FIDELITY
(REGISTERED TRADEMARK)
BALANCED
FUND
SEMIANNUAL REPORT
JANUARY 31, 1998
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 6 THE MANAGERS' REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 10 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 31 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 35 NOTES TO THE FINANCIAL STATEMENTS.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As we entered 1998, the pesky economic and currency crises in
Southeast Asia were still very much with us. Adding to these concerns
was the possibility that U.S. corporate earnings might decline in the
face of lower global product demand. But the news wasn't all bad as
low inflation, low interest rates and moderate economic growth
continued to prevail. The bond market performed well, as it benefited
from the favorable economic backdrop and a "flight-to-safety"
mentality on the part of stock investors.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
FIDELITY BALANCED 4.47% 21.37% 73.30% 219.26%
S&P 500 (REGISTERED TRADEMARK) 3.56% 26.91% 152.28% 410.11%
LB AGGREGATE BOND 4.90% 10.72% 42.55% 135.42%
BALANCED FUNDS AVERAGE 2.73% 16.52% 84.74% 229.66%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you 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 return 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 six
months average represents a peer group of 380 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 JANUARY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY BALANCED 21.37% 11.62% 12.31%
S&P 500 26.91% 20.33% 17.69%
LB AGGREGATE BOND 10.72% 7.35% 8.94%
BALANCED FUNDS AVERAGE 16.52% 13.01% 12.60%
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 19980131 19980218 100903 S00000000000001
Balanced S&P 500
LB Aggregate Bond
00304 SP001
LB001
1988/01/31 10000.00 10000.00
10000.00
1988/02/29 10284.87 10466.00
10118.70
1988/03/31 10194.33 10142.60
10023.74
1988/04/30 10274.06 10255.18
9969.65
1988/05/31 10313.92 10344.40
9902.63
1988/06/30 10725.21 10819.21
10141.54
1988/07/31 10664.56 10778.10
10088.35
1988/08/31 10614.02 10411.64
10114.80
1988/09/30 10867.74 10855.18
10343.79
1988/10/31 11031.78 11156.95
10538.53
1988/11/30 10929.26 10997.41
10410.51
1988/12/31 11054.77 11189.86
10422.23
1989/01/31 11432.00 12008.96
10572.18
1989/02/28 11348.17 11709.94
10495.55
1989/03/31 11474.06 11982.78
10540.93
1989/04/30 11845.90 12604.69
10761.51
1989/05/31 12111.50 13115.18
11044.30
1989/06/30 12292.39 13040.42
11380.57
1989/07/31 12776.77 14217.97
11622.49
1989/08/31 12852.12 14496.64
11450.29
1989/09/30 12862.20 14437.21
11508.90
1989/10/31 12905.80 14102.26
11792.28
1989/11/30 13102.00 14389.95
11904.68
1989/12/31 13233.54 14735.31
11936.53
1990/01/31 12744.71 13746.57
11794.69
1990/02/28 12837.82 13923.90
11832.85
1990/03/31 12942.57 14292.88
11841.57
1990/04/30 12765.60 13935.56
11733.08
1990/05/31 13190.33 15294.28
12080.48
1990/06/30 13249.00 15190.28
12274.31
1990/07/31 13284.87 15141.67
12444.10
1990/08/31 12722.87 13772.86
12277.92
1990/09/30 12515.02 13102.12
12379.49
1990/10/31 12454.38 13045.78
12536.66
1990/11/30 12890.95 13888.54
12806.53
1990/12/31 13171.99 14276.03
13006.07
1991/01/31 13717.21 14898.47
13166.85
1991/02/28 14336.77 15963.71
13279.24
1991/03/31 14610.99 16350.03
13370.60
1991/04/30 14849.49 16389.27
13515.45
1991/05/31 15326.48 17097.28
13594.48
1991/06/30 15047.82 16314.23
13587.57
1991/07/31 15441.80 17074.47
13775.99
1991/08/31 15797.66 17479.14
14074.11
1991/09/30 15932.11 17187.24
14359.30
1991/10/31 16288.51 17417.54
14519.17
1991/11/30 15998.11 16715.62
14652.30
1991/12/31 16699.64 18627.88
15087.45
1992/01/31 16699.64 18281.40
14882.20
1992/02/29 16943.04 18519.06
14978.96
1992/03/31 16835.03 18157.94
14894.52
1992/04/30 17040.33 18691.78
15002.10
1992/05/31 17355.14 18783.37
15285.19
1992/06/30 17300.72 18503.50
15495.55
1992/07/31 17716.27 19260.30
15811.70
1992/08/31 17813.23 18865.46
15971.87
1992/09/30 17936.47 19088.07
16161.20
1992/10/31 17850.51 19154.88
15946.93
1992/11/30 17893.49 19808.06
15950.53
1992/12/31 18026.52 20051.70
16204.17
1993/01/31 18422.55 20220.14
16514.91
1993/02/28 18921.25 20495.13
16804.00
1993/03/31 19524.65 20927.58
16874.02
1993/04/30 20147.77 20421.13
16991.53
1993/05/31 20474.17 20968.42
17013.16
1993/06/30 20490.32 21029.22
17321.49
1993/07/31 20760.33 20945.11
17419.46
1993/08/31 21435.34 21738.93
17724.79
1993/09/30 21228.92 21571.54
17773.47
1993/10/31 21401.77 22018.07
17839.88
1993/11/30 21024.65 21808.90
17688.12
1993/12/31 21501.56 22072.78
17783.99
1994/01/31 22079.65 22823.26
18024.10
1994/02/28 21694.26 22204.75
17710.96
1994/03/31 20803.85 21236.62
17274.31
1994/04/30 20625.48 21508.45
17136.37
1994/05/31 20657.91 21861.19
17133.97
1994/06/30 20444.82 21325.59
17096.11
1994/07/31 20836.73 22025.07
17435.69
1994/08/31 21032.69 22928.10
17457.33
1994/09/30 20884.80 22366.36
17200.38
1994/10/31 20638.13 22869.60
17185.06
1994/11/30 20342.13 22036.69
17146.89
1994/12/31 20358.93 22363.49
17265.30
1995/01/31 20358.93 22943.38
17606.98
1995/02/28 20806.20 23837.48
18025.60
1995/03/31 21156.14 24540.93
18136.19
1995/04/30 21373.55 25263.66
18389.53
1995/05/31 21774.94 26273.45
19101.15
1995/06/30 22012.59 26883.78
19241.19
1995/07/31 22334.07 27775.24
19198.22
1995/08/31 22384.83 27844.96
19429.92
1995/09/30 22586.91 29020.02
19618.94
1995/10/31 22381.57 28916.42
19874.08
1995/11/30 23014.69 30185.85
20171.90
1995/12/31 23393.05 30767.23
20454.98
1996/01/31 23600.68 31814.54
20590.82
1996/02/29 23168.12 32109.46
20232.90
1996/03/31 22981.40 32418.68
20092.26
1996/04/30 23051.41 32896.53
19979.26
1996/05/31 23208.94 33744.93
19938.69
1996/06/30 23385.16 33873.50
20206.46
1996/07/31 22836.38 32376.97
20261.75
1996/08/31 23101.92 33059.80
20227.79
1996/09/30 23853.02 34920.40
20580.30
1996/10/31 24623.05 35883.51
21036.18
1996/11/30 25822.86 38595.94
21396.50
1996/12/31 25577.58 37831.36
21197.56
1997/01/31 26304.21 40195.06
21262.47
1997/02/28 26576.70 40510.19
21315.36
1997/03/31 25893.27 38845.62
21079.16
1997/04/30 26535.56 41164.71
21394.70
1997/05/31 27856.83 43670.82
21596.95
1997/06/30 28817.05 45627.27
21853.29
1997/07/31 30559.05 49257.83
22442.60
1997/08/31 29650.99 46498.41
22251.17
1997/09/30 31069.43 49045.12
22579.34
1997/10/31 30441.37 47407.02
22906.90
1997/11/30 30990.92 49601.49
23012.38
1997/12/31 31574.81 50453.15
23244.08
1998/01/30 31926.34 51011.16
23542.49
IMATRL PRASUN SHR__CHT 19980131 19980218 100906 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Balanced Fund on January 31, 1988. As the chart
shows, by January 31, 1998, the value of the investment would have
grown to $31,926 - a 219.26% 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 $51,011 - a 410.11% increase. If $10,000 was put in the
bond index, it would have grown to $23,542 - a 135.42% 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
Economic woes in Southeast Asia
and a resulting "flight to quality"
mentality on the part of investors
played leading roles in the
performance of the U.S. stock and
bond markets during the
six-month period that ended
January 31, 1998. During that
period, the Standard & Poor's 500
Index - a measure of the U.S.
stock market based on the
average performance of 500 widely
held stocks - returned 3.56%,
and the Lehman Brothers
Aggregate Bond Index - a
measure of the U.S. taxable bond
market - returned 4.90%. What
began as a trickle in June - with
several small Asian countries
devaluing their currencies -
transformed into a downpour in
October as larger markets such as
Hong Kong became affected. This
crisis brought volatility to markets
across the globe. The previously
surging U.S. stock market cooled
down as a result. Investors
reversed fields, gravitating toward
larger-capitalization stocks
because of their reliable earnings
growth and liquidity. Earlier,
smaller-cap stocks had performed
best due to their superior earnings
growth. In the bond market an
already-positive environment -
due to a lack of inflationary
pressure - was bolstered as wary
stock investors sought
investments offering lower volatility.
U.S. Treasury securities - with
their reputation as one of the
highest-quality bond investments
in the world - were the most
notable beneficiaries of this flight
to quality.
An interview with Stephen DuFour (right photo), Lead Portfolio Manager
of Fidelity Balanced Fund, as well as Kevin Grant, Co-Manager for its
fixed-income investments
Q. HOW DID THE FUND PERFORM, STEVE?
S.D. Overall, quite well. For the six-month period ending January 31,
1998, the fund returned 4.47%, beating the balanced funds average
tracked by Lipper Analytical Services, which was up 2.73%. Over the
same six-month period, the Lehman Brothers Aggregate Bond Index
returned 4.90%, while the Standard & Poor's 500 Index returned 3.56%.
During the past 12 months, the fund returned 21.37%, which compared to
16.52% for the balanced funds average. During the same one-year
period, the Lehman Brothers Aggregate Bond Index returned 10.72%,
while the Standard & Poor's 500 Index returned 26.91%.
Q. WHY DID THE FUND OUTPERFORM ITS PEER GROUP, ESPECIALLY DURING THE
PAST SIX MONTHS?
S.D. The fund was well-positioned in the strong domestic finance and
utility sectors, while it was underweighted versus the balanced funds
average in the poorly performing cyclical sectors. Cyclical stocks are
those that tend to perform well when the economy is up and poorly when
the economy is weak. All of these sectors were strongly impacted by
the Asian market crisis this fall. Over the past six-months, U.S.
investors - concerned about the fallout from the Asian crisis - fled
to what they considered to be safe investments, such as domestic
financial and utility stocks, and moved away from cyclical companies.
Q. OVER THE PAST SIX MONTHS THE FUND UNDERPERFORMED THE LEHMAN
BROTHERS AGGREGATE BOND INDEX BUT OUTPERFORMED THE S&P 500 INDEX. WHAT
WAS BEHIND THAT?
S.D. Simply put, the fund underperformed the bond index but beat the
S&P index - which measures the returns of stocks, not bonds - because
bonds outperformed stocks during the past six months. At the end of
the period, the fund had about 54% invested in stocks versus
approximately 36% in bonds - reflecting a slight increase in the
fund's bond holdings from six months ago, which was about 33%. In
general - although the percentages fluctuate each month - the fund's
goal is to hold about 60% in stocks and 40% in bonds.
Q. TURNING TO YOU, KEVIN, WHY WERE BONDS RELATIVELY STRONG OVER THE
PAST SIX MONTHS?
K.G. There has been a "flight to quality," or safe investments, during
the past six months due to investors' fears that the Asian crisis
would affect the U.S. domestic economy. During this period, investors
looked not only to safe stocks, but also to bonds, which are
considered a sound investment when the stock market is experiencing
some turmoil. In terms of the larger economic picture over the past
six months, many Asian countries began exporting like crazy to help
their troubled economies. This put downward pressure on goods prices
globally, and, combined with the potential weakening of the U.S.
economy and falling interest rates, provided a good environment for
bonds.
Q. GIVEN THIS ENVIRONMENT, HOW DID YOU POSITION THE BOND PORTION OF
THE FUND DURING THIS PERIOD?
K.G. The fund invests in three main sectors of the investment-grade
bond market: government bonds, corporate bonds and mortgage
securities. Over the past six months, U.S. government bonds were far
and away the winners. They benefited from the flight to quality and
because the U.S. government appeared to have a budget surplus in
1998, which meant that its need to borrow money was greatly reduced.
This made investors think that these bonds could be more scarce in the
future than they were during the period. Corporate bonds, on the other
hand, were more negatively affected by events in Asia than government
bonds. In fact, the yield advantage offered by corporate bonds over
government bonds widened, and, consequently, prices of corporate bonds
rose but by less than those of government bonds.
