 150,000 $ 266
Saevik Supply AS (d) 700,000 9,631
9,897
TRUCKING & FREIGHT - 1.2%
Air Express International Corp. 739,950 22,892
Arnold Industries, Inc. 1,302,500 22,468
Baltrans Holdings Ltd. 1,500,000 275
Cannon Express, Inc. Class A (a)(d) 271,200 1,831
Frozen Food Express Industries, Inc. 89,500 828
Goodfellow, Inc. (d) 250,000 1,787
Hub Group, Inc. Class A (a) 82,500 2,764
Landair Services, Inc. (a) 178,200 3,141
Landstar System, Inc. (a) 103,100 2,577
Mark VII, Inc. (a) 156,000 4,914
Marten Transport Ltd. (a)(d) 296,000 5,698
MTL, Inc. (a)(d) 452,000 10,904
Old Dominion Freight Lines, Inc. (a)(d) 463,000 7,639
USFreightways Corp. 387,600 12,040
99,758
TOTAL TRANSPORTATION 358,730
UTILITIES - 3.8%
CELLULAR - 0.5%
Century Telephone Enterprises, Inc. 1,000,000 36,750
Europolitan Holdings AB 25,000 588
Palmer Wireless, Inc. (a) 98,200 1,663
Rural Cellular Corp. Class A (a) 90,000 934
Vodafone Group PLC 300,000 1,516
41,451
ELECTRIC UTILITY - 0.6%
Central Maine Power Co. 586,800 7,922
Gas Y Electricidad 15,000 966
National Grid Co. PLC 6,000,000 25,393
Niagara Mohawk Power Corp. (a) 391,800 3,649
Scottish Power PLC ADR 550,000 3,888
Scottish Hydro-Electric PLC Ord. 1,000,000 7,299
49,117
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - 0.6%
Aquila Gas Pipeline Corp. 1,025,900 $ 13,465
Midcoast Energy Resources, Inc. 224,500 4,069
Southwestern Energy Co. (d) 1,676,100 23,046
USX-Delhi Group (d) 824,200 10,354
50,934
TELEPHONE SERVICES - 0.2%
Atlantic Tele-Network, Inc. (a)(d) 1,227,300 15,341
Davel Communications Group, Inc. (a)(d) 416,000 7,410
22,751
WATER - 1.9%
Hyder PLC 5,200,002 73,783
Severn Trent PLC Ord. 950,000 13,479
South West Water PLC Ord. 500,000 6,422
Yorkshire Water PLC 10,000,000 73,324
167,008
TOTAL UTILITIES 331,261
TOTAL COMMON STOCKS
(Cost $5,185,825) 7,087,678
PREFERRED STOCKS - 0.7%
CONVERTIBLE PREFERRED STOCKS - 0.6%
CONSTRUCTION & REAL ESTATE - 0.0%
BUILDING MATERIALS - 0.0%
Bird Corp. $1.85 87,250 1,527
ENERGY - 0.6%
OIL & GAS - 0.6%
Atlantic Richfield Co. $2.23 1,809,100 44,549
Goodrich Petroleum Corp., Series A 80,200 592
45,141
TOTAL CONVERTIBLE PREFERRED STOCKS 46,668
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
FINANCE - 0.1%
BANKS - 0.1%
Bank Austria AG 135,912 $ 4,832
Creditanstalt Bankverein 50,000 2,343
7,175
MEDIA & LEISURE - 0.0%
BROADCASTING - 0.0%
Prosieben Media AG (non-vtg.) 5,000 224
NONDURABLES - 0.0%
FOODS - 0.0%
Chips AB OY (a) 5,000 348
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Telecom Italia Mobile Spa de Risp 1,500,000 2,614
TOTAL NONCONVERTIBLE PREFERRED STOCKS 10,361
TOTAL PREFERRED STOCKS
(Cost $52,274) 57,029
CONVERTIBLE BONDS - 0.0%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) (C) AMOUNT (000S)
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Mercury Air Group, Inc. 7 3/4%, 2/1/06 B- $ 500,000 518
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Park Ohio Industries, Inc. 7 1/4%, 6/15/04 (e) - 2,000,000 1,960
TOTAL CONVERTIBLE BONDS
(Cost $2,593) 2,478
CASH EQUIVALENTS - 17.9%
SHARES VALUE (NOTE 1)
(000S)
Taxable Central Cash Fund (b)
(Cost $1,559,639) 1,559,638,932 $ 1,559,639
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $6,800,331) $ 8,706,824
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. 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. Affiliated company (see Note 6 of Notes to Financial Statements).
5. Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Park Ohio Industries, Inc.
7 1/4%, 6/15/04 6/6/94 $ 2,000
6. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $61,273,000 or
0.7% of net assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 79.4%
United Kingdom 6.6
Canada 4.7
Finland 1.5
Denmark 1.1
Norway 1.0
Others (individually less than 1%) 5.7
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $6,801,598,000. Net unrealized appreciation
aggregated $1,905,226,000, of which $2,058,905,000 related to
appreciated investment securities and $153,679,000 related to
depreciated investment securities.
The fund hereby designates approximately $24,739,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $6,800,331) - $ 8,706,824
SEE ACCOMPANYING SCHEDULE
CASH 554
RECEIVABLE FOR INVESTMENTS SOLD 27,598
RECEIVABLE FOR FUND SHARES SOLD 20,798
DIVIDENDS RECEIVABLE 9,619
INTEREST RECEIVABLE 7,718
OTHER RECEIVABLES 186
TOTAL ASSETS 8,773,297
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 80,986
PAYABLE FOR FUND SHARES REDEEMED 11,323
ACCRUED MANAGEMENT FEE 5,165
OTHER PAYABLES AND ACCRUED EXPENSES 2,513
TOTAL LIABILITIES 99,987
NET ASSETS $ 8,673,310
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 6,294,560
UNDISTRIBUTED NET INVESTMENT INCOME 62,129
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 410,181
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,906,440
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 344,125 SHARES OUTSTANDING $ 8,673,310
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $25.20
PER SHARE ($8,673,310 (DIVIDED BY) 344,125 SHARES)
MAXIMUM OFFERING PRICE PER SHARE $25.98
(100/97.00 OF $25.20)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1997
INVESTMENT INCOME $ 85,663
DIVIDENDS (INCLUDING $10,390 RECEIVED FROM
AFFILIATED ISSUERS)
INTEREST 65,230
150,893
LESS FOREIGN TAXES WITHHELD (6,140)
TOTAL INCOME 144,753
EXPENSES
MANAGEMENT FEE $ 39,775
BASIC FEE
PERFORMANCE ADJUSTMENT 6,610
TRANSFER AGENT FEES 12,891
ACCOUNTING FEES AND EXPENSES 817
NON-INTERESTED TRUSTEES' COMPENSATION 30
CUSTODIAN FEES AND EXPENSES 720
REGISTRATION FEES 1,386
AUDIT 68
LEGAL 24
MISCELLANEOUS 22
TOTAL EXPENSES BEFORE REDUCTIONS 62,343
EXPENSE REDUCTIONS (752) 61,591
NET INVESTMENT INCOME 83,162
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING REALIZED GAIN OF 472,141
$27,541 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (68) 472,073
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 1,503,075
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (308) 1,502,767
NET GAIN (LOSS) 1,974,840
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 2,058,002
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 83,162 $ 51,737
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 472,073 426,340
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,502,767 (121,876)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,058,002 356,201
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 3,683,464 1,468,403
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 402,041 237,135
COST OF SHARES REDEEMED (1,079,186) (748,770)
REDEMPTION FEES 1,242 900
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 3,007,561 957,668
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,654,768 1,071,261
NET ASSETS
BEGINNING OF PERIOD 4,018,542 2,947,281
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 8,673,310 $ 4,018,542
INCOME OF $62,129 AND $35,638, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 170,807 75,258
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 20,738 12,697
REDEEMED (49,663) (38,819)
NET INCREASE (DECREASE) 141,882 49,136
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31,
1997 1996 1995 1994 D 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 19.87 $ 19.25 $ 17.62 $ 17.19 $ 14.94
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .30 C .26 .20 .06 .15
NET REALIZED AND UNREALIZED 6.93 1.83 3.57 2.15 2.88
GAIN (LOSS)
TOTAL FROM INVESTMENT 7.23 2.09 3.77 2.21 3.03
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.24) (.23) (.09) (.16) (.10)
FROM NET REALIZED GAIN (1.66) (1.24) (2.05) (1.62) (.69)
TOTAL DISTRIBUTIONS (1.90) (1.47) (2.14) (1.78) (.79)
REDEMPTION FEES ADDED TO - - - - .01
PAID IN CAPITAL
NET ASSET VALUE, END OF PERIOD $ 25.20 $ 19.87 $ 19.25 $ 17.62 $ 17.19
TOTAL RETURN A, B 39.45% 11.50% 23.81% 13.67% 21.32%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 8,673 $ 4,019 $ 2,947 $ 2,167 $ 2,116
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE 1.02% 1.05% 1.12% 1.14% 1.12%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE 1.01% E 1.04% E 1.11% E 1.13% E 1.12%
NET ASSETS AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT INCOME 1.36% 1.46% 1.31% .51% 1.00%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 45% 79% 65% 54% 47%
AVERAGE COMMISSION RATE F $ .0230
</TABLE>
A 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).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D 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.
E 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).
F 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 July 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Low-Priced Stock Fund (the fund) is a fund of Fidelity
Puritan Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities (including restricted
securities) for which exchange quotations are not readily available
(and in certain cases debt securities which trade on an exchange) are
valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities 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
U.S. federal income taxes to the extent that it distributes
substantially all of its taxable income for its fiscal year. The fund
may be subject to foreign taxes on income and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests. The
fund accrues such taxes as applicable. 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 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, foreign currency transactions,
market discount, 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.
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.
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements 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. Income distributions 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 in the
accompanying financial statements.
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 $1,960,000 or 0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $4,120,753,000 and $2,275,644,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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.
The annual individual fund fee rate is .35%. 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 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 annual rate of .76% of average net assets after
the performance adjustment.
SALES LOAD. For the period, Fidelity Distributors Corporation, an
affiliate of FMR and the general distributor of the fund, received
sales charges of $9,602,000 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 annual 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 $974,000 for the
period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $654,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's custodian and transfer agent fees were
reduced by $26,000 and $72,000, respectively, under these
arrangements.
6. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
AAF Industries PLC $ - $ - $ - $ 308
AEP Industries, Inc. - 1,843 - -
ABT Building Products Corp. 315 - - 12,327
Advocat, Inc. 2,532 - - 6,579
ACETO Corp. - 2,821 78 -
Alamco, Inc. - - - 7,270
Allied Research Corp. 185 28 - 4,521
Allou Health & Beauty Care,
Inc. Class A - 1,048 - -
Align Rite International, Inc. 2,820 - - 6,930
All American Communications, Inc. - - - 16,442
American Safety Razor Co. 7,979 - - 22,372
Amerus Life Holdings, Inc. 9,028 - 82 -
American Service Group, Inc. - 58 - -
American Business Information, Inc. - 1,271 - 53,500
American Indemnity Financial Corp. - 470 58 2,046
American List Corp. 261 77 398 -
Amwest Insurance Group, Inc. - 166 - -
ASA Holdings, Inc. 11,969 3,625 370 54,946
ARK Restaurants Corp. 24 168 - 2,050
Atlantic Tele-Network, Inc. 7,167 - - 15,341
Autocam Corp. 1,287 - 31 6,206
Australian Oil & Gas Corp. Ltd. 1,041 - 117 5,546
Award Software International, Inc. - - - -
Aztec Manufacturing Co. 234 122 36 9,908
BMTC Group, Inc. Class A (sub-vtg.) 963 - - 3,673
Bank Atlantic Bancorp, Inc. - - - -
Bank United Corp. Class A - - - -
Banyan Short Term
Income Trust (SBI) - - - -
Banyan Strategic Land Trust (SBI) - - 198 4,463
BA Merchant Services, Inc. Class A 1,162 1,795 - -
BTU International, Inc. 236 - - 2,012
Baker (J.), Inc. 679 - 23 6,857
Ballard Medical Products 13,060 - 84 43,701
BancTec, Inc. 7,557 - - 34,178
Beijer AG (G&L), Series B - 332 - -
BeautiControl Cosmetics, Inc. 3,355 333 164 5,594
Bertucci's, Inc. 1,144 149 - 4,374
Belmont Homes, Inc. 1,698 22 - 6,433
Black Box Corp. 7,765 1,696 - 43,800
Boole & Babbage, Inc. 2,208 - - 28,809
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Brookstone, Inc. $ 148 $ - $ - $ 6,697
Bush Industries, Inc. Class A 2,607 3,237 34 -
CFC International, Inc. 2,041 34 - 3,467
Cannon Express, Inc. Class A - - - 1,831
Castle Energy Corp. - - 148 12,607
Cavco Industries, Inc. - 227 - -
CEC Resources Ltd. - 30 - 602
Celebrity, Inc. - 211 - -
CPAC, Inc. 3,407 - - 8,255
Chateau Stores of Canada Ltd.
Class A 205 - 45 1,295
Chempower, Inc. - 1,381 - -
Circuit Systems, Inc. - 428 - -
Coastal Bancorp, Inc. 206 5,103 161 -
Cogeco, Inc. 1,859 - 24 7,386
Cogeco Cable, Inc. 1,050 - 26 6,289
Cold Metal Products, Inc. - - - 3,184
Cole National Corp. Class A - 2,270 - 41,693
Columbus Energy Corp. 127 230 - 2,626
Columbus McKinnon Corp. - - - -
Communications Systems, Inc. 3,454 732 142 12,575
Computalog Ltd. 662 1,172 - -
Computer Data Systems, Inc. 1,139 - 69 18,240
Concord Fabrics, Inc. Class A - - - 1,528
Conso Products Co. 3,115 - - 8,555
Control Devices, Inc. - - - -
Continental Circuits Corp. 3,467 - - 11,266
Continental Homes Holding Corp. 4,971 - 140 15,909
Corcom, Inc. 1,012 220 - 3,626
ConVest Energy Corp. 36 - - 4,385
Craig (Jenny), Inc. 2,322 4,853 - 7,770
Crazy Woman Creek Bancorp., Inc. - 518 18 -
Crossman Communities, Inc. 4,100 - - 15,265
Custom Chrome, Inc. 5,616 2,248 - 8,746
Cube Energy Corp. - 553 - -
Dyersburg Corp. 3,461 - 12 12,905
DH Technology, Inc. 1,478 591 - 9,698
DSP Technology, Inc. - - - 884
DSG International Ltd. 1,199 - - 11,785
Dallas Semiconductor Corp. 3,959 1,374 193 57,617
Data Systems & Software 760 327 - 2,834
Data Research Associates, Inc. 92 - - 3,914
Davel Communications Group, Inc. 40 512 - 7,410
Dawson Geophysical Co. 27 54 - -
Decorator Industries, Inc. - - 68 2,872
Depuy, Inc. 4,135 3,751 - -
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Devon Group, Inc. $ 1,978 $ - $ - $ 25,382
Diagnostic Retrieval Systems, Inc. 1,818 - - 5,076
Dorel Industries, Inc. Class B (sub-vtg.) 523 984 - 11,998
Dreco Energy Services Ltd. Class A - 1,333 - -
Drew Industries, Inc. 2,587 - - 15,058
Ducommun, Inc. 1,782 - - 15,162
Durakon Industries, Inc. - - - 6,111
Elxsi Corp. 257 - - 2,002
EDAC Technologies Corp. - 176 - -
Echelon International Corp. 72 - - 7,896
Elscint Ltd. 2,919 - - 10,083
Enea Data AB, Series B Free shares - 136 33 2,656
Engle Homes, Inc. 1,943 - 94 8,228
ENEX Resources Corp. - - 43 1,407
Excel Industries, Inc. 7,515 - 117 19,420
Equitrac Corp. 1,280 - - 4,414
Farm Family Holdings, Inc. 5,330 2 - 15,858
Federal Screw Works - - 131 5,440
First Central Financial Corp. - 123 36 398
Firstbank Puerto Rico - 1,068 666 41,719
Flir Systems, Inc. 3,387 - - 9,861
FRM Nexus, Inc. - - - 313
Fabri-Centers of America, Inc.
Class A 561 409 - 12,004
Farr Co. 216 - - 5,873
Foremost Industries, Inc. 1,390 129 - 4,914
Fossil, Inc. 3,423 - - 20,490
Gainsco, Inc. 3,925 5,541 100 12,441
Galey & Lord, Inc. 167 - - 11,559
Gateway Data Sciences Corp. 1,283 - - 899
GBC Bancorp California 61 - 221 21,824
Gehl Co. 1,868 82 - 9,783
Genicom Corp. 3,256 574 - 10,050
Goodfellow, Inc. 493 - 23 1,787
Government Technology Services, Inc. 23 - - -
Granite Financial, Inc. - - - -
Griffon Corp. 16,154 - - 41,820
Graphic Industries, Inc. 1,429 - 45 9,657
GSE Systems, Inc. - 39 - 1,645
Haemonetics Corp. - 3,437 - -
HEI, Inc. 1,384 1,437 - -
Hein-Werner Corp. - 418 - -
Helen of Troy Corp. 332 - - 42,182
Herbalife International, Inc. 12,870 7,077 1,220 46,934
Home State Holdings, Inc. - 158 - -
HPSC, Inc. - 142 - 1,786
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
IHOP Corp. $ 6,962 $ - $ - $ 24,721
ILC Technology, Inc. - 793 - -
Independence Federal Savings Bank - - 26 1,673
Intercontinental Life Corp. 1,435 - - 8,600
Intermetco Ltd. - 443 - -
International Imaging Materials, Inc. 5,719 2,705 - 13,915
International Jenson, Inc. - 5,009 - -
Intest Corp. - - - 2,071
IPC Information Systems, Inc. 1,020 1,154 - 12,173
Jean Coutu Group, Inc. Class A 3,806 - 157 22,615
Jean Philippe Fragrances, Inc. - 88 - 5,372
Journal Register Co. 9,355 - - 19,708
Kennedy Wilson, Inc. 124 - - 1,601
Kenneth Cole Productions, Inc. Class A 283 - - 6,686
Kentucky Electric Steel, Inc. - - - 1,665
Kentek Information Systems, Inc. - - 8 -
Kevco, Inc. 3,168 - - -
Key Energy Group, Inc. - - - -
Koss Corp. 1,529 - - 2,938
Laser Industries Ltd. Ord. 2,728 - - 13,129
Lawyers Title Corp. 6,023 - 62 19,272
Lechters, Inc. - 1,573 - 4,950
Libbey, Inc. - - 115 28,582
Life USA Holding, Inc. 9,300 - - 28,639
Lund International Holdings, Inc. - 3 - -
M Corp, Inc. - - - 544
M/I Schottenstein Homes, Inc. 241 - - 12,210
MMI Companies, Inc. - - 49 19,225
MacFrugals Bargains Closeouts, Inc. 1,140 2,032 - 43,754
Markwest Hydrocarbon, Inc. 2,701 - - -
Marten Transport Ltd. 35 - - 5,698
Martin Color-Fi, Inc. 349 - - 2,902
Medstone International, Inc. 404 - - 3,154
Melita International Corp. 2,000 250 - 1,662
Mercury Air Group 87 - 31 4,222
Micro Linear Corp. - - - 10,061
Microsemi Corp. 5,619 - - 12,028
Midwest Express Holdings, Inc. - 2,270 - 16,178
Mitcham Industries, Inc. 197 - - -
Monro Muffler Brake, Inc. 4,636 89 - 11,899
Moore Medical Corp. - 1,908 - -
MTL, Inc. 4,583 - - 10,904
Movado Group, Inc. - - 51 13,742
MYR Group, Inc. 1,066 - 11 5,129
Mysoftware Co. 662 - - 789
Nathans Famous, Inc. 378 - - 1,111
Natural Alternatives International, Inc. 472 1,791 - 2,606
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
New Dimension Software Ltd. $ 735 $ - $ - $ 10,713
North American Mortgage Co. 8,904 20 72 32,269
NSC Corp. 37 - 82 1,514
Nutramax Products, Inc. 769 - - 7,808
99 Cents Only Stores 137 - - -
OEC Medical Systems, Inc. 5,526 1,038 - 17,125
Old American Stores, Inc. - 1,336 - 171
Old Dominion Freight Lines, Inc. 568 - - 7,639
One Price Clothing Stores, Inc. - - - 3,276
ORBIT/FR, Inc. - - - 1,739
Orcad, Inc. 3,252 330 - 7,396
Oriole Homes Corp. Class B - - - 2,284
OroAmerica, Inc. 141 - - 1,760
Orthofix International 1,042 - - 8,278
Piercing Pagoda, Inc. 1,300 - - 16,434
Patrick Industries, Inc. - 1,392 99 8,893
Pe Ben Oilfield Services Ltd. 38 - - 1,200
Petroleum Development Corp. 333 447 - 5,895
Petroleum Helicopters, Inc. 884 - 41 3,320
Pittston Co. (Burlington Group) 2,148 - 68 -
Poncebank 96 1,432 322 9,549
Powell Industries, Inc. 3,924 - - 13,381
Premier Choix Tvec, Inc. Class A - - 51 4,075
Primex Technologies, Inc. 1,963 - - 10,974
Pubco Corp. 252 - - 1,728
Programming & Systems, Inc. - - - -
PXRE Corp. 710 - - 22,403
Qualix Group, Inc. 1,502 1,118 - 1,275
Quest Diagnostics, Inc. 6,785 - - 32,444
Quality Semiconductor, Inc. - 1,336 - -
Quixote Corp. 88 140 107 3,390
Rainbow Technologies, Inc. 6,703 - - 15,975
Raytech Corp. 146 - - 1,828
Reflectone, Inc. - 2,985 - -
Regal-Beloite Corp. - 1,385 131 -
Rehabcare Corp. 175 1,360 - 11,486
Reliability, Inc. 579 - - 7,878
Res-Care, Inc. 3,818 - - 17,100
Right Management Consultants, Inc. 1,114 - - 6,429
Rightchoice Managed Care, Inc. - 1,780 - -
Riser Foods, Inc. Class A 329 4,816 81 -
RLI Corp. - 1,831 67 -
RPC Energy Services, Inc. 4,956 - - 20,954
S&K Famous Brands, Inc. 409 - - 6,024
Sands Regent - - - -
Saevik Supply AS 903 - - 9,631
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
San Francisco Boutiques, Inc.
Class B (sub-vtg.) $ - $ - $ - $ 970
SCPIE Holdings, Inc. 952 - 34 18,162
Schult Homes Corp. 3,953 392 73 7,734
Seattle FilmWorks, Inc. 1,198 - - 12,044
Sevenson Environmental Services - - 5 -
Seibels Bruce Group, Inc. 708 - - 2,146
Shelter Components Corp. 605 2,858 41 7,512
Sonic Corp. 11,710 - - 30,338
Sound Advice, Inc. 4 55 - 680
Southern Electronics Corp. 2,148 - - 10,928
Southern Energy Homes, Inc. 6,062 - - 14,267
Southwestern Energy Co. 2,824 - 89 23,046
Sparebanken Rana Grunnfondsbevis 71 - 28 600
Special Metals Corp. 3,304 - - 6,768
Speizman Industries, Inc. 174 36 - 1,050
Standard Commercial Corp. 3,271 - - 14,772
Stanley Furniture Co., Inc. - - - -
Steel of West Virginia, Inc. - - - 6,713
Stephan Co. - - 33 4,766
Stewart Information Services Corp. 1,578 - 134 13,838
Summit Holdings Southeast, Inc. 50 - - 5,813
Superior Energy Services, Inc. 1,108 - - 6,566
Superior Surgical Manufacturing 3,047 - 90 -
Swift Energy Co. 9,788 - - 23,099
Sybron Chemical Industry Corp. 637 - - 8,035
Sylvan Foods Holdings, Inc. - 143 - 7,152
Symons International Group, Inc. 518 - - --
T B Wood's Corp. 1,557 - 67 6,319
Taitron Components, Inc. Class A 323 - - 1,329
Talentum OY Class B 325 - 118 5,699
Tay Homes PLC - - 226 4,035
TBC Corp. 6,681 - - 16,870
Thomas Group 448 366 - 4,379
Thorn Apple Valley, Inc. - - - -
Torch Energy Royalty Trust unit 2,583 390 589 6,757
Transpro, Inc. 2,634 - 89 6,237
Transport Holdings, Inc. Class - - - -
Transtechnology Corp. 1,716 - 93 9,955
Twin Disc, Inc. 449 - 28 4,561
Twinlab Corp. 1,916 - - --
Uni Select, Inc. 355 - 100 7,544
Unicomp, Inc. 875 - - -
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Unidigital, Inc. $ - $ - $ - $ -
Unionamerica Holdings PLC
sponsored ADR - - - 18,928
United Insurance Companies, Inc. - - - -
Universal Health Services, Inc. Class B 2,632 3,371 - --
URS Corp. 3,900 - - 11,239
USX-Delhi Group 1,978 1,974 150 10,354
Unico America Corporation 146 - 23 3,627
US Home Corp. - - - 19,971
Utah Medical Products, Inc. 1,033 2,411 - 5,400
Valley Forge Corp. 613 - 59 6,497
Varsity Spirit Corp. - 3,974 59 -
Vaughns, Inc. 134 216 - --
Vertex Communications Corp. - - - 11,159
Vestcom International, Inc. - - - 3,425
Video Display Corp. 601 - - 1,568
Virginia First Financial Corp. 609 - -- 7,560
Warren Bancorp., Inc. 753 - 309 6,550
Washington Homes, Inc. 674 - - 1,912
Weston (Roy F.), Inc. Class A - - - 1,132
Wilshire Financial Services
Group, Inc. 152 - - --
World Fuel Services Corp. - - 241 17,885
Worldtex Corp. 2,515 - - 9,679
WSOY (Werner Soderstrom Osakeyhtio)
Class B - 491 489 25,305
Western Beef, Inc. 1,157 - - 3,713
Winsloew Furniture, Inc. 1,133 - - 5,996
Wynn's International, Inc. 10,966 - 138 33,094
York Group, Inc. - - 6 -
Zilog, Inc. 19,575 - - 48,723
TOTALS $ 480,021 $ 128,876 $ 10,390 $ 2,472,799
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Low-Priced Stock Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Puritan Trust: Fidelity Low-Priced Stock Fund, including
the schedule of portfolio investments, as of July 31, 1997, and the
related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights
are the responsibility of the fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 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 Low-Priced
Stock Fund as of July 31, 1997, the results of its operations for the
year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 11, 1997
DISTRIBUTIONS
The Board of Trustees of Fidelity Low-Priced Stock Fund voted to pay
on September 8, 1997, to shareholders of record at the opening of
business on September 5, 1997, a distribution of $1.10 per share
derived from capital gains realized from sales of portfolio securities
and a dividend of $.16 per share from net investment income.