Q. WHAT ABOUT MORTGAGE SECURITIES?
K.G. They began to look cheap at the end of the period, so I increased
the fund's holdings in them at that time. With the drop in interest
rates, many homeowners in the United States sparked a refinancing wave
over the period. That meant that many refinanced their homes and paid
off their existing mortgages early. As a result, investors holding
those existing mortgage securities got their money back sooner than
expected, forcing them to reinvest at lower interest rates. Even with
this risk to mortgage investors, the mortgage market was quite
expensive for most of the period. That changed in late January when
the market cheapened pretty significantly relative to Treasuries and
reflected imminent prepayment risk.
Q. SHIFTING BACK TO STOCKS, WE TALKED EARLIER ABOUT HOW SOME OF YOUR
SECTOR SELECTIONS PAID OFF FOR THE FUND. LET'S TALK MORE ABOUT THE
FINANCE SECTOR - WHICH MADE UP ABOUT 35% OF THE STOCK PORTION OF THE
FUND AT THE END OF THE PERIOD . . .
S.D. As I noted, the fund benefited from its heavy position in
financial stocks. I also was successful in choosing the areas in the
finance sector that were the strongest performers. I reduced the
fund's exposure to money center banks - big banks, such as
NationsBank, which were hurt by Asian lending exposure - and focused
instead on federal sponsored agencies like Fannie Mae and Freddie Mac,
which were boosted by the refinancing boom. I also took advantage of
lower valuations in some regional banks - which turned in strong
performances - and some credit card issuers that stood to benefit
from improving personal credit that also was a result of the
refinancing boom. Some outstanding stocks were top 10 holdings Fannie
Mae - which rode the refinancing wave - and Banc One, which benefited
from improving personal credit trends and cost-cutting measures.
Another top 10 holding, American Express, has done a great job of
expanding acceptance of its credit card at retailers and expanding its
customer base.
Q. WERE THERE ANY DISAPPOINTMENTS OVER THE PERIOD?
S.D. My biggest regret is that I had too much of the fund in the
energy sector. Energy stocks suffered because investors expected and
continue to expect that the crisis in Asia would result in lower
demand for petroleum products over the next few years.
Q. STEVE, HOW DOES THE FUND LOOK GOING FORWARD?
S.D. I continue to be cautiously optimistic. That's because the jury
is still out on what effect Asia's troubles will have on the U.S.
economy as well as the U.S. stock market going forward. I am trying to
position the fund so that it can benefit from what could be a period
of low inflation with earnings growth. At the same time, I'm worried
about deflation and a slowdown in consumer demand around the world.
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 SOME
STRATEGY CHANGES HE HAS
MADE OVER THE PAST SIX
MONTHS:
"In the last shareholder report
published when I took over the
fund six months ago, I noted that I
planned to cut the overall number
of fund holdings and somewhat
reduce the fund's international
exposure. Since then, I have taken
these steps. I reduced the number
of the fund's stock holdings from
more than 300 to about 150. In
addition, I decreased the fund's
international exposure from 7.7%
to 3.8% of the fund's investments.
"In terms of the lower number of
fund holdings, I believe I am able
to do a notably better job investing
if I focus on a core group of stock
names instead of a large number
of names.
"The reduction in international
holdings also has paid off. I was
able to sell holdings in
lower-returning international
markets and invest instead in
the U.S. stock market - one of the
best-performing stock markets in
1997. In addition, I sold all of the
fund's stock holdings in Japan well
before the Asian crisis this past
fall."
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 January 31, 1998,
more than $4.3 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, 1996-1997; Fidelity
Select Transportation
Portfolio, 1994-1997; Fidelity
Select Multimedia,
1993-1996; joined Fidelity in
1992
(checkmark)
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
BANC ONE CORP. 2.4 0.4
FANNIE MAE 2.3 1.6
UNISYS CORP. 1.8 0.7
ALLSTATE CORP. 1.5 1.9
AMERICAN EXPRESS CO. 1.5 2.1
TOP FIVE BOND ISSUERS AS OF JANUARY 31, 1998
<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
FANNIE MAE 10.8 4.8
U.S. TREASURY 4.1 13.6
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 3.2 0.3
FORD MOTOR CREDIT CO. 0.6 0.7
WORLDCOM, INC. 0.6 0.4
</TABLE>
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 25.7 24.0
UTILITIES 11.0 6.2
ENERGY 6.2 8.3
TECHNOLOGY 4.8 3.6
MEDIA & LEISURE 3.6 3.1
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1998 * AS OF JULY 31, 1997 **
ROW: 1, COL: 1, VALUE: 53.6
ROW: 1, COL: 2, VALUE: 36.0
ROW: 1, COL: 3, VALUE: 1.5
ROW: 1, COL: 4, VALUE: 8.9
STOCKS 60.6%
BONDS 33.2%
CONVERTIBLE
SECURITIES 2.4%
SHORT-TERM
INVESTMENTS 3.8%
FOREIGN
INVESTMENTS 7.7%
STOCKS 53.6%
BONDS 36.4%
CONVERTIBLE
SECURITIES 1.1%
SHORT-TERM
INVESTMENTS 8.9%
FOREIGN
INVESTMENTS 3.8%
ROW: 1, COL: 1, VALUE: 60.6
ROW: 1, COL: 2, VALUE: 33.2
ROW: 1, COL: 3, VALUE: 2.4
ROW: 1, COL: 4, VALUE: 3.8
*
**
INVESTMENTS JANUARY 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 53.6%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.0%
AEROSPACE & DEFENSE - 0.9%
Lockheed Martin Corp. 86,000 $ 8,949
Textron, Inc. 566,200 33,866
42,815
DEFENSE ELECTRONICS - 0.1%
Raytheon Co. Class B 66,500 3,466
TOTAL AEROSPACE & DEFENSE 46,281
BASIC INDUSTRIES - 0.6%
CHEMICALS & PLASTICS - 0.1%
Olin Corp. 75,600 3,251
METALS & MINING - 0.2%
Aluminum Co. of America 51,200 3,910
Kaiser Aluminum Corp. 100,000 1,081
Reynolds Metals Co. 100,000 6,306
11,297
PAPER & FOREST PRODUCTS - 0.3%
Fort James Corp. 302,700 12,997
TOTAL BASIC INDUSTRIES 27,545
CONSTRUCTION & REAL ESTATE - 1.1%
BUILDING MATERIALS - 0.3%
Masco Corp. 120,000 5,910
Owens-Corning 356,300 9,910
15,820
ENGINEERING - 0.2%
Fluor Corp. 200,900 7,571
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Duke Realty Investors, Inc. 200,000 4,750
Equity Office Properties Trust 187,200 5,675
Equity Residential Properties Trust (SBI) 230,200 11,769
Glenborough Realty Trust, Inc. 2,800 89
Public Storage, Inc. 166,000 5,457
27,740
TOTAL CONSTRUCTION & REAL ESTATE 51,131
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 1.7%
AUTOS, TIRES, & ACCESSORIES - 1.4%
Eaton Corp. 354,300 $ 31,798
Ford Motor Co. 125,000 6,375
Navistar International Corp. (a) 997,300 26,927
65,100
CONSUMER DURABLES - 0.2%
Minnesota Mining & Manufacturing Co. 76,000 6,346
TEXTILES & APPAREL - 0.1%
NIKE, Inc. Class B 50,000 2,003
Unifi, Inc. 90,400 3,706
5,709
TOTAL DURABLES 77,155
ENERGY - 6.2%
British Petroleum PLC:
Ord. 1,670,990 22,573
ADR 837 67
Burlington Resources, Inc. 362,500 15,497
Coastal Corp. (The) 329,980 19,139
Enron Oil & Gas Co. 150,000 3,000
Exxon Corp. 395,000 23,428
Mobil Corp. 484,000 32,973
Phillips Petroleum Co. 944,500 41,558
Texaco, Inc. 698,962 36,390
Tosco Corp. 1,200,200 40,132
Total SA:
Class B 332,867 34,619
sponsored ADR 192,700 9,996
Valero Energy Corp. 212,300 6,701
286,073
FINANCE - 19.0%
BANKS - 7.5%
Banc One Corp. 1,958,700 109,442
Bank of New York Co., Inc. 956,600 51,836
BankAmerica Corp. 279,800 19,883
Chase Manhattan Corp. 240,600 25,789
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Citicorp 253,600 $ 30,178
Comerica, Inc. 75,700 7,144
Crestar Financial Corp. 126,355 6,634
Mellon Bank Corp. 238,300 14,387
National City Corp. 245,000 14,746
NationsBank Corp. 328,327 19,700
Norwest Corp. 412,800 15,067
Providian Financial Corp. 130,000 6,354
Republic New York Corp. 50,000 5,444
U.S. Bancorp 167,600 18,352
344,956
CREDIT & OTHER FINANCE - 2.6%
American Express Co. 799,600 66,917
Beneficial Corp. 104,300 8,096
Fleet Financial Group, Inc. 344,700 24,689
Household International, Inc. 105,000 13,073
Transamerica Corp. 81,600 8,384
121,159
FEDERAL SPONSORED CREDIT - 3.3%
Freddie Mac 806,300 35,880
Fannie Mae 1,712,800 105,765
SLM Holding Corp. 250,000 10,531
152,176
INSURANCE - 3.6%
Allstate Corp. 788,700 69,800
American Bankers Insurance Group, Inc. 224,100 12,382
American International Group, Inc. 160,600 17,716
Conseco, Inc. 125,000 5,719
Fremont General Corp. 115,408 5,864
Hartford Financial Services Group, Inc. 100,500 9,045
Highlands Insurance Group, Inc. (a) 149,200 3,879
MBIA, Inc. 76,398 4,947
SunAmerica, Inc. 206,000 8,279
Torchmark Corp. 50,000 2,078
Travelers Group, Inc. (The) 450,000 22,275
UNUM Corp. 77,600 3,773
165,757
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - 1.0%
Ahmanson (H.F.) & Co. 86,100 $ 5,021
TCF Financial Corp. 66,000 2,108
Washington Mutual, Inc. 579,380 37,225
44,354
SECURITIES INDUSTRY - 1.0%
Lehman Brothers Holdings, Inc. 602,700 32,734
Morgan Stanley, Dean Witter, Discover and Co. 250,000 14,594
47,328
TOTAL FINANCE 875,730
HEALTH - 2.5%
DRUGS & PHARMACEUTICALS - 2.1%
American Home Products Corp. 526,700 50,267
Bristol-Myers Squibb Co. 194,700 19,409
Schering-Plough Corp. 271,600 19,657
Warner-Lambert Co. 50,000 7,525
96,858
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
Bausch & Lomb, Inc. 99,700 4,275
MEDICAL FACILITIES MANAGEMENT - 0.3%
Columbia/HCA Healthcare Corp. 309,300 7,733
Tenet Healthcare Corp. (a) 133,800 4,616
12,349
TOTAL HEALTH 113,482
HOLDING COMPANIES - 0.5%
Norfolk Southern Corp. 739,600 23,344
INDUSTRIAL MACHINERY & EQUIPMENT - 1.8%
ELECTRICAL EQUIPMENT - 0.6%
Emerson Electric Co. 74,000 4,477
General Electric Co. 317,700 24,622
29,099
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Tyco International Ltd. 193,910 $ 8,605
POLLUTION CONTROL - 1.0%
USA Waste Services, Inc. (a) 1,224,000 44,982
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 82,686
MEDIA & LEISURE - 2.5%
BROADCASTING - 1.2%
CBS Corp. 194,000 5,808
Scripps E.W. Co. Class A 76,000 3,667
Time Warner, Inc. 725,900 46,594
56,069
ENTERTAINMENT - 0.3%
News Corp. Ltd. ADR 118,600 2,950
Viacom, Inc. Class B (non-vtg.) (a) 263,800 11,014
13,964
PUBLISHING - 1.0%
Cognizant Corp. 72,600 3,294
Dun & Bradstreet Corp. 155,000 4,941
Meredith Corp. 95,000 3,723
U S WEST Media Group (a) 1,087,900 32,297
44,255
TOTAL MEDIA & LEISURE 114,288
NONDURABLES - 0.5%
FOODS - 0.1%
Heinz (H.J.) Co. 100,000 5,544
Keebler Foods Co. 5,200 143
5,687
HOUSEHOLD PRODUCTS - 0.3%
Unilever PLC Ord. 181,150 1,426
Unilever NV ADR 225,000 12,839
14,265
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
TOBACCO - 0.1%
Philip Morris Companies, Inc. 49,040 $ 2,035
TOTAL NONDURABLES 21,987
RETAIL & WHOLESALE - 1.8%
APPAREL STORES - 0.1%
Payless ShoeSource, Inc. (a) 111,180 7,234
DRUG STORES - 0.3%
CVS Corp. 101,800 6,674
Rite Aid Corp. 100,000 6,244
12,918
GENERAL MERCHANDISE STORES - 1.4%
Dayton Hudson Corp. 101,900 7,330
Federated Department Stores, Inc. (a) 383,800 16,264
Penney (J.C.) Co., Inc. 259,500 17,484
Wal-Mart Stores, Inc. 569,700 22,717
63,795
TOTAL RETAIL & WHOLESALE 83,947
SERVICES - 0.3%
Block (H&R), Inc. 120,600 5,291
Cendant Corp. (a) 264,341 8,955
14,246
TECHNOLOGY - 4.3%
COMPUTER SERVICES & SOFTWARE - 0.1%
First Data Corp. 200,000 6,125
COMPUTERS & OFFICE EQUIPMENT - 3.1%
EMC Corp. (a) 1,485,000 48,355
International Business Machines Corp. 114,600 11,310
Quantum Corp. 78,500 1,913
Unisys Corp. (a) 4,999,800 82,497
144,075
ELECTRONIC INSTRUMENTS - 0.3%
Varian Associates, Inc. 278,400 14,198
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - 0.2%
Intel Corp. 21,300 $ 1,725
Micron Technology, Inc. (a) 162,900 5,640
7,365
PHOTOGRAPHIC EQUIPMENT - 0.6%
Eastman Kodak Co. 450,000 29,363
TOTAL TECHNOLOGY 201,126
TRANSPORTATION - 1.0%
AIR TRANSPORTATION - 0.4%
Continental Airlines, Inc. Class B (a) 100,000 4,638
Southwest Airlines Co. 285,000 7,428
Viad Corp. 364,600 7,246
19,312
RAILROADS - 0.6%
CSX Corp. 479,500 25,414
Wisconsin Central Transportation Corp. (a) 153,300 3,890
29,304
TOTAL TRANSPORTATION 48,616
UTILITIES - 8.8%
CELLULAR - 0.0%
Metromedia Fiber Network, Inc. Class A (a) 5,600 139
ELECTRIC UTILITY - 1.0%
Allegheny Energy, Inc. 193,100 5,914
American Electric Power Co., Inc. 252,000 12,427
Central Maine Power Co. 187,800 3,110
Citizens Utilities Co. Class B 282,295 2,682
Duke Energy Corp. 152,377 8,257
Niagara Mohawk Power Corp. (a) 306,200 3,311
PG&E Corp. 249,168 7,428
Pinnacle West Capital Corp. 110,000 4,400
47,529
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - 1.2%
MCN Corp. 1,123,900 $ 41,584
Questar Corp. 333,000 13,861
55,445
TELEPHONE SERVICES - 6.6%
AT&T Corp. 866,000 54,233
Ameritech Corp. 258,800 11,112
Bell Atlantic Corp. 424,577 39,300
BellSouth Corp. 216,500 13,112
GTE Corp. 696,900 38,025
MCI Communications Corp. 232,000 10,774
McLeodUSA, Inc. Class A (a) 122,000 4,201
NEXTLINK Communications, Inc. Class A 91,400 2,274
SBC Communications, Inc. 587,800 45,701
Sprint Corp. 197,400 11,721
Teleport Communications Group, Inc. Class A (a) 100,600 5,615
U S WEST Communications Group 100,000 4,813
WorldCom, Inc. (a) 1,764,773 63,201
304,082
TOTAL UTILITIES 407,195
TOTAL COMMON STOCKS
(Cost $1,988,119) 2,474,832
CONVERTIBLE PREFERRED STOCKS - 0.6%
ENERGY - 0.0%
OIL & GAS - 0.0%
Tosco Financing Trust $2.875 TOPRS (e) 13,900 834
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.3%
Loral Space & Communications Ltd.:
Series C, $3.00 (e) 61,000 3,866
Series C, $3.00 172,600 10,960
14,826
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 0.1%
BROADCASTING - 0.1%
Evergreen Media Corp. $3.00 (e) 58,000 $ 4,328
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 10,700 3,692
UTILITIES - 0.1%
GAS - 0.1%
MCN Corp. $4.00 48,700 2,940
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $21,873) 26,620
CORPORATE BONDS - 13.6%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (000S)
CONVERTIBLE BONDS - 0.5%
RETAIL & WHOLESALE - 0.5%
DRUG STORES - 0.4%
Rite Aid Corp. 5 1/4%, 9/15/05 (e) Baa $ 15,000 17,044
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Home Depot, Inc. 3 1/4%, 10/1/01 A1 4,510 6,263
TOTAL RETAIL & WHOLESALE 23,307
NONCONVERTIBLE BONDS - 13.1%
AEROSPACE & DEFENSE - 0.3%
DEFENSE ELECTRONICS - 0.3%
Raytheon Co. 6.45%, 8/15/04 Baa 13,000 13,192
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Daimler-Benz Capital AG 4 1/8%, 7/5/03 unit A1 3,060 2,407
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
TEXTILES & APPAREL - 0.2%
Levi Strauss & Co. 7%, 11/1/06 (e) Baa $ 10,000 $ 10,191
TOTAL DURABLES 12,598
ENERGY - 0.0%
OIL & GAS - 0.0%
Pennzoil Co. 9 5/8%, 11/15/99 Baa 1,280 1,356
FINANCE - 6.7%
ASSET-BACKED SECURITIES - 1.3%
Capital Equipment Receivables Trust
6.48%, 10/15/06 Baa 4,680 4,699
Contimortgage Home Equity Loan Trust
6.26%, 7/15/12 Aaa 15,000 15,082
Ford Credit Auto Owner Trust 6.40%, 5/15/02 A1 4,250 4,310
Green Tree Financial Corp. 6.10%, 4/15/27 Aaa 2,732 2,734
Key Auto Finance Trust Class C
6.65%, 10/15/03 Baa 1,740 1,747
Key Plastics, Inc. 10 1/4%, 3/15/07 A2 5,930 5,980
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 337 335
MBNA Master Credit Card Trust II Class A
6.55%, 1/15/07 Aaa 15,000 15,512
Premier Auto Trust:
4.90%, 12/15/98 Aaa 88 88
8.05%, 4/4/00 Aaa 2,952 2,978
6%, 5/6/00 Aaa 3,920 3,922
Standard Credit Card Master Trust I
7.65%, 2/15/00 A2 2,300 2,303
Union Federal Savings Bank Grantor Trust:
7.275%, 10/10/00 Baa 456 459
8.20%, 1/10/01 Baa 328 332
60,481
BANKS - 2.3%
ABN Amro Bank NV 6 5/8%, 10/31/01 Aa3 6,750 6,906
Bank of New York Institutional Capital Trust A
7.78%, 10/1/26 (e) A1 10,000 10,445
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Banc One Corp. 6.70%, 3/24/00 Aa3 $ 5,300 $ 5,390
Banco Latinoamericano Exportaciones SA euro
6.90%, 12/4/99 (e) Baa 2,300 2,342
BanPonce Corp.:
5 3/4%, 3/1/99 A3 1,620 1,616
6.378%, 4/8/99 A3 2,980 2,992
BanPonce Financial Corp.:
6.88%, 6/16/00 A3 2,500 2,550
6.69%, 9/21/00 A3 500 508
6 3/4%, 8/9/01 A3 770 786
Capital One Bank 7.20%, 7/19/99 Baa 18,000 18,315
Chase Manhattan Corp. 7 1/4%, 6/1/07 A1 9,750 10,330
Citicorp 7.20%, 6/15/07 A1 4,510 4,776
Den Danske Bank AS
7.40%, 6/15/10 (e)(f) A1 10,000 10,514
Firstar Corp. 7.15%, 9/1/00 A3 6,210 6,251
Midland American Capital Corp. gtd.
12 3/4%, 11/15/03 Aa3 590 619
NB Capital Trust IV 8 1/4%, 4/15/27 A1 6,630 7,204
Signet Banking Corp. 9 5/8%, 6/1/99 A2 4,469 4,672
Union Planters National Bank
6.81%, 8/20/01 A3 4,000 4,070
Zions Bancorp. 8 5/8%, 10/15/02 Baa 6,000 6,643
106,929
CREDIT & OTHER FINANCE - 2.5%
AT&T Capital Corp.:
6.41%, 8/13/99 Baa 7,500 7,551
6.16%, 12/3/99 Baa 2,750 2,758
Associates Corp. of North America
6 7/8%, 2/15/00 Aa3 13,000 13,320
BCH Cayman Islands Ltd. yankee
7.70%, 7/15/06 A3 690 735
BankBoston Capital Trust II 7 3/4%, 12/15/26 Baa 3,250 3,305
BanPonce Trust I 8.327%, 2/1/27 (e) Baa 7,150 7,707
Chase Capital I 7.67%, 12/1/26 A1 7,635 7,773
Chrysler Financial Corp. 6 3/8%, 1/28/00 A3 7,230 7,299
Finova Capital Corp. 6.12%, 5/28/02 Baa 5,000 5,041
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
First Security Capital I 8.41%, 12/15/26 A3 $ 4,690 $ 5,201
First Union Institutional Capital I 8.04%, 12/1/26 A1 2,000 2,128
Ford Motor Credit Co.:
euro 8 5/8%, 1/24/00 A1 3,766 3,945
5.73%, 2/23/00 A1 4,500 4,491
6.20%, 3/12/01 A1 20,000 20,151
General Electric Capital Corp.
6.94%, 4/13/09 (d) Aaa 7,000 7,088
General Motors Acceptance Corp.
6.65%, 5/24/00 A3 5,000 5,085
JPM Capital Trust II 7.95%, 2/1/27 Aa2 2,480 2,610
KeyCorp Institutional Capital Series A
7.826%, 12/1/26 A1 4,000 4,151
Union Acceptance Corp. 7.075%, 7/10/02 Baa 803 807
U.S. West Capital Funding, Inc. 6.95%, 1/15/37 Baa 3,910 4,069
115,215
INSURANCE - 0.4%
Executive Risk Capital Trust 8 5/8%, 2/1/27 Baa 10,000 10,996
SunAmerica, Inc. 6.20%, 10/31/99 Baa 5,500 5,529
16,525
SAVINGS & LOANS - 0.2%
Great West Financial Trust II 8.206%, 2/1/27 A3 8,000 8,589
TOTAL FINANCE 307,739
HOLDING COMPANIES - 0.2%
Norfolk Southern Corp. 7.05%, 5/1/37 Baa 8,820 9,330
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc. 6 1/4%, 4/1/99 Baa 8,500 8,506
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 1.0%
BROADCASTING - 1.0%
Continental Cablevision, Inc.:
8.30%, 5/15/06 Baa $ 500 $ 551
9%, 9/1/08 Baa 3,430 4,029
Hearst-Argyle Television, Inc. 7 1/2%, 11/15/27 Baa 6,500 6,639
TCI Communications:
7 1/4%, 6/15/99 Ba1 1,550 1,573
7 3/8%, 2/15/00 Ba1 3,750 3,843
8.65%, 9/15/04 Ba1 5,000 5,548
6.82%, 9/15/10 Ba1 5,000 5,022
Time Warner, Inc.:
7.95%, 2/1/00 Ba1 6,700 6,941
6.85%, 1/15/26 Ba1 10,000 10,361
44,507
PUBLISHING - 0.0%
News America, Inc. 6 5/8%, 1/9/08 (e) Baa 950 936
RESTAURANTS - 0.0%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa 1,400 1,362
TOTAL MEDIA & LEISURE 46,805
NONDURABLES - 0.5%
FOODS - 0.2%
ConAgra, Inc. 7 1/8%, 10/1/26 Baa 5,000 5,331
Dart and Kraft Finance NV 7 3/4%, 11/30/98 A2 3,750 3,806
9,137
TOBACCO - 0.3%
Philip Morris Companies, Inc.:
7%, 7/15/05 A2 7,000 7,177
6.95%, 6/1/06 A2 8,980 9,260
16,437
TOTAL NONDURABLES 25,574
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.6%
GENERAL MERCHANDISE STORES - 0.4%
Dayton Hudson Corp.:
6.40%, 2/15/03 Baa $ 1,000 $ 1,011
6 3/4%, 1/1/28 Baa 5,000 4,935
Federated Department Stores, Inc.:
8 1/2%, 6/15/03 Baa 4,000 4,407
6.79%, 7/15/27 Baa 6,000 6,171
Penney (J.C.) Co., Inc. 6.95%, 4/1/00 A2 5,000 5,111
21,635
GROCERY STORES - 0.2%
American Stores Co. 7 1/2%, 5/1/37 Baa 7,000 7,793
TOTAL RETAIL & WHOLESALE 29,428
TECHNOLOGY - 0.5%
COMPUTERS & OFFICE EQUIPMENT - 0.5%
Comdisco, Inc.:
9.45%, 6/8/00 Baa 6,000 6,480
9.30%, 6/27/00 Baa 3,750 4,037
6 3/8%, 11/30/01 Baa 12,000 12,131
22,648
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.3%
AMR Corp. 9 1/2%, 7/15/98 Baa 4,000 4,067
Delta Air Lines, Inc.:
9 7/8%, 5/15/00 Baa 2,000 2,163
9 7/8%, 4/30/08 Baa 4,805 5,629
equipment trust certificate 8.54%, 1/2/07 Baa 826 912
12,771
RAILROADS - 0.4%
Burlington Northern Santa Fe Corp.:
6 7/8%, 12/1/27 Baa 5,000 4,981
6.53%, 7/15/37 Baa 12,000 12,327
17,308
TOTAL TRANSPORTATION 30,079
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - 2.1%
CELLULAR - 0.0%
360 Degrees Communications Co.
7 1/8%, 3/1/03 Ba1 $ 1,665 $ 1,710
ELECTRIC UTILITY - 1.3%
Avon Energy Partners Holdings
7.05%, 12/11/07 (e) Baa 20,000 20,765
DR Investment yankee 7.10%, 5/15/02 (e) Baa 7,500 7,729
Gulf States Utilities Co. 1st mortgage
6 3/4%, 10/1/98 Baa 1,000 1,005
Israel Electric Corp. Ltd. (e):
yankee 7 1/4%, 12/15/06 A3 3,000 3,104
7 3/4%, 12/15/27 A3 14,930 15,279
Texas Utilities Co., Series C,
6 3/8%, 1/1/08 (e) Baa 9,625 9,433
Texas Utilities Electric Co. 9 1/2%, 8/1/99 Baa 1,000 1,051
58,366
GAS - 0.2%
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa 8,700 9,876
TELEPHONE SERVICES - 0.6%
WorldCom, Inc.:
8 7/8%, 1/15/06 Ba1 9,592 10,519
7 3/4%, 4/1/07 Ba1 14,600 15,757
26,276
TOTAL UTILITIES 96,228
TOTAL NONCONVERTIBLE BONDS 603,483
TOTAL CORPORATE BONDS
(Cost $556,468) 626,790
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 8.3%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
U.S. TREASURY OBLIGATIONS - 6.6%
5 1/2%, 11/15/98 Aaa $ 113,915 $ 113,986
6 7/8%, 3/31/00 Aaa 31,750 32,722
5 1/2%, 12/31/00 Aaa 10,900 10,937
5 7/8%, 11/30/01 Aaa 1,240 1,259
10 3/4%, 5/15/03 Aaa 2,006 2,486
6 1/2%, 8/15/05 Aaa 4,527 4,793
7%, 7/15/06 Aaa 75,550 82,739
9%, 11/15/18 Aaa 14,600 20,007
6 7/8%, 8/15/25 Aaa 30,810 34,936
303,865
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.7%
Federal Agricultural Mortgage Corporation:
7.01%, 2/10/05 Aaa 1,530 1,635
7.04%, 8/10/05 Aaa 2,400 2,579
Federal Home Loan Bank:
7.36%, 7/1/04 Aaa 2,990 3,253
7.46%, 9/9/04 Aaa 1,540 1,683
7.87%, 10/20/04 Aaa 6,400 7,190
Freddie Mac:
8.115%, 1/31/05 Aaa 4,750 5,380
6.783%, 8/18/05 Aaa 3,660 3,878
Fannie Mae:
7.49%, 3/2/05 Aaa 11,000 12,090
6.72%, 8/1/05 Aaa 6,060 6,397
Financing Corporation:
0%, 3/26/04 Aaa 4,574 3,223
0%, 5/11/05 Aaa 3,461 2,278
Government Trust Certificates (assets of Trust
guaranteed by U.S. Government through
Defense Security Assistance Agency):
Class T3, 9 5/8%, 5/15/02 Aaa 2,170 2,309
Class 1C, 9 1/4%, 11/15/01 Aaa 7,322 7,814
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 555 559
Private Export Funding Corp. secured
6.86%, 4/30/04 Aaa 1,567 1,618
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
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
0%, 11/15/01 Aaa $ 5,280 $ 4,295
6 3/8%, 8/15/01 Aaa 4,896 5,016
U.S. Department of Housing and Urban
Development Government guaranteed
participation certificates Series 1995-A,
8.27%, 8/1/03 Aaa 6,270 7,007
78,204
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $374,981) 382,069
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 13.6%
FREDDIE MAC - 0.0%
7%, 9/1/98 to 7/1/01 Aaa 2,634 2,671
FANNIE MAE - 10.4%
5 1/2%, 11/1/08 to 2/1/26 Aaa 19,247 18,878
6%, 12/1/00 to 2/1/28 Aaa 82,792 82,068
6%, 2/1/13 (h) Aaa 30,400 30,134
6 1/2%, 7/1/08 to 2/1/28 Aaa 235,635 234,701
7%, 4/1/23 to 2/1/28 Aaa 110,387 100,910
7 1/2%, 6/1/07 to 2/1/28 Aaa 2,608 2,686
8%, 9/1/17 to 7/1/25 Aaa 9,129 9,497
478,874
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 3.2%
7%, 10/15/26 to 12/15/27 Aaa 98,799 100,297
7 1/2%, 2/15/28 (h) Aaa 40,000 41,188
8%, 1/15/17 to 8/15/25 Aaa 1,373 1,429
9%, 11/15/14 to 8/15/22 Aaa 1,398 1,518
9 1/2%, 11/15/09 to 11/15/24 Aaa 3,036 3,300
147,732
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $675,029) 629,277
COMMERCIAL MORTGAGE SECURITIES - 1.0%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
CS First Boston Mortgage Securities Corp.
Series 1997-C2 Class D, 7.27%, 4/17/11 Baa $ 5,790 $ 5,895
Equitable Life Assurance Society of the
United States (The) (e):
Series 174 Class B1, 7.33%, 5/15/06 Aa2 4,000 4,296
Series 1996-1 Class C1, 7.52%, 5/15/06 A2 4,000 4,307
First Union-Lehman Brothers Commercial
Mortgage Trust sequential pay Series 1997-C2
Class A3, 6.65%, 12/18/07 Aaa 13,000 13,349
General Motors Acceptance Corp. Commercial
Mortgage Securities, Inc. Series 1997-C2
Class E, 7.624%, 4/15/11 Baa 5,000 5,118
Oregon Commercial Mortgage, Inc. Series 1995-1
Class A, 7.15%, 6/25/26 (e) Aaa 1,067 1,067
Structured Asset Securities Corp. commercial Series:
1995-C1 Class A-1A, 7 3/8%, 9/25/24 Aaa 18 18
1993-C1 Class A-1A, 6.60%, 10/25/24 AA+ 14 14
Thirteen Affiliates of General Growth Properties,
Inc. sequential pay Series A-2,
6.602%, 11/15/12 (e) Aaa 8,000 8,139
Wells Fargo Capital Markets Apartment Financing
Trust 6.56%, 12/29/05 (e) Aaa 2,590 2,657
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $43,478) 44,860
FOREIGN GOVERNMENT OBLIGATIONS (G) - 0.2%
Export Development Corp. yankee
8 1/8%, 8/10/99 Aa2 1,900 1,965
Quebec Province yankee 7.22%, 7/22/36 (d) A2 4,200 4,654
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $6,157) 6,619
SUPRANATIONAL OBLIGATIONS - 0.1%
African Development Bank 7 3/4%, 12/15/01 Aa1 3,000 3,193
Inter American Development Bank yankee
6.29%, 7/16/27 Aaa 3,000 3,186
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $5,960) 6,379
CERTIFICATES OF DEPOSIT - 0.1%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (000S) (000S)
Canadian Imperial Bank of Commerce
yankee 6.20%, 8/1/00
(Cost $4,507) Aa3 $ 4,500 $ 4,537
CASH EQUIVALENTS - 8.9%
SHARES
Taxable Central Cash Fund (b)
(Cost $412,365) 412,365,479 412,365
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,088,937) $ 4,614,348
SECURITY TYPE ABBREVIATIONS
TOPRS - Trust Originated Preferred
Securities
LEGEND
1. Non-income producing
2. At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.63%. 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. The rate shown is the rate at
period end.
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 $144,983,000 or
3.4% of net assets.
6. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
7. 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.
8. Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 29.1% AAA, AA, A 28.6%
Baa 6.5% BBB 7.4%
Ba 1.3% BB 0.1%
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.
INCOME TAX INFORMATION
At January 31, 1998, the aggregate cost of investment securities for
income tax purposes was $4,089,231,000. Net unrealized appreciation
aggregated $525,117,000, of which $562,794,000 related to appreciated
investment securities and $37,677,000 related to depreciated
investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JANUARY 31, 1998 (UNAUDITED)
9.ASSETS 10. 11.
12.INVESTMENT IN SECURITIES, AT VALUE (COST $4,088,937) - 13. $ 4,614,348
SEE ACCOMPANYING SCHEDULE
14.CASH 15. 1,429
16.RECEIVABLE FOR INVESTMENTS SOLD 17. 79,525
18.RECEIVABLE FOR FUND SHARES SOLD 19. 6,298
20.DIVIDENDS RECEIVABLE 21. 3,866
22.INTEREST RECEIVABLE 23. 19,831
24.OTHER RECEIVABLES 25. 487
26. 27.TOTAL ASSETS 28. 4,725,784
29.LIABILITIES 30. 31.
32.PAYABLE FOR INVESTMENTS PURCHASED $ 335,810 33.
REGULAR DELIVERY
34. DELAYED DELIVERY 71,692 35.
36.PAYABLE FOR FUND SHARES REDEEMED 7,173 37.
38.ACCRUED MANAGEMENT FEE 1,568 39.
40.OTHER PAYABLES AND ACCRUED EXPENSES 992 41.
42.COLLATERAL ON SECURITIES LOANED, AT VALUE 3,084 43.
44. 45.TOTAL LIABILITIES 46. 420,319
47.48.NET ASSETS 49. $ 4,305,465
50.NET ASSETS CONSIST OF: 51. 52.
53.PAID IN CAPITAL 54. $ 3,648,069
55.UNDISTRIBUTED NET INVESTMENT INCOME 56. 9,687
57.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 58. 122,326
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
59.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 60. 525,383
INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
61.62.NET ASSETS, FOR 278,787 SHARES OUTSTANDING 63. $ 4,305,465
64.65.NET ASSET VALUE, OFFERING PRICE AND REDEMPTION 66. $15.44
PRICE
PER SHARE ($4,305,465 (DIVIDED BY) 278,787 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
67.INVESTMENT INCOME 69. $ 20,738
68.DIVIDENDS
70.INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $47) 71. 56,373
72. 73.TOTAL INCOME 74. 77,111
75.EXPENSES 76. 77.
78.MANAGEMENT FEE $ 9,313 79.
80.TRANSFER AGENT FEES 4,860 81.
82.ACCOUNTING AND SECURITY LENDING FEES 420 83.
84.NON-INTERESTED TRUSTEES' COMPENSATION 15 85.
86.CUSTODIAN FEES AND EXPENSES 90 87.
88.REGISTRATION FEES 41 89.
90.AUDIT 47 91.
92.LEGAL 17 93.
94.MISCELLANEOUS 22 95.
96. TOTAL EXPENSES BEFORE REDUCTIONS 14,825 97.
98. EXPENSE REDUCTIONS (670) 14,155
99.100.NET INVESTMENT INCOME 101. 62,956
102.REALIZED AND UNREALIZED GAIN (LOSS) 104. 105.
103.NET REALIZED GAIN (LOSS) ON:
106. INVESTMENT SECURITIES 311,001 107.
108. FOREIGN CURRENCY TRANSACTIONS (81) 310,920
109.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 110. 111.
ON:
112. INVESTMENT SECURITIES (186,976) 113.
114. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 202 (186,774)
115.116.NET GAIN (LOSS) 117. 124,146
118.119.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 120. $ 187,102
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1998 JULY 31,
(UNAUDITED) 1997
121.INCREASE (DECREASE) IN NET ASSETS
122.OPERATIONS $ 62,956 $ 140,705
NET INVESTMENT INCOME
123. NET REALIZED GAIN (LOSS) 310,920 244,306
124. CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (186,774) 764,886
125. 187,102 1,149,897
126.NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
127.DISTRIBUTIONS TO SHAREHOLDERS (67,208) (179,398)
FROM NET INVESTMENT INCOME
128. FROM NET REALIZED GAIN (378,463) -
129. 130.TOTAL DISTRIBUTIONS (445,671) (179,398)
131.SHARE TRANSACTIONS 500,073 848,181
NET PROCEEDS FROM SALES OF SHARES
132. REINVESTMENT OF DISTRIBUTIONS 437,396 174,028
133. COST OF SHARES REDEEMED (546,702) (1,841,701)
134.135. 390,767 (819,492)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
136. 132,198 151,007
137.TOTAL INCREASE (DECREASE) IN NET ASSETS
138.NET ASSETS 139. 140.
141. BEGINNING OF PERIOD 4,173,267 4,022,260
142. $ 4,305,465 $ 4,173,267
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $9,687 AND $13,939, RESPECTIVELY)
143.OTHER INFORMATION 145. 146.