A total of 7.38% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 20% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
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
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the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
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0
*
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services.
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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)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
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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.
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AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
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OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
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INVESTMENT ADVISER
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INVESTMENT SUB-ADVISER
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OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
William J. Hayes, Vice President
Abigail Johnson, Vice President
Joel C. Tillinghast, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
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
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AUTOMATED LINE FOR QUICKEST SERVICE
FIDELITY
(REGISTERED TRADEMARK)
BALANCED
FUND
ANNUAL REPORT
JULY 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.
REPORT OF INDEPENDENT 45 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 46
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:
Through the first seven months of 1997, stock and bond markets
experienced the kind of short-term volatility that can affect them
periodically. The stock market rebounded strongly from its early
spring correction to continue on its record-setting pace, as seen by
the roughly 30% year-to-date gain by the Standard & Poor's 500 Index.
The bond market posted moderate returns over the past seven months, as
positive news on the inflation front helped soften the effects of a
hike in short-term interest rates by the Federal Reserve Board in late
March.
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 JULY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY BALANCED 33.82% 72.49% 195.94%
S&P 500(REGISTERED TRADEMARK) 52.14% 155.75% 303.48%
LEHMAN BROTHERS AGGREGATE 10.76% 41.93% 139.30%
BOND INDEX
BALANCED FUNDS AVERAGE 29.46% 88.96% 194.25%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, 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 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past one
year average represents a peer group of 317 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY BALANCED 33.82% 11.52% 11.46%
S&P 500 52.14% 20.66% 14.96%
LEHMAN BROTHERS AGGREGATE 10.76% 7.26% 9.12%
BOND INDEX
BALANCED FUNDS AVERAGE 29.46% 13.51% 11.34%
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 19970731 19970812 100710 S00000000000001
Balanced S&P 500
LB Aggregate Bond
00304 SP001
LB001
1987/07/31 10000.00 10000.00
10000.00
1987/08/31 10127.27 10373.00
9946.49
1987/09/30 9955.09 10145.83
9734.68
1987/10/31 9112.24 7960.42
10081.39
1987/11/30 8971.76 7304.48
10162.14
1987/12/31 9246.75 7860.35
10300.56
1988/01/31 9684.35 8191.27
10662.65
1988/02/29 9960.24 8572.99
10789.22
1988/03/31 9872.56 8308.08
10687.96
1988/04/30 9949.76 8400.30
10630.29
1988/05/31 9988.36 8473.38
10558.83
1988/06/30 10386.68 8862.31
10813.57
1988/07/31 10327.94 8828.63
10756.86
1988/08/31 10278.99 8528.46
10785.06
1988/09/30 10524.71 8891.77
11029.22
1988/10/31 10683.57 9138.96
11236.86
1988/11/30 10584.28 9008.28
11100.36
1988/12/31 10705.83 9165.92
11112.86
1989/01/31 11071.15 9836.87
11272.75
1989/02/28 10989.97 9591.93
11191.04
1989/03/31 11111.88 9815.42
11239.43
1989/04/30 11471.99 10324.84
11474.62
1989/05/31 11729.21 10743.00
11776.15
1989/06/30 11904.39 10681.76
12134.71
1989/07/31 12373.48 11646.33
12392.66
1989/08/31 12446.45 11874.59
12209.05
1989/09/30 12456.21 11825.91
12271.53
1989/10/31 12498.43 11551.55
12573.70
1989/11/30 12688.44 11787.20
12693.54
1989/12/31 12815.83 12070.09
12727.51
1990/01/31 12342.43 11260.19
12576.26
1990/02/28 12432.60 11405.44
12616.96
1990/03/31 12534.04 11707.69
12626.25
1990/04/30 12362.66 11415.00
12510.57
1990/05/31 12773.98 12527.96
12880.99
1990/06/30 12830.80 12442.77
13087.67
1990/07/31 12865.54 12402.95
13268.71
1990/08/31 12321.28 11281.73
13091.51
1990/09/30 12119.99 10732.31
13199.82
1990/10/31 12061.26 10686.16
13367.41
1990/11/30 12484.05 11376.48
13655.15
1990/12/31 12756.22 11693.89
13867.92
1991/01/31 13284.23 12203.74
14039.35
1991/02/28 13884.24 13076.31
14159.19
1991/03/31 14149.80 13392.75
14256.60
1991/04/30 14380.77 13424.90
14411.05
1991/05/31 14842.71 14004.85
14495.32
1991/06/30 14572.84 13363.43
14487.95
1991/07/31 14954.39 13986.17
14688.86
1991/08/31 15299.02 14317.64
15006.73
1991/09/30 15429.22 14078.53
15310.82
1991/10/31 15774.37 14267.18
15481.29
1991/11/30 15493.14 13692.22
15623.24
1991/12/31 16172.53 15258.61
16087.22
1992/01/31 16172.53 14974.80
15868.37
1992/02/29 16408.24 15169.47
15971.55
1992/03/31 16303.64 14873.66
15881.50
1992/04/30 16502.46 15310.95
15996.22
1992/05/31 16807.33 15385.97
16298.06
1992/06/30 16754.63 15156.72
16522.37
1992/07/31 17157.06 15776.63
16859.46
1992/08/31 17250.96 15453.21
17030.25
1992/09/30 17370.31 15635.56
17232.12
1992/10/31 17287.07 15690.28
17003.65
1992/11/30 17328.69 16225.32
17007.50
1992/12/31 17457.53 16424.89
17277.94
1993/01/31 17841.05 16562.86
17609.27
1993/02/28 18324.01 16788.12
17917.52
1993/03/31 18908.36 17142.35
17992.18
1993/04/30 19511.82 16727.50
18117.47
1993/05/31 19827.92 17175.80
18140.54
1993/06/30 19843.55 17225.61
18469.30
1993/07/31 20105.04 17156.71
18573.76
1993/08/31 20758.74 17806.95
18899.32
1993/09/30 20558.84 17669.83
18951.23
1993/10/31 20726.23 18035.60
19022.05
1993/11/30 20361.01 17864.26
18860.23
1993/12/31 20822.88 18080.42
18962.45
1994/01/31 21382.71 18695.15
19218.47
1994/02/28 21009.49 18188.51
18884.58
1994/03/31 20147.18 17395.49
18419.00
1994/04/30 19974.45 17618.16
18271.92
1994/05/31 20005.85 17907.09
18269.35
1994/06/30 19799.49 17468.37
18228.98
1994/07/31 20179.03 18041.33
18591.07
1994/08/31 20368.80 18781.03
18614.14
1994/09/30 20225.58 18320.89
18340.17
1994/10/31 19986.70 18733.11
18323.83
1994/11/30 19700.04 18050.85
18283.13
1994/12/31 19716.31 18318.55
18409.38
1995/01/31 19716.31 18793.55
18773.71
1995/02/28 20149.46 19525.93
19220.07
1995/03/31 20488.36 20102.14
19337.99
1995/04/30 20698.91 20694.15
19608.11
1995/05/31 21087.62 21521.30
20366.89
1995/06/30 21317.78 22021.23
20516.21
1995/07/31 21629.11 22751.46
20470.39
1995/08/31 21678.26 22808.57
20717.44
1995/09/30 21873.96 23771.09
20919.00
1995/10/31 21675.11 23686.22
21191.04
1995/11/30 22288.24 24726.05
21508.59
1995/12/31 22654.66 25202.27
21810.43
1996/01/31 22855.74 26060.16
21955.27
1996/02/29 22436.83 26301.74
21573.63
1996/03/31 22256.00 26555.02
21423.67
1996/04/30 22323.80 26946.44
21303.19
1996/05/31 22476.36 27641.39
21259.93
1996/06/30 22647.02 27746.70
21545.44
1996/07/31 22115.56 26520.86
21604.40
1996/08/31 22372.72 27080.18
21568.19
1996/09/30 23100.11 28604.25
21944.05
1996/10/31 23845.83 29393.16
22430.15
1996/11/30 25007.78 31614.99
22814.34
1996/12/31 24770.23 30988.69
22602.22
1997/01/31 25473.93 32924.87
22671.43
1997/02/28 25737.82 33183.00
22727.83
1997/03/31 25075.96 31819.51
22475.97
1997/04/30 25697.98 33719.13
22812.42
1997/05/31 26977.54 35771.95
23028.07
1997/06/30 27907.45 37374.54
23301.40
1997/07/31 29594.46 40348.43
23929.76
IMATRL PRASUN SHR__CHT 19970731 19970812 100714 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Balanced Fund on July 31, 1987. As the chart
shows, by July 31, 1997, the value of the investment would have grown
to $29,594 - a 195.94% 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 $40,348 - a 303.48% increase. If $10,000 was put in the
bond index, it would have grown to $23,930 - a 139.30% 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
long-term growth and
short-term volatility. 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 MANAGERS' OVERVIEW
MARKET RECAP
Moderate economic growth and
subdued inflation helped create an
almost perfect investing environment
for the U.S. stock market, which
posted exceptionally strong returns
for the 12 months that ended July 31,
1997. The Standard & Poor's 500
Index returned 52.14% during the
period - well above its long-term
annual average of about 11%. The
stock market spent much of the
period breaking price and trading
volume records. Solid corporate
earnings, large inflows into mutual
funds, widespread optimism and a
generally favorable interest-rate
backdrop propelled share prices
higher, especially among
large-capitalization stocks.
Concerns in March and April over
higher interest rates and the
possibility of weaker corporate
earnings provided the only
significant pause in the stock
market's upward climb. Higher
interest rates tend to slow economic
growth and increase borrowing
costs. When the Federal Reserve
Board raised a key short-term
interest rate in March, the stock
market - already at historically
high valuations - sold off sharply
through mid-April, when positive
news on the inflation front
emerged. From that point through
the end of the period, the market
soared ever higher, with the Dow
Jones Industrial Average breaking
through the 8000 mark for the first
time in July on its way to finishing
above 8200 at the end of the
period. The market broadened to
include many small- and
mid-capitalization stocks during
this latest rally.
NOTE TO SHAREHOLDERS: Effective July 1, 1997, Stephen Dufour (right)
became Portfolio Manager of Fidelity Balanced Fund. The following is
an interview with Stephen Petersen, who managed the fund for most of
the period covered by this report, and Stephen Dufour, who discusses
his investing style and outlook.
Q. HOW DID THE FUND PERFORM, STEVE?
S.P. For the 12-month period ending July 31, 1997, the fund had a
total return of 33.82%. For the same period, the balanced funds
average, as tracked by Lipper Analytical Services, was up 29.46%. In
addition, the Lehman Brothers Aggregate Bond Index returned 10.76%
over the past 12 months, while the Standard & Poor's 500 Index
returned 52.14%.
Q. WHY DID THE FUND OUTPERFORM THE BOND INDEX, BUT UNDERPERFORM THE
S&P 500 INDEX?
S.P. Simply put, the fund outperformed the bond index because the fund
had significant equity holdings - it was made up of about 62% equities
and 38% bonds and short-term investments at the end of the period. In
the market environment of the past year, stocks performed dramatically
better than bonds. Conversely, in terms of the fund's underperformance
versus the S&P 500 index, it was hurt by its holdings in bonds. In
addition, most actively managed diversified funds, like this one,
underperformed the S&P 500 index because the index was heavily
weighted in a small number of very-large-capitalization stocks, and
those stocks were the top performers over the period. In general,
diversified funds own stocks of several different capitalization
sizes, not just large-cap stocks.
Q. IN LIGHT OF THIS MARKET ENVIRONMENT, WHY DID THE FUND OUTPERFORM
ITS PEER GROUP?
S.P. Mostly because it had a higher equities-to-bonds ratio than most
other balanced funds. In addition, the fund owned more
large-capitalization stocks over the period than many of its peers
did, which helped the fund's relative performance significantly.
Q. WHAT WERE SOME OF THE FUND'S TOP LARGE-CAPITALIZATION STOCKS?
S.P. General Electric, the fund's top stock holding, showed
consistently strong earnings growth and performed better than initial
expectations. In addition, much of the fund's growth came from its
holdings in large energy companies, such as British Petroleum, and
from large financial companies.
Q. AT THE END OF THE PERIOD, FINANCIAL HOLDINGS MADE UP 24% OF THE
FUND. WHY DID THEY LOOK GOOD?
S.P. Financial securities, which tend to do well when interest rates
are low, benefited from the favorable interest-rate environment over
the period. An example of an attractive, large financial holding was
American Express. It traded at a discount to the overall market and
showed signs of good earnings growth.
Q. HOW DID YOU POSITION THE BOND PORTION OF THE FUND OVER THE PERIOD?
S.P. The fund's strategy was to be neutral, or, in other words, to
make no bets in terms of the direction of interest rates. Our goal is
for the bond portion of the fund to beat its index by between half of
a percent and 1% each year by buying the right securities. Over the
past year, this approach has been rewarded nicely. Despite the fact
that interest rates generally have remained low, there was some market
volatility over the period. Our neutral position benefited the
overall performance of the portfolio.
Q. WERE THERE DISAPPOINTMENTS OVER THE PERIOD?
S.P. Sure. I expected to see a significant lift in the performance of
cyclical stocks - those whose performance is closely associated with
the strength of the economy - and I positioned the fund accordingly.
Unfortunately, cyclicals did not perform well relative to
growth-oriented stocks.
Q. TURNING TO YOU, STEVE, HOW DOES THE FUND LOOK GOING FORWARD?
S.D. While I don't have the ability to predict the future direction of
the market, I will continue to position the fund by investing in
companies with the best stories and the most attractive business
prospects in the top industries.
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.
STEVE DUFOUR ON HIS
INVESTMENT APPROACH
"AT THE END OF THE PERIOD, THE FUND
WAS VERY WELL-POSITIONED. GOING
FORWARD, I DO NOT INTEND TO MAKE
ANY RADICAL CHANGES TO THE FUND'S
POSITIONING OR PHILOSOPHY. HOWEVER,
I EXPECT TO MAKE TWO MINOR
CHANGES. I PLAN TO CUT THE OVERALL
NUMBER OF FUND HOLDINGS AND TO
REDUCE SOMEWHAT THE FUND'S
INTERNATIONAL EXPOSURE.
"IN TERMS OF THE NUMBER OF FUND
HOLDINGS, I BELIEVE I AM ABLE TO DO
A BETTER JOB INVESTING IF I FOCUS ON
A CORE GROUP OF STOCK AND BOND
NAMES INSTEAD OF A LARGE NUMBER
OF NAMES.
"I PLAN TO REDUCE SOMEWHAT THE
FUND'S FOREIGN INVESTMENTS FOR
PERFORMANCE REASONS. THERE IS
SIGNIFICANTLY LESS INFORMATION
AVAILABLE ABOUT FOREIGN STOCKS AND
BONDS THAN WHAT IS AVAILABLE ON
U.S. HOLDINGS. INFORMATION ON
FOREIGN SECURITIES IS LESS TIMELY AS
WELL. TO COMPENSATE FOR THESE RISK
FACTORS, I EXPECT TO CHOOSE ONLY
FOREIGN INVESTMENTS THAT I BELIEVE
WILL PROVIDE THE FUND WITH HIGHER
RETURNS THAN IT COULD GET FROM U.S.
SECURITIES. I PLAN TO CONTINUE TO
INVEST OVERSEAS IN TOP-PERFORMING
COMPANIES THAT I HAVE BEEN ABLE TO
RESEARCH THOROUGHLY."
FUND FACTS
GOAL: SEEKS HIGH INCOME WITH
PRESERVATION OF CAPITAL BY
INVESTING IN A BROADLY
DIVERSIFIED PORTFOLIO OF
HIGH-YIELDING EQUITY AND DEBT
SECURITIES
FUND NUMBER: 304
TRADING SYMBOL: FBALX
START DATE: NOVEMBER 6, 1986
SIZE: AS OF JULY 31, 1997,
MORE THAN $4.1 BILLION
MANAGER: STEPHEN DUFOUR,
SINCE JULY 1997; MANAGER,
FIDELITY CONVERTIBLE SECURITIES
FUND, JANUARY 1997-JULY 1997;
FIDELITY ADVISOR NATURAL
RESOURCES PORTFOLIO AND FIDELITY
SELECT ENERGY PORTFOLIO, 1996-
JANUARY 1997; FIDELITY SELECT
TRANSPORTATION PORTFOLIO, 1994-
JANUARY 1997; FIDELITY SELECT
MULTIMEDIA, 1993-1996;
JOINED FIDELITY IN 1992
(CHECKMARK)
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
GENERAL ELECTRIC CO. 2.2 2.0
AMERICAN EXPRESS CO. 2.1 1.8
ALLSTATE CORP. 1.9 1.8
BRITISH PETROLEUM PLC ORD. 1.8 1.6
FEDERAL NATIONAL MORTGAGE ASSOCIATION 1.6 1.4
TOP FIVE BOND ISSUERS AS OF JULY 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
(WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE BOND ISSUERS
6 MONTHS AGO
U.S. TREASURY 13.6 13.0
FEDERAL NATIONAL MORTGAGE ASSOCIATION 4.8 5.8
FORD MOTOR CREDIT CO. 0.7 0.7
CHRYSLER FINANCIAL CORP. 0.7 0.7
STATE OF ISRAEL 0.6 0.6
</TABLE>
TOP FIVE MARKET SECTORS AS OF JULY 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 24.0 22.5
ENERGY 8.3 10.5
UTILITIES 6.2 6.7
INDUSTRIAL MACHINERY & EQUIPMENT 5.1 5.4
BASIC INDUSTRIES 4.6 4.5
</TABLE>
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JULY 31, 1997* AS OF JANUARY 31, 1997 **
ROW: 1, COL: 1, VALUE: 3.8
ROW: 1, COL: 2, VALUE: 2.4
ROW: 1, COL: 3, VALUE: 33.2
ROW: 1, COL: 4, VALUE: 60.6
STOCKS 60.5%
BONDS 33.9%
CONVERTIBLE
SECURITIES 4.3%
SHORT-TERM
INVESTMENTS 1.3%
FOREIGN
INVESTMENTS 12.3%
STOCKS 60.6%
BONDS 33.2%
CONVERTIBLE
SECURITIES 2.4%
SHORT-TERM
INVESTMENTS 3.8%
FOREIGN
INVESTMENTS 7.7%
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
*
**
INVESTMENTS JULY 31, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 60.6%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 3.0%
AEROSPACE & DEFENSE - 2.0%
AlliedSignal, Inc. 267,500 $ 24,676
Boeing Co. 91,752 5,396
GenCorp, Inc. 173,800 5,062
Gulfstream Aerospace Corp. (a) 82,200 2,189
Lockheed Martin Corp. 264,400 28,159
Rockwell International Corp. 22,000 1,444
Textron, Inc. 183,800 12,877
United Technologies Corp. 56,100 4,744
84,547
DEFENSE ELECTRONICS - 0.9%
Northrop Grumman Corp. 113,000 13,009
Raytheon Co. 405,400 22,652
35,661
SHIP BUILDING & REPAIR - 0.1%
General Dynamics Corp. 26,100 2,310
Newport News Shipbuilding, Inc. 103,180 2,122
4,432
TOTAL AEROSPACE & DEFENSE 124,640
BASIC INDUSTRIES - 4.6%
CHEMICALS & PLASTICS - 1.6%
Air Products & Chemicals, Inc. 58,300 5,141
du Pont (E.I.) de Nemours & Co. 259,000 17,337
Goodrich (B.F.) Co. 29,600 1,338
Great Lakes Chemical Corp. 85,800 4,295
Hercules, Inc. 69,500 3,692
Millenium Chemicals, Inc. 213,642 4,500
Olin Corp. 75,600 3,204
Union Carbide Corp. 317,300 17,570
Witco Corp. 203,800 9,298
66,375
IRON & STEEL - 0.2%
Aeroquip Vickers, Inc. 47,500 2,604
Inland Steel Industries, Inc. 210,400 4,826
Quanex Corp. 19,800 616
8,046
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 1.2%
Alcan Aluminium Ltd. 119,700 $ 4,690
Alumax, Inc. (a) 269,016 11,400
Aluminum Co. of America 234,900 20,789
Harsco Corp. 223,200 9,904
Phelps Dodge Corp. 28,900 2,458
49,241
PACKAGING & CONTAINERS - 0.0%
Owens-Illinois, Inc. (a) 34,400 1,187
PAPER & FOREST PRODUCTS - 1.6%
Boise Cascade Corp. 333,100 12,346
Champion International Corp. 178,400 11,061
Georgia-Pacific Corp. 60,700 5,732
James River Corp. of Virginia 477,700 19,675
Kimberly-Clark Corp. 146,700 7,436
Weyerhaeuser Co. 145,400 9,051
65,301
TOTAL BASIC INDUSTRIES 190,150
CONSTRUCTION & REAL ESTATE - 1.0%
BUILDING MATERIALS - 0.3%
American Standard Companies, Inc. (a) 164,800 8,189
Masco Corp. 120,000 5,625
13,814
CONSTRUCTION - 0.0%
Lennar Corp. 51,300 1,911
ENGINEERING - 0.2%
EG&G, Inc. 61,900 1,269
Fluor Corp. 112,300 6,906
8,175
REAL ESTATE INVESTMENT TRUSTS - 0.5%
Boston Properties, Inc. 23,900 666
Equity Residential Properties Trust (SBI) 230,200 11,611
First Industrial Realty Trust, Inc. 47,800 1,478
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Liberty Property Trust (SBI) 27,000 $ 712
Macerich Co. 89,800 2,582
Weeks Corp. 54,500 1,724
18,773
TOTAL CONSTRUCTION & REAL ESTATE 42,673
DURABLES - 3.1%
AUTOS, TIRES, & ACCESSORIES - 2.0%
Chrysler Corp. 387,200 14,375
Cummins Engine Co., Inc. 225,500 17,702
Eaton Corp. 277,500 25,062
Johnson Controls, Inc. 49,600 2,223
Modine Manufacturing Co. 140,700 4,397
Navistar International Corp. (a) 455,200 9,389
PACCAR, Inc. 55,000 2,729
Snap-On Tools Corp. 135,450 5,587
81,464
CONSUMER DURABLES - 0.3%
Minnesota Mining & Manufacturing Co. 154,600 14,648
CONSUMER ELECTRONICS - 0.4%
Maytag Co. 264,500 7,720
Whirlpool Corp. 175,500 8,775
16,495
TEXTILES & APPAREL - 0.4%
Burlington Industries, Inc. (a) 62,900 813
Dexter Corp. 110,900 4,415
Kellwood Co. 200,500 6,228
Unifi, Inc. 137,600 5,255
16,711
TOTAL DURABLES 129,318
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 7.4%
ENERGY SERVICES - 0.7%
Baker Hughes, Inc. 89,100 $ 3,926
Dresser Industries, Inc. 59,700 2,492
Schlumberger Ltd. 330,800 25,265
31,683
OIL & GAS - 6.7%
Amerada Hess Corp. 104,200 6,128
Amoco Corp. 18,600 1,748
Atlantic Richfield Co. 167,600 12,539
British Petroleum PLC:
Ord. 5,305,798 72,586
ADR 12,390 1,021
Burlington Resources, Inc. 107,100 5,060
Exxon Corp. 95,000 6,104
Mobil Corp. 194,000 14,841
Monterey Resources, Inc. 90,933 1,387
Phillips Petroleum Co. 152,500 7,025
Royal Dutch Petroleum Co. 652,000 36,471
Santa Fe Energy Resources, Inc. (a) 206,163 1,778
Texaco, Inc. 150,000 17,409
Tosco Corp. 575,000 18,005
Total SA:
Class B 357,867 35,912
sponsored ADR 63,400 3,198
USX-Marathon Group 376,100 12,106
Unocal Corp. 203,981 8,159
Valero Energy Corp. 355,900 15,304
276,781
TOTAL ENERGY 308,464
FINANCE - 17.1%
BANKS - 5.9%
Banc One Corp. 310,900 17,449
Bank of New York Co., Inc. 549,500 26,685
BankBoston Corp. 174,732 14,841
BankAmerica Corp. 554,800 41,887
Chase Manhattan Corp. 115,600 13,128
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Citicorp 193,800 $ 26,308
Comerica, Inc. 195,700 14,800
Credit Suisse Group (Reg.) 46,200 6,235
Crestar Financial Corp. 75,600 3,567
First Bank System, Inc. 194,400 17,302
NationsBank Corp. 549,527 39,119
Norwest Corp. 243,900 15,381
Wells Fargo & Co. 32,600 8,963
245,665
CREDIT & OTHER FINANCE - 3.7%
American Express Co. 1,049,600 87,904