144.SHARES
147. SOLD 31,950 58,807
148. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 28,648 12,375
149. REDEEMED (34,945) (129,888)
150. NET INCREASE (DECREASE) 25,653 (58,706)
</TABLE>
FINANCIAL HIGHLIGHTS
151. SIX MONTHS ENDED YEARS ENDED JULY 31,
JANUARY 31, 1998
152. (UNAUDITED) 1997 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
153.SELECTED PER-SHARE DATA
154.NET ASSET VALUE, $ 16.49 $ 12.90 $ 13.20 $ 12.76 $ 13.84 $ 12.79
BEGINNING OF PERIOD
155.INCOME FROM
INVESTMENT OPERATIONS
156. NET INVESTMENT .23 D .51 D .57 .62 .25 .62
INCOME
157. NET REALIZED AND .44 3.73 (.27) .27 (.17) 1.45
UNREALIZED GAIN (LOSS)
158. TOTAL FROM .67 4.24 .30 .89 .08 2.07
INVESTMENT
OPERATIONS
159.LESS DISTRIBUTIONS (.26) (.65) (.60) (.45) (.25) (.66)
FROM NET
INVESTMENT INCOME
160. FROM NET REALIZED (1.46) - - - (.50) (.36)
GAIN
161. IN EXCESS OF NET - - - - (.41) -
REALIZED GAIN
162. TOTAL DISTRIBUTIONS (1.72) (.65) (.60) (.45) (1.16) (1.02)
163.NET ASSET VALUE, $ 15.44 $ 16.49 $ 12.90 $ 13.20 $ 12.76 $ 13.84
END
OF PERIOD
164.TOTAL RETURN B, C 4.47% 33.82% 2.25% 7.19% .37% 17.18%
165.RATIOS AND SUPPLEMENTAL DATA
166.NET ASSETS, END $ 4,305 $ 4,173 $ 4,022 $ 5,070 $ 5,390 $ 3,599
OF PERIOD (IN MILLIONS)
167.RATIO OF EXPENSES .71% A .75% .82% .91% 1.02% .93%
TO AVERAGE NET ASSETS
168.RATIO OF EXPENSES .68% A, E .74% E .79% E .90% E 1.01% E .93%
TO AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
169.RATIO OF NET 3.00% A 3.58% 4.12% 5.33% 4.09% 5.07%
INVESTMENT INCOME TO
AVERAGE
NET ASSETS
170.PORTFOLIO TURNOVER 155% A 70% 247% 269% 157% 162%
RATE
171.AVERAGE $ .0427 $ .0415
COMMISSION
RATE F
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO
FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
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 January 31, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Balanced Fund (the fund) is a fund of Fidelity Puritan Trust
(the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement date on purchases and sales of securities. 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
among 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.
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.
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
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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 Fidelity Investments Money Management, Inc.
(formerly FMR Texas, Inc.), 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 earned
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. 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.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $3,086,127,000 and $3,108,944,000, respectively, of which
U.S. government and government agency obligations aggregated
$1,409,816,000 and $1,376,846,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. 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 annualized rate of .44% 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 annualized rate of .23% 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 $404,000 for the
period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income.
The fund receives U.S. Treasury obligations and/or cash as collateral
against the loaned securities, in an amount at least equal to 102% of
the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan.
At period end, the value of the securities loaned and the value of
collateral amounted to $2,950,000 and $3,084,000, respectively.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $491,000 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 $5,000 and $174,000, respectively, under these
arrangements.
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
Kevin E. Grant, Vice President
Richard A. Spillane, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
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(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
FIDELITY
(REGISTERED TRADEMARK)
GLOBAL BALANCED
FUND
SEMIANNUAL REPORT
JANUARY 31, 1998
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 25 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 29 NOTES TO THE FINANCIAL STATEMENTS.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As we entered 1998, the pesky economic and currency crises in
Southeast Asia were still very much with us. Adding to these concerns
was the possibility that U.S. corporate earnings might decline in the
face of lower global product demand. But the news wasn't all bad as
low inflation, low interest rates and moderate economic growth
continued to prevail. The bond market performed well, as it benefited
from the favorable economic backdrop and a "flight-to-safety"
mentality on the part of stock investors.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1998 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
FIDELITY GLOBAL BALANCED -0.64% 15.16% 67.92%
MSCI WORLD -1.42% 17.58% 108.70%
SB WORLD GOVT BOND 3.27% 3.99% N/A
GLOBAL FLEXIBLE PORTFOLIO FUNDS AVERAGE -1.60% 10.46% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on February 1, 1993. For example, if you 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 six months average represents a
peer group of 90 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 JANUARY 31, 1998 PAST 1 LIFE OF
YEAR FUND
FIDELITY GLOBAL BALANCED 15.16% 10.92%
MSCI WORLD 17.58% 15.85%
SB WORLD GOVT BOND 3.99% N/A
GLOBAL FLEXIBLE PORTFOLIO FUNDS AVERAGE 10.46% 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 19980131 19980212 155045 S00000000000001
Global Bal MS World
SB World Govt.
00334 MS004
SB006
1993/02/28 10000.00 10000.00
10000.00
1993/03/31 10639.77 10576.83
10153.51
1993/04/30 11203.78 11064.11
10368.08
1993/05/31 11423.65 11316.16
10472.05
1993/06/30 11299.46 11218.32
10449.72
1993/07/31 11501.06 11446.52
10479.38
1993/08/31 12163.48 11968.39
10794.43
1993/09/30 12102.98 11744.40
10922.48
1993/10/31 12649.13 12065.21
10903.98
1993/11/30 12502.84 11379.87
10825.83
1993/12/31 13096.97 11933.93
10917.94
1994/01/31 13743.86 12718.26
11005.86
1994/02/28 13246.25 12550.86
10933.99
1994/03/31 12368.06 12006.96
10918.29
1994/04/30 12198.22 12375.31
10930.85
1994/05/31 12398.03 12404.35
10834.90
1994/06/30 11806.56 12367.06
10991.21
1994/07/31 12027.25 12599.35
11078.78
1994/08/31 12278.02 12975.91
11040.40
1994/09/30 12247.93 12632.10
11120.30
1994/10/31 12087.43 12988.52
11298.58
1994/11/30 11746.38 12422.32
11143.33
1994/12/31 11595.91 12539.70
11174.03
1995/01/30 11284.95 12348.47
11408.49
1995/02/28 11405.32 12525.49
11700.51
1995/03/31 11726.32 13126.17
12395.51
1995/04/30 11906.88 13580.59
12625.08
1995/05/31 11916.91 13693.69
12980.25
1995/06/30 11947.00 13686.40
13056.66
1995/07/31 12438.52 14368.10
13087.36
1995/08/31 12358.27 14044.91
12637.64
1995/09/30 12538.83 14450.95
12919.89
1995/10/31 12418.46 14220.32
13016.19
1995/11/30 12649.17 14710.97
13163.42
1995/12/31 12930.36 15137.97
13301.24
1996/01/31 12940.43 15408.69
13136.91
1996/02/29 12728.95 15499.36
13069.92
1996/03/31 12799.44 15754.07
13051.78
1996/04/30 13161.98 16121.28
12999.79
1996/05/31 13182.12 16131.99
13002.58
1996/06/30 13282.82 16210.32
13104.81
1996/07/31 13000.85 15634.18
13356.01
1996/08/31 13031.06 15810.64
13408.00
1996/09/30 13330.51 16426.40
13462.42
1996/10/31 13392.46 16537.82
13714.33
1996/11/30 13991.35 17461.31
13895.05
1996/12/31 13932.06 17178.39
13782.71
1997/01/31 13900.78 17382.20
13414.28
1997/02/28 14046.77 17578.87
13314.14
1997/03/31 13994.63 17227.87
13212.62
1997/04/30 14140.63 17787.72
13098.18
1997/05/31 14901.89 18882.39
13452.66
1997/06/30 15538.01 19820.92
13613.15
1997/07/31 16111.56 20730.57
13507.08
1997/08/31 15298.16 19340.53
13499.06
1997/09/30 16099.75 20387.98
13786.55
1997/10/31 15482.98 19311.64
14072.64
1997/11/30 15525.52 19650.09
13856.67
1997/12/31 15675.93 19886.29
13814.81
1998/01/31 16008.10 20437.18
13949.13
IMATRL PRASUN SHR__CHT 19980131 19980212 155048 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Global Balanced Fund on February 28, 1993,
shortly after the fund started. As the chart shows, by January 31,
1998, the value of the investment would have grown to $16,008 - a
60.08% 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 $20,437 - a 104.37% increase. If $10,000 was
put in the Salomon Brothers World Government Bond Index, Unhedged, it
would have grown to $13,949 - a 39.49% 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
Global stock and bond markets
posted varying returns during the
six months that ended January 31,
1998. Economic and currency
upheaval sent most Pacific Rim
markets tumbling, while a common
theme of moderate economic growth,
low inflation and low interest rates
boosted bonds. The Standard &
Poor's 500 Index - a measure of
U.S. stock performance - returned
3.56% during this period. Europe -
which was initially stung over
concerns that its export volumes
would weaken due to lack of Asian
demand - bounced back nicely
toward the end of the period due to
a favorable trend of increased
consolidation activity within the
financial, pharmaceutical and
telecommunications industries.
Japan, meanwhile, continued to
struggle due to sluggish economic
progress and rising corporate
bankruptcies. A strong dollar relative
to the yen and most European
currencies also eroded gains for
dollar-based investors. The Morgan
Stanley Capital International World
Index returned -1.42% during the
period. The Asian chaos also spilled
over into other emerging-market
regions, most notably Latin America.
The Morgan Stanley Emerging
Markets Free Index was down
31.82% over the six-month period.
A favorable economy coupled with a
"flight to quality" by wary stock
investors helped U.S. bonds perform
very well. The Lehman Brothers
Aggregate Bond Index returned
4.90% during the period. A
convergence in interest rates -
sparked by the forthcoming
implementation of the European
Monetary Union - contributed
positively to the performance of
certain developed bond markets. The
Salomon Brothers World
Government Bond Index, Unhedged
returned 3.27%.
An interview with Rick Mace,
Portfolio Manager of Fidelity
Global Balanced Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. For the six months that ended January 31, 1998, the fund had a
return of -0.64%. The fund compares its performance to three measures:
a bond index, an equity index and a peer group of competitor funds.
The fund lagged the Salomon Brothers World Government Bond Index,
Unhedged, which returned 3.27% during this time, but topped the -1.42%
return of the Morgan Stanley Capital International World Index. The
global flexible portfolio funds average, as tracked by Lipper
Analytical Services, returned -1.60% during the period. For the 12
months that ended January 31, 1998, the fund returned 15.16% while the
Salomon Brothers and Morgan Stanley indexes returned 3.99% and 17.58%,
respectively. The Lipper group had a 12-month return of 10.46%.
Q. WHAT FACTORS SHAPED THE FUND'S PERFORMANCE DURING THE PERIOD?
A. The primary area of discontent continued to be Japan, as a sluggish
economy and low consumer confidence figured prominently. Japanese
banks suffered severe declines amid concerns over rising corporate
bankruptcies and the extent of the nation's loan exposure to Southeast
Asia and South Korea. Finance positions that performed poorly included
Yasuda Trust & Banking - which the fund no longer held at the end of
the period - and Sakura Bank. Many of the fund's Japanese technology
positions suffered as well, as signs of weakening demand from Asia
played a role. Rohm Company and Fujitsu were two positions that
detracted from performance. On a positive note, the fund benefited
from attractive investments in Europe, particularly in the
pharmaceutical and finance areas.
Q. SPEAKING OF SOUTHEAST ASIA, WHAT ARE YOUR VIEWS ON THE CRISIS AND
HOW DID IT AFFECT THE FUND DURING THE PERIOD?
A. The interesting thing about the fallout from Southeast Asia is that
the crisis has affected some parts of the world where I didn't think
it would. Stocks in Latin America and several other non-Asia emerging
markets, for example, were penalized because of a perceived
association with Asia. In terms of direct impact, the fund had very
little exposure to Southeast Asia. At the end of the period, Southeast
Asia accounted for roughly 2% of the fund's investments.
Q. MERGER AND ACQUISITION ACTIVITY INCREASED DURING THE PERIOD. WAS
THE FUND ABLE TO TAKE ADVANTAGE OF THIS TREND?
A. While some of the fund's positions did benefit from this trend, it
was more of an unintentional strategy. A case in point was the
proposed merger of two of the
fund's largest stock positions, SmithKline Beecham and Glaxo Wellcome.
I didn't buy these stocks because I felt they were merger candidates.
Rather, I was drawn to their individual business prospects and
appealing valuations. Picking stocks based on their ability to become
consolidation targets is fruitless. I pick them based solely on
individual potential and hope investors eventually come to the same
conclusions.
Q. WHAT WAS YOUR STRATEGY WITH RESPECT TO THE BOND PORTION OF THE FUND
DURING THE PERIOD?
A. I reduced the fund's exposure to U.S. bonds after the U.S. bond
market staged a nice rally over the past few months. Outside of the
U.S., I didn't change much. The fund's bond positions in many European
markets - including the U.K. and Germany - posted strong advances.
Q. WHICH STOCKS PERFORMED WELL?
A. Several European pharmaceutical stocks - namely SmithKline Beecham,
Glaxo Wellcome, Rhone Poulenc and Novartis - performed well due to
steady earnings growth and well-received product introductions. Some
of the fund's finance-related positions also performed well, including
Britain's Lloyds TSB Group and Barclay's, as well as Spain's Banco
Bilbao Vizcaya.
Q. WHAT'S YOUR OUTLOOK?
A. My expectation is that Europe's economic recovery will continue and
that Japan's erratic economy may soon show signs of improvement.
Retail stocks,
which detracted from the fund's performance recently, may offer
opportunities going forward if consumer consumption levels gradually
improve.
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
"GLOBALIZATION OF RESEARCH":
"Over the past few years, Fidelity
has devoted considerable resources
to its global investment
infrastructure. In order to cover
an ever-expanding number of
opportunities across the world,
we've doubled our analyst staff in
that time. We also practice a
teamwork approach, which is
essential for sharing global
information.
"Increased consolidation activity
around the world - particularly
cross-border mergers and
acquisitions - has kept our
research staff quite busy.
European banks, for example, are
aggressively acquiring foreign
banks and it looks like this trend
could continue. Since the close
relationship between our domestic
and foreign analysts affords more
opportunities to visit companies
and focus on the characteristics
we feel are important, I think
we're well-positioned to stay
on top of these developments.
"Apparently, our teamwork
approach is paying - excuse the
pun - dividends. A recent survey
of non-U.S. company finance
executives named `Team Fidelity'
as the best investment manager in
Europe. The award usually goes to
an individual money manager."
FUND FACTS
GOAL: high current income
with regard for both
preservation of capital and
potential for growth of
capital by investing in a
broadly diversified portfolio of
high-yielding equity and debt
securities
FUND NUMBER: 334
TRADING SYMBOL: FGBLX
START DATE: February 1, 1993
SIZE: as of January 31, 1998,
more than $68 million
MANAGER: Richard Mace,
since 1996; manager, Fidelity
International Value Fund, since
1994; manager, Fidelity
Overseas Fund, since 1996;
Group leader, Fidelity's
International funds; joined
Fidelity in 1987
(checkmark)
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JANUARY 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
NOVARTIS AG (REG.) (SWITZERLAND) 1.2 1.2
SMITHKLINE BEECHAM PLC ORD. (UNITED KINGDOM) 1.0 0.8
WAL-MART STORES, INC. (UNITED STATES OF AMERICA) 0.9 0.9
RHONE POULENC SA CLASS A (FRANCE) 0.7 1.0
AMERICAN EXPRESS CO. (UNITED STATES OF AMERICA) 0.7 0.7
</TABLE>
TOP FIVE BOND ISSUERS AS OF JANUARY 31, 1998
<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 9.4 17.2
FEDERAL HOME LOAN BANK 6.5 0.0
TREUHANDANSTALT 3.6 3.4
FANNIE MAE 2.7 0.0
UNITED KINGDOM, GREAT BRITAIN & NORTHERN IRELAND 1.8 1.7
</TABLE>
TOP FIVE COUNTRIES AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE COUNTRIES
6 MONTHS AGO
UNITED STATES OF AMERICA 50.4 35.7
JAPAN 10.6 12.7
UNITED KINGDOM 8.5 9.9
GERMANY 5.3 5.9
FRANCE 4.8 7.3
TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY,
INDICATING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT
RISKS.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1998 * AS OF JULY 31, 1997 **
ROW: 1, COL: 1, VALUE: 62.5
ROW: 1, COL: 2, VALUE: 26.7
ROW: 1, COL: 3, VALUE: 1.7
ROW: 1, COL: 4, VALUE: 9.1
STOCKS 70.7%
BONDS 24.9%
CONVERTIBLE
SECURITIES 0.8%
SHORT-TERM
INVESTMENTS 3.6%
FOREIGN
INVESTMENTS 64.3%
STOCKS AND
EQUITY FUTURES 63.5%
BONDS 26.7%
CONVERTIBLE
SECURITIES 0.7%
SHORT-TERM
INVESTMENTS 9.1%
FOREIGN
INVESTMENTS 49.6%
ROW: 1, COL: 1, VALUE: 69.7
ROW: 1, COL: 2, VALUE: 24.7
ROW: 1, COL: 3, VALUE: 2.0
ROW: 1, COL: 4, VALUE: 3.6
**
*
INVESTMENTS JANUARY 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 59.6%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.3%
Bansud SA Class B (a) 17,000 $ 149,654
Telecom Argentina Class B sponsored ADR 1,100 34,513
YPF Sociedad Anonima sponsored ADR representing
Class D shares 1,200 36,525
220,692
AUSTRALIA - 1.5%
Australian Gas Light Co. 7,000 53,703
Australia & New Zealand Banking Group Ltd. 6,300 42,588
Brambles Industries Ltd. 3,700 75,341
Broken Hill Proprietary Co. Ltd. (The) 4,250 42,055
CSR Ltd. 16,500 58,033
Harvey Norman Holdings Ltd. 24,600 104,568
Leighton Holdings Ltd. 5,500 19,910
Mirvac Ltd. warrants 6/30/01 (a) 1,255 344
National Australia Bank Ltd. 10,800 149,422
National Mutual Holdings Ltd. 21,000 41,033
News Corp. Ltd. 14,800 93,250
QNI Ltd. 50,000 32,587
Telstra Corp. Ltd. (a) 30,000 68,286
Westpac Banking Corp. 15,400 105,582
Woodside Petroleum Ltd. 11,600 79,927
Woolworths Ltd. 25,700 91,976
1,058,605
BRAZIL - 0.7%
Centrais Electricas Brasileiras SA 2,410,000 108,370
Compania Energertica Minas Gerais 3,152,000 124,615
Eletropaulo SA PN 77,000 13,713
Klabin Industria de Papel e Celulose PN 18,000 7,052
Petrobras PN (Pfd. Reg.) 290,000 61,974
Telebras sponsored ADR 500 55,500
Telesp PN (Pfd. Reg.) 366,000 105,920
Telerj SA PN (a) 105,000 13,080
490,224
CANADA - 1.5%
Abitibi-Consolidated, Inc. 1,600 22,095
Alcan Aluminium Ltd. 1,200 35,698
Alliance Communications Corp. Class B (non-vtg.) (a) 4,000 48,092
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CANADA - CONTINUED
Alliance Forest Products, Inc. (a) 1,200 $ 22,177
Alliance Forest Products, Inc. (a)(d) 2,000 36,962
BCE, Inc. 2,700 84,587
Bro-X Minerals Ltd. (a) 600 -
Canadian Pacific Ltd. 500 13,569
Canadian Imperial Bank of Commerce 600 16,324
Canadian National Railway Co. 300 14,984
Canadian Natural Resources Ltd. (a) 3,300 64,615
Cominco Ltd. 4,500 77,290
Domtar, Inc. 7,200 49,713
Greenstone Resources Ltd. (a) 12,000 76,260
Inco Ltd. 2,100 37,512
National Bank of Canada 10,100 156,820
Noranda, Inc. 6,000 110,474
Renaissance Energy Ltd. (a) 3,600 71,973
Rio Alto Exploration Ltd. (a) 6,200 54,309
St. Laurent Paperboard, Inc. (a)(d) 5,700 69,510
TVI Pacific, Inc. 157,000 9,168
1,072,132
CHILE - 0.0%
Santa Isabel SA sponsored ADR 600 11,175
Soc Quimica y Minera de Chile ADR 100 4,025
15,200
DENMARK - 0.5%
Den Danske Bank Group AS 1,400 186,790
International Service Systems AS, Series B (a) 3,800 141,055
Ratin AS Class B 300 43,039
Sophus Berendsen AS Class B 300 10,071
380,955
FINLAND - 0.7%
Huhtamaki Ord. 3,300 145,911
Metsa-Serla Ltd. Class B 18,900 143,316
Nokia Corp. AB, Series A 600 45,607
Pohjola Class B 2,100 90,236
UPM-Kymmene Corp. 3,700 81,498
506,568
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FRANCE - 3.8%
Alcatel Alsthom Compagnie Generale d'Electricite SA 3,700 $ 490,358
Axime SA Ex Segin (a) 400 58,358
Axime SA Ex Segin (a)(d) 1,500 218,844
Cap Gemini Sogeti SA 2,700 256,598
Credit Commercial de France Ord. 2,300 156,458
Elf Sanofi SA 200 22,007
Lagardere S.C.A. (Reg.) 2,000 70,747
Michelin SA (Compagnie Generale des Etablissements)
Class B 2,052 109,215
Pechiney SA Class A 4,633 181,634
Rhone Poulenc SA Class A 11,123 507,693
Societe Generale Class A 1,000 129,758
Total SA Class B 4,582 476,537
2,678,207
GERMANY - 1.1%
Adidas AG 800 116,554
BHF Bank (Bank Berlin Hand) 5,200 153,510
Daimler-Benz AG Ord. 800 55,981
Hannover Rueckversicherungs-AG 2,100 178,521
Lufthansa Deutsche AG (Reg.) 2,900 52,366
Mannesmann AG Ord. 100 56,855
Veba AG Ord. 2,300 158,430
772,217
HONG KONG - 1.1%
Cheung Kong Holdings Ltd. 8,000 40,856
China Telecom (Hong Kong) Ltd. 56,000 88,025
Dairy Farm International Holdings Ltd. (SG) 71,000 69,580
CLP Holdings Ltd. 14,000 76,928
Hang Seng Bank Ltd. 7,000 55,207
Hong Kong & China Gas Co. Ltd. 39,600 66,559
Hong Kong Telecommunications Ltd. 46,000 101,200
Hutchison Whampoa Ltd. Ord. 22,000 129,420
Johnson Electric Holdings Ltd. 10,000 29,931
Li & Fung Ltd. 26,000 35,969
National Mutual Asia Ltd. 58,000 48,743
New World Development Co. Ltd. 7,000 16,879
Sun Hung Kai Properties Ltd. 2,000 10,266
Vtech Holdings Ltd. 14,000 38,012
807,575
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDIA - 0.0%
Mahindra & Mahindra Ltd. GDR 1,500 $ 10,875
State Bank of India GDR (Reg.) 1,000 14,750
25,625
IRELAND - 0.2%
Bank of Ireland, Inc. 5,900 91,847
CRH PLC 2,814 33,126
Smurfit (Jefferson) Group PLC 10,000 28,096
Smurfit (Jefferson) Group PLC 9,000 24,638
177,707
ITALY - 1.7%
Credito Italiano Ord. 90,500 336,887
Istituto Nazionale Delle Assicurazioni Spa 102,000 225,850
Telecom Italia Spa 55,000 380,950
Telecom Italia Mobile Spa 53,500 253,582
1,197,269
JAPAN - 9.9%
Acom Co. Ltd. 3,000 169,909
Akita Bank Ltd. 19,000 90,547
Alpine Electronics, Inc. Ord. 3,000 31,193
Asahi Breweries Ltd. 5,000 68,925
Bank of Tokyo-Mitsubishi Ltd. 9,000 130,445
Bridgestone Corp. 2,000 48,050
Canon, Inc. 5,000 121,308
Circle K Japan Co. Ltd. 1,000 49,311
Dainippon Ink & Chemicals, Inc. 20,000 57,976
Denso Corp. 3,000 61,442
Daito Trust Construction Co. 5,000 42,930
Fuji Heavy Industries Ltd. 7,000 25,916
Fuji Photo Film Co. Ltd. 5,000 209,531
Fujitsu Ltd. 15,000 171,327
Honda Motor Co. Ltd. 7,000 254,195
Ito En Ltd. 1,000 24,970
Jafco Co. Ltd. 2,000 95,313
Japan Tobacco, Inc. 10 68,058
Kaneka Corp. 5,000 27,294
Kao Corp. 5,000 70,500
Komatsu Ltd. Ord. 10,000 51,674
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Long Term Credit Bank of Japan Ltd. (The) 39,000 $ 87,554
Matsushita Electric Industrial Co. Ltd. 9,000 135,408
Matsushita Communication Industrial Co. Ltd. 4,000 128,239
Matsumotokiyoshi Co. Ltd. 1,000 37,416
Minebea Co. Ltd. 25,000 265,853
Minolta Camera Co. Ltd. 26,000 150,122
Mitsubishi Estate Co. Ltd. 6,000 66,168
Mitsui Mining & Smelting Co. Ltd. 7,000 26,908
Mycal Corp. 4,000 34,974
Namco Ltd. 3,000 87,909
Nintendo Co. Ltd. Ord. 3,000 316,660
Nippon Telegraph & Telephone Corp. Ord. 23 208,350
Nomura Securities Co. Ltd. 5,000 66,955
Nippon Soda Co. Ltd. 10,000 84,285
Nichiei Co. Ltd. 2,000 211,107
Orix Corp. 4,500 324,695
Rohm Co. Ltd. 3,000 328,476
Sakura Bank Ltd. 49,000 183,340
Sankyo Co. Ltd. 8,000 208,586
Shin-Etsu Chemical Co. Ltd. 1,000 22,213
Shinko Electric Industries Co. Ltd. 5,000 224,892
Sony Corp. 3,000 276,487
Sumitomo Realty & Development Co. Ltd. 25,000 152,619
TDK Corp. 4,000 309,728
Takashimaya Co. Ltd. 5,000 38,716
Takeda Chemical Industries Ltd. 11,000 310,201
Takasago International Corp. 8,000 34,659
Takefuji Corp. 4,000 202,915
Terumo Corp. 5,000 80,347
Teisan Co. Ltd. 20,000 51,989
THK Co. Ltd. 7,000 81,056
Toyota Motor Corp. 3,000 83,655
Toyo Trust & Banking Co. Ltd. 7,000 48,247
Uni Charm Corp. Ord. 5,000 171,721
World Co. Ltd. 2,000 51,516
Yonekyu Corp. 4,000 49,468
7,014,248
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
LUXEMBOURG - 0.0%
Quilmes Industrial SA sponsored ADR 1,500 $ 18,844
MALAYSIA - 0.3%
Berjaya Sports Toto BHD 18,000 41,239
Carlsberg Brewery BHD 6,000 17,756
Oriental Holdings BHD 11,200 12,295
RJ Reynolds BHD 14,000 22,719
Rothmans of Pall Mall Malaysia BHD 10,000 79,351
Tenega Nasional BHD 6,000 10,166
YTL Corp. BHD 5,000 6,265
189,791
MEXICO - 0.5%
BANACCI SA de CV Class B (a) 5,000 13,402
DESC (Sociedad de Fomento Industrial SA) Class B 5,000 36,309
El Puerto Liverpool SA Class C 11,000 14,287
Fomento Economico Mexicano SA de CV Class B 2,000 12,965
Grupo Carso SA de CV Class A-1 2,000 11,713
Grupo Financiero Bancomer Class B (a) 185,000 98,737
Grupo Financiero Inbursa SA Class B 5,000 15,881
Grupo Televisa SA de CV sponsored ADR (a) 900 28,969
Kimberly Clark de Mexico SA Class A 7,000 30,210
Telefonos de Mexico SA sponsored ADR representing Ord.