Beneficial Corp. 129,300 9,374
First Chicago NBD Corp. 491,000 37,255
Household International, Inc. 105,000 13,598
Transamerica Corp. 51,600 5,205
153,336
FEDERAL SPONSORED CREDIT - 1.6%
Federal National Mortgage Association 1,387,800 65,660
INSURANCE - 4.6%
Aetna, Inc. 84,800 9,662
Allstate Corp. 988,700 78,107
American Bankers Insurance Group, Inc. 220,400 14,918
American Financial Group, Inc. 169,100 8,075
Enhance Financial Services Group Corp. 16,000 800
Fremont General Corp. 140,408 6,002
General Re Corp. 63,100 13,180
Hartford Financial Services Group, Inc. 319,600 27,845
Highlands Insurance Group, Inc. (a) 149,200 3,348
MBIA, Inc. 4,400 519
Marsh & McLennan Companies, Inc. 47,800 3,702
Provident Companies, Inc. 77,200 4,891
Providian Financial Corp. 55,000 2,155
Reliastar Financial Corp. 238,410 18,283
191,487
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - 0.9%
Ahmanson (H.F.) & Co. 36,100 $ 1,920
TCF Financial Corp. 8,000 429
Washington Mutual, Inc. 519,380 35,902
38,251
SECURITIES INDUSTRY - 0.4%
Bear Stearns Companies, Inc. 102,750 4,193
First Marathon Inc. Class A (non-vtg.) 230,000 3,454
Lehman Brothers Holdings, Inc. 127,700 6,361
14,008
TOTAL FINANCE 708,407
HEALTH - 2.1%
DRUGS & PHARMACEUTICALS - 1.5%
Bristol-Myers Squibb Co. 307,800 24,143
Novartis AG (Reg.) 4,800 7,707
Pharmacia & Upjohn, Inc. 116,900 4,413
Schering-Plough Corp. 371,600 20,275
Takeda Chemical Industries Ltd. 198,000 5,990
62,528
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
Allegiance Corp. 190,620 5,957
Bausch & Lomb, Inc. 99,700 4,243
Baxter International, Inc. 40,700 2,353
12,553
MEDICAL FACILITIES MANAGEMENT - 0.3%
Columbia/HCA Healthcare Corp. 150,000 4,838
Tenet Healthcare Corp. (a) 250,200 7,490
12,328
TOTAL HEALTH 87,409
HOLDING COMPANIES - 0.4%
CINergy Corp. 190,000 6,388
Norfolk Southern Corp. 90,300 10,001
U.S. Industries, Inc. (a) 41,600 1,677
18,066
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 4.8%
ELECTRICAL EQUIPMENT - 2.6%
Emerson Electric Co. 94,000 $ 5,546
General Electric Co. 1,323,600 92,900
Omron Corp. 151,000 3,550
Westinghouse Electric Corp. 244,000 5,871
107,867
INDUSTRIAL MACHINERY & EQUIPMENT - 1.1%
Caterpillar, Inc. 98,200 5,499
Cooper Industries, Inc. 157,900 8,773
Harnischfeger Industries, Inc. 87,700 3,782
Ingersoll-Rand Co. 181,900 12,381
Keystone International, Inc. 270,400 9,785
Regal-Beloit Corp. 49,200 1,393
Stewart & Stevenson Services, Inc. 93,700 2,559
44,172
POLLUTION CONTROL - 1.1%
Browning-Ferris Industries, Inc. 344,900 12,761
Safety Kleen Corp. 176,000 3,091
USA Waste Services, Inc. (a) 498,200 20,084
Waste Management, Inc. 194,600 6,227
Zurn Industries, Inc. 128,200 3,790
45,953
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 197,992
MEDIA & LEISURE - 2.5%
BROADCASTING - 0.7%
British Sky Broadcasting Group 414,400 3,151
Evergreen Media Corp. Class A (a) 23,400 1,076
Scripps (E.W.) Co. Class A 26,000 1,063
Time Warner, Inc. 400,600 21,858
27,148
ENTERTAINMENT - 0.3%
MGM Grand, Inc. (a) 82,800 2,857
Viacom, Inc. Class B (non-vtg.) (a) 281,900 8,704
11,561
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.1%
Brunswick Corp. 115,200 $ 3,715
Coleman, Inc. (a) 114,000 1,974
5,689
LODGING & GAMING - 0.8%
HFS, Inc. (a) 150,000 8,738
Host Marriott Corp. (a) 535,000 10,667
ITT Corp. (a) 184,100 11,771
Mirage Resorts, Inc. (a) 49,500 1,324
32,500
PUBLISHING - 0.6%
ACNielsen Corp. (a) 226,900 4,878
Cognizant Corp. 172,600 7,357
Harcourt General, Inc. 107,400 5,075
McGraw-Hill, Inc. 101,900 6,910
Meredith Corp. 45,000 1,246
25,466
TOTAL MEDIA & LEISURE 102,364
NONDURABLES - 2.4%
BEVERAGES - 0.1%
PepsiCo, Inc. 73,500 2,816
FOODS - 0.5%
General Mills, Inc. 80,900 5,592
Heinz (H.J.) Co. 53,700 2,480
Kellogg Co. 37,400 3,436
Ralston Purina Co. 111,600 10,072
21,580
HOUSEHOLD PRODUCTS - 0.6%
Avon Products, Inc. 28,300 2,053
Premark International, Inc. 141,800 4,476
Rubbermaid, Inc. 271,000 7,063
Unilever PLC Ord. 319,700 9,277
Unilever NV ADR 19,400 4,229
27,098
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
TOBACCO - 1.2%
BAT Industries PLC Ord. 99,851 $ 844
Dimon, Inc. 12,000 293
Philip Morris Companies, Inc. 697,340 31,467
RJR Nabisco Holdings Corp. 479,680 15,740
Swedish Match Co. 238,500 755
49,099
TOTAL NONDURABLES 100,593
PRECIOUS METALS - 0.2%
Newmont Mining Corp. 174,000 7,178
RETAIL & WHOLESALE - 3.3%
APPAREL STORES - 0.4%
Charming Shoppes, Inc. (a) 122,300 719
Gap, Inc. 25,000 1,111
Limited, Inc. (The) 219,000 4,886
Payless ShoeSource, Inc. (a) 153,880 9,464
16,180
DRUG STORES - 0.2%
CVS Corp. 126,800 7,212
GENERAL MERCHANDISE STORES - 2.3%
Coles Myer Ltd. 91,281 474
Dayton Hudson Corp. 136,900 8,847
Federated Department Stores, Inc. (a) 608,800 26,673
May Department Stores Co. (The) 87,500 4,889
Sears, Roebuck & Co. 233,000 14,752
Wal-Mart Stores, Inc. 1,053,500 39,572
95,207
GROCERY STORES - 0.1%
American Stores Co. 98,200 2,480
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
Officemax, Inc. (a) 100,000 1,400
Toys "R" Us, Inc. (a) 368,200 12,540
13,940
TOTAL RETAIL & WHOLESALE 135,019
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 0.5%
PRINTING - 0.3%
Deluxe Corp. 162,500 $ 5,413
Donnelley (R.R.) & Sons Co. 190,300 7,648
New England Business Service, Inc. 17,600 519
13,580
SERVICES - 0.2%
Block (H&R), Inc. 120,600 4,620
Jostens, Inc. 45,000 1,162
5,782
TOTAL SERVICES 19,362
TECHNOLOGY - 3.0%
COMMUNICATIONS EQUIPMENT - 0.4%
Alcatel Alsthom Compagnie Generale d'Electricite SA 87,644 11,439
Intermedia Communications of Florida, Inc. (a) 88,800 3,230
Lucent Technologies, Inc. 22,454 1,907
16,576
COMPUTER SERVICES & SOFTWARE - 0.1%
Electronic Data Systems Corp. 81,000 3,503
Sabre Group Holdings, Inc. Class A (a) 57,200 1,687
5,190
COMPUTERS & OFFICE EQUIPMENT - 1.4%
EMC Corp. (a) 270,000 13,635
International Business Machines Corp. 164,600 17,406
Unisys Corp. (a) 3,000,000 28,875
59,916
ELECTRONICS - 1.0%
AMP, Inc. 157,600 8,235
Intel Corp. 125,000 11,477
Micron Technology, Inc. (a) 350,000 17,041
Thomas & Betts Corp. 67,500 3,856
40,609
PHOTOGRAPHIC EQUIPMENT - 0.1%
Polaroid Corp. 74,200 4,415
TOTAL TECHNOLOGY 126,706
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 0.8%
AIR TRANSPORTATION - 0.2%
Viad Corp. 364,600 $ 6,905
RAILROADS - 0.6%
CSX Corp. 351,900 21,730
Wisconsin Central Transportation Corp. (a) 100,000 3,131
24,861
TOTAL TRANSPORTATION 31,766
UTILITIES - 4.4%
ELECTRIC UTILITY - 1.6%
Allegheny Power System, Inc. 268,100 7,859
American Electric Power Co., Inc. 252,000 11,277
Central Maine Power Co. 187,800 2,535
CILCORP, Inc. 32,900 1,380
Consolidated Edison Co. of New York, Inc. 87,100 2,755
DQE, Inc. 55,000 1,736
DPL, Inc. 200,600 4,940
Duke Power Co. 152,377 7,724
Entergy Corp. 453,200 12,378
National Grid Co. PLC 262,400 1,111
Niagara Mohawk Power Corp. (a) 306,200 2,851
PECO Energy Co. 100,000 2,350
PG&E Corp. 202,000 5,012
Pinnacle West Capital Corp. 110,000 3,472
Unicom Corp. 48,000 1,089
68,469
GAS - 0.8%
MCN Corp. 323,200 10,241
Pacific Enterprises 267,000 8,928
Questar Corp. 295,000 12,077
31,246
TELEPHONE SERVICES - 2.0%
ALLTEL Corp. 162,100 5,329
Ameritech Corp. 164,400 11,087
Bell Atlantic Corp. 126,200 9,157
BellSouth Corp. 195,200 9,248
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
McLeodUSA, Inc. (a) 78,400 $ 2,695
NYNEX Corp. 203,200 11,265
SBC Communications, Inc. 229,800 13,601
Teleport Communications Group, Inc. Class A (a) 70,000 2,756
WorldCom, Inc. (a) 538,813 18,825
83,963
TOTAL UTILITIES 183,678
TOTAL COMMON STOCKS
(Cost $1,847,211) 2,513,785
CONVERTIBLE PREFERRED STOCKS - 1.5%
CONSTRUCTION & REAL ESTATE - 0.1%
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Vornado Realty Trust $3.25 Series A 42,600 2,231
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Republic Industries, Inc. $1.55 68,900 1,679
ENERGY - 0.2%
OIL & GAS - 0.2%
Occidental Petroleum Corp. $3.00 58,900 5,654
Tosco Financing Trust $2.875 (e) 13,900 813
Unocal Capital Trust $3.125 41,500 2,407
8,874
FINANCE - 0.3%
INSURANCE - 0.1%
Aetna, Inc. Class C 6.25% 66,200 6,670
SECURITIES INDUSTRY - 0.2%
Merrill Lynch & Co, Inc. $2.3906 72,700 2,554
Salomon, Inc. $2.03 117,400 4,226
6,780
TOTAL FINANCE 13,450
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Loral Space & Communications Ltd $3.00 Series C (e) 61,000 $ 3,096
MEDIA & LEISURE - 0.1%
BROADCASTING - 0.1%
Evergreen Media Corp. $3.00 (e) 58,000 3,255
LODGING & GAMING - 0.0%
Host Marriott Financial Trust $3.375 (e) 17,400 1,103
PUBLISHING - 0.0%
Hollinger International, Inc. $0.95 64,600 751
TOTAL MEDIA & LEISURE 5,109
NONDURABLES - 0.1%
FOODS - 0.1%
Dole Food Automatic Common Exchange
Security Trust $2.7475 61,300 2,483
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 10,700 3,263
GENERAL MERCHANDISE STORES - 0.1%
K mart Financing I $3.875 109,000 5,941
TOTAL RETAIL & WHOLESALE 9,204
TECHNOLOGY - 0.1%
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Wang Labs, Inc. $3.25 (e) 36,000 1,791
Wang Labs, Inc. $3.25 42,100 2,105
3,896
UTILITIES - 0.3%
CELLULAR - 0.1%
AirTouch Communications, Inc. Class B $1.74 63,600 2,019
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - 0.0%
MCN Corp. $4.00 18,400 $ 1,009
TELEPHONE SERVICES - 0.2%
Worldcom, Inc. 8% depositary shares 71,700 8,792
TOTAL UTILITIES 11,820
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $50,126) 61,842
CORPORATE BONDS - 12.8%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (000S)
CONVERTIBLE BONDS - 0.9%
DURABLES - 0.1%
CONSUMER ELECTRONICS - 0.1%
Matsushita Electric Industrial Co. Ltd.:
1.30%, 3/29/02 Aa2 $ 131,000 1,690
1.40%, 3/31/04 Aa2 60,000 774
2,464
ENERGY - 0.6%
ENERGY SERVICES - 0.1%
Baker Hughes, Inc. 0%, 5/5/08 A2 3,510 3,058
OIL & GAS - 0.5%
Pennzoil Co.:
6 1/2%, 1/15/03 Baa3 8,440 15,941
4 3/4%,10/1/03 Baa3 4,270 5,754
21,695
TOTAL ENERGY 24,753
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.1%
MBL International Finance of Bermuda
3%, 11/30/02 Aa2 $ 3,770 $ 4,072
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
POLLUTION CONTROL - 0.0%
WMX Technologies, Inc. 2%, 1/24/05 Baa1 1,000 923
MEDIA & LEISURE - 0.0%
LODGING & GAMING - 0.0%
Hilton Hotels Corp. 5%, 5/15/06 Baa1 1,580 1,837
RETAIL & WHOLESALE - 0.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Home Depot, Inc. 3 1/4%, 10/1/01 A1 4,510 5,389
TOTAL CONVERTIBLE BONDS 39,438
NONCONVERTIBLE BONDS - 11.9%
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Daimler-Benz Capital AG
4 1/8%, 7/5/03 unit A1 3,060 2,672
Tennessee Gas Pipeline Co. 7%, 3/15/27 Baa2 3,080 3,186
5,858
TEXTILES & APPAREL - 0.3%
Levi Strauss & Co. 7%, 11/1/06 (e) Baa2 10,000 10,230
TOTAL DURABLES 16,088
ENERGY - 0.1%
OIL & GAS - 0.1%
Pennzoil Co. 9 5/8%, 11/15/99 Baa3 2,610 2,791
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 6.5%
ASSET-BACKED SECURITIES - 0.5%
Discover Card Master Trust I 6.90%, 2/16/00 A2 $ 4,500 $ 4,501
Green Tree Financial Corp. 6.10%, 4/15/27 Aaa 3,666 3,672
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 542 541
Premier Auto Trust:
4.90%, 12/15/98 Aaa 209 209
8.05%, 4/4/00 Aaa 3,450 3,504
6%, 5/6/00 Aaa 3,920 3,926
Standard Credit Card Master Trust I:
5 1/2%, 9/7/98 participation certificate A2 2,800 2,800
7.65%, 2/15/00 A2 2,300 2,322
Union Federal Savings Bank Grantor Trust:
7.275%, 10/10/00 Baa2 643 647
8.20%, 1/10/01 Baa2 451 458
22,580
BANKS - 2.5%
ABN Amro Bank NV
6 5/8%, 10/31/01 Aa3 6,750 6,843
Banc One Corp. 6.70%, 3/24/00 Aa3 5,300 5,378
Banco Latinoamer Exportaciones Euro
6.90%, 12/6/99 (e) Baa2 2,300 2,334
BanPonce Corp.:
5 3/4%, 3/1/99 A3 1,620 1,607
6.378%, 4/8/99 A3 2,980 2,982
BanPonce Financial Corp.:
6.88%, 6/16/00 A3 2,500 2,541
6.69%, 9/21/00 A3 500 506
6 3/4%, 8/9/01 A3 770 780
Capital One Bank 7.20%, 7/19/99 Baa3 18,000 18,329
Corporacion Andina De Fomento:
euro 7 1/4%, 4/30/98 Baa3 800 808
yankee 7 1/4%, 4/30/98 (e) A3 5,900 5,956
Export-Import Bank of Korea 6 3/8%, 2/15/06 A1 10,700 10,327
Firstar Corp. 7.15%, 9/1/00 A3 6,210 6,260
Korea Development Bank yankee:
6 3/4%, 12/1/05 A1 2,240 2,217
7 1/4%, 5/15/06 A1 6,000 6,127
Midland American Capital Corp. gtd.
12 3/4%, 11/15/03 A1 590 637
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 $ 4,500 $ 4,783
NB Capital Trust IV 8 1/4%, 4/15/27 A1 5,000 5,358
Signet Bank 7.80%, 9/15/06 Baa1 4,000 4,264
Signet Banking Corp. 9 5/8%, 6/1/99 Baa2 4,469 4,723
Union Planters National Bank
6.81%, 8/20/01 A3 4,000 4,070
Zions Bancorp. 8 5/8%, 10/15/02 Baa1 6,000 6,571
103,401
CREDIT & OTHER FINANCE - 2.9%
AT&T Capital Corp.:
6.02%, 12/1/98 Baa3 7,500 7,508
6.16%, 12/3/99 Baa3 2,750 2,744
Associates Corp. of North America
6 7/8%, 2/15/00 Aa3 13,000 13,244
BCH Cayman Islands Ltd. yankee
7.70%, 7/15/06 A3 2,000 2,109
BanPonce Trust I 8.327%, 2/1/27 (e) Baa1 7,150 7,641
Chrysler Financial Corp.:
5.74%, 1/11/99 A3 5,000 4,991
5 5/8%, 1/15/99 A3 15,000 14,935
6 3/8%, 1/28/00 A3 7,230 7,276
Finova Capital Corp. 6.12%, 5/28/02 Baa1 5,000 4,944
First Security Capital I 8.41%, 12/15/26 A3 1,690 1,822
Ford Motor Credit Co.:
euro 8 5/8%, 1/24/00 A1 3,766 3,964
5.73%, 2/23/00 A1 4,500 4,458
6.20%, 3/12/01 A1 20,000 19,969
General Electric Capital Corp.
6.94%, 4/13/09 (d) Aaa 7,000 7,104
General Motors Acceptance Corp.
6.65%, 5/24/00 A3 5,000 5,061
Greyhound Financial Corp. 6.95%, 1/28/98 Baa2 1,250 1,255
KeyCorp Institutional Capital Series A
7.826%, 12/1/26 A1 4,000 4,104
Secured Finance, Inc. gtd. secured
9.05%, 12/15/04 Aaa 1,500 1,711
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Union Acceptance Corp. 7.075%, 7/10/02 Baa2 $ 1,059 $ 1,067
U.S. West Capital Funding, Inc.
6.95%, 1/15/37 Baa1 3,910 4,036
119,943
INSURANCE - 0.4%
Executive Risk Capital Trust 8 5/8%, 2/1/27 Baa3 10,000 10,487
SunAmerica, Inc. 6.20%, 10/31/99 Baa1 5,500 5,507
15,994
SAVINGS & LOANS - 0.2%
Great West Financial Trust II 8.206%, 2/1/27 Baa2 8,000 8,437
TOTAL FINANCE 270,355
HEALTH - 0.1%
MEDICAL FACILITIES MANAGEMENT - 0.1%
Columbia/HCA Healthcare Corp.
6 7/8%, 7/15/01 A3 3,000 3,064
HOLDING COMPANIES - 0.2%
Norfolk Southern Corp. 7.05%, 5/1/37 Baa1 8,820 9,198
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc. 6 1/4%, 4/1/99 A3 8,500 8,528
MEDIA & LEISURE - 0.5%
BROADCASTING - 0.4%
TCI Communication, Inc.:
7 1/4%, 6/15/99 Ba1 1,550 1,571
6.82%, 9/15/10 (f) Ba1 5,000 5,011
7 3/8%, 2/15/00 Ba1 3,750 3,815
Time Warner, Inc. 7.95%, 2/1/00 Ba1 6,700 6,949
17,346
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 0.1%
Circus Circus Enterprises, Inc. 7%, 11/15/36 Baa2 $ 2,000 $ 2,018
RESTAURANTS - 0.0%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa1 1,400 1,337
TOTAL MEDIA & LEISURE 20,701
NONDURABLES - 0.6%
FOODS - 0.2%
ConAgra, Inc. 7 1/8%, 10/1/26 Baa1 5,000 5,261
Dart and Kraft Finance NV 7 3/4%, 11/30/98 A2 3,750 3,839
9,100
TOBACCO - 0.4%
Philip Morris Companies, Inc.:
7%, 7/15/05 A2 7,000 7,088
6.95%, 6/1/06 A2 8,980 9,147
16,235
TOTAL NONDURABLES 25,335
RETAIL & WHOLESALE - 0.6%
GENERAL MERCHANDISE STORES - 0.4%
Dayton Hudson Corp. 6.40%, 2/15/03 Baa1 1,000 996
Federated Department Stores, Inc.:
8 1/2%, 6/15/03 Baa2 4,000 4,375
6.79%, 7/15/27 Baa2 6,000 6,093
Penney (J.C.) Co., Inc. 6.95%, 4/1/00 A2 5,000 5,093
16,557
GROCERY STORES - 0.2%
American Stores Co. 7 1/2%, 5/1/37 Baa2 7,000 7,412
TOTAL RETAIL & WHOLESALE 23,969
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.5%
COMPUTERS & OFFICE EQUIPMENT - 0.5%
Comdisco, Inc.:
9.45%, 6/8/00 Baa2 $ 6,000 $ 6,494
9.30%, 6/27/00 Baa2 3,750 4,054
6 3/8%, 11/30/01 Baa1 12,000 11,966
22,514
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.4%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 2,030 2,041
9 1/2%, 7/15/98 Baa3 4,000 4,130
Delta Air Lines, Inc.:
9 7/8%, 5/15/00 Baa3 2,000 2,174
equipment trust certificate 8.54%, 1/2/07 Baa1 867 944
Delta Air Lines, Inc. pass through trust
9 7/8%, 4/30/08 Baa1 4,886 5,632
14,921
RAILROADS - 0.3%
Burlington Northern Santa Fe Corp.
6.53%, 7/15/37 Baa2 12,000 12,431
TOTAL TRANSPORTATION 27,352
UTILITIES - 1.5%
CELLULAR - 0.3%
360 Degrees Communications Co.:
7 1/8%, 3/1/03 Ba1 5,750 5,866
7 1/2%, 3/1/06 Ba1 4,400 4,542
10,408
ELECTRIC UTILITY - 0.3%
DR Investment yankee 7.10%, 5/15/02 (e) Baa1 7,500 7,707
Gulf States Utilities Co. 1st mortgage
6 3/4%, 10/1/98 Baa3 1,000 1,007
Israel Electric Corp. Ltd. yankee
7 1/4%, 12/15/06 (e) A3 3,000 3,077
Texas Utilities Electric Co. 9 1/2%, 8/1/99 Baa1 1,000 1,061
12,852
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
GAS - 0.2%
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa2 $ 8,700 $ 9,844
TELEPHONE SERVICES - 0.7%
LCI International, Inc. 7 1/4%, 6/15/07 Ba1 2,950 3,020
MFS Communications, Inc.
8.88%, 1/15/06 (d) Ba3 9,593 10,461
WorldCom, Inc. 7 3/4%, 4/1/07 Ba1 14,600 15,470
28,951
TOTAL UTILITIES 62,055
TOTAL NONCONVERTIBLE BONDS 491,950
TOTAL CORPORATE BONDS
(Cost $515,248) 531,388
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 15.7%
U.S. TREASURY OBLIGATIONS - 13.6%
5 7/8%, 8/15/98 Aaa 54,000 54,135
7 3/4%, 12/31/99 Aaa 51,849 54,142
5 1/2%, 12/31/00 Aaa 10,900 10,789
6 5/8%, 6/30/01 Aaa 85,400 87,628
10 3/4%, 5/15/03 Aaa 10,186 12,551
7 1/4%, 5/15/04 Aaa 109,485 117,252
12 3/8%, 5/15/04 Aaa 9,614 12,986
7%, 7/15/06 Aaa 38,800 41,304
11 3/4%, 2/15/10 (callable) Aaa 73,985 98,955
9%, 11/15/18 Aaa 55,081 71,829
561,571
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.1%
Federal Agricultural Mortgage Corporation:
7.01%, 2/10/05 Aaa 1,530 1,595
7.04%, 8/10/05 Aaa 2,400 2,513
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Federal Home Loan Bank:
7.36%, 7/1/04 Aaa $ 2,990 $ 3,191
7.46%, 9/9/04 Aaa 1,540 1,649
7.87%, 10/20/04 Aaa 6,400 7,021
Federal Home Loan Mortgage Corporation:
8.115%, 1/31/05 Aaa 4,750 5,270
6.783%, 8/18/05 Aaa 3,660 3,776
Federal National Mortgage Association:
7.49%, 3/02/05 Aaa 11,000 11,839
6.72%, 8/1/05 Aaa 6,060 6,222
Financing Corporation:
0%, 3/26/04 Aaa 4,574 3,034
0%, 5/11/05 - 3,461 2,127
Government Trust Certificates (assets of Trust
guaranteed by U.S. Government
through Defense Security Assistance Agency):
Class T-3, 9 5/8%, 5/15/02 Aaa 2,492 2,658
Class 1-C, 9 1/4%, 11/15/01 Aaa 2,193 2,340
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 720 724
Private Export Funding Corp. secured
6.86%, 4/30/04 Aaa 1,687 1,722
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
7 3/4%, 11/15/99 Aaa 8,448 8,770
0%, 11/15/01 Aaa 5,280 4,106
8%, 11/15/01 Aaa 3,440 3,689
6 1/4%, 8/15/02 Aaa 4,896 4,942
5.89%, 8/15/05 Aaa 4,527 4,432
U.S. Department of Housing and Urban
Development Government guaranteed
participation certificates
Series 1995-A, 8.27%, 8/1/03 Aaa 6,270 6,929
88,549
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $638,952) 650,120
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 4.7%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.1%
7.00%, 9/1/98 to 7/1/01 Aaa $ 3,099 $ 3,125
7.50%, 8/1/27 (g) Aaa 40 41
3,166
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.3%
5.50%, 11/1/08 to 3/1/11 Aaa 18,410 17,794
5.50%, 8/1/12 (g) Aaa 1,930 1,852
6.00%, 12/1/00 to 4/1/26 Aaa 45,916 44,731
6.50%, 7/1/08 to 5/1/26 Aaa 55,726 54,632
7.00%, 4/1/23 to 8/1/27 Aaa 47,585 47,644
7.50%, 6/1/07 to 4/1/08 Aaa 2,549 2,612
7.50%, 8/1/27 (g) Aaa 273 274
8.00%, 9/1/17 to 8/1/27 Aaa 10,048 10,394
179,933
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.3%
8.00%, 1/15/17 to 8/15/25 Aaa 1,606 1,660
9.00%, 11/15/14 to 2/15/25 Aaa 5,296 5,668
9.50%, 6/15/09 to 11/15/24 Aaa 3,440 3,726
11,054
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $188,827) 194,153
COMMERCIAL MORTGAGE SECURITIES - 0.4%
Equitable Life Assurance Society of the United States (The):
Series 174 Class B1,
7.33%, 5/15/06 (e) Aa2 4,000 4,202
Series 1996-1 Class C1,
7.52%, 5/15/06 (e) A2 4,000 4,229
Oregon Commercial Mortgage, Inc.
Series 1995-1 Class A, 7.15%, 6/25/23 (e) Aaa 2,081 2,092
Resolution Trust Corp. Series 1995-C1
Class A-4A, 6 1/4%, 2/25/27 Aaa 187 187
Structured Asset Securities Corp.:
commercial Series 1995-C1 Class A1-A,
7 3/8%, 9/25/24 Aaa 1,422 1,430
sequential pay Series 1993-C1 Class A-1A,
6.60%, 10/25/24 AA+ 633 631
Wells Fargo Capital Markets Apartment
Financing Trust 6.56%, 12/29/05 (e) Aaa 4,500 4,542
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $16,602) 17,313
FOREIGN GOVERNMENT OBLIGATIONS (H) - 0.3%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
Export Development Corp. yankee
8 1/8%, 8/10/99 Aa2 $ 1,900 $ 1,978
Israeli State 6 3/8%, 12/15/05 A3 4,000 3,882
Quebec Province yankee 7.22%, 7/22/36 (d) A2 5,250 5,643
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $11,013) 11,503
SUPRANATIONAL OBLIGATIONS - 0.2%
African Development Bank 7 3/4%, 12/15/01 Aa1 3,000 3,171
Inter American Development Bank
yankee 6.29%, 7/16/27 Aaa 3,000 3,053
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $5,960) 6,224
CASH EQUIVALENTS - 3.8%
SHARES
Taxable Central Cash Fund (b)
(Cost $158,895) 158,895,292 158,895
PURCHASED OPTIONS - 0.0%
EXPIRATION DATE/ UNDERLYING FACE
STRIKE PRICE AMOUNT AT VALUE
(000S)
J. Aron and Co. OTC Put Option on Sept. 97/
1,185,125,000 Japanese Yen (Cost $114) 124.75 $ 9,997 7
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,432,948) $ 4,145,230
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.66%. 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 $62,068,000 or
1.5% of net assets.
6. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
7. Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
8. For foreign government obligations not 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 26.8% AAA, AA, A 26.0%
Baa 5.8% BBB 7.0%
Ba 1.4% BB 0.4%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
of the sovereign credit of the issuing government. The percentage not
rated by both S&P and Moody's amounted to 0.1%.
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $3,433,895,000. Net unrealized appreciation
aggregated $711,335,000, of which $724,013,000 related to appreciated
investment securities and $12,678,000 related to depreciated
investment securities.
The fund hereby designates approximately $29,910,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $3,432,948) - $ 4,145,230
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 48,590
RECEIVABLE FOR FUND SHARES SOLD 7,984
DIVIDENDS RECEIVABLE 5,264
INTEREST RECEIVABLE 21,999
OTHER RECEIVABLES 45
TOTAL ASSETS 4,229,112
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 13,292
REGULAR DELIVERY
DELAYED DELIVERY 34,386
PAYABLE FOR FUND SHARES REDEEMED 5,610
ACCRUED MANAGEMENT FEE 1,503
OTHER PAYABLES AND ACCRUED EXPENSES 1,054
TOTAL LIABILITIES 55,845
NET ASSETS $ 4,173,267
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 3,227,392
UNDISTRIBUTED NET INVESTMENT INCOME 13,939
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 219,779
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 712,157
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 253,134 SHARES OUTSTANDING $ 4,173,267
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $16.49
SHARE ($4,173,267 (DIVIDED BY) 253,134 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1997
INVESTMENT INCOME $ 69,441
DIVIDENDS
INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $94) 100,199
TOTAL INCOME 169,640
EXPENSES
MANAGEMENT FEE $ 17,730
TRANSFER AGENT FEES 10,335
ACCOUNTING AND SECURITY LENDING FEES 849
NON-INTERESTED TRUSTEES' COMPENSATION 27
CUSTODIAN FEES AND EXPENSES 253
REGISTRATION FEES 65
AUDIT 110
LEGAL 18
INTEREST 81
MISCELLANEOUS 28
TOTAL EXPENSES BEFORE REDUCTIONS 29,496
EXPENSE REDUCTIONS (561) 28,935
NET INVESTMENT INCOME 140,705
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 242,335
FOREIGN CURRENCY TRANSACTIONS 1,971 244,306
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 765,519
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (633) 764,886
NET GAIN (LOSS) 1,009,192
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,149,897
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 140,705 $ 193,431
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 244,306 111,252
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 764,886 (186,087)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 1,149,897 118,596
OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (179,398) (211,267)
SHARE TRANSACTIONS 848,181 1,055,217
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 174,028 203,684
COST OF SHARES REDEEMED (1,841,701) (2,214,260)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (819,492) (955,359)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 151,007 (1,048,030)
NET ASSETS
BEGINNING OF PERIOD 4,022,260 5,070,290
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 4,173,267 $ 4,022,260
INCOME OF $13,939 AND $52,588, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 58,807 79,220
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 12,375 15,438
REDEEMED (129,888) (166,917)
NET INCREASE (DECREASE) (58,706) (72,259)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31,
1997 1996 1995 1994 C 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 12.90 $ 13.20 $ 12.76 $ 13.84 $ 12.79
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .51 B .57 .62 .25 .62
NET REALIZED AND UNREALIZED 3.73 (.27) .27 (.17) 1.45
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS 4.24 .30 .89 .08 2.07
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.65) (.60) (.45) (.25) (.66)
FROM NET REALIZED GAIN - - - (.50) (.36)
IN EXCESS OF NET REALIZED GAIN - - - (.41) -
TOTAL DISTRIBUTIONS (.65) (.60) (.45) (1.16) (1.02)
NET ASSET VALUE, END OF PERIOD $ 16.49 $ 12.90 $ 13.20 $ 12.76 $ 13.84
TOTAL RETURN A 33.82% 2.25% 7.19% .37% 17.18%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 4,173 $ 4,022 $ 5,070 $ 5,390 $ 3,599
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE .75% .82% .91% 1.02% .93%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE NET .74% .79% .90% 1.01% .93%
ASSETS AFTER EXPENSE REDUCTIONS D D D D
RATIO OF NET INVESTMENT INCOME TO 3.58% 4.12% 5.33% 4.09% 5.07%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 70% 247% 269% 157% 162%
AVERAGE COMMISSION RATE E $ $.0415 $
</TABLE>
G THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 OF NOTES TO
FINANCIAL STATEMENTS).
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
I 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.
J 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).
K 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 July 31, 1997
7. 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 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 paydown gains/losses on certain securities, foreign
currency transactions, market discount, non-taxable dividends, capital
loss carryforwards 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.
8. 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
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
more joint trading accounts. These balances are invested in one or
more repurchase agreements 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. Income distributions 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 in the accompanying financial statements.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the fund, along with other registered investment companies
having management contracts with FMR, may participate in an interfund
lending program. This program provides an alternative credit facility
allowing the fund to borrow from, or lend money to, other
participating funds.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a 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. The market values of the securities purchased or sold on a
delayed delivery basis are identified as such in the fund's schedule
of investments. The fund may receive compensation for interest forgone
in the purchase of a delayed delivery security. 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.
2. OPERATING POLICIES -
CONTINUED
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. Gains and
losses are realized upon the expiration or closing of the options.
Realized gains (losses) on purchased options are included in realized
gains (losses) on investment securities, except purchased options on
foreign currency which are included in realized gains (losses) on
foreign currency transactions.
Exchange-traded options are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
9. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,706,298,000 and $3,645,997,000, respectively, of which
U.S. government and government agency obligations aggregated
$1,323,827,000 and $1,561,871,000, respectively.
10. 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. The annual individual fund fee rate is .15%. 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. For the
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
period, the management fee was equivalent to an annual 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 annual rate of .26% 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 $517,000 for the
period.
11. 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
$32,125,000, respectively. The weighted average interest rate was
5.77%. Interest expense includes $76,000 paid under the interfund
lending program.
12. 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.
13. 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 $5,454,000, respectively. The weighted average
7. BANK BORROWINGS -
CONTINUED
interest rate was 5.76%. Interest expense includes $5,000 paid under
the bank borrowing program.
14. 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 $210,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's custodian and transfer agent fees were
reduced by $12,000 and $339,000, respectively, under these
arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Balanced Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Puritan Trust: Fidelity Balanced Fund, including the
schedule of portfolio investments, as of July 31, 1997, and the
related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights
are the responsibility of the fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 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 Balanced Fund
as of July 31, 1997, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 11, 1997
DISTRIBUTIONS
The Board of Trustees of Fidelity Balanced Fund voted to pay on
September 8, 1997, to shareholders of record at the opening of
business on September 5, 1997, a distribution of $.76 per share
derived from capital gains realized from sales of portfolio securities
and a dividend of $.15 per share from net investment income.
A total of 22.06% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 53.74% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
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)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
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)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)
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
Robert C. Pozen, Senior Vice President
William J. Hayes, Vice President
Kevin E. Grant, Vice President
Richard A. Spillane, Jr., Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
William O. McCoy *
Marvin L. Mann *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* 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
Puritan Fund
Real Estate Investment Portfolio
Spartan(registered trademark) Market Index Fund
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
ANNUAL REPORT
JULY 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 24 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 28 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 32 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 33
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:
Through the first seven months of 1997, stock and bond markets
experienced the kind of short-term volatility that can affect them
periodically. The stock market rebounded strongly from its early
spring correction to continue on its record-setting pace, as seen by
the roughly 30% year-to-date gain by the Standard & Poor's 500 Index.
The bond market posted moderate returns over the past seven months, as
positive news on the inflation front helped soften the effects of a
hike in short-term interest rates by the Federal Reserve Board in late
March.
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 JULY 31, 1997 PAST 1 LIFE OF
YEAR FUND
FIDELITY GLOBAL BALANCED 23.93% 69.01%
MORGAN STANLEY CAPITAL INTERNATIONAL 32.60% 112.15%
WORLD INDEX
SALOMON BROTHERS WORLD GOVERNMENT 1.13% 37.73%
BOND INDEX, UNHEDGED
GLOBAL FLEXIBLE PORTFOLIO FUNDS AVERAGE 25.74% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on February 1, 1993. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, 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 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past one year average represents a peer
group of 81 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1997 PAST 1 LIFE OF
YEAR FUND
FIDELITY GLOBAL BALANCED 23.93% 12.37%
MORGAN STANLEY CAPITAL INTERNATIONAL 32.60% 18.20%
WORLD INDEX
SALOMON BROTHERS WORLD GOVERNMENT 1.13% 7.37%
BOND INDEX, UNHEDGED
GLOBAL FLEXIBLE PORTFOLIO FUNDS AVERAGE 25.74% 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 19970731 19970814 103713 S00000000000001
Global Balanced MS World Index (Net)
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
1997/02/28 14735.07 17990.03
13576.08
1997/03/31 14680.37 17630.82
13472.55
1997/04/30 14833.52 18203.76
13355.86
1997/05/31 15632.08 19324.04
13717.31
1997/06/30 16299.37 20284.52
13880.96
1997/07/31 16901.02 21215.45
13772.81
IMATRL PRASUN SHR__CHT 19970731 19970814 103716 R00000000000057
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Global Balanced Fund on February 1, 1993, when
the fund started. As the chart shows, by July 31, 1997, the value of
the investment would have grown to $16,901 - a 69.01% 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 $21,215 - a 112.15% increase. If $10,000 was put
in the Salomon Brothers World Government Bond Index, Unhedged, it
would have grown to $13,773 - a 37.73% 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
MARKET RECAP
Stock and bond market
performance worldwide was mixed
during the 12 months that ended
July 31, 1997. The U.S. stock
market posted exceptionally strong
returns, as moderate economic
growth and subdued inflation
helped create an almost perfect
investing environment. For the
period, the Standard & Poor's 500
Index returned 52.14% - well
above its long-term annual average
of about 11%. Increased emphasis
on shareholder-friendly
management by European
corporations helped the
performance of stocks in developed
markets overseas, while slow
economic growth, a weak yen and
ongoing deregulation hurt returns
for dollar-based investors in Japan.
The Morgan Stanley EAFE Index
(Europe, Australia, Far East) returned
18.26%. While many Southeast Asian
markets struggled due to slow
export growth and currency problems,
stable economic growth and other
positive factors helped Latin American
markets post very strong returns. The
Morgan Stanley Emerging Markets
Free Index returned 22.90%. A
favorable inflation backdrop steadied
fears of higher interest rates, buoying
the U.S. taxable bond market. The
Lehman Brothers Aggregate Bond
Index - a broad measure of the
U.S. taxable bond market - returned
10.76%. Uncertainty concerning the
implementation of the European
Monetary Union and the weak yen
hurt the return of the Salomon
Brothers World Government Bond
Index, Unhedged - a proxy of
bond market performance in
developed nations, including the U.S.
- - which returned 1.13%. Low
interest rates and increased
economic reforms helped the J.P.
Morgan Emerging Market Bond
Index return a strong 37.30%.
An interview with Richard Mace, Portfolio Manager of Fidelity Global
Balanced Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. For the 12 months that ended July 31, 1997, the fund had a return
of 23.93%. 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 12-month return of 1.13%
as of July 31. On the other hand, the fund trailed its equity-related
benchmark - the Morgan Stanley Capital International World Index -
which returned 32.60% during the same period. The global flexible
portfolio funds average, as tracked by Lipper Analytical Services, had
a 12-month return of 25.74%.
Q. WHAT FACTORS INFLUENCED PERFORMANCE?
A. Individual stock selection played a key role, as several of the
fund's larger holdings performed well. The fund also benefited from a
considerable weighting in U.S. bonds, as most currencies around the
world underperformed the strong dollar. In particular, many European
currencies performed poorly, partly reflecting uncertainty over the
push to make the `euro' the region's uniform currency. Questions
persisted over which countries will meet the requirements set forth by
the European Monetary Union (EMU), and the dollar was the beneficiary.
On the other hand, the fund's substantial exposure to Japanese
equities detracted from performance, as did an underweighting in U.S.
equities relative to the index.
Q. DID THE CURRENCY SITUATION ALTER YOUR INVESTING STRATEGY AT ALL?
A. It did. As I mentioned, the fund held a fairly significant amount
of U.S. bonds, reflecting the vitality of the dollar. In Japan - as
the yen continued its descent - I focused on equities believing they
offered superior value to Japanese bonds. On the equity side, my basic
philosophy was unchanged. I continued to search for companies that
were restructuring, as well as those that could benefit from a strong
dollar and improving worldwide economies.
Q. ON THAT NOTE, MANY INTERNATIONAL COMPANIES ARE FOLLOWING THE LEAD
OF AMERICAN CORPORATIONS BY STREAMLINING THEIR OPERATIONS. WHY IS THIS
A POSITIVE TREND?
A. It's a good thing because it shows that they care about their
shareholders. Over the past few years, foreign companies have focused
on finding ways to make their respective stock more attractive. As a
result, company managements have become smarter about how they run
their businesses. In order to earn returns above and beyond their cost
of capital, companies have reduced expenses - either by trimming
personnel, restructuring their balance sheets or upgrading their
existing technology. Similar to what we've seen in the U.S., foreign
companies also have been eliminating the non-core, less profitable
portions of their businesses. This trend has hit home with the fund,
as many of its positions reflect this new strategy. Volvo, for
instance, divested many of its non-essential business units and
announced plans to implement a share redemption program in which the
company will buy back one of every 20 outstanding shares. While this
corporate mentality may be winding down somewhat in the U.S., I think
there's lots of room for more growth internationally.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. Volvo was a positive contributor, thanks largely to the corporate
activity I just mentioned. Other worthy performers included Telebras,
a Brazilian telecommunications company; Total, a French oil company;
and Alcatel, a French firm specializing in telecommunications and
electrical equipment. Disappointments included several Japanese
brokerage companies, most notably Nomura Securities and Nikko
Securities, the latter of which the fund no longer owns. These stocks
suffered from the aforementioned economic and currency woes within
Japan.
Q. WHAT'S YOUR OUTLOOK?
A. I'll continue to utilize my three-pronged approach of looking for
stocks that can benefit from a rising dollar, stronger economies and
increased corporate efficiencies. One interesting area could be the
emerging-market countries of Southeast Asia. While stock prices in
that corner of the world have declined recently, there have been a few
successful restructuring stories, the valuations look fairly
attractive and overall business prospects appear to be in good shape.
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.
RICK MACE ON FIDELITY'S
INTERNATIONAL STOCK-PICKING
PROCESS:
"The process of looking for
attractive global investments isn't
all that different from choosing
domestic stocks, but there can be
more uncontrollable variables -
such as political unrest - at
times. Like U.S. stock fund
managers, we target stocks,
conduct our analysis and visit with
companies regularly. The best way
to find good stocks is to take a
hands-on approach; if you turn
over enough rocks and kick
enough tires, you'll inevitably find
some winners. In terms of Fidelity
itself, we've become more of a
presence on the international
investing stage. Our team includes
hundreds of analysts and fund
managers, covering as many
corners of the world as possible.
We consider our international
team to be among the best and
brightest in the game, and we
function as a complete team. If I
could toot our horn for a moment,
we've recently begun to see the
fruits of our efforts. Fidelity
recently won two distinguished
awards for its global investing
efforts and service. What I'm
proudest of, though, is that both
awards singled out Fidelity's
impressive devotion to teamwork."
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 July 31, 1997,
more than $74 million
MANAGER: Richard Mace,
since 1996; manager, Fidelity
International Value Fund, since
1994; manager, Fidelity
Overseas, since 1996; joined
Fidelity in 1987
(checkmark)
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
ALCATEL ALSTHOM COMPAGNIE GENERALE 1.2 1.1
D'ELECTRICITE SA (FRANCE)
NOVARTIS AG (REG.) (SWITZERLAND) 1.2 0.8
WELLA AG (GERMANY) 1.1 0.0
RHONE POULENC SA CLASS A (FRANCE) 1.0 0.0
MASCO CORP. (UNITED STATES OF AMERICA) 0.9 0.8
TOP FIVE BOND ISSUERS AS OF JULY 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
(WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE BOND ISSUERS
6 MONTHS AGO
U.S. TREASURY 17.2 20.4
TREUHANDSTALT 3.4 3.9
UNITED KINGDOM, GREAT BRITAIN & 1.7 1.6
NORTHERN IRELAND
SWEDISH KINGDOM 1.0 1.2
FRENCH GOVERNMENT 0.9 1.1
</TABLE>
TOP FIVE COUNTRIES AS OF JULY 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE COUNTRIES
6 MONTHS AGO
UNITED STATES OF AMERICA 35.7 40.8
JAPAN 12.7 12.5
UNITED KINGDOM 9.9 7.5
FRANCE 7.3 7.9
GERMANY 5.9 6.9
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 JULY 31, 1997 * AS OF JANUARY 31, 1997 **
ROW: 1, COL: 1, VALUE: 3.6
ROW: 1, COL: 2, VALUE: 1.0
ROW: 1, COL: 3, VALUE: 24.9
ROW: 1, COL: 4, VALUE: 70.5
STOCKS 65.9%
BONDS 28.9%
CONVERTIBLE
SECURITIES 1.7%
SHORT-TERM
INVESTMENTS 3.5%
FOREIGN
INVESTMENTS 59.2%
STOCKS 70.7%
BONDS 24.9%
CONVERTIBLE
SECURITIES 0.8%
SHORT-TERM
INVESTMENTS 3.6%
FOREIGN
INVESTMENTS 64.3%
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: 65.90000000000001
*
**
INVESTMENTS JULY 31, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 69.2%
SHARES VALUE (NOTE 1)
AUSTRALIA - 1.9%
Australia & New Zealand Banking Group Ltd. 12,300 $ 98,747
Broken Hill Proprietary Co. Ltd. (The) 14,500 197,580
Burns Philip & Co. 43,000 80,432
CSR Ltd. 16,500 64,813
Coles Myer Ltd. 13,300 68,861
Harvey Norman Holdings Ltd. 12,300 74,635
James Hardie Industries Ltd. Ord. 25,000 82,863
Leighton Holdings Ltd. 17,500 81,703
Mirvac Ltd. 25,100 55,588
National Australia Bank Ltd. 10,800 157,894
North Ltd. 19,600 71,857
Pioneer International Ltd. 22,300 81,255
Tabcorp Holdings Ltd. 21,000 106,057
Woodside Petroleum Ltd. 11,600 98,777
Woolworths Ltd. 17,700 55,489
1,376,551
AUSTRIA - 0.0%
Voest-Alpine Stahl AG 600 28,058
BELGIUM - 0.1%
BBL (Banque Bruxelles Lambert) 200 52,309
BRAZIL - 0.5%
Centrais Electricas Brasileiras SA 48,000 28,367
Compania Energertica Minas Gerais 1,954,000 110,064
Multicanal Participacoes SA sponsored ADR 4,000 45,000
Petrobras PN (Pfd. Reg.) 80,000 24,607
Telebras PN (Pfd. Reg.) 1,219,100 181,241
389,279
CANADA - 2.6%
Abitibi-Consolidated, Inc. 1,600 32,387
Alcan Aluminium Ltd. 3,200 125,367
Alliance Communications Corp. Class B (non-vtg.) (a) 4,000 36,275
Alliance Forest Products, Inc. (a) 1,200 30,994
Alliance Forest Products (a)(c) 2,000 51,656
BCE, Inc. 10,900 331,741
Bank of Nova Scotia 600 28,730
Bro-X Minerals Ltd. 600 -
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CANADA - CONTINUED
Canadian Imperial Bank of Commerce 600 $ 17,260
Canadian Natural Resources Ltd. (a) 5,300 142,656
Cominco Ltd. 4,500 127,326
Dofasco, Inc. 700 14,855
Domtar, Inc. 7,200 64,773
Greenstone Resources Ltd. (a) 12,000 113,179
Inco Ltd. 4,300 132,586
National Bank of Canada 14,000 182,827
Noranda, Inc. 8,300 178,844
Renaissance Energy Ltd. (a) 5,600 138,746
St. Laurent Paperboard, Inc. (a)(c) 5,700 100,490
TVI Pacific, Inc. (a) 157,000 36,449
1,887,141
DENMARK - 0.7%
Den Danske Bank Group AS 1,400 147,909
International Service Systems AS, Series B (a) 5,100 163,828
Novo-Nordisk AS Class B 800 84,291
Sophus Berendsen AS, Series B 200 28,268
Unidanmark AS Class A 2,000 119,355
543,651
EMERGING MARKETS - 0.2%
GT Global Developing Markets Fund 6,500 93,844
TCW/DW Emerging Markets Opportunities Trust (SBI) 2,400 37,950
Templeton Dragon Fund, Inc. 1,000 16,688
148,482
FINLAND - 1.3%
Enso OY Class R 2,000 18,238
Huhtamaki Ord. 4,000 180,920
Metsa-Serla Ltd. Class B 18,900 164,764
Nokia Corp. AB, Series A 2,600 225,000
Outokumpu OY Class A 15,000 284,511
Rauma OY 41 903
UPM-Kymmene Corp. 3,000 72,933
947,269
FRANCE - 6.4%
Alcatel Alsthom Compagnie Generale d'Electricite SA 7,000 913,630
Axa SA 1,200 78,427
Axime SA Ex Segin (a) 400 44,593
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FRANCE - CONTINUED
Axime SA Ex Segin (a)(c) 1,500 $ 167,222
Canal Plus SA 150 28,992
Cap Gemini Sogeti SA 2,700 168,577
Carrefour Supermarche SA 150 101,277
Compagnie de Saint Gobain 800 114,611
Credit Commercial de France Ord. 2,500 125,436
Elf Aquitaine SA sponsored ADR 6,400 366,400
Eramet SA 3,300 178,354
Groupe Danone 500 78,892
Lafarge Coppee SA 600 42,214
Lagardere S.C.A. (Reg.) 1,500 44,697
Michelin SA (Compagnie Generale des Etablissements) Class B 2,052
127,688
Pechiney SA Class A 6,139 266,325
Paribas SA (Cie Financiere) Class A 1,200 86,152
Rhone Poulenc SA Class A 17,823 750,491
Societe Generale Class A 2,200 290,335
Total SA Class B 5,982 600,289
Usinor Sacilor 4,600 91,653
Valeo SA 500 31,460
4,697,715
GERMANY - 1.4%
Allianz Aktiengesellschaft Holdings (Reg.) 330 84,194
BASF AG 3,200 122,725
Bayer AG 400 16,570
Buderus AG 250 118,591
Continental Gummi-Werke AG 3,600 92,729
Daimler-Benz AG Ord. 800 66,520
Deutsche Lufthansa AG 2,900 57,897
Deutsche Telekom AG 1,500 35,292
Dresdner Bank AG Ord. 500 22,848
Emerging Germany Fund, Inc. 3,000 32,438
Hoechst AG Ord. 800 37,253
Mannesmann AG Ord. 100 46,403
New Germany Fund, Inc. (The) 4,300 69,338
Philipp Holzmann AG 100 29,919
Thyssen AG Ord. 100 22,657
Veba AG Ord. 2,300 132,876
Volkswagen AG 39 29,617
1,017,867
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HONG KONG - 1.7%
Cheung Kong Holdings Ltd. 12,000 $ 133,316
China Light & Power Co. Ltd. 14,000 80,300
Hong Kong & China Gas Co. Ltd. 39,600 85,942
Hong Kong Telecommunications Ltd. 69,200 181,217
Hutchison Whampoa Ltd. Ord. 22,000 214,572
JCG Holdings Ltd. 88,000 82,987
Liu Chong Hing Bank Ltd. 34,000 94,871
National Mutual Asia Ltd. 58,000 61,439
New World Development Co. Ltd. 13,000 93,625
Sun Hung Kai Properties Ltd. 10,000 125,630
Wing Hang Bank Ltd. 16,000 95,698
1,249,597
INDIA - 0.1%
Mahindra & Mahindra Ltd. GDR 1,500 21,000
State Bank of India GDR (Reg.) 1,000 27,250
48,250
INDONESIA - 0.2%
PT Multipolar Corp. rights 12/31/97 (For. Reg.) (a) 247,500 25,081
Putra Surya Multidana PT (For. Reg.) (a) 92,000 132,811
157,892
IRELAND - 0.1%
CRH PLC 2,800 27,537
Smurfit (Jefferson) Group PLC 10,000 30,346
57,883
ITALY - 1.4%
Aeroporti di Roma SPA (a) 3,000 24,315
Credito Italiano Ord. 99,000 195,350
Eni Spa 51,700 304,433
Telecom Italia SPA 55,000 344,754
Telecom Italia Mobile Spa 53,500 181,476
1,050,328
JAPAN - 12.3%
Acom Co. Ltd. 4,000 215,041
Akita Bank Ltd. 19,000 112,551
Aisin Seiki Co. Ltd. 5,000 74,152
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Amway Japan Ltd. 3,000 $ 93,533
Asahi Breweries Ltd. 10,000 151,675
Bank of Tokyo-Mitsubishi Ltd. 9,000 166,842
Canon, Inc. 8,000 254,814
Dai-Ichi Kangyo Bank 7,000 86,707
Denso Corp. 6,000 148,136
Daito Trust Construction Co. 5,000 53,507
Fuji Photo Film Co. Ltd. 5,000 209,817
Fujitsu Ltd. 15,000 219,928
Fujitec Co. Ltd. 6,000 75,837
Hokkaido Takushoku Bank Ltd. 80,000 87,634
Honda Motor Co. Ltd. 5,000 166,842
Jafco Co. Ltd. 2,000 119,992
Jusco Co. Ltd. 4,000 111,228
Komatsu Ltd. Ord. 20,000 136,170
Long Term Credit Bank of Japan Ltd. (The) 21,000 90,246
Matsushita Electric Industrial Co. Ltd. 9,000 187,318
Matsushita Communication Industrial Co. Ltd. 8,000 334,359
Minebea Co. Ltd. 25,000 297,030
Melco Inc. 3,000 94,291
Minolta Camera Co. Ltd. 20,000 124,373
Namco Ltd. 3,000 112,998
Nichiei Co. Ltd. 2,000 212,345
Nintendo Co. Ltd. Ord. 3,000 303,350
Nippon Soda Co. Ltd. 10,000 102,802
Nippon Telegraph & Telephone Corp. Ord. 20 202,233
Nomura Securities Co. Ltd. 5,000 70,782
Orix Corp. 6,000 483,337
Rohm Co. Ltd. 3,000 391,826
Sumitomo Sitix Corp. 1,000 23,088
Sakura Bank Ltd. 49,000 299,347
Sankyo Co. Ltd. 5,000 178,218
Shinko Electric Industries Co. Ltd. 6,000 258,858
Sony Corp. 3,000 298,294
TDK Corp. 4,000 343,796
Takeda Chemical Industries Ltd. 12,000 363,008
Takefuji Corp. 2,000 96,904
Teisan Co. Ltd. 20,000 76,006
THK Co. Ltd. 13,000 244,281
Toshiba Ceramics Co. Ltd. 5,000 60,670
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Toyota Motor Corp. 13,000 $ 397,641
Toyo Trust & Banking Co. Ltd. 7,000 54,561
Tokyo Electron Ltd. 3,000 185,043
Uni Charm Corp. Ord. 5,000 191,700
Uny Co. Ltd. 10,000 204,761
World Co. Ltd. 2,000 85,780
Yasuda Trust & Banking 45,000 172,530
York Benimaru Co. 3,000 83,168
9,109,350
MEXICO - 0.2%
Gruma SA Class B sponsored ADR (c) 785 14,719
Grupo Financiero Bancomer Class B (a) 48,000 35,456
Grupo Financiero Inbursa SA Class B 4,000 19,220
Tubos De Acero De Mexico ADR (a) 5,300 99,706
169,101
MALAYSIA - 0.9%
Arab Malaysian Corp. 12,000 40,068
Amway Holding 9,000 48,150
Berjaya Sports Toto 18,000 85,373
Hong Leong Credit BHD 10,000 33,580
Hong Leong Credit BHD Class A (a) 2,000 6,660
Magnum Corp. 50,000 64,124
Malakoff 11,000 43,407
Malayan Banking 9,000 85,373
Oriental Holdings 7,000 47,809
Rothmans of Pall Mall Malaysia 10,000 104,345
Tenega Nasional 18,000 72,396
YTL Corp. 10,000 31,493
662,778
NETHERLANDS - 4.0%
Ahold NV 2,600 75,215
AKZO Nobel NV 400 61,972
Chicago Bridge & Iron Co. NV 4,000 91,500
DSM NV 700 73,867
ING Groep NV 6,500 316,430
KBB NV Ord. 1,000 67,372
KLM Royal Dutch Airlines NV (NY Reg.) 400 14,300
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NETHERLANDS - CONTINUED
KLM Royal Dutch Air Lines NV 1,000 $ 35,690
Koninklijke Hoogovens NV 2,900 175,770
Koninklijke KNP BT NV 5,900 135,632
Koninklijke Pakhoed NV 700 25,355
New Holland NV 5,100 146,306
Philips Electronics NV (Bearer) 7,500 608,519
Royal Dutch Petroleum Co. Ord. 8,000 448,566
Unilever NV Ord. 2,200 483,435
VNU Ord. 2,900 69,048
Vendex International NV (c) 3,000 154,738
2,983,715
NORWAY - 0.6%
Den Norske Bank AS Class A Free shares 17,100 71,927
Elkem ASA 4,600 91,319
NCL Holdings AS (a) 17,700 58,447
Nydalens Compagnie ASA 13,000 74,952
Olav Thon Eiendomsselskp Ord. 3,000 80,784
SAS Norske ASA Shares B 500 7,109
Steen & Stroem Invest AS (a) 5,500 85,042
469,580
NETHERLANDS ANTILLES - 0.1%
Schlumberger Ltd. 600 45,825
PERU - 0.1%
Compania de Minas Buenaventura SA Class B sponsored ADR 5,000 90,625
PORTUGAL - 0.3%
Electricidade de Portugal SA 7,000 118,618
Portugal Fund, Inc. 3,000 52,500
Portugal Telecom SA sponsored ADR 2,000 80,500
251,618
REGIONAL ASIA - 0.0%
Morgan Stanley Asia-Pacific Fund, Inc. 1,500 16,031
RUSSIA - 0.0%
Vimpel Communications sponsored ADR (a) 400 13,900
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SINGAPORE - 0.9%
City Developments Ltd. 7,000 $ 59,455
Creative Technology Corp. Ltd. (a) 2,600 52,975
Datacraft Asia Ltd. 20,000 67,600
DBS Land Ltd. 10,000 31,120
Delifrance Asia Ltd. (a) 28,000 34,627
Elec & Eltek International Co. Ltd. 4,000 30,000
Natsteel Ltd. 16,000 45,009
Overseas Union Bank Ltd. (For. Reg.) 9,000 58,402
Overseas Chinese Banking Corp. 9,600 96,541
Parkway Holdings Ltd. 14,000 64,211
United Overseas Bank Ltd. (For. Reg.) 8,000 86,974
Wing Tai Holdings Ltd. 13,000 35,333
662,247
SOUTH AFRICA - 0.1%
Gencor Ltd. (Reg.) 5,800 13,769
Gencor/Billiton letter of entitlement 7,250 26,401
JCI Ltd. 7,700 51,333
91,503
SPAIN - 0.7%
Acerinox SA (Reg.) 800 145,679
Asturiana del Zinc SA (a)(c) 2,100 44,826
Banco Bilbao Vizcaya SA Ord. (Reg.) 7,200 187,997
Banco de Santander SA Ord. (Reg.) 4,200 117,373
495,875
SWEDEN - 4.2%
ABB AB:
Series A 5,500 73,269
Series B 3,000 40,153
Astra AB Class A Free shares 30,767 550,333
Assi Doman AB Free shares 3,000 87,810
Electrolux AB 1,700 130,990
Ericsson (L.M.) Telephone Co.:
Class B 3,900 175,377
Class B ADR 1,300 58,825
Esselte AB Class B Free shares 5,600 131,691
Forcenergy AB Class B Free shares 10,000 108,825
Graenges AB (Reg.) (a) 950 14,022
Nordbanken AB 5,200 171,393
SKF AB Ord. 600 15,986
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - CONTINUED
Scania AB Class B 3,000 $ 85,184
Skandia Foersaekrings AB 7,000 283,695
Svenska Cellulosa AB (SCA) Class B Ord. 4,000 95,566
Svenska Handelsbanken 4,300 132,854
Swedish Match Co. 159,600 505,082
Svedala Industri Free shares 7,500 160,423
Volvo AB Class B 9,100 243,023
3,064,501
SWITZERLAND - 3.0%
ABB AG (Bearer) 40 56,871
Credit Suisse Group (Reg.) 4,000 539,861
Julius Baer Holding AG 128 186,305
Nestle SA (Reg.) 178 225,989
Novartis AG (Reg.) 567 910,426
Roche Holding AG participation certificates 15 145,137
Sulzer AG (Reg.) 20 15,111
Sulzer Medica AG (Reg.) (a) 202 57,533
SGS Societe Generale de Surveillance Holding SA (Bearer) 20 40,357
2,177,590
TAIWAN - 0.1%
Acer, Inc. GDR (Reg.) (a) 4,700 80,605
UNITED KINGDOM - 8.2%
Asda Group PLC 69,600 163,261
BAT Industries PLC Ord. 33,200 280,467
BOC Group PLC 2,000 36,826
BBA Group PLC 6,100 33,921
Barclays PLC Ord. 5,200 109,712
Bass PLC Ord. 5,700 77,979
Billiton PLC 21,750 79,918
Blue Circle Industries PLC 11,200 76,060
British Aerospace PLC 5,900 129,057
British Petroleum PLC Ord. 21,494 294,049
British Land Co. PLC, (The) Ord. 4,800 47,085
British Telecommunications PLC Ord. 3,100 21,713
Caradon PLC 57,960 192,051
Cookson Group PLC 70,000 266,393
DR Solomons Group PLC sponsored ADR 3,400 83,300
English China Clay PLC 10,700 38,175
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Glaxo Wellcome PLC 14,300 $ 302,947
Granada Group PLC 8,000 110,232
Grand Metropolitan PLC 4,800 47,124
Guinness PLC Ord. 4,000 38,384
HSBC Holdings PLC 5,600 195,937
HSBC Holdings PLC Ord. 1,000 36,170
Hays PLC 1,500 13,988
Inchcape PLC Ord. 18,300 85,327
JJB Sports PLC Class L 10,100 79,856
Ladbroke Group PLC Ord. 36,500 147,886
Lloyds TSB Group PLC 30,529 338,279
Lucas Varity PLC 39,100 120,579
Mercury Asset Management Group PLC 2,100 48,020
National Grid Co. PLC 58,300 246,732
Pearson PLC 1,500 16,744
Perpetual PLC 500 21,120
Redland PLC Ord. 25,000 116,260
Rentokil Initial PLC 103,600 369,620
Rugby Group PLC 15,000 27,312
Shell Transport & Trading Co. PLC (Reg.) 79,800 589,704
SmithKline Beecham PLC Ord. 29,217 570,321
Somerfield PLC 53,200 170,170
Tarmac 7,500 13,779
Thames Water PLC Ord. 4,000 52,688
Tomkins PLC Ord. 3,000 15,157
Unigate PLC 15,000 131,884
Unilever PLC Ord. 7,500 217,633
WPP Group PLC 6,900 28,126
6,081,946
UNITED STATES OF AMERICA - 14.9%
Alumax, Inc. (a) 5,803 245,902
Aluminum Co. of America 300 26,550
American Express Co. 6,000 502,500
American Standard Companies, Inc. (a) 9,000 447,188
Anheuser-Busch Companies, Inc. 6,300 270,506
Baker Hughes, Inc. 7,500 330,469
Berkley (W.R.) Corp. 3,800 219,450
Burlington Resources, Inc. 8,000 378,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
CNF Transportation, Inc. 4,000 $ 139,500
CSX Corp. 2,500 154,375
Chrysler Corp. 5,000 185,625
Consolidated Freightways Corp. (a) 6,000 91,125
D.R. Horton, Inc. 20,000 240,000
Dresser Industries, Inc. 13,500 563,625
du Pont (E.I.) de Nemours & Co. 6,600 441,788
Eaton Corp. 5,000 451,563
First Chicago NBD Corp. 5,000 379,375
Fort Howard Corp. (a) 8,000 446,000
Genentech, Inc. special (a) 3,800 219,450
International Business Machines Corp. 5,000 528,750
Lehman Brothers Holdings, Inc. 6,000 298,875
Liberty Property Trust (SBI) 1,400 36,925
Limited, Inc. (The) 11,000 245,438
MCI Communications Corp. 9,500 335,469
Masco Corp. 14,100 660,938
National Mercantile Bancorp. warrants 6/2/99 (a) 2,403 -
Newell Co. 10,000 419,375
Quaker Oats Co. 4,000 204,750
Rite Aid Corp. 5,000 259,688
Silgan Holdings, Inc. 1,000 36,813
Silicon Graphics, Inc. (a) 10,000 250,000
Stewart & Stevenson Services, Inc. 5,000 136,563
Tenet Healthcare Corp. (a) 10,000 299,375
Teradyne, Inc. (a) 8,000 374,000
Toys "R" Us, Inc. (a) 10,000 340,625
Wal-Mart Stores, Inc. 17,000 638,563
Western Atlas, Inc. (a) 2,000 159,125
10,958,263
TOTAL COMMON STOCKS
(Cost $40,714,851) 51,077,325
PREFERRED STOCKS - 1.9%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.4%
JAPAN - 0.4%
AJL participating trust 15,000 $ 249,375
NONCONVERTIBLE PREFERRED STOCKS - 1.5%
GERMANY - 1.1%
SAP AG 100 24,371
Wella AG 1,080 804,896
829,267
ITALY - 0.4%
Telecom Italia Mobile Spa 43,313 155,303
Telecom Italia Mobile Spa de Risp 78,700 137,165
292,468
TOTAL NONCONVERTIBLE PREFERRED STOCKS 1,121,735
TOTAL PREFERRED STOCKS
(Cost $1,242,352) 1,371,110
CONVERTIBLE BONDS - 0.4%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
BERMUDA - 0.4%
MBL International Finance of Bermuda
3%, 11/30/02 (Cost $277,225) Aa2 $ 240,000 259,200
GOVERNMENT OBLIGATIONS (E) - 24.9%
FRANCE - 0.9%
French Government OAT 5 1/2%, 4/25/04 Aaa FRF 4,200,000 698,538
GERMANY - 3.4%
Treuhandstalt 6 5/8%, 7/9/03 Aaa DEM 4,250,000 2,504,801
ITALY - 0.7%
Italian Republic 10 1/2%, 9/1/05 (d) Aa3 ITL 700,000 487,423
GOVERNMENT OBLIGATIONS (E) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (B) (NOTE 1)
SWEDEN - 1.0%
Swedish Kingdom 10 1/4%, 5/5 /03 Aa1 SEK 5,000,000 $ 754,112
UNITED KINGDOM - 1.7%
United Kingdom, Great Britain &
Northern Ireland 9 1/2%, 4/18/05 Aaa GBP 650,000 1,220,164
UNITED STATES OF AMERICA - 17.2%
7 7/8%, 8/15/01 Aaa 640,000 685,702
12 3/4%, 11/15/10 (callable) Aaa 880,000 1,254,686
13 7/8%, 5/15/11 (callable) Aaa 980,000 1,489,443
8 1/8%, 8/15/19 Aaa 1,300,000 1,566,500
7 1/4%, 2/ 15/23 Aaa 1,350,000 1,476,563
6 1/4%, 8/15/23 Aaa 2,225,000 2,191,981
7 1/2%, 11/15/24 Aaa 1,335,000 1,530,030
7 5/8%, 2/15/25 Aaa 1,560,000 1,814,467
6 7/8%, 8/15/25 Aaa 665,000 710,094
12,719,466
TOTAL GOVERNMENT OBLIGATIONS
(Cost $18,853,642) 18,384,504
CASH EQUIVALENTS - 3.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.77%, dated
7/31/97 due 8/1/97 $ 2,693,432 2,693,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $63,781,070) $ 73,785,139
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 $533,651 or 0.7%
of net assets.
4. Principal amount in thousands.
5. For foreign government obligations not 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 25.3% AAA, AA, A 25.3%
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%
For some foreign government obligations, FMR has assigned the ratings
of the sovereign credit of the issuing government.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
Basic Industries 7.9%
Cash Equivalents 3.6
Construction & Real Estate 4.9
Durables 5.4
Energy 6.3
Finance 13.0
Government Obligations 24.9
Health 6.0
Industrial Machinery &
Equipment 2.0
Media & Leisure 1.6
Nondurables 4.5
Retail & Wholesale 4.5
Services 1.5
Technology 7.7
Utilities 4.3
Others (individually less than 1%) 1.9
100.0%
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $63,850,845. Net unrealized appreciation
aggregated $9,934,294, of which $11,919,683 related to appreciated
investment securities and $1,985,389 related to depreciated investment
securities.
At July 31, 1997, the fund had a capital loss carryforward of
approximately $13,100,000 of which $6,254,000 and $6,846,000 will
expire on July 31, 2003 and 2004, respectively.
For the period, interest and dividends from foreign countries were
$1,412,331. Taxes accrued or paid to foreign countries were $84,501.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 73,785,139
AGREEMENTS OF $2,693,000) (COST $63,781,070) -
SEE ACCOMPANYING SCHEDULE
CASH 798
RECEIVABLE FOR INVESTMENTS SOLD 1,249,898
RECEIVABLE FOR FUND SHARES SOLD 253,192
DIVIDENDS RECEIVABLE 220,935
INTEREST RECEIVABLE 408,816
TOTAL ASSETS 75,918,778
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 629,147
PAYABLE FOR FUND SHARES REDEEMED 535,608
ACCRUED MANAGEMENT FEE 46,446
OTHER PAYABLES AND ACCRUED EXPENSES 89,030
TOTAL LIABILITIES 1,300,231
NET ASSETS $ 74,618,547
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 76,771,111
UNDISTRIBUTED NET INVESTMENT INCOME 1,038,716
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (13,184,783)
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 9,993,503
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 4,829,429 SHARES OUTSTANDING $ 74,618,547
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $15.45
PER SHARE ($74,618,547 (DIVIDED BY) 4,829,429 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1997
INVESTMENT INCOME $ 1,140,032
DIVIDENDS
INTEREST 1,818,112
2,958,144
LESS FOREIGN TAXES WITHHELD (84,501)
TOTAL INCOME 2,873,643
EXPENSES
MANAGEMENT FEE $ 572,461
TRANSFER AGENT FEES 272,269
ACCOUNTING FEES AND EXPENSES 61,646
NON-INTERESTED TRUSTEES' COMPENSATION 499
CUSTODIAN FEES AND EXPENSES 125,743
REGISTRATION FEES 26,706
AUDIT 85,772
LEGAL 377
MISCELLANEOUS 2,600
TOTAL EXPENSES BEFORE REDUCTIONS 1,148,073
EXPENSE REDUCTIONS (10,423) 1,137,650
NET INVESTMENT INCOME 1,735,993
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 4,074,858
FOREIGN CURRENCY TRANSACTIONS (31,899) 4,042,959
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 10,351,507
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (23,085) 10,328,422
NET GAIN (LOSS) 14,371,381
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 16,107,374
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 1,735,993 $ 3,408,536
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 4,042,959 6,896,195
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 10,328,422 (5,043,765)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 16,107,374 5,260,966
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (2,871,377) (479,379)
SHARE TRANSACTIONS 36,337,493 56,434,636
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 2,728,128 452,937
COST OF SHARES REDEEMED (65,467,695) (122,715,801)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (26,402,074) (65,828,228)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,166,077) (61,046,641)
NET ASSETS
BEGINNING OF PERIOD 87,784,624 148,831,265
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 74,618,547 $ 87,784,624
INCOME OF $1,038,716 AND $2,018,787, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 2,664,438 4,439,802
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 214,058 35,497
REDEEMED (4,847,773) (9,683,927)
NET INCREASE (DECREASE) (1,969,277) (5,208,628)
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31, FEBRUARY 1, 1993
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
1997 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 .31 D .31 .28 .32 D .15
NET REALIZED AND UNREALIZED 2.68 .25 .13 .25 1.91
GAIN (LOSS)
TOTAL FROM INVESTMENT 2.99 .56 .41 .57 2.06
OPERATIONS
LESS DISTRIBUTIONS (.45) (.05) - (.15) (.08)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN - - - (.11) -
IN EXCESS OF NET REALIZED GAIN - - - (.20) -
RETURN OF CAPITAL - - - (.10) -
TOTAL DISTRIBUTIONS (.45) (.05) - (.56) (.08)
NET ASSET VALUE, END OF PERIOD $ 15.45 $ 12.91 $ 12.40 $ 11.99 $ 11.98
TOTAL RETURN B, C 23.93% 4.52% 3.42% 4.58% 20.65%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 74,619 $ 87,785 $ 148,831 $ 313,246 $ 84,157
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 1.51% 1.39% 1.34% 1.68% 2.12% A
NET ASSETS
RATIO OF EXPENSES TO AVERAGE 1.49% 1.36% 1.33% 1.67% F 2.12% A
NET ASSETS AFTER EXPENSE F F F
REDUCTIONS
RATIO OF NET INVESTMENT INCOME 2.28% 2.94% 4.68% 2.56% 4.02% A
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 57% 189% 242% 226% 172% A
AVERAGE COMMISSION RATE G $ .0089
</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 5 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 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 July 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Global Balanced Fund (the fund) is a fund of Fidelity Puritan
Trust (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The financial
statements have been prepared in conformity with generally accepted
accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. 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 options transactions, foreign currency transactions,
passive foreign investment companies (PFIC), non-taxable dividends,
capital loss carryforwards and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
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 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 for U.S. Treasury or Federal Agency obligations.
2. OPERATING POLICIES - CONTINUED
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $41,200,567 and $65,679,414, respectively, of which U.S.
government and government agency obligations aggregated $0 and
$5,681,313, 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. The annual individual fund fee rate
is .45%. 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.
For the period, the management fee was equivalent to an annual 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.
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 annual rate of .36% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 $9,826 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $10,219 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During
the period, the fund's custodian fees were reduced by $204 under this
arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Global Balanced Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Puritan Trust: Fidelity Global Balanced Fund , including
the schedule of portfolio investments, as of July 31, 1997, and the
related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the four years in the
period then ended and for the period February 1, 1993 (commencement of
operations) to July 31, 1993. These financial statements and financial
highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements
and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 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 Global Balanced
Fund as of July 31, 1997, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the
four years in the period then ended and for the period February 1,
1993(commencement of operations) to July 31, 1993, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 11, 1997
DISTRIBUTIONS
The Board of Trustees of Fidelity Global Balanced voted to pay on
September 8, 1997, to shareholders of record at the opening of
business on September 5, 1997, a dividend of $.29 per share from net
investment income.
A total of 44.9% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 8% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
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)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
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)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)
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
2300 Litton Lane - KH1A
Hebron, KY 41048
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
815 East Birch Street
Brea, CA
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
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
1907 West State Road 434
Longwood, FL
4001 Tamiami Trail, North
Naples, 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 Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
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
155 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
1055 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
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, 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
Robert C. Pozen, Senior Vice President
William J. Hayes, Vice President
Richard R. Mace, Jr., Vice President
Richard A. Spillane, Jr., Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* 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
Puritan Fund
Real Estate Investment Portfolio
Spartan Market Index Fund
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)
PURITAN(registered trademark)
FUND
ANNUAL REPORT
JULY 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 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
DISTRIBUTIONS 55
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:
Through the first seven months of 1997, stock and bond markets
experienced the kind of short-term volatility that can affect them
periodically. The stock market rebounded strongly from its early
spring correction to continue on its record-setting pace, as seen by
the roughly 30% year-to-date gain by the Standard & Poor's 500 Index.
The bond market posted moderate returns over the past seven months, as
positive news on the inflation front helped soften the effects of a
hike in short-term interest rates by the Federal Reserve Board in late
March.
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 JULY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY PURITAN 33.63% 117.18% 238.93%
S&P 500(REGISTERED TRADEMARK) 52.14% 155.75% 303.48%
LEHMAN BROTHERS AGGREGATE BOND INDEX 10.76% 41.93% 139.30%
BALANCED FUNDS AVERAGE 29.46% 88.96% 194.25%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, 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 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past one
year average represents a peer group of 317 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY PURITAN 33.63% 16.78% 12.98%
S&P 500 52.14% 20.66% 14.96%
LEHMAN BROTHERS AGGREGATE BOND INDEX 10.76% 7.26% 9.12%
BALANCED FUNDS AVERAGE 29.46% 13.51% 11.34%
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.)
$10,0IMAHDR PRASUN SHR__CHT 19970731 19970812 101024 S00000000000001
Puritan S&P 500
LB Aggregate Bond
00004 SP001
LB001
1987/07/31 10000.00 10000.00
10000.00
1987/08/31 10203.94 10373.00
9946.49
1987/09/30 9991.76 10145.83
9734.68
1987/10/31 8515.68 7960.42
10081.39
1987/11/30 8212.84 7304.48
10162.14
1987/12/31 8526.40 7860.35
10300.56
1988/01/31 9044.04 8191.27
10662.65
1988/02/29 9317.66 8572.99
10789.22
1988/03/31 9146.49 8308.08
10687.96
1988/04/30 9274.25 8400.30
10630.29
1988/05/31 9432.08 8473.38
10558.83
1988/06/30 9774.01 8862.31
10813.57
1988/07/31 9796.92 8828.63
10756.86
1988/08/31 9697.65 8528.46
10785.06
1988/09/30 9973.62 8891.77
11029.22
1988/10/31 10136.49 9138.96
11236.86
1988/11/30 10066.69 9008.28
11100.36
1988/12/31 10136.87 9165.92
11112.86
1989/01/31 10637.35 9836.87
11272.75
1989/02/28 10542.02 9591.93
11191.04
1989/03/31 10733.53 9815.42
11239.43
1989/04/30 11096.42 10324.84
11474.62
1989/05/31 11467.37 10743.00
11776.15
1989/06/30 11547.56 10681.76
12134.71
1989/07/31 12185.46 11646.33
12392.66
1989/08/31 12267.24 11874.59
12209.05
1989/09/30 12131.99 11825.91
12271.53
1989/10/31 11769.21 11551.55
12573.70
1989/11/30 11988.57 11787.20
12693.54
1989/12/31 12123.56 12070.09
12727.51
1990/01/31 11610.30 11260.19
12576.26
1990/02/28 11734.19 11405.44
12616.96
1990/03/31 11751.08 11707.69
12626.25
1990/04/30 11463.59 11415.00
12510.57
1990/05/31 12101.45 12527.96
12880.99
1990/06/30 12036.68 12442.77
13087.67
1990/07/31 11927.25 12402.95
13268.71
1990/08/31 11206.88 11281.73
13091.51
1990/09/30 10686.50 10732.31
13199.82
1990/10/31 10501.13 10686.16
13367.41
1990/11/30 11094.31 11376.48
13655.15
1990/12/31 11353.67 11693.89
13867.92
1991/01/31 11862.47 12203.74
14039.35
1991/02/28 12550.28 13076.31
14159.19
1991/03/31 12633.67 13392.75
14256.60
1991/04/30 12738.87 13424.90
14411.05
1991/05/31 13360.51 14004.85
14495.32
1991/06/30 12896.95 13363.43
14487.95
1991/07/31 13343.35 13986.17
14688.86
1991/08/31 13576.25 14317.64
15006.73
1991/09/30 13587.66 14078.53
15310.82
1991/10/31 13784.58 14267.18
15481.29
1991/11/30 13311.96 13692.22
15623.24
1991/12/31 14130.38 15258.61
16087.22
1992/01/31 14250.30 14974.80
15868.37
1992/02/29 14650.02 15169.47
15971.55
1992/03/31 14578.42 14873.66
15881.50
1992/04/30 15054.57 15310.95
15996.22
1992/05/31 15226.80 15385.97
16298.06
1992/06/30 15144.77 15156.72
16522.37
1992/07/31 15606.19 15776.63
16859.46
1992/08/31 15452.38 15453.21
17030.25
1992/09/30 15640.80 15635.56
17232.12
1992/10/31 15522.71 15690.28
17003.65
1992/11/30 15941.38 16225.32
17007.50
1992/12/31 16310.33 16424.89
17277.94
1993/01/31 16775.07 16562.86
17609.27
1993/02/28 17118.10 16788.12
17917.52
1993/03/31 17794.98 17142.35
17992.18
1993/04/30 18130.74 16727.50
18117.47
1993/05/31 18376.96 17175.80
18140.54
1993/06/30 18501.31 17225.61
18469.30
1993/07/31 18772.88 17156.71
18573.76
1993/08/31 19316.04 17806.95
18899.32
1993/09/30 19183.08 17669.83
18951.23
1993/10/31 19681.82 18035.60
19022.05
1993/11/30 19365.55 17864.26
18860.23
1993/12/31 19808.41 18080.42
18962.45
1994/01/31 20688.79 18695.15
19218.47
1994/02/28 20462.40 18188.51
18884.58
1994/03/31 19700.78 17395.49
18419.00
1994/04/30 19916.57 17618.16
18271.92
1994/05/31 20043.51 17907.09
18269.35
1994/06/30 19888.36 17468.37
18228.98
1994/07/31 20387.49 18041.33
18591.07
1994/08/31 20989.01 18781.03
18614.14
1994/09/30 20536.45 18320.89
18340.17
1994/10/31 20777.27 18733.11
18323.83
1994/11/30 20121.71 18050.85
18283.13
1994/12/31 20161.85 18318.55
18409.38
1995/01/31 20066.55 18793.55
18773.71
1995/02/28 20679.16 19525.93
19220.07
1995/03/31 21159.11 20102.14
19337.99
1995/04/30 21584.48 20694.15
19608.11
1995/05/31 22051.03 21521.30
20366.89
1995/06/30 22298.70 22021.23
20516.21
1995/07/31 23044.29 22751.46
20470.39
1995/08/31 23154.75 22808.57
20717.44
1995/09/30 23486.50 23771.09
20919.00
1995/10/31 23108.59 23686.22
21191.04
1995/11/30 23934.40 24726.05
21508.59
1995/12/31 24488.67 25202.27
21810.43
1996/01/31 24834.19 26060.16
21955.27
1996/02/29 25150.92 26301.74
21573.63
1996/03/31 25569.60 26555.02
21423.67
1996/04/30 25584.10 26946.44
21303.19
1996/05/31 25743.54 27641.39
21259.93
1996/06/30 25860.30 27746.70
21545.44
1996/07/31 25362.98 26520.86
21604.40
1996/08/31 25597.01 27080.18
21568.19
1996/09/30 26612.24 28604.25
21944.05
1996/10/31 27258.17 29393.16
22430.15
1996/11/30 28630.77 31614.99
22814.34
1996/12/31 28199.78 30988.69
22602.22
1997/01/31 29164.85 32924.87
22671.43
1997/02/28 29606.50 33183.00
22727.83
1997/03/31 28616.03 31819.51
22475.97
1997/04/30 29787.74 33719.13
22812.42
1997/05/31 30992.45 35771.95
23028.07
1997/06/30 32146.16 37374.54
23301.40
1997/07/31 33876.59 40348.43
23929.76
IMATRL PRASUN SHR__CHT 19970731 19970812 101028 R0000000000012300
OVER 10 YEARS
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Puritan Fund on July 31, 1987. As the chart
shows, by July 31, 1997, the value of the investment would have grown
to $33,893 - a 238.93% 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 $40,348 - a 303.48% increase. If $10,000 was put in the
bond index, it would have grown to $23,930 - a 139.30% 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
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks will
vary. That means if you sell
your shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Moderate economic growth and
subdued inflation helped create an
almost perfect investing environment
for the U.S. stock market, which
posted exceptionally strong returns
for the 12 months that ended July 31,
1997. The Standard & Poor's 500
Index returned 52.14% during the
period - well above its long-term
annual average of about 11%. The
stock market spent much of the
period breaking price and trading
volume records. Solid corporate
earnings, large inflows into mutual
funds, widespread optimism and a
generally favorable interest-rate
backdrop propelled share prices
higher, especially among
large-capitalization stocks.
Concerns in March and April over
higher interest rates and the
possibility of weaker corporate
earnings provided the only
significant pause in the stock market's
upward climb. Higher interest rates
tend to slow economic growth and
increase borrowing costs. When
the Federal Reserve Board raised a
key short-term interest rate in March,
the stock market - already at
historically high valuations - sold
off sharply through mid-April,
when positive news on the inflation
front emerged. From that point
through the end of the 12-month
period, the market soared ever
higher, with the Dow Jones Industrial
Average breaking through the
8000 mark for the first time in July
on its way to finishing above 8200
at the end of the 12-month period.
The market broadened to include
many small- and
mid-capitalization stocks during
this latest rally.
An interview with Bettina Doulton, Portfolio Manager of Fidelity
Puritan Fund
Q. HOW DID THE FUND PERFORM, BETTINA?
A. For the 12 months that ended July 31, 1997, the fund returned
33.63%, solidly ahead of the 29.46% return for the balanced funds
average, as tracked by Lipper Analytical Services. Given the structure
of the fund - namely its target mix of approximately 60% equities and
40% bonds - performance typically falls between the equity-based
Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. This general rule of thumb held true during the period, as the
fund outperformed the Lehman Brothers index, which returned 10.76%,
but underperformed the VERY strong S&P 500 index, which gained 52.14%.
Q. THE S&P 500'S 52% 12-MONTH GAIN WAS WELL ABOVE AVERAGE, WASN'T IT?
WHAT FACTORS WERE RESPONSIBLE FOR THE STOCK MARKET'S DRAMATIC RISE?
A. Yes, it truly was a remarkable period - the third-best 12-month
period for the S&P 500 in the past 35 years. Broadly, the stock
market's exceptionally strong performance resulted from a confluence
of positive factors, which together created an extremely favorable
environment for equities. Among the positive factors were
stronger-than-expected corporate earnings, declining interest rates
overall and positive flows of money into the stock market - helped by
the highest consumer confidence in over a quarter century.
Q. THE FUND PERFORMED STRONGLY COMPARED TO THE LIPPER AVERAGE. WHAT
STRATEGIES BENEFITED PERFORMANCE DURING THE PERIOD?
A. The fund's emphasis on larger-capitalization companies proved to be
a very successful strategy, as the fund's equities performed in line
with the S&P 500. Large-capitalization companies continued to generate
stronger earnings growth than their smaller-capitalization
counterparts - a trend that has been ongoing for the past few years.
In part, this has resulted from the restructurings undertaken by large
U.S. firms over the past decade, which have enabled them to become
more competitive globally. In terms of industries, my significant
commitment to strong-performing finance and health stocks was quite
beneficial. Underexposure to generally weak utilities, including both
telecommunications and electrics, was another helpful strategy.
Performance of the fund's equities likely would have exceeded that of
the S&P 500 if not for my underweighting of the technology sector -
the strongest-performing sector over the past year. However, given
Puritan's conservative objective, it's typically difficult to justify
a large technology weighting.
Q. DID THE PERFORMANCE OF THE FUND'S TOP INVESTMENTS MEET YOUR
EXPECTATIONS?
A. Yes, nine of the 10 stocks that, on average, comprised the fund's
largest equity investments over the course of the period significantly
outperformed the S&P 500. SmithKline Beecham and BankAmerica were two
particularly strong performers. SmithKline Beecham, similar to a
number of the fund's other pharmaceuticals holdings, has benefited
from a solid stream of new products, in combination with rising drug
utilization rates in the U.S. Among the fund's finance investments,
BankAmerica was the most significant contributor. This bank is in the
process of aggressively reducing its cost structure, achieving
improved returns on capital and utilizing excess capital to repurchase
its stock. In addition, the firm has been the beneficiary of an
improving California economy. I'd also highlight the fund's top equity
holding at the end of the period, General Electric, which continued to
execute spectacularly in all of its diverse businesses under CEO Jack
Welch.
Q. WERE ANY OF YOUR INVESTMENTS DISAPPOINTING?
A. There were certainly a few smaller positions that didn't perform as
I expected - largely because their business prospects didn't
materialize. However, given the strength of the market, I'd
characterize most of my disappointments as missed opportunities. In
some cases I sold stocks too early as they reached my price targets,
only to watch them continue rising, while in other situations, I
simply missed out on stocks by not buying them fast enough.
Q. WHERE HAVE YOU BEEN FINDING INVESTMENT OPPORTUNITIES LATELY?
A. For the most part, recent changes in the fund have reflected
company-specific opportunities. While the fund's health care exposure
has risen moderately, this has resulted mainly from selected
pharmaceuticals purchases, as well as market appreciation. With the
finance sector, I've recently taken some profits, particularly among
several money-center banks that had run up strongly during the past
year. That said, I continue to find attractive opportunities within
the finance sector - especially firms with diversified businesses. The
utilities sector is the one area where the fund has remained
considerably underexposed. Deregulation of both telecommunications and
electric utilities has led to very uncertain business prospects for
the vast majority of utilities. Accordingly, I've found few attractive
utilities investments, but I'm actively watching for new developments
at several companies.
Q. WHAT STOCKS HAVE YOU RECENTLY FOUND PARTICULARLY ATTRACTIVE?
A. Two stocks whose weighting I've increased in the months leading up
to the end of the period are American Home Products and Tyco
International. American Home Products is a pharmaceutical company
whose stock valuation was discounted relative to comparable firms.
Based on a number of exciting new products, it appeared that the
firm's sales growth rate and margins were poised to rise. Another
interesting company is Tyco International, a fabulously well-managed
conglomerate that has grown aggressively through a series of
acquisitions. It has proven to be exceedingly adept at integrating
complementary businesses into its existing organization, and its
business mix recently has become less cyclical.
Q. HOW WAS THE BOND PORTION OF THE FUND STRUCTURED?
A. The manager of the bond sub-portfolio, Kevin Grant, continued to
maintain an interest rate posture in line with the overall bond market
as measured by the Lehman Brothers Aggregate Bond Index. For the past
six to nine months, corporate bonds issued by companies generally
unaffected by shifts in the economy - including bonds issued by banks
- - were attractive. Historically, bank earnings were quite sensitive to
interest rates. However, over the past several years, banks have
increased the fee-based portions of their business, making them less
sensitive to interest rates and loans. In the corporate area, Kevin
has focused on shorter maturities in the two- to four-year range.
These bonds offer a yield advantage over Treasuries, but are short
enough in maturity that they shouldn't markedly underperform
Treasuries if the market becomes nervous about credit risk.
Q. WHAT TYPE OF INVESTMENT ENVIRONMENT DO YOU ENVISION FOR THE NEXT
SIX MONTHS?
A. While there's little I can point to at this time suggesting that
the outstanding environment that's prevailed over the past year won't
continue, it's difficult to imagine such strong stock market
performance carrying forward indefinitely. One thing I'm fairly
confident in predicting is that market volatility, which has increased
substantially in the past six months, will continue. This is because
the stock market's overall valuation is at the high end of many
traditional yardsticks. Consequently, any new developments that cause
market analysts to upgrade or downgrade their views on the
sustainability of the current environment have resulted recently in
exaggerated stock price swings. On the subject of volatility, I'd also
like to remind shareholders that as a balanced fund, Puritan generally
has lower volatility than pure equity funds.
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.
BETTINA DOULTON ON
DECLINING STOCK YIELDS:
"AS RECENTLY AS THE EARLY `90S,
INVESTORS COULD COUNT ON STOCK
DIVIDENDS TO PROVIDE CURRENT
INCOME, A SUBSTANTIAL PORTION OF
THE TOTAL RETURN ON STOCKS, AS WELL
AS A CUSHION DURING PERIODS OF
MARKET WEAKNESS. RECENTLY,
HOWEVER, DIVIDEND INCREASES
HAVEN'T KEPT PACE WITH EARNINGS.
BETWEEN THE FIRST QUARTER OF 1996
AND THE FIRST QUARTER OF 1997,
DIVIDENDS PAID BY COMPANIES IN
THE S&P 500 GREW BY ONLY 7%, WHILE
THEIR EARNINGS PER SHARE ROSE BY
18%. PART OF THE REASON DIVIDEND
PAYOUTS HAVEN'T KEPT PACE IS THAT
COMPANIES INCREASINGLY HAVE
CHOSEN TO USE THEIR CASH FLOW TO
EXECUTE SHARE BUYBACKS - WHICH
GENERALLY BOOST A COMPANY'S STOCK
PRICE - RATHER THAN RAISE THEIR
DIVIDENDS. COMPANIES CONTEND
THAT SINCE DIVIDENDS GENERALLY ARE
TAXED AT A HIGHER RATE THAN CAPITAL
GAINS, STOCK PRICE GAINS - VIA
SHARE BUYBACKS - ARE A MORE
TAX-EFFICIENT MEANS OF RETURNING
CAPITAL TO SHAREHOLDERS THAN
PAYING DIVIDENDS. AS SUCH,
DECLINING YIELDS - COMBINED WITH
A SHRINKING UNIVERSE OF
`INCOME-ORIENTED' STOCKS - HAVE
CREATED A VERY CHALLENGING
INVESTING ENVIRONMENT FOR
DIVERSIFIED, INCOME-ORIENTED
MUTUAL FUNDS, SUCH AS PURITAN,
WHICH SEEK TO GENERATE SUBSTANTIAL
CURRENT INCOME FOR SHAREHOLDERS."
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 JULY 31, 1997,
MORE THAN $22.3 BILLION
MANAGER: BETTINA DOULTON,
SINCE 1996; MANAGER, SEVERAL
OTHER FIDELITY FUNDS; JOINED
FIDELITY IN 1986
(CHECKMARK)
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
GENERAL ELECTRIC CO. 2.7 2.3
CITICORP 2.7 2.7
PHILIP MORRIS COMPANIES, INC. 2.6 2.9
BANKAMERICA CORP. 2.2 2.0
AMERICAN EXPRESS CO. 2.1 1.8
TOP FIVE BOND ISSUERS AS OF JULY 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
(WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE BOND ISSUERS
6 MONTHS AGO
U.S. TREASURY 8.1 7.0
FEDERAL NATIONAL MORTGAGE ASSOCIATION 3.8 3.6
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 2.3 3.2
STATE OF ISRAEL 0.7 0.9
FEDERATED DEPARTMENT STORES, INC. 0.4 -
</TABLE>
TOP FIVE MARKET SECTORS AS OF JULY 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 21.0 21.5
NONDURABLES 8.8 8.1
HEALTH 7.9 6.4
ENERGY 7.8 7.6
INDUSTRIAL MACHINERY & EQUIPMENT 6.7 6.2
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JULY 31, 1997 * AS OF JANUARY 31, 1997 **
ROW: 1, COL: 1, VALUE: 3.2
ROW: 1, COL: 2, VALUE: 1.6
ROW: 1, COL: 3, VALUE: 32.4
ROW: 1, COL: 4, VALUE: 62.8
STOCKS 61.7%
BONDS 33.1%
CONVERTIBLE
SECURITIES 0.7%
SHORT-TERM
INVESTMENTS 4.5%
FOREIGN
INVESTMENTS 9.7%
STOCKS 63.8%
BONDS 33.4%
CONVERTIBLE
SECURITIES 0.6%
SHORT-TERM
INVESTMENTS 2.2%
FOREIGN
INVESTMENTS 10.9%
ROW: 1, COL: 1, VALUE: 4.5
ROW: 1, COL: 2, VALUE: 1.7
ROW: 1, COL: 3, VALUE: 33.1
ROW: 1, COL: 4, VALUE: 60.7
*
**
INVESTMENTS JULY 31, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 62.5%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 5.8%
AEROSPACE & DEFENSE - 4.7%
AlliedSignal, Inc. 4,579,000 $ 422,413
Boeing Co. 1,759,452 103,478
Lockheed Martin Corp. 1,877,800 199,986
Sundstrand Corp. 1,176,500 72,943
Textron, Inc. 788,200 55,223
United Technologies Corp. 2,278,300 192,659
1,046,702
DEFENSE ELECTRONICS - 0.6%
Raytheon Co. 2,519,000 140,749
SHIP BUILDING & REPAIR - 0.5%
General Dynamics Corp. 1,259,800 111,492
Newport News Shipbuilding, Inc. 379,480 7,803
119,295
TOTAL AEROSPACE & DEFENSE 1,306,746
BASIC INDUSTRIES - 3.6%
CHEMICALS & PLASTICS - 2.7%
Air Products & Chemicals, Inc. 1,335,400 117,766
du Pont (E.I.) de Nemours & Co. 1,582,000 105,895
Goodrich (B.F.) Co. 1,049,900 47,442
Monsanto Co. 2,586,400 128,835
Nalco Chemical Co. 1,139,100 46,490
Olin Corp. 658,100 27,887
Praxair, Inc. 2,408,800 132,785
607,100
METALS & MINING - 0.1%
Aluminum Co. of America 310,600 27,488
PAPER & FOREST PRODUCTS - 0.8%
Fort Howard Corp. (a) 510,000 28,432
Kimberly-Clark Corp. 2,748,400 139,310
SDW Holdings Corp. warrants 12/15/06 (a) 1,970 10
167,752
TOTAL BASIC INDUSTRIES 802,340
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.3%
Masco Corp. 1,134,900 $ 53,199
ENGINEERING - 0.0%
Fluor Corp. 78,800 4,846
TOTAL CONSTRUCTION & REAL ESTATE 58,045
DURABLES - 1.4%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Johnson Controls, Inc. 986,300 44,199
CONSUMER DURABLES - 1.2%
Corning, Inc. 602,200 37,223
Minnesota Mining & Manufacturing Co. 2,421,800 229,466
266,689
TOTAL DURABLES 310,888
ENERGY - 7.3%
ENERGY SERVICES - 0.8%
Halliburton Co. 900,000 41,400
Schlumberger Ltd. 1,614,400 123,300
164,700
OIL & GAS - 6.5%
Amoco Corp. 1,232,900 115,893
British Petroleum PLC:
Ord. 9,519,763 130,235
ADR 3,910,030 322,333
Exxon Corp. 1,950,700 125,332
Harcor Energy, Inc. warrants 7/24/00 (a) 165,000 371
Mobil Corp. 1,752,600 134,074
Royal Dutch Petroleum Co. Ord. 592,800 33,239
Royal Dutch Petroleum Co. 6,717,600 375,765
Texaco, Inc. 1,071,000 124,303
Total SA:
Class B 290,700 29,172
sponsored ADR 353,200 17,815
USX-Marathon Group 1,549,400 49,871
1,458,403
TOTAL ENERGY 1,623,103
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 14.5%
BANKS - 7.2%
BankAmerica Corp. 6,647,800 $ 501,909
BankBoston Corp. 677,429 57,539
Citicorp 4,437,400 602,377
NationsBank Corp. 4,998,600 355,838
Wells Fargo & Co. 377,000 103,651
1,621,314
CREDIT & OTHER FINANCE - 2.5%
American Express Co. 5,475,627 458,584
Associates First Capital Corp. 191,000 12,594
Beneficial Corp. 526,400 38,164
First Chicago NBD Corp. 150,000 11,381
Household International, Inc. 300,400 38,902
559,625
FEDERAL SPONSORED CREDIT - 2.6%
Federal Home Loan Mortgage Corporation 9,424,900 339,886
Federal National Mortgage Association 4,909,450 232,278
572,164
INSURANCE - 1.9%
Allstate Corp. 2,457,522 194,143
Hartford Financial Services Group, Inc. 1,110,400 96,744
Loews Corp. 409,100 44,234
Progressive Corp. 8,000 858
St. Paul Companies, Inc. (The) 594,700 46,647
Travelers Group, Inc. (The) 466,667 33,571
416,197
SAVINGS & LOANS - 0.3%
Washington Mutual, Inc. 981,360 67,837
SECURITIES INDUSTRY - 0.0%
ECM Corp. LP (h) 6,318 632
TOTAL FINANCE 3,237,769
HEALTH - 7.8%
DRUGS & PHARMACEUTICALS - 7.0%
American Home Products Corp. 3,347,200 275,935
Bristol-Myers Squibb Co. 4,573,200 358,710
Merck & Co., Inc. 2,172,500 225,804
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Novartis AG (Reg.) 18,600 $ 29,866
Pharmacia & Upjohn, Inc. 150,000 5,663
Pfizer, Inc. 1,750,000 104,344
Schering-Plough Corp. 3,238,000 176,673
SmithKline Beecham PLC ADR 3,837,100 373,158
1,550,153
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Baxter International, Inc. 2,430,500 140,513
Johnson & Johnson 688,100 42,877
183,390
TOTAL HEALTH 1,733,543
HOLDING COMPANIES - 0.0%
CINergy Corp. 343,900 11,564
INDUSTRIAL MACHINERY & EQUIPMENT - 6.4%
ELECTRICAL EQUIPMENT - 3.6%
Emerson Electric Co. 1,381,400 81,503
General Electric Co. 8,744,800 613,775
Grainger (W.W.), Inc. 645,900 62,006
Honeywell, Inc. 591,900 44,208
801,492
INDUSTRIAL MACHINERY & EQUIPMENT - 1.8%
Cooper Industries, Inc. 2,818,204 156,586
Harnischfeger Industries, Inc. 1,180,800 50,922
Tyco International Ltd. 2,456,566 198,982
406,490
POLLUTION CONTROL - 1.0%
Browning-Ferris Industries, Inc. 3,635,700 134,521
Waste Management, Inc. 2,838,500 90,832
225,353
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,433,335
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.1%
Benedek Communications Corp. warrants 7/1/00 (a) 51,900 $ 104
CS Wireless Systems, Inc. (a)(h) 3,141 -
Time Warner, Inc. 423,500 23,107
23,211
ENTERTAINMENT - 0.0%
Cedar Fair LP (depositary unit) 150,000 6,628
Live Entertainment, Inc. (a)(g):
$2.00 warrants 3/28/98 256,000 -
$2.72 warrants 3/28/98 244,705 -
6,628
LEISURE DURABLES & TOYS - 0.0%
IHF Capital, Inc. (a)(h):
Series H warrants 11/15/04 10,225 1,738
Series I warrants 11/14/99 5,050 303
2,041
LODGING & GAMING - 0.0%
Bally Gaming International, Inc. warrants 7/29/98 (a) 135,000 152
Motels of America, Inc. (a) 3,000 93
245
PUBLISHING - 0.3%
McGraw-Hill, Inc. 938,900 63,669
TOTAL MEDIA & LEISURE 95,794
NONDURABLES - 8.0%
BEVERAGES - 0.4%
Anheuser-Busch Companies, Inc. 1,086,800 46,664
PepsiCo, Inc. 1,300,000 49,807
96,471
FOODS - 0.7%
Campbell Soup Co. 254,100 13,181
Flowers Industries, Inc. 1,038,300 18,105
General Mills, Inc. 102,300 7,071
Heinz (H.J.) Co. 1,461,600 67,508
Nabisco Holdings Corp. Class A 1,316,200 55,939
161,804
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 4.1%
Avon Products, Inc. 969,500 $ 70,349
Clorox Co. 415,700 58,042
Procter & Gamble Co. 2,044,900 311,082
Renaissance Cosmetics, Inc. warrants 8/31/06 (a)(h) 10,000 1,100
Rubbermaid, Inc. 1,076,200 28,048
Unilever:
PLC Ord. 2,653,900 77,010
NV ADR 1,577,400 343,874
NV Ord. 150,000 32,961
922,466
TOBACCO - 2.8%
Philip Morris Companies, Inc. 13,068,040 589,695
RJR Nabisco Holdings Corp. 780,000 25,594
615,289
TOTAL NONDURABLES 1,796,030
RETAIL & WHOLESALE - 2.4%
APPAREL STORES - 0.0%
Footstar, Inc. (a) 269,739 7,215
Lamonts Apparel, Inc. (a) 50,220 5
Lamonts Apparel, Inc. warrants 6/10/99 (a) 92,674 -
7,220
DRUG STORES - 0.6%
CVS Corp. 1,070,300 60,873
Rite Aid Corp. 1,229,100 63,837
124,710
GENERAL MERCHANDISE STORES - 1.6%
Dayton Hudson Corp. 623,700 40,307
Sears, Roebuck & Co. 951,700 60,255
Wal-Mart Stores, Inc. 6,950,300 261,070
361,632
GROCERY STORES - 0.2%
American Stores Co. 1,347,000 34,011
Food 4 Less Holdings, Inc. warrants 12/31/02 (a)(g) 235,622 3,417
37,428
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Town & Country Jewelry Manufacturing Corp. Class A (a) 92,394 $ 12
TOTAL RETAIL & WHOLESALE 531,002
SERVICES - 0.8%
LEASING & RENTAL - 0.1%
Ryder Systems, Inc. 357,000 12,785
PRINTING - 0.5%
Deluxe Corp. 1,800,300 59,973
Donnelley (R.R.) & Sons Co. 1,655,500 66,530
126,503
SERVICES - 0.2%
National Service Industries, Inc. 959,500 47,315
TOTAL SERVICES 186,603
TECHNOLOGY - 2.6%
COMPUTERS & OFFICE EQUIPMENT - 2.0%
Exide Electronics Group, Inc. 21,527 511
International Business Machines Corp. 527,200 55,751
Pitney Bowes, Inc. 3,438,540 258,321
Xerox Corp. 1,581,800 130,103
444,686
ELECTRONICS - 0.6%
AMP, Inc. 137,700 7,195
Thomas & Betts Corp. 2,172,350 124,095
131,290
TOTAL TECHNOLOGY 575,976
TRANSPORTATION - 0.2%
RAILROADS - 0.2%
Burlington Northern Santa Fe Corp. 391,300 37,785
CSX Corp. 89,100 5,502
43,287
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 1.0%
CELLULAR - 0.0%
Microcell Telecommunications, Inc. (a):
warrants 6/1/06 120,280 $ 1,504
conditional warrants 6/1/06 120,280 75
Powertel, Inc. warrants 2/1/06 (a) 25,856 171
1,750
ELECTRIC UTILITY - 0.1%
Allegheny Power System, Inc. 244,700 7,173
Edison International 650,000 16,411
23,584
GAS - 0.2%
Consolidated Natural Gas Co. 581,700 33,666
El Paso Natural Gas Co. 60,208 3,481
37,147
TELEPHONE SERVICES - 0.7%
ALLTEL Corp. 173,900 5,717
Ameritech Corp. 862,800 58,185
BCE, Inc. 1,930,200 58,747
Hyperion Telecommunications, Inc. warrants 4/15/01 (a)(h) 19,130 574
MCI Communications Corp. 1,036,000 36,584
NextLink Communications, Inc. warrants 2/1/09 (a) 449,930 4
RSL Communications Ltd./RSL Communications
PLC warrants 11/15/06 (a) 5,920 296
160,107
TOTAL UTILITIES 222,588
TOTAL COMMON STOCKS
(Cost $9,344,614) 13,968,613
PREFERRED STOCKS - 1.7%
CONVERTIBLE PREFERRED STOCKS - 0.4%
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Republic Industries, Inc. $1.55 521,000 12,699
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
ENERGY - 0.0%
OIL & GAS - 0.0%
Tosco Financing Trust $2.875 (h) 116,000 $ 6,786
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Loral Space & Communications Ltd. $3.00 Series C (h) 300,000 15,225
MEDIA & LEISURE - 0.1%
BROADCASTING - 0.0%
Benedek Communucations Corp. 15% (a) 30,300 3,424
LODGING & GAMING - 0.1%
Host Marriott Financial Trust $3.375 (h) 534,900 33,899
TOTAL MEDIA & LEISURE 37,323
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 63,000 19,215
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Town & Country Corp., pay-in-kind 3,625 2
TOTAL RETAIL & WHOLESALE 19,217
TOTAL CONVERTIBLE PREFERRED STOCKS 91,250
NONCONVERTIBLE PREFERRED STOCKS - 1.3%
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.0%
American Annuity Group Capital Trust II 8 3/4% 6,030 6,000
SAVINGS & LOANS - 0.1%
California Federal Bank FSB 11 1/2% 59,929 6,862
California Federal Preferred Capital Corp. 9 1/8% 382,820 10,001
16,863
TOTAL FINANCE 22,863
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp. 8% (a)(g) 2,581 $ 2,006
MEDIA & LEISURE - 0.8%
BROADCASTING - 0.7%
Adelphia Communications Corp. 13%, 7/15/09 (h) 38,030 4,145
American Radio Systems Corp. 11 3/8%, pay-in-kind 145,331 16,204
Cablevision System Corp., pay-in-kind:
11 1/8%, depositary shares 185,388 19,558
Series H, $11.75 116,423 12,632
Capstar Broadcasting Partners, Inc. 12% (h) 11,340 1,194
Chancellor Radio Broadcasting Co.:
12%, pay-in-kind (h) 7,662 877
Series A, 12 1/4% 64,300 8,391
Citadel Broadcasting Co. 13 1/4%, pay-in-kind (h) 76,550 8,229
Granite Broadcasting Corp. 12 3/4%, pay-in-kind 1,620 1,717
PanAmSat Corp. 12 3/4%, pay-in-kind 27,609 32,855
Time Warner, Inc., Series M, 10 1/4%, pay-in-kind 44,672 50,927
156,729
PUBLISHING - 0.1%
K-III Communications Corp.:
Series B, $11.625, pay-in-kind 13,818 1,513
Series D, $10 161,300 16,533
18,046
TOTAL MEDIA & LEISURE 174,775
NONDURABLES - 0.1%
HOUSEHOLD PRODUCTS - 0.1%
Renaissance Cosmetics, Inc. 14%, pay-in-kind 11,104 9,605
TECHNOLOGY - 0.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc. 13 1/2%, pay-in-kind 27,532 31,112
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - 0.2%
CELLULAR - 0.1%
Nextel Communications Corp. 13%, pay-in-kind (h) 18,035 $ 19,207
ELECTRIC UTILITY - 0.0%
Entergy Gulf States, Inc., Series A adj. rate 37,296 3,655
TELEPHONE SERVICES - 0.1%
NextLink Communications, Inc. 14%, pay-in-kind 480,277 27,616
TOTAL UTILITIES 50,478
TOTAL NONCONVERTIBLE PREFERRED STOCKS 290,839
TOTAL PREFERRED STOCKS
(Cost $339,429) 382,089
CORPORATE BONDS - 16.4%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - 0.2%
MEDIA & LEISURE - 0.1%
BROADCASTING - 0.1%
Time Warner, Inc. liquid yield option notes
0%, 6/22/13 Ba1 $ 54,450 26,238
RETAIL & WHOLESALE - 0.1%
GENERAL MERCHANDISE STORES - 0.1%
Federated Department Stores, Inc.
5%, 10/1/03 Baa3 16,700 22,983
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
GST Telecommunications, Inc.
0%, 12/15/05 (d)(h) - 40 28
TOTAL CONVERTIBLE BONDS 49,249
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - 16.2%
AEROSPACE & DEFENSE - 0.4%
AEROSPACE & DEFENSE - 0.4%
Fairchild Corp. 12%, 10/15/01 Caa1 $ 1,250 $ 1,256
Lockheed Martin Corp. 7.20%, 5/1/36 A3 74,700 79,503
RHI Holdings, Inc. 11 7/8%, 3/1/99 B2 2,090 2,090
82,849
DEFENSE ELECTRONICS - 0.0%
Tracor, Inc. 8 1/2%, 3/1/07 B1 2,970 3,063
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, Inc.:
8 5/8%, 12/1/06 Ba2 370 389
9 1/4%, 12/1/06 B1 2,430 2,575
2,964
TOTAL AEROSPACE & DEFENSE 88,876
BASIC INDUSTRIES - 1.1%
CHEMICALS & PLASTICS - 0.4%
Atlantis Group, Inc. 11%, 2/15/03 B2 5,630 5,827
Foamex LP/Foamex Capital Corp.
9 7/8%, 6/15/07 (h) B3 1,330 1,347
Freedom Chemical Co. 10 5/8%, 10/15/06 B3 13,650 14,145
Huntsman Corp. 9 1/2%, 7/1/07 (h) B2 11,160 11,662
Methanex Corp. yankee 8 7/8%, 11/15/01 A2 25,455 27,055
Plastic Specialties & Technologies, Inc.
11 1/4%, 12/1/03 B3 700 753
Sovereign Specialty Chemicals, Inc.
9 1/2%, 8/1/07 (h) B3 250 250
Sterling Chemicals Holdings, Inc.:
11 3/4%, 8/15/06 B3 11,000 12,045
11 1/4%, 4/1/07 B3 5,650 6,116
79,200
IRON & STEEL - 0.1%
GS Technologies Operating, Inc.
12 1/4%, 10/1/05 B2 3,560 3,938
Republic Engineered Steels, Inc.
9 7/8%, 12/15/01 Caa1 7,260 6,951
WCI Steel, Inc. 10%, 12/1/04 B2 7,250 7,758
18,647
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 0.0%
Commonwealth Aluminum Corp.
10 3/4%, 10/1/06 B2 $ 6,240 $ 6,638
PACKAGING & CONTAINERS - 0.1%
Crown Cork & Seal, Inc. 5 7/8%, 4/15/98 Baa1 15,250 15,251
PAPER & FOREST PRODUCTS - 0.5%
American Pad & Paper Co., Inc. 13%, 11/15/05 B3 4,980 5,876
Asia Pulp & Paper Finance II Mauritius Ltd.
12%, 3/15/4 (h) B3 13,365 13,465
Crown Paper Co. 11%, 9/1/05 B3 2,800 2,954
Doman Industries Ltd. yankee 8 3/4%, 3/15/04 B1 10,650 10,570
Florida Coast Paper Co. LLC/Florida Coast Paper
Finance Corp., Series B, 12 3/4%, 6/1/03 Caa1 1,990 2,134
Great Northern Nekoosa Corp.
9 1/8%, 2/1/98 Baa2 7,800 7,920
Koppers Industries, Inc. 8 1/2%, 2/1/04 B1 3,090 3,082
Mail-Well Corp. 10 1/2%, 2/15/04 B 1,160 1,224
Malette, Inc. yankee 12 1/4%, 7/15/04 Ba3 1,010 1,131
Repap New Brusnwick, Inc. yankee:
9 7/8%, 7/15/00 B2 4,880 4,929
10 5/8%, 4/15/05 Caa1 3,280 3,124
Repap Wisconsin, Inc. 9 7/8%, 5/1/06 Caa1 6,870 7,385
Riverwood International Corp.:
10 5/8%, 8/1/07 (h) B3 3,950 4,009
10 7/8%, 4/1/08 Caa1 6,310 6,010
SD Warren Co., Series B, 12%, 12/15/04 B1 4,920 5,523
Stone Container Corp.:
12 5/8%, 7/15/98 B2 13,030 13,649
11 7/8%, 12/1/98 B2 4,340 4,579
10 3/4%, 10/1/02 B1 9,950 10,648
11 7/8%, 8/1/16 B2 6,840 7,524
Tembec Finance Corp. yankee
9 7/8%, 9/30/05 B1 1,000 1,050
116,786
TOTAL BASIC INDUSTRIES 236,522
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - 0.3%
HOME FURNISHINGS - 0.1%
Guitar Center Management Co., Inc.
11%, 7/1/06 B2 $ 1,487 $ 1,651
Interlake Corp. 12 1/8%, 3/1/02 B3 9,370 9,792
Knoll, Inc. 10 7/8%, 3/15/06 B1 2,661 2,966
14,409
TEXTILES & APPAREL - 0.2%
Dan River, Inc. 10 1/8%, 12/15/03 B3 3,340 3,524
GFSI, Inc. 9 5/8%, 3/1/07 (h) B3 260 267
Levi Strauss & Co. 6.80%, 11/1/03 (h) Baa2 30,210 30,721
Nine West Group, Inc. (h):
8 3/8%, 8/15/05 Ba2 5,850 5,974
9%, 8/15/07 Ba3 5,890 5,993
Polymer Group Inc. 9%, 7/1/07 (h) B2 5,500 5,665
Synthetic Industries, Inc. 9 1/4%, 2/15/07 B2 5,820 6,009
58,153
TOTAL DURABLES 72,562
ENERGY - 0.5%
ENERGY SERVICES - 0.0%
McDermott International, Inc. 9 3/8%, 3/15/02 Ba3 8,575 9,143
OIL & GAS - 0.5%
Belden & Blake Corp. 9 7/8%, 6/15/07 (h) B3 7,865 7,924
Clark R&M Holdings, Inc. 0%, 2/15/00 B2 5,630 4,349
Cross Timbers Oil Co. 9 1/4%, 4/1/07 B2 8,560 8,902
Flores & Rucks, Inc. 9 3/4%, 10/1/06 B3 7,135 7,599
Harcor Energy, Inc. 14 7/8%, 7/15/02 B3 6,530 7,705
Occidental Petroleum Corp. 8 1/2%, 11/9/01 Baa2 5,900 6,349
Ocean Energy, Inc. 8 7/8%, 7/15/07 (h) B3 8,020 8,200
Pennzoil Co. 9 5/8%, 11/15/99 Baa3 10,920 11,679
Ras Laffan Liquid Natural Gas Co. Ltd. yankee
8.29%, 3/15/14 (h) A3 44,540 48,995
111,702
TOTAL ENERGY 120,845
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 6.4%
ASSET-BACKED SECURITIES - 1.1%
Airplanes Pass Through Trust Class D
10 7/8%, 3/15/19 Ba2 $ 11,560 $ 13,554
Arcadia Automobile Receivables Trust
6 1/2%, 6/17/02 Aaa 15,500 15,611
Capital Equipment Receivables Trust
6.11%, 7/15/99 Aaa 76,770 76,890
Chase Manhattan Grantor Trust:
6.61%, 9/15/02 Aaa 30,474 30,740
6.76%, 9/15/02 A3 7,981 8,049
Chevy Chase Auto Receivables Trust:
6.60%, 12/15/02 Aaa 13,567 13,673
5.90%, 7/15/03 Aaa 32,344 32,294
Ford Credit Grantor Trust 5.90%, 10/15/00 Aaa 9,144 9,155
General Motors Acceptance Corp. Grantor
Trust 1995-A 7.15%, 3/15/00 Aaa 4,553 4,588
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 1,031 1,028
Premier Auto Trust:
4.90%, 12/15/98 Aaa 279 278
4.95%, 2/2/99 A2 889 885
Sears Credit Account Master Trust II
6 1/2%, 10/15/03 Aaa 34,060 34,401
Standard Credit Card Master Trust I
7.65%, 2/15/00 A2 3,800 3,837
Union Federal Savings Bank Grantor Trust
8.20%, 1/10/01 Baa2 752 763
245,746
BANKS - 2.4%
ABN Amro Bank NV
6 5/8%, 10/31/01 Aa3 28,500 28,891
Banc One Corp. 6.70%, 3/24/00 Aa3 23,130 23,472
Banco Latinoamer Exportaciones Euro
6.90%, 12/6/99 (h) Baa2 10,550 10,705
Bank of New York Institutional Capital Trust A
7.78%, 10/1/26 (h) A1 50,000 51,431
Banponce Financial Corp.:
6.66%, 3/26/01 A3 10,000 10,108
6 3/4%, 8/9/01 A3 18,240 18,488
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Capital One Bank:
6.74%, 5/31/99 Baa3 $ 14,195 $ 14,307
7.20%, 7/19/99 Baa3 22,000 22,402
6.42%, 11/12/99 Baa3 25,000 25,086
Corporacion Andina De Fomento yankee
7 1/4%, 4/30/98 (h) A3 5,900 5,956
Export-Import Bank of Korea 6 3/8%, 2/15/06 A1 61,650 59,500
First Chicago Institutional Capital B
7 3/4%, 12/1/26 (h) A1 35,000 35,267
First Fidelity Bancorp 8 1/2%, 4/1/98 A2 7,485 7,604
First Maryland Bancorp 10 3/8%, 8/1/99 A3 8,345 8,992
First USA Bank 6 1/2%, 12/23/99 Aa2 29,500 29,620
Firstar Corp. 7.15%, 9/1/00 A3 11,970 12,066
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 3,520 3,624
Hartford National Corp. 9.85%, 6/1/99 A3 2,000 2,128
Kansallis-Osake-Pankki 10%, 5/1/02 A3 5,285 6,029
Korea Development Bank yankee:
6 1/4%, 5/1/00 A1 6,000 6,011
7 1/4%, 5/15/06 A1 19,026 19,428
Manufacturers Hanover Corp.
8 1/2%, 2/15/99 A1 160 166
Merchants National Corp. 9 7/8%, 10/1/99 A2 6,850 7,360
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 16,530 17,568
Midlantic Corp.:
9 7/8%, 12/1/99 A3 18,227 19,655
9.20%, 8/1/01 A3 11,550 12,680
NationsBank Corp. 5 1/8%, 9/15/98 A1 1,642 1,628
Provident Bank 6 1/8%, 12/15/00 A3 27,500 27,386
Shawmut National Corp. 8 5/8%, 12/15/99 A3 7,440 7,816
Signet Bank 7.80%, 9/15/06 Baa1 12,500 13,326
Signet Banking Corp.:
5.9375%, 4/15/98 (i) Baa2 6,210 6,181
9 5/8%, 6/1/99 Baa2 7,500 7,926
Summit Bancorp. 8 5/8%, 12/10/02 BBB- 6,750 7,386
Union Planters National Bank 6.81%, 8/20/01 A3 13,000 13,228
United Virginia Bankshares, Inc.
8 5/8%, 4/15/98 Baa1 1,522 1,550
544,971
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 2.3%
APP International Finance Co. BV yankee
11 3/4%, 10/1/05 Ba3 $ 1,585 $ 1,740
AT&T Capital Corp.:
6%, 11/13/98 Baa3 6,000 6,006
6.65%, 4/30/99 Baa3 40,260 40,602
Ahmanson Capital Trust I
8.36%, 12/1/26 (h) Baa3 15,500 16,520
Associates Corp. of North America
6 1/2%, 9/9/98 Aa3 50,000 50,312
BankBoston Capital Trust II 7 3/4%, 12/15/26 Baa1 37,000 37,587
CIT Group Holdings, Inc. 6 1/4%, 9/30/99 Aa3 45,890 46,120
Chase Capital I 7.67%, 12/1/26 A1 35,000 35,559
Chrysler Financial Corp.:
6.80%, 5/26/98 A3 5,000 5,035
6 3/8%, 1/28/00 A3 29,710 29,899
Delta Financial Corp. 9 1/2%, 8/1/04 B1 1,550 1,558
Finova Capital Corp. 6.14%, 11/2/98 Baa1 1,880 1,886
First Security Capital I 8.41%, 12/15/26 A3 7,920 8,538
Fleet Mortgage Group, Inc. 6 1/2%, 6/15/00 A2 3,900 3,933
Ford Motor Credit Co. euro 8 5/8%, 1/24/00 A1 7,250 7,631
GST Equipment Funding, Inc.
13 1/4%, 5/1/07 (h) - 7,470 8,254
General Electric Capital Corp.
6.94%, 4/13/09 (e) Aaa 25,630 26,011
General Motors Acceptance Corp.:
8 5/8%, 6/15/99 A3 6,400 6,688
8%, 10/1/99 A3 11,200 11,642
6.65%, 5/24/00 A3 5,950 6,022
Greyhound Financial Corp. 6.95%, 1/28/98 Baa2 2,000 2,008
Imperial Credit Capital Trust I
10 1/4%, 6/14/02 (h) B2 3,600 3,609
Imperial Credit Industries, Inc.
9 7/8%, 1/15/07 B2 6,497 6,432
KeyCorp Institutional Capital Series A
7.826%, 12/1/26 A1 19,000 19,492
MCN Investment Corp. 5.84%, 2/1/99 Baa2 11,820 11,807
Nordstrom Credit, Inc. 7 1/4%, 4/30/02 A2 21,150 21,922
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
PNC Institutional Capital Trust
8.315%, 5/15/27 (h) A2 $ 19,000 $ 20,324
PTC International Finance BV
0%, 7/1/07 (d)(h) B3 1,740 1,101
Tjiwi Kimia Mauritius Ltd. 10%, 8/1/04 (h) Ba3 7,360 7,415
U.S. West Capital Funding, Inc.
6.95%, 1/15/37 Baa1 16,000 16,515
Wells Fargo Capital C Capital Securities
7.73%, 12/1/26 (h) A1 50,000 49,963
512,131
INSURANCE - 0.3%
Integon Capital I 10 3/4%, 2/15/27 Ba3 10,100 12,322
SunAmerica, Inc. 6.20%, 10/31/99 Baa1 48,500 48,654
60,976
SAVINGS & LOANS - 0.3%
First Nationwide Holdings, Inc.:
9 1/8%, 1/15/03 Ba3 1,930 2,017
10 5/8%, 10/1/03 Ba3 5,620 6,224
First Nationwide Parent Holdings Ltd.
12 1/2%, 4/15/03 B3 20,050 22,857
Great Western Financial Corp. 6 3/8%, 7/1/00 A3 1,330 1,334
Home Savings of America 6%, 11/1/00 A3 10,500 10,383
Long Island Savings Bank FSB 7%, 6/13/02 Baa3 14,850 15,147
57,962
SECURITIES INDUSTRY - 0.0%
ECM Corp. extendible 14%, 6/1/02 (h) - 497 542
TOTAL FINANCE 1,422,328
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Wright Medical Technology, Inc.
10 3/4%, 7/1/00 B3 7,220 7,364
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - 0.1%
Columbia/HCA Healthcare Corp.
6 1/2%, 3/15/99 A3 $ 13,120 $ 13,231
Integrated Health Services, Inc.
9 1/2%, 9/15/07 (h) B1 2,120 2,242
Tenet Healthcare Corp.:
8%, 1/15/05 Ba1 3,490 3,612
8 5/8%, 1/15/07 Ba3 990 1,035
Vencor, Inc. 8 5/8%, 7/15/07 (h) B1 6,910 7,057
27,177
TOTAL HEALTH 34,541
HOLDING COMPANIES - 0.2%
Gray Communications System, Inc.
10 5/8%, 10/1/06 B3 5,040 5,444
Norfolk Southern Corp. 7.05%, 5/1/37 Baa1 39,550 41,243
46,687
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.1%
Amphenol Corp. 9 7/8%, 5/15/07 B2 770 816
Motors & Gears, Inc. 10 3/4%, 11/15/06 B3 9,850 10,441
11,257
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Calmar, Inc. 11 1/2%, 8/15/05 B3 520 556
Continental Global Group, Inc. 11%, 4/1/07 (h) B2 3,380 3,583
Goss Graphic System, Inc. 12%, 10/15/06 B2 6,900 7,641
International Knife & Saw, Inc.
11 3/8%, 11/15/06 B3 870 942
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 B1 2,790 2,916
10 3/4%, 11/1/03 B3 8,019 8,490
24,128
POLLUTION CONTROL - 0.0%
Allied Waste North America 10 1/4%, 12/1/06 B3 2,080 2,278
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 37,663
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 1.7%
BROADCASTING - 0.9%
Adelphia Communications Corp.:
9 1/2%, 2/15/04 B3 $ 4,621 $ 4,413
10 1/2%, 7/15/04 (h) B3 5,460 5,774
9 7/8%, 3/1/07 (h) B3 16,820 17,156
Benedek Communications Corp.
0%, 5/15/06 (d) B- 5,440 3,427
Capstar Broadcasting Partners, Inc.
0%, 2/1/09 (d)(h) CCC 8,840 5,901
Capstar Radio Broadcasting Partners, Inc.
9 1/4%, 7/1/07 (h) B- 8,110 8,333
Chancellor Radio Broadcasting Co.
8 3/4%, 6/15/07 (h) B3 4,650 4,790
Citadel Broadcasting Co.
10 1/4%, 7/1/07 (h) B3 4,850 5,177
CS Wireless Systems, Inc.
0%, 3/1/06 (d) Caa 11,430 2,229
Diamond Cable Communications PLC yankee
0%, 9/30/04 (d) B3 540 446
Echostar Satellite Broadcasting Corp.
0%, 3/15/04 (d) Caa1 5,950 4,344
Falcon Holdings Group LP
11%, 9/15/03, pay-in-kind - 10,875 11,337
Intermedia Capital Partners IV LP/Intermedia
Partners IV Capital Corp. 11 1/4%, 8/1/06 B2 370 405
Jacor Communications Co.:
9 3/4%, 12/15/06 B2 660 713
8 3/4%, 6/15/07 (h) B2 2,660 2,746
Olympus Communications LP/Olympus Capital
Corp 10 5/8%, 11/15/06 B1 7,520 8,159
SFX Broadcasting, Inc. 10 3/4%, 5/15/06 B3 1,780 1,998
TCI Communication, Inc.:
7 1/4%, 6/15/99 Ba1 6,700 6,790
6.82%, 9/15/10 (i) Ba1 26,000 26,056
TeleTrac, Inc. 14%, 8/1/07 unit (h) Caa2 10,020 10,020
Telewest PLC 0%, 10/1/07 (d) B1 12,650 9,424
Time Warner, Inc.:
7 3/4%, 6/15/05 Ba1 22,000 23,138
6.85%, 1/15/26 Ba1 19,000 19,322
UIH Australia/PAC, Inc., Series B,
0%, 5/15/06 (d) B2 17,060 11,430
193,528
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - 0.2%
AMC Entertainment, Inc.
9 1/2%, 3/15/09 (h) B2 $ 8,790 $ 9,054
AMF Group, Inc., Series B:
0%, 3/15/06 (d) B2 9,350 6,966
10 7/8%, 3/15/06 B2 8,025 8,888
Cinemark USA, Inc. 9 5/8%, 8/1/08 B2 4,860 4,994
Hollywood Theaters, Inc. 10 5/8%, 8/1/07 (h) B3 190 190
Viacom, Inc. 8%, 7/7/06 B1 20,940 20,574
50,666
LEISURE DURABLES & TOYS - 0.0%
Coleman Escrow Corp. secured 2nd priority
0%, 5/15/01 (h) Caa1 3,200 1,888
ICON Fitness Corp. 0%, 11/15/06 (d) Caa3 1,510 831
ICON Health and Fitness, Inc. 13%, 7/15/02 B3 9,070 10,158
12,877
LODGING & GAMING - 0.4%
American Skiing Co. 12%, 7/15/06 B3 5,980 6,384
Circus Circus Enterprises, Inc. 7%, 11/15/36 Baa2 9,600 9,686
HMC Acquisition Properties, Inc. 9%, 12/15/07 Ba3 17,230 17,833
HMH Properties, Inc.:
9 1/2%, 5/15/05 Ba3 12,930 13,624
8 7/8%, 7/15/07 (h) Ba3 9,220 9,543
Hollywood Casino Corp. 12 3/4%, 11/1/03 B2 8,470 9,105
Horseshoe Gaming LLC 12 3/4%, 9/30/00 B1 8,845 9,895
KSL Recreation Group, Inc.
10 1/4%, 5/1/07 (h) B3 450 479
Prime Hospitality Corp. 9 3/4%, 4/1/07 - 850 912
Speedway Motorsports, Inc.
8 1/2%, 8/15/07 (h) - 260 264
Sun International Hotels Ltd./Sun International
North America, Inc. yankee 9%, 3/15/07 Ba3 10,560 10,930
88,655
PUBLISHING - 0.1%
Big Flower Press Holdings, Inc.
8 7/8%, 7/1/07 (h) - 14,030 13,995
News America Holdings, Inc. gtd.
9 1/8%, 10/15/99 Baa3 10,000 10,591
24,586
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.1%
AFC Enterprises, Inc. 10 1/4%, 5/15/07 (h) B3 $ 6,250 $ 6,484
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa1 2,820 2,694
Host Marriott Travel Plazas, Inc.
9 1/2%, 5/15/05 B1 12,670 13,350
22,528
TOTAL MEDIA & LEISURE 392,840
NONDURABLES - 0.7%
FOODS - 0.2%
ConAgra, Inc. 7 1/8%, 10/1/26 Baa1 22,725 23,911
Dart and Kraft Finance NV
7 3/4%, 11/30/98 A2 7,239 7,411
International Home Foods, Inc.
10 3/8%, 11/1/06 B2 2,370 2,506
33,828
HOUSEHOLD PRODUCTS - 0.1%
Renaissance Cosmetic, Inc. 11 3/4%, 2/15/04 B3 8,480 8,544
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 10,020 10,671
19,215
TOBACCO - 0.4%
North Atlantic Trading, Inc.
11%, 6/15/04 (h) B3 2,220 2,309
Philip Morris Companies, Inc.:
7%, 7/15/05 A2 50,500 51,132
6.95%, 6/1/06 A2 20,550 20,933
RJR Nabisco, Inc. 8 1/2%, 7/1/07 Baa3 20,000 20,863
95,237
TOTAL NONDURABLES 148,280
RETAIL & WHOLESALE - 0.9%
APPAREL STORES - 0.1%
AnnTaylor, Inc. 8 3/4%, 6/15/00 B3 810 814
Lamonts Apparel, Inc.
10 1/4%, 11/1/99, pay-in-kind (b)(h) - 3,082 131
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Mothers Work, Inc. 12 5/8%, 8/1/05 B3 $ 10,550 $ 11,078
Specialty Retailers, Inc. (h):
8 1/2%, 7/15/05 Ba3 3,920 4,018
9%, 7/15/07 B2 1,620 1,656
17,697
GENERAL MERCHANDISE STORES - 0.5%
Dayton Hudson Corp. 6.80%, 10/1/01 Baa1 2,850 2,895
Federated Department Stores, Inc.:
8 1/2%, 6/15/03 Baa2 60,285 65,940
6.79%, 7/15/27 Baa2 11,500 11,679
Penney (J.C.) Co., Inc. 6.95%, 4/1/00 A2 22,220 22,631
103,145
GROCERY STORES - 0.3%
American Stores Co. 7 1/2%, 5/1/37 Baa2 32,000 33,886
Di Giorgio Corp. 10%, 6/15/07 (h) B3 1,330 1,317
Fleming Companies, Inc.
10 1/2%, 12/1/04 (h) B3 4,320 4,428
Food 4 Less Holdings, Inc. 13 5/8%, 6/15/07 - 1,271 1,471
Pathmark Stores, Inc.:
11 5/8%, 6/15/02 Caa1 8,890 8,957
9 5/8%, 5/1/03 B3 1,450 1,396
Penn Traffic Co.:
10 1/4%, 2/15/02 B3 5,760 4,982
8 5/8%, 12/15/03 B3 2,760 2,256
10 3/8%, 10/1/04 B3 2,800 2,394
11 1/2%, 4/15/06 B3 2,340 2,048
Pueblo Xtra International, Inc.:
9 1/2%, 8/1/03 B3 7,375 7,264
9 1/2%, 8/1/03 (h) B3 150 147
70,546
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Corporate Expess, Inc., Series B,
9 1/8%, 3/15/04 B2 800 800
TOTAL RETAIL & WHOLESALE 192,188
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
SERVICES - 0.3%
LEASING & RENTAL - 0.1%
Interpool, Inc. 7.35%, 8/01/07 (h) Ba1 $ 18,000 $ 18,139
PRINTING - 0.0%
Sullivan Graphics, Inc. 12 3/4%, 8/1/05 Caa1 10,910 11,183
SERVICES - 0.2%
Orion Network Systems, Inc.:
0%, 1/15/07 unit (d) B2 41,555 25,452
11 1/4%, 1/15/07 unit B2 8,090 8,515
Outsourcing Solutions, Inc. 11%, 11/1/06 B3 2,190 2,442
36,409
TOTAL SERVICES 65,731
TECHNOLOGY - 1.0%
COMMUNICATIONS EQUIPMENT - 0.2%
Echostar Communications Corp. secured discount
0%, 6/1/04 (d) B2 28,810 24,741
Intermedia Communications, Inc.:
0%, 5/15/06 B2 6,770 5,010
0%, 7/15/07 (d)(h) B2 14,590 9,338
Jordan Telecommunications Products
0%, 8/1/07 (d)(h) B3 8,550 6,198
45,287
COMPUTER SERVICES & SOFTWARE - 0.1%
DecisionOne Corp. 9 3/4%, 8/1/07 B3 920 934
Verio, Inc. 13 1/2%, 6/15/4 unit (h) - 7,400 7,733
8,667
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Comdisco, Inc.:
6.44%, 3/8/99 Baa1 20,000 20,139
6 1/2%, 4/30/99 Baa1 13,250 13,339
6.70%, 8/6/99 Baa1 6,750 6,820
9.28%, 6/5/00 Baa2 2,000 2,156
9.30%, 6/27/00 Baa2 2,000 2,162
9 1/4%, 7/6/00 Baa2 7,625 8,227
6 3/8%, 11/30/01 Baa1 24,500 24,430
9 1/2%, 1/28/02 Baa2 2,580 2,892
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
DecisionOne Holdings Corp.
0%, 8/1/08 unit (d) Caa1 $ 350 $ 200
Dictaphone Corp. 11 3/4%, 8/1/05 B3 6,980 4,537
Exide Electronics Group, Inc. 11 1/2%, 5/15/06 B3 4,180 4,807
Unisys Corp. 10 5/8%, 10/1/99 B1 2,250 2,318
92,027
ELECTRONIC INSTRUMENTS - 0.0%
Wavetek Corp. 10 1/8%, 6/15/07 (h) B3 1,210 1,258
ELECTRONICS - 0.3%
Fairchild Semiconductor Corp.
10 1/8%, 3/15/07 (h) B2 6,680 7,114
Motorola, Inc. 6 1/2%, 9/1/25 Aa3 30,050 30,590
Texas Instruments, Inc. 6 7/8%, 7/15/00 A3 32,100 32,727
Viasystems, Inc. 9 3/4%, 6/1/07 (h) B3 3,590 3,716
74,147
TOTAL TECHNOLOGY 221,386
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.1%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 3,500 3,519
9 1/2%, 7/15/98 Baa3 5,690 5,875
Atlas Air, Inc. pass through trust
12 1/4%, 12/1/02 Ba3 4,810 5,388
US Air Inc., pass through trust
8 5/8%, 9/1/98 B1 3,000 3,045
17,827
RAILROADS - 0.2%
Burlington Northern Santa Fe Corp.:
7.29%, 6/1/36 Baa2 22,430 23,856
6.53%, 7/15/37 Baa2 20,000 20,718
TFM SA de CV 10 1/4%, 6/15/07 (h) B2 650 672
Transtar Holdings LP/Transtar Capital Corp.
0%, 12/15/03 (d) B- 9,742 8,280
53,526
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - 0.0%
Trism, Inc. 10 3/4%, 12/15/00 B3 $ 600 $ 603
TOTAL TRANSPORTATION 71,956
UTILITIES - 2.1%
CELLULAR - 0.8%
Clearnet Communications, Inc. yankee
0%, 12/15/05 (d) B3 8,490 6,113
McCaw International Ltd. unit
0%, 4/15/07 (d)(h) CCC 35,470 19,509
Microcell Telecommunications, Inc.
0%, 6/1/06 (d) B3 30,070 18,493
Millicom International Cellular SA
0%, 6/1/06 (d) B3 54,350 40,626
Mobile Telecommunications Technologies Corp.
13 1/2%, 12/15/02 B3 6,790 7,401
Omnipoint Corp.:
11 5/8%, 8/15/06 B2 1,340 1,303
Series A, 11/5/8%, 8/15/06 B3 1,730 1,682
Pagemart, Inc. 0%, 11/1/03 (d) - 15,290 13,685
Pagemart Nationwide, Inc. 0%, 2/1/05 (d) - 4,925 3,866
Rogers Communications, Inc. 8 7/8%, 7/15/07 B2 1,330 1,347
Telesystem International Wireless, Inc.
0%, 6/30/07 (d)(h) B- 7,960 4,597
360 Degrees Communications Co.:
7 1/8%, 3/1/03 Ba1 26,900 27,442
7 1/2%, 3/1/06 Ba1 21,500 22,193
USA Mobile Communications, Inc. II
9 1/2%, 2/1/04 B2 3,050 2,867
171,124
ELECTRIC UTILITY - 0.4%
AES Corp. 8 3/8%, 8/15/07 (h) Ba1 3,845 3,898
British Columbia Hydro & Power Authority
yankee 12 1/2%, 1/15/14 Aa2 8,660 9,760
CMS Energy Corp. 8 1/8%, 5/15/02 Ba3 1,500 1,539
DR Investment yankee 7.10%, 5/15/02 (h) Baa1 32,000 32,882
Israel Electric Corp. Ltd. yankee
7 1/4%, 12/15/06 (h) A3 7,250 7,437
Ohio Edison Co. 8 3/4%, 2/15/98 Baa2 8,580 8,702
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Texas Utilities Electric Co.:
6 3/8%, 8/1/97 Baa1 $ 2,000 $ 2,000
9 1/2%, 8/1/99 Baa1 2,000 2,123
United Illuminating Co.:
7 3/8%, 1/15/98 Baa3 4,000 4,027
9.76%, 1/2/06 Baa3 11,074 11,425
Virginia Electric & Power Co. 6.35%, 6/8/98 A3 10,000 10,026
93,819
GAS - 0.2%
Kern River Funding Corp. 6.72%, 9/30/01 (h) A3 20,000 20,295
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa2 20,650 23,365
43,660
TELEPHONE SERVICES - 0.7%
Brooks Fiber Properties, Inc. 11 7/8%, 11/1/06 - 4,350 3,089
GCI, Inc. 9 3/4%, 8/1/07 B2 640 660
GST USA, Inc. 0%, 12/15/05 (d) - 7,710 5,166
Hyperion Telecommunications, Inc., Series B,
0%, 4/15/03 (d) - 21,080 12,806
LCI International, Inc. 7 1/4%, 6/15/07 Ba1 13,370 13,688
MFS Communications, Inc.:
9 3/8%, 1/15/04 (d) Ba3 6,127 6,658
8 7/8%, 1/15/06 (d) Ba3 28,746 31,347
McLeodUSA, Inc. 0%, 3/1/07 (d)(h) B3 4,950 3,317
RSL Communications Ltd./RSL Communications
PLC 12 1/4%, 11/15/06 Caa1 9,070 9,433
Shared Technologies Fairchild Communications
Corp. 0%, 3/1/06 (d) Caa1 13,340 12,806
Teleport Communications Group, Inc. 8%, 8/1/05 B1 3,170 2,409
WorldCom, Inc. 7 3/4%, 4/1/07 Ba1 62,000 65,690
167,069
TOTAL UTILITIES 475,672
TOTAL NONCONVERTIBLE BONDS 3,628,077
TOTAL CORPORATE BONDS
(Cost $3,570,487) 3,677,326
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 9.9%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
U.S. TREASURY OBLIGATIONS - 8.1%
5 7/8%, 8/15/98 Aaa $ 215,000 $ 215,538
6 5/6%, 6/30/01 Aaa 342,940 351,887
7 1/4%, 5/15/04 Aaa 224,900 240,854
12 3/8%, 5/15/04 Aaa 23,226 31,377
13 3/4%, 8/15/04 Aaa 80,000 115,138
11 5/8%, 11/15/04 Aaa 72,568 96,312
7%, 7/15/06 Aaa 182,705 194,495
11 3/4%, 2/15/10 (callable) Aaa 139,740 186,902
12 3/4%, 11/15/10 (callable) Aaa 36,507 52,051
13 7/8%, 5/15/11 (callable) Aaa 21,940 33,345
12%, 8/15/13 (callable) Aaa 48,550 70,784
9%, 11/15/18 Aaa 44,960 58,631
8 7/8%, 2/15/19 Aaa 114,205 147,414
7 1/4%, 2/15/23 Aaa 14,147 15,473
TOTAL U.S. TREASURY OBLIGATIONS 1,810,201
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.8%
Federal Agricultural Mortgage Corporation:
7.01%, 8/10/03 Aaa 1,040 1,085
7.01%, 8/10/04 Aaa 1,340 1,397
7.04%, 8/10/05 Aaa 5,100 5,340
Federal Farm Credit Banks 6.55%, 2/7/04 Aaa 3,920 4,003
Federal Home Loan Bank:
6 3/4%, 4/5/04 Aaa 14,000 14,424
7.56%, 9/1/04 Aaa 1,340 1,442
8.195%, 12/22/04 Aaa 10,000 11,153
8.09%, 12/28/04 Aaa 3,500 3,883
Federal National Mortgage Association:
4 7/8%, 10/15/98 (callable) Aaa 5,000 4,943
6.79%, 6/2/04 Aaa 43,335 44,594
6.35%, 6/10/05 Aaa 29,100 29,204
6.72%, 8/1/05 Aaa 27,260 27,988
Government Loan Trusts (assets of Trust
guaranteed by U.S. Government through
Agency for International Development)
8 1/2%, 4/1/06 Aaa 9,580 10,554
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Government Trust Certificates (assets of Trust
guaranteed by U.S. Government through
Defense Security Assistance Agency):
Class 1-C, 9 1/4%, 11/15/01 Aaa $ 5,385 $ 5,746
Class 2-E, 9.40%, 5/15/02 Aaa 17,582 18,755
Class T-3, 9 5/8%, 5/15/02 Aaa 20,550 21,918
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 1,369 1,378
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 5,396 5,501
Overseas Private Investment Corp. U.S.
Government guaranteed participation
Series 1996-A1, 6.726%, 9/15/10 (callable) - 30,000 30,556
Private Export Funding Corp. secured
6.86%, 4/30/04 Aaa 3,283 3,351
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
4 7/8%, 9/15/98 Aaa 11,520 11,405
7 3/4%, 11/15/99 Aaa 31,010 32,193
8%, 11/15/01 Aaa 39,490 42,349
6 1/4%, 8/15/02 Aaa 23,011 23,226
6 1/8%, 3/15/03 Aaa 7,210 7,194
5 5/8%, 9/15/03 Aaa 19,160 18,725
6 5/8%, 2/15/04 Aaa 3,530 3,623
7 5/8%, 8/15/04 Aaa 8,330 9,017
5.89%, 8/15/05 Aaa 6,910 6,765
U.S. Department of Housing and Urban
Development Government guaranteed
participation certificates Series 1995-A,
8.27%, 8/1/03 Aaa 11,375 12,570
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 414,282
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $2,183,577) 2,224,483
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 5.7%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
FEDERAL HOME LOAN MORTGAGE - 0.2%
5 1/2%, 2/1/99 to 7/3/03 Aaa $ 21,294 $ 20,617
7%, 9/1/98 to 7/1/01 Aaa 27,774 28,027
8%, 10/1/16 to 8/1/27 Aaa 3,554 3,710
8 1/2%, 9/1/19 Aaa - -
52,354
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.2%
5 1/2%, 8/1/02 to 5/1/26 Aaa 328,010 316,253
6%, 1/1/02 to 4/1/26 Aaa 242,388 235,144
6 1/2%, 1/1/24 to 8/1/27 Aaa 171,351 167,715
7 1/2%, 11/1/07 to 5/1/08 Aaa 4,609 4,731
8%, 6/1/07 Aaa 81 84
8 1/2%, 1/1/09 to 7/1/21 Aaa 92 97
10%, 8/1/17 Aaa 113 124
724,148
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.3%
6%, 9/15/08 to 12/15/10 Aaa 31,353 30,992
6 1/2%, 6/15/02 to 8/15/25 Aaa 26,738 26,344
7%, 10/15/17 to 5/15/24 Aaa 110,818 111,382
7 1/2%, 8/15/21 to 11/15/25 Aaa 170,106 173,543
8%, 4/15/00 to 10/15/25 Aaa 110,849 114,714
8 1/2%, 11/15/02 to 5/15/26 Aaa 8,245 8,701
9%, 3/15/10 to 1/15/25 Aaa 1,829 1,964
9 1/2%, 7/15/09 to 11/15/24 Aaa 11,891 12,865
10%, 11/15/09 to 10/15/25 Aaa 17,469 19,298
11%, 3/15/10 to 5/15/19 Aaa 3,203 3,618
503,421
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $1,258,348) 1,279,923
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.3%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
Federal Home Loan Mortgage Corporation:
sequential pay Series 1838 Class A,
6 1/2%, 12/15/02 Aaa $ 12,535 $ 12,574
planned amortization class Series 1645
Class ZA, 5 1/2%, 4/15/05 Aaa 13,173 12,975
planned amortization class Series 1727
Class D, 6 1/2%, 8/15/14 Aaa 20,000 20,138
Federal National Mortgage Association
planned ammortization class Series 1993-129
Class D, 6.10%, 6/25/05 Aaa 24,500 24,457
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $69,615) 70,144
COMMERCIAL MORTGAGE SECURITIES - 0.7%
ACP Mortgage LP floater Series E,
7.3343%, 2/28/28 (h)(i) BB 2,076 1,930
American Southwest Financial Securities
Series 1994-C2 Class B2,
12.79%, 12/25/01 (h)(i) - 3,250 3,258
Berkeley Federal Bank & Trust FSB Series 1994
Class 1-B, 7.6996%, 8/1/24 (h)(i) - 6,065 4,575
commercial Series 1995-C2
Class D, 7%, 5/25/27 Baa2 3,830 3,824
CBA Mortgage Corp. Series 1993-C1 Class E,
7.76%, 12/25/03 (h)(i) Ba2 3,169 3,196
CBM Funding Corp.:
sequential pay Series 1996-1
Class A-1, 7.55%, 7/1/99 AA 1,263 1,282
sequential pay Series 1996-1B
Class C, 7.86%, 2/1/08 BBB 12,500 13,370
CS First Boston Mortgage Securities Corp.:
floater Series 1995-AEWI Class E,
9.781%, 11/25/97 (h)(i) - 4,000 4,126
Series 1994-CFB1 Class E,
7.5879%, 1/25/28 (h)(i) Ba2 1,299 1,280
Series 1995-AEWI Class A-1,
6.665%, 11/25/27 Aaa 1,852 1,850
Series 1995-WF1 Class A-2,
6.648%, 12/21/27 Aaa 31,981 32,120
DLJ Mortgage Acceptance Corp.
Series 1993-MF12 Class B-2,
10.10%, 9/18/03 (h) - 2,800 2,860
Equitable Life Assurance Society of the United
States (The) Series 1996-1 Class C1,
7.52%, 5/15/06 (h) A2 6,000 6,344
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
First Chicago/Lennar Trust I, Series 1997-CHL1 (i):
Class D, 8.106%, 5/29/08 - $ 3,500 $ 3,485
Class E, 8.106%, 4/1/39 - 2,900 2,401
General Motors Acceptance Corp. Commercial
Mortgage Securities, Inc. Series 1996-C1
Class F, 7.86%, 11/15/06 (h) Ba3 2,500 2,415
Morgan Stanley Capital One, Inc.
Series 1996-MBL1 Class E,
8.661%, 5/25/21 (h) - 3,832 3,591
Oregon Commercial Mortgage, Inc. commercial
Series 1995 Class E,
9.9255%, 6/25/26 (h)(i) BB 3,208 3,305
Penn Mutual Life Insurance Co. (The)
Series 1996-PML Class K,
7.90%, 11/15/26 (h) - 6,500 4,271
Phoenix Real Estate Securities, Inc. commercial
Series 1993, Class D-1,
8 1/4%, 11/25/23 (h) Ba2 3,500 3,465
Resolution Trust Corp.
Series 1995-C1 Class A-4A,
6 1/4%, 2/25/27 Aaa 497 496
SML, Inc. Series 1994-C1 Class C,
9.20%, 9/18/99 (g) - 2,450 2,012
Structured Asset Securities Corp.:
commercial Series 1992-M1 Class C,
7.05%, 11/25/02 B2 3,200 2,913
commercial Series 1995-C1 Class A1-A,
7 3/8%, 9/25/24 Aaa 2,888 2,903
commercial Series 1996-CFL Class E,
7 3/4%, 2/25/28 BB+ 11,188 11,547
Series 1993-C1 Class E,
6.60%, 10/25/24 (h) B 3,250 1,138
Series 1995-C1
Class E, 7 3/8%, 9/25/24 (h) BB 7,896 7,210
Series 1996-CFL
Class G, 7 3/4%, 2/25/28 (h) - 2,500 2,202
sequential pay Series 1993-C1 Class A-1A,
6.60%, 10/25/24 AA+ 963 960
sequential pay Series 1995-C4 Class A-1A,
6.90%, 6/25/26 Aaa 3,884 3,870
Whitehall Partners commercial Series 1995-C1
Class E, 8.01%, 7/20/25 (h) - 8,892 8,941
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $136,687) 147,140
FOREIGN GOVERNMENT OBLIGATIONS (J) - 0.4%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
Export Development Corp. yankee
8 1/8%, 8/10/99 Aa2 $ 8,700 $ 9,058
Manitoba Province:
6 3/4%, 3/1/03 A1 5,000 5,111
yankee 6%, 10/15/97 A1 5,000 5,004
yankee 6 3/8%, 10/15/99 A1 25,795 26,010
Quebec Province yankee (e):
6.86%, 4/15/26 A2 16,750 17,021
7.22%, 7/22/36 A2 16,150 17,360
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $77,194) 79,564
SUPRANATIONAL OBLIGATIONS - 0.2%
African Development Bank:
6 3/4%, 7/30/99 Aa1 10,200 10,316
9.30%, 7/1/00 Aa1 15,000 16,214
Inter American Development Bank yankee
6.29%, 7/16/27 Aaa 10,850 11,041
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $37,491) 37,571
CASH EQUIVALENTS - 2.2%
SHARES
Taxable Central Cash Fund (f)
(Cost $491,060) 491,059,903 491,060
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $17,508,502) $ 22,357,913
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 5.66%. 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 12/31/02 12/30/92 $ 428
Live Entertainment, Inc.:
$2.00 warrants
3/28/98 3/23/93 $ 230
$2.72 warrants
3/28/98 3/23/93 $ 241
SML, Inc. Series 1994-C1
Class C, 9.20%
9/18/99 8/11/94 $ 1,593
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 $788,388,000 or
3.5% of net assets.
9. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
10. For foreign government obligations not 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 22.7% AAA, AA, A 20.9%
Baa 3.8% BBB 6.5%
Ba 1.9% BB 1.1%
B 3.5% B 3.5%
Caa 0.4% CCC 0.4%
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 0.7%. FMR has determined
that unrated debt securities that are lower quality account for 0.5%
of the total value of investment in securities.
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 89.1%
United Kingdom 4.4
Netherlands 4.2
Others (individually less than 1%) 2.3
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1997, the aggregate cost of investment securities for
income tax purposes was $17,530,395,000. Net unrealized appreciation
aggregated $4,827,518,000, of which $4,873,720,000 related to
appreciated investment securities and $46,202,000 related to
depreciated investment securities.
The fund hereby designates approximately $55,790,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
(EXCEPT PER-SHARE AMOUNT) JULY 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $17,508,502) - $ 22,357,913
SEE ACCOMPANYING SCHEDULE
CASH 1,654
RECEIVABLE FOR INVESTMENTS SOLD 384,092
RECEIVABLE FOR FUND SHARES SOLD 26,258
DIVIDENDS RECEIVABLE 20,540
INTEREST RECEIVABLE 115,608
OTHER RECEIVABLES 211
TOTAL ASSETS 22,906,276
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 511,030
PAYABLE FOR FUND SHARES REDEEMED 55,901
ACCRUED MANAGEMENT FEE 8,128
OTHER PAYABLES AND ACCRUED EXPENSES 4,598
TOTAL LIABILITIES 579,657
NET ASSETS $ 22,326,619
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 16,764,904
UNDISTRIBUTED NET INVESTMENT INCOME 79,303
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 633,066
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 4,849,346
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 1,096,313 SHARES OUTSTANDING $ 22,326,619
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $20.37
SHARE ($22,326,619 (DIVIDED BY) 1,096,313 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1997
INVESTMENT INCOME $ 284,450
DIVIDENDS (INCLUDING $113 RECEIVED FROM AFFILIATED ISSUERS)
INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $248) 544,043
TOTAL INCOME 828,493
EXPENSES
MANAGEMENT FEE $ 85,970
TRANSFER AGENT FEES 39,294
ACCOUNTING AND SECURITY LENDING FEES 975
NON-INTERESTED TRUSTEES' COMPENSATION 211
CUSTODIAN FEES AND EXPENSES 445
REGISTRATION FEES 884
AUDIT 236
LEGAL 84
INTEREST 35
MISCELLANEOUS 89
TOTAL EXPENSES BEFORE REDUCTIONS 128,223
EXPENSE REDUCTIONS (2,313) 125,910
NET INVESTMENT INCOME 702,583
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING REALIZED GAIN (LOSS) OF 721,106
$454 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS 493 721,599
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 4,188,502
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (60) 4,188,442
NET GAIN (LOSS) 4,910,041
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 5,612,624
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 702,583 $ 545,081
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 721,599 1,872,741
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 4,188,442 (942,495)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 5,612,624 1,475,327
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (692,744) (504,777)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (1,497,701) (389,349)
TOTAL DISTRIBUTIONS (2,190,445) (894,126)
SHARE TRANSACTIONS 4,085,647 4,041,699
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 2,090,783 843,928
COST OF SHARES REDEEMED (3,970,707) (3,154,783)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 2,205,723 1,730,844
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,627,902 2,312,045
NET ASSETS
BEGINNING OF PERIOD 16,698,717 14,386,672
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 22,326,619 $ 16,698,717
INCOME OF $79,303 AND $64,786, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 228,546 234,833
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 127,174 49,609
REDEEMED (222,372) (183,230)
NET INCREASE (DECREASE) 133,348 101,212
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31,
1997 1996 1995 1994 B 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 17.34 $ 16.69 $ 15.93 $ 16.59 $ 15.22
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .66 E .64 .42 .46 .72
NET REALIZED AND UNREALIZED 4.57 1.00 1.53 .88 2.14
GAIN (LOSS)
TOTAL FROM INVESTMENT 5.23 1.64 1.95 1.34 2.86
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.66) (.55) (.44) (.51) (.80)
FROM NET REALIZED GAIN (1.54) (.44) (.75) (1.49) (.69)
TOTAL DISTRIBUTIONS (2.20) (.99) (1.19) (2.00) (1.49)
NET ASSET VALUE, END OF PERIOD $ 20.37 $ 17.34 $ 16.69 $ 15.93 $ 16.59
TOTAL RETURN A 33.63% 10.06% 13.03% 8.60% 20.29%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 22,327 $ 16,699 $ 14,387 $ 10,899 $ 7,828
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE .67% .74% .77% .80% .74%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE .66% C .72% C .77% .79% C .74%
NET ASSETS AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT INCOME 3.69% 3.44% 3.50% 4.00% 4.89%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 80% 139% 76% 74% 76%
AVERAGE COMMISSION RATE D $ .0441
</TABLE>
H 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).
I 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.
J 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).
K 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.
L NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1997
6. 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, 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.
7. 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 accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
2. OPERATING POLICIES -
CONTINUED
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. Income distributions 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 in the
accompanying financial statements.
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. Gains and losses are realized upon the
expiration or closing of the options. Realized gains (losses) on
purchased options are included in realized gains (losses) on
investment securities.
Exchange-traded options are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be
2. OPERATING POLICIES -
CONTINUED
RESTRICTED SECURITIES - CONTINUED
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 $7,435,000
or 0.0% of net assets.
8. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $15,429,373,000 and $14,479,176,000, respectively, of which
U.S. government and government agency obligations aggregated
$5,288,694,000 and $4,983,658,000, respectively.
9. 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. The annual individual fund fee rate is .15%. 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. For the period, the management
fee was equivalent to an annual rate of .45% of average net assets.
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 annual rate of .21% of average net assets.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $2,131,000 for the
period.
10. 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,
5. SECURITY LENDING - CONTINUED
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.
11. 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 $41,000,000, respectively. The weighted average
interest rate was 6.2%.
12. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $1,316,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's custodian and transfer agent fees were
reduced by $36,000 and $961,000, respectively, under these
arrangements.
13. 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 July 31, 1997, and the
related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights
are the responsibility of the fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 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 July 31, 1997, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 11, 1997
DISTRIBUTIONS
The Board of Trustees of Fidelity Puritan Fund voted to pay on
September 8, 1997, to shareholders of record at the opening of
business on September 5, 1997, a distribution of $.54 per share
derived from capital gains realized from sales of portfolio securities
and a dividend of $.16 per share from net investment income.
A total of 10.71% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 24.73% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1998 of these percentages
for use in preparing 1997 income tax returns.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
William J. Hayes, Vice President
Robert A. Lawrence, Vice President
Bettina Doulton, Vice President
Kevin E. Grant, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
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
Puritan Fund
Real Estate Investment Portfolio
Spartan(registered trademark) Market Index Fund
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