Class L shares 1,500 73,875
336,348
NETHERLANDS ANTILLES - 0.0%
Schlumberger Ltd. 300 22,106
NETHERLANDS - 2.2%
AKZO Nobel NV 400 72,376
Ahold NV 2,626 72,317
KLM Royal Dutch Airlines NV 400 13,900
Philips Electronics NV (Bearer) 6,000 404,936
Royal Dutch Petroleum Co. Ord. 6,000 313,592
Unilever NV Ord. 7,600 435,539
VNU Ord. 4,100 114,698
Vendex International NV (d) 3,000 164,360
1,591,718
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NORWAY - 0.5%
NCL Holdings AS (a) 19,666 $ 73,842
Nydalens Compagnie ASA 13,000 89,061
Olav Thon Eiendomsselskp Ord. 3,000 94,858
Steen & Stroem ASA (a) 5,500 84,055
341,816
PERU - 0.1%
Compania de Minas Buenaventura SA Class B
sponsored ADR 5,000 59,375
PORTUGAL - 0.5%
BPI-SGPS SA (Reg.) 4,500 138,217
Electricidade de Portugal SA 7,000 144,745
Portugal Telecom SA sponsored ADR 2,000 101,750
384,712
RUSSIA - 0.0%
Vimpel Communications sponsored ADR (a) 400 12,375
SINGAPORE - 0.1%
Datacraft Asia Ltd. 20,000 43,000
Elec & Eltek International Co. Ltd. 4,400 22,660
Overseas Chinese Banking Corp. 1,000 4,174
United Overseas Bank Ltd. (For. Reg.) 1,000 3,736
73,570
SOUTH AFRICA - 0.2%
Gencor Ltd. (Reg.) 5,800 11,052
JCI Ltd. 7,700 38,399
Sasol Ltd. 10,000 91,222
140,673
SPAIN - 0.5%
Banco Bilbao Vizcaya SA Ord. (Reg.) 7,200 251,362
Mapfre Vida SA 2,400 93,527
344,889
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - 2.7%
ABB AB:
Series A 5,500 $ 65,096
Series B 3,000 34,582
Astra AB Class A Free shares 14,966 274,001
Ericsson (L.M.) Telephone Co. Class B 2,000 78,411
Esselte AB Class B Free shares 5,600 112,192
Granges AB (Reg.) 950 15,285
Nordbanken Holding AB 36,400 203,292
Skandia Foersaekrings AB 7,000 365,055
Svenska Handelsbanken 4,300 157,186
Swedish Match Co. 75,200 244,761
Volvo AB Class B 14,800 405,075
1,954,936
SWITZERLAND - 2.3%
Credit Suisse Group (Reg.) 1,500 238,832
Julius Baer Holding AG 128 237,374
Novartis AG (Reg.) 517 885,286
Sulzer AG (Reg.) 20 13,834
Swiss Bank Corp. (Reg.) 800 246,362
1,621,688
UNITED KINGDOM - 6.7%
BBA Group PLC 6,134 35,971
Barclays PLC Ord. 6,700 201,925
British Aerospace PLC 5,927 153,940
British Petroleum PLC Ord. 19,035 257,145
British Land Co. PLC (The) Ord. 4,800 60,217
Dr Solomons Group PLC sponsored ADR (a) 3,900 135,038
English China Clay PLC 10,700 39,832
Gallaher Group PLC 27,800 165,297
Glaxo Wellcome PLC 15,000 402,576
Granada Group PLC 8,000 125,845
HSBC Holdings PLC 4,400 108,889
Hays PLC 1,500 21,587
Hazlewood Foods PLC Ord. 30,800 92,574
Inchcape PLC Ord. 18,300 41,252
JJB Sports PLC Class L 10,100 115,488
Lloyds TSB Group PLC 30,529 429,872
Man (E D & F) Group PLC 20,000 83,309
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Millennium & Copthorne Hotels PLC 23,100 $ 169,802
National Grid Co. PLC 18,300 86,391
Pearson PLC 1,500 19,234
Perpetual PLC 500 24,012
Royal & Sun Alliance Insurance Group PLC 46 521
Rentokil Initial PLC 79,900 374,257
Shell Transport & Trading Co. PLC (Reg.) 47,700 324,139
SmithKline Beecham PLC Ord. 58,434 744,525
Somerfield PLC 53,200 214,648
Tarmac PLC Ord. 7,500 12,680
Tomkins PLC Ord. 3,000 16,172
Vodafone Group PLC 34,400 258,940
WPP Group PLC 6,900 29,869
4,745,947
UNITED STATES OF AMERICA - 19.9%
AFLAC, Inc. 2,000 108,875
AT&T Corp. 4,000 250,500
Alumax, Inc. (a) 2,003 69,729
Aluminum Co. of America 1,000 76,375
American Express Co. 6,000 502,125
American Home Products Corp. 3,500 334,031
American International Group, Inc. 1,800 198,563
American Standard Companies, Inc. (a) 4,000 160,250
AMP, Inc. 4,000 160,000
Avon Products, Inc. 3,000 180,000
Baker Hughes, Inc. 3,900 150,394
Banc One Corp. 1,500 83,813
Bank of New York Co., Inc. 2,100 113,794
BankAmerica Corp. 1,500 106,594
Bausch & Lomb, Inc. 6,500 278,688
Beneficial Corp. 400 31,050
Burlington Resources, Inc. 8,000 342,000
CBS Corp. 3,000 89,813
CSX Corp. 2,500 132,500
CVS Corp. 2,000 131,125
Callaway Golf Co. 5,000 135,000
Cardinal Health, Inc. 500 38,719
Cendant Corp. (a) 3,000 101,625
Chesapeake Corp. 1,500 50,813
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Citicorp 2,400 $ 285,600
Compaq Computer Corp. 5,000 150,313
Cooper Cameron Corp. (a) 2,000 102,875
Corn Products International, Inc. 1,000 32,000
D.R. Horton, Inc. 16,700 329,825
Dell Computer Corp. 1,500 149,156
Disney (Walt) Co. 1,000 106,563
Dole Food, Inc. 4,000 186,000
Dresser Industries, Inc. 3,400 121,550
du Pont (E.I.) de Nemours & Co. 1,600 90,600
Duke Energy Corp. 2,500 135,469
Eaton Corp. 1,200 107,700
FPL Group, Inc. 1,800 103,275
Fannie Mae 2,500 154,375
Federated Department Stores, Inc. (a) 3,000 127,125
Fleet Financial Group, Inc. 1,000 71,625
Ford Motor Co. 2,000 102,000
Fort James Corp. 2,500 107,344
GTE Corp. 2,000 109,125
General Electric Co. 6,000 465,000
Gillette Co. 2,500 246,875
Gulfstream Aerospace Corp. (a) 6,000 204,375
Hartford Financial Services Group, Inc. 1,000 90,000
Intel Corp. 2,000 162,000
International Business Machines Corp. 1,200 118,425
Johnson & Johnson 2,500 167,344
King World Productions, Inc. 3,800 224,913
Leggett & Platt, Inc. 3,600 162,675
Lehman Brothers Holdings, Inc. 3,000 162,938
Limited, Inc. (The) 11,000 291,500
Lockheed Martin Corp. 1,300 135,281
MCI Communications Corp. 8,500 394,719
Masco Corp. 1,500 73,875
Medtronic, Inc. 3,000 153,188
Microsoft Corp. 2,000 298,375
Mirage Resorts, Inc. (a) 2,000 46,125
Morgan Stanley, Dean Witter, Discover and Co. 1,000 58,375
Motorola, Inc. 2,500 148,594
Nalco Chemical Co. 3,000 112,500
National Mercantile Bancorp. warrants 6/2/99 (a) 2,403 -
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Newell Co. 2,000 $ 82,125
Philip Morris Companies, Inc. 3,000 124,500
Procter & Gamble Co. 3,500 274,313
RedFed Bancorp, Inc. 3,000 59,438
Rite Aid Corp. 2,500 156,094
Rubbermaid, Inc. 5,000 129,375
St. Jude Medical, Inc. (a) 3,500 113,750
Sara Lee Corp. 2,000 109,125
Schering-Plough Corp. 2,900 209,888
Tenet Healthcare Corp. (a) 2,500 86,250
Tosco Corp. 4,200 140,438
Transocean Offshore, Inc. (a) 3,000 119,250
Travelers Group, Inc. (The) 1,400 69,300
USX-Marathon Group 4,500 151,031
U.S. Bancorp 1,000 109,500
Unisys Corp. 6,000 99,000
United HealthCare Corp. 3,000 153,750
U S WEST Media Group (a) 3,000 89,063
Wainoco Oil Corp. (a) 12,000 93,000
Wal-Mart Stores, Inc. 16,000 638,000
Warner-Lambert Co. 1,000 150,500
Washington Mutual, Inc. 2,600 167,050
Wells Fargo & Co. 300 92,700
Western Atlas, Inc. 2,000 124,625
Witco Corp. 3,700 149,850
WorldCom, Inc. (a) 10,000 358,125
14,166,013
VENEZUELA - 0.1%
Compania Anonima Nacional Telefonos de Venezuela
sponsored ADR 1,000 36,750
TOTAL COMMON STOCKS
(Cost $36,889,202) 42,458,775
PREFERRED STOCKS - 1.1%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.3%
JAPAN - 0.3%
AJL participating trust $1.44 PEPS 15,000 $ 192,188
NONCONVERTIBLE PREFERRED STOCKS - 0.8%
AUSTRALIA - 0.1%
Sydney Harbour Casino Holdings Ltd. (a) 62,000 60,785
GERMANY - 0.4%
SAP AG (Systeme Anwendungen Produkte) 100 36,519
Wella AG 380 288,760
325,279
ITALY - 0.3%
Telecom Italia Mobile Spa de Risp 78,700 232,782
TOTAL NONCONVERTIBLE PREFERRED STOCKS 618,846
TOTAL PREFERRED STOCKS
(Cost $751,757) 811,034
CLOSED-END INVESTMENT COMPANIES - 0.3%
EMERGING MARKETS - 0.0%
Templeton Dragon Fund, Inc. 1,000 10,875
GERMANY - 0.2%
Emerging Germany Fund, Inc. 3,000 36,375
New Germany Fund, Inc. (The) 4,300 61,275
97,650
MULTI-NATIONAL - 0.0%
Morgan Stanley Asia-Pacific Fund, Inc. 1,500 12,563
PORTUGAL - 0.1%
Portugal Fund, Inc. 3,000 54,750
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $168,358) 175,838
CONVERTIBLE BONDS - 0.4%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (B) (NOTE 1)
JAPAN - 0.4%
MBL International Finance of Bermuda
3%, 11/30/02 (Cost $277,225) Aa2 $ 240,000 $ 258,000
GOVERNMENT OBLIGATIONS - 26.9% (E)
FRANCE - 1.0%
French Government OAT 5 1/2%, 4/25/04 Aaa FRF 4,200,000 713,545
GERMANY - 3.6%
Treuhandanstalt 6 5/8%, 7/9/03 Aaa DEM 4,250,000 2,539,498
ITALY - 0.7%
Italian Republic 10 1/2%, 9/1/05 (c) Aa3 ITL 700,000 510,833
SWEDEN - 1.0%
Swedish Kingdom 10 1/4%, 5/5/03 Aa1 SEK 5,000,000 753,547
UNITED KINGDOM - 1.8%
United Kingdom, Great Britain & Northern Ireland
9 1/2%, 4/18/05 Aaa GBP 650,000 1,261,190
UNITED STATES OF AMERICA - 18.8%
Federal Home Loan Bank:
5.67%, 1/14/00 Aaa 2,985,000 2,995,716
5.53%, 2/3/00 Aaa 1,625,000 1,626,268
Fannie Mae 5.43%, 1/27/00 Aaa 1,950,000 1,946,646
U.S. Treasury Bill, yields at dates of
purchase 5.11% to 5.15%, 4/30/98 (f) - 125,000 123,468
U.S. Treasury Obligations:
7 7/8%, 8/15/01 Aaa 640,000 690,099
12 3/4%, 11/15/10 (callable) Aaa 880,000 1,269,400 13 7/8%,
5/15/11 (callable) Aaa 980,000 1,507,054
8 1/8%, 8/15/19 Aaa 1,300,000 1,650,597
7 1/4%, 2/15/23 Aaa 1,350,000 1,565,150
13,374,398
TOTAL GOVERNMENT OBLIGATIONS
(Cost $19,280,974) 19,153,011
CASH EQUIVALENTS - 11.7%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.59%, dated
1/30/98 due 2/2/98 $ 8,336,882 $ 8,333,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $65,700,516) $ 71,189,658
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
8 S&P 500 Stock Index Contracts Mar 98 $ 1,975,600 $ 23,152
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 2.8%
SECURITY TYPE ABBREVIATIONS
PEPS - Participating Equity Preferred
Shares/Premium Exchangeable
Participating Shares
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. Principal amount in thousands.
4. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $489,676 or 0.7%
of net assets.
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.
6. Security or a portion of the security was pledged to cover margin
requirements for futures contracts. At the period end, the value of
securities pledged amounted to $85,500.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 27.1% AAA, AA, A 27.1%
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
As a Percentage of Total Value of Investment in Securities
Basic Industries 3.6%
Cash Equivalents 11.7
Construction & Real Estate 1.9
Durables 3.8
Energy 4.4
Finance 13.9
Government Obligations 26.9
Health 7.2
Industrial Machinery & Equipment 1.9
Media & Leisure 2.5
Nondurables 4.0
Retail & Wholesale 3.6
Services 1.3
Technology 5.6
Utilities 6.2
Others (individually less than 1%) 1.5
100.0%
INCOME TAX INFORMATION
At January 31, 1998, the aggregate cost of investment securities for
income tax purposes was $65,736,086. Net unrealized appreciation
aggregated $5,453,572, of which $8,421,870 related to appreciated
investment securities and $2,968,298 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.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS JANUARY 31, 1998 (UNAUDITED)
7.ASSETS 8. 9.
10.INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE 11. $ 71,189,658
AGREEMENTS OF $8,333,000) (COST $65,700,516) -
SEE ACCOMPANYING SCHEDULE
12.FOREIGN CURRENCY HELD AT VALUE (COST $53,792) 13. 53,792
14.RECEIVABLE FOR INVESTMENTS SOLD 15. 1,554,726
16.RECEIVABLE FOR FUND SHARES SOLD 17. 79,988
18.DIVIDENDS RECEIVABLE 19. 82,366
20.INTEREST RECEIVABLE 21. 385,536
22.RECEIVABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 23. 1,400
24. 25.TOTAL ASSETS 26. 73,347,466
27.LIABILITIES 28. 29.
30.PAYABLE TO CUSTODIAN BANK $ 25,961 31.
32.PAYABLE FOR INVESTMENTS PURCHASED 3,981,757 33.
34.PAYABLE FOR FUND SHARES REDEEMED 578,982 35.
36.ACCRUED MANAGEMENT FEE 42,339 37.
38.OTHER PAYABLES AND ACCRUED EXPENSES 96,377 39.
40. 41.TOTAL LIABILITIES 42. 4,725,416
43.44.NET ASSETS 45. $ 68,622,050
46.NET ASSETS CONSIST OF: 47. 48.
49.PAID IN CAPITAL 50. $ 73,347,210
51.DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 52. (247,558)
53.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 54. (9,982,245)
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
55.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 56. 5,504,643
INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
57.58.NET ASSETS, FOR 4,591,809 SHARES OUTSTANDING 59. $ 68,622,050
60.61.NET ASSET VALUE, OFFERING PRICE AND REDEMPTION 62. $14.94
PRICE
PER SHARE ($68,622,050 (DIVIDED BY) 4,591,809 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
63.INVESTMENT INCOME 65. $ 279,259
64.DIVIDENDS
66.INTEREST 67. 870,424
68. 69. 1,149,683
70.LESS FOREIGN TAXES WITHHELD 71. (22,627)
72. 73.TOTAL INCOME 74. 1,127,056
75.EXPENSES 76. 77.
78.MANAGEMENT FEE $ 263,318 79.
80.TRANSFER AGENT FEES 110,874 81.
82.ACCOUNTING FEES AND EXPENSES 30,079 83.
84.CUSTODIAN FEES AND EXPENSES 65,837 85.
86.REGISTRATION FEES 14,495 87.
88.AUDIT 35,823 89.
90.LEGAL 200 91.
92.MISCELLANEOUS 903 93.
94. TOTAL EXPENSES BEFORE REDUCTIONS 521,529 95.
96. EXPENSE REDUCTIONS (4,019) 517,510
97.98.NET INVESTMENT INCOME 99. 609,546
100.REALIZED AND UNREALIZED GAIN (LOSS) 102. 103.
101.NET REALIZED GAIN (LOSS) ON:
104. INVESTMENT SECURITIES 3,212,215 105.
106. FOREIGN CURRENCY TRANSACTIONS (9,677) 3,202,538
107.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 108. 109.
ON:
110. INVESTMENT SECURITIES (4,514,927) 111.
112. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 2,915 113.
114. FUTURES CONTRACTS 23,152 (4,488,860)
115.116.NET GAIN (LOSS) 117. (1,286,322)
118.119.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 120. $ (676,776)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1998 JULY 31,
(UNAUDITED) 1997
121.INCREASE (DECREASE) IN NET ASSETS
122.OPERATIONS $ 609,546 $ 1,735,993
NET INVESTMENT INCOME
123. NET REALIZED GAIN (LOSS) 3,202,538 4,042,959
124. CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (4,488,860) 10,328,422
125. (676,776) 16,107,374
126.NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
127.DISTRIBUTIONS TO SHAREHOLDERS (1,648,262) (2,871,377)
FROM NET INVESTMENT INCOME
128. IN EXCESS OF NET INVESTMENT INCOME (247,558) -
129. 130.TOTAL DISTRIBUTIONS (1,895,820) (2,871,377)
131.SHARE TRANSACTIONS 26,829,257 36,337,493
NET PROCEEDS FROM SALES OF SHARES
132. REINVESTMENT OF DISTRIBUTIONS 1,827,297 2,728,128
133. COST OF SHARES REDEEMED (32,080,455) (65,467,695)
134.135. (3,423,901) (26,402,074)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
136. (5,996,497) (13,166,077)
137.TOTAL INCREASE (DECREASE) IN NET ASSETS
138.NET ASSETS 139. 140.
141. BEGINNING OF PERIOD 74,618,547 87,784,624
142. $ 68,622,050 $ 74,618,547
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION OF
NET INVESTMENT INCOME OF $(247,558) AND $1,038,716,
RESPECTIVELY)
143.OTHER INFORMATION 145. 146.
144.SHARES
147. SOLD 1,803,297 2,664,438
148. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 124,912 214,058
149. REDEEMED (2,165,829) (4,847,773)
150. NET INCREASE (DECREASE) (237,620) (1,969,277)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
151. SIX MONTHS ENDED YEARS ENDED JULY 31, FEBRUARY 1, 1993
JANUARY 31, 1998 (COMMENCEMENT
OF OPERATIONS) TO
JULY 31,
152. (UNAUDITED) 1997 1996 1995 1994 1993
153.SELECTED PER-SHARE DATA
154.NET ASSET VALUE, $ 15.45 $ 12.91 $ 12.40 $ 11.99 $ 11.98 $ 10.00
BEGINNING OF PERIOD
155.INCOME FROM INVESTMENT
OPERATIONS
156. NET INVESTMENT .13 D .31 D .31 .28 .32 D .15
INCOME
157. NET REALIZED (.24) 2.68 .25 .13 .25 1.91
AND
UNREALIZED GAIN
(LOSS)
158. TOTAL FROM (.11) 2.99 .56 .41 .57 2.06
INVESTMENT
OPERATIONS
159.LESS DISTRIBUTIONS (.35) (.45) (.05) - (.15) (.08)
FROM NET INVESTMENT
INCOME
160. IN EXCESS OF NET (.05) - - - - -
INVESTMENT INCOME
161. FROM NET - - - - (.11) -
REALIZED
GAIN
162. IN EXCESS OF - - - - (.20) -
NET REALIZED GAIN
163. RETURN OF - - - - (.10) -
CAPITAL
164. TOTAL (.40) (.45) (.05) - (.56) (.08)
DISTRIBUTIONS
165.NET ASSET VALUE, $ 14.94 $ 15.45 $ 12.91 $ 12.40 $ 11.99 $ 11.98
END OF PERIOD
166.TOTAL RETURN B, C (.64)% 23.93% 4.52% 3.42% 4.58% 20.65%
167.RATIOS AND SUPPLEMENTAL
DATA
168.NET ASSETS, END $ 68,622 $ 74,619 $ 87,785 $ 148,831 $ 313,246 $ 84,157
OF PERIOD (000
OMITTED)
169.RATIO OF 1.47% A 1.51% 1.39% 1.34% 1.68% 2.12% A
EXPENSES TO
AVERAGE NET ASSETS
170.RATIO OF 1.46% A, E 1.49% E 1.36% E 1.33% E 1.67% E 2.12% A
EXPENSES TO
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
171.RATIO OF NET 1.72% A 2.28% 2.94% 4.68% 2.56% 4.02% A
INVESTMENT INCOME
TO AVERAGE NET
ASSETS
172.PORTFOLIO 78% A 57% 189% 242% 226% 172% A
TURNOVER RATE
173.AVERAGE $ .0078 $ .0089
COMMISSION RATE
F
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 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.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JANUARY 31, 1998 (UNAUDITED)
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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rates on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
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, and gains and losses between
trade and settlement date of purchases and sales of securities. 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES - CONTINUED
The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. 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
among 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.
Distributions in excess of net investment income and accumulated
undistributed net realized gain (loss) on investments and foreign
currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
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.
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
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock market. Buying futures tends to increase the
fund's exposure to the underlying instrument, while selling futures
tends to decrease the fund's exposure to the underlying instrument or
hedge other fund investments. Futures contracts involve, to varying
degrees, risk of loss in excess of the futures variation margin
reflected in the Statement of Assets and Liabilities. The underlying
face amount at value of any open futures contracts at period end is
shown in the schedule of investments under the caption "Futures
Contracts." 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 or if the counterparties do
not perform under the contracts' terms. Gains (losses) are realized
upon the expiration or closing of the futures contracts. Futures
contracts are valued at the settlement price established each day by
the board of trade or exchange on which they are traded.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $24,714,930 and $31,748,548, respectively, of which U.S.
government and government agency obligations aggregated $6,570,061 and
$6,618,829, respectively.
The market value of futures contracts opened and closed during the
period amounted to $1,952,448 and $0, 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 annualized rate of .74% 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., and 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 annualized rate of .31% 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 $4,918 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 $4,019 under this arrangement.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate
the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)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 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
48 West Putnam Avenue
Greenwich, CT
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
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
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
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
OREGON
16850 SW 72 Avenue
Tigard, 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
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
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 500
Merrimack, NH 03054-0500
(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 500
Merrimack, NH 03054-0500
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
Richard R. Mace, Jr., Vice President
Richard A. Spillane, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
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
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Fidelity Service Company, Inc.
Boston, MA
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Brown Brothers Harriman & Co.
Boston, MA
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FIDELITY
(REGISTERED TRADEMARK)
LOW-PRICED STOCK
FUND
SEMIANNUAL REPORT
JANUARY 31, 1998
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 50 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 54 NOTES TO THE FINANCIAL STATEMENTS.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As we entered 1998, the pesky economic and currency crises in
Southeast Asia were still very much with us. Adding to these concerns
was the possibility that U.S. corporate earnings might decline in the
face of lower global product demand. But the news wasn't all bad as
low inflation, low interest rates and moderate economic growth
continued to prevail. The bond market performed well, as it benefited
from the favorable economic backdrop and a "flight-to-safety"
mentality on the part of stock investors.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1998 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
FIDELITY LOW-PRICED STOCK 7.41% 25.37% 146.81% 371.83%
FIDELITY LOW-PRICED STOCK 4.19% 21.61% 139.41% 357.67%
(INCL. 3% SALES CHARGE)
RUSSELL 2000(REGISTERED TRADEMARK) 4.42% 18.07% 103.44% 197.07%
SMALL CAP FUNDS AVERAGE 2.19% 15.79% 107.98% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on December 27, 1989. For example, if
you 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 six months average represents a peer group of
547 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 JANUARY 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY LOW-PRICED STOCK 25.37% 19.80% 21.11%
FIDELITY LOW-PRICED STOCK 21.61% 19.08% 20.65%
(INCL. 3% SALES CHARGE)
RUSSELL 2000 18.07% 15.27% 14.39%
SMALL CAP FUNDS AVERAGE 15.79% 15.60% N/A
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a slightly different figure than
that obtained by averaging the cumulative total returns and
annualizing the result.)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19980131 19980225 150940 S00000000000001
Low-Priced Stock Fund Russell 2000
00316 RS002
1989/12/27 9700.00 10000.00
1989/12/31 9593.30 10142.97
1990/01/31 9535.10 9256.82
1990/02/28 9719.40 9544.23
1990/03/31 9816.40 9915.46
1990/04/30 9447.80 9591.71
1990/05/31 10194.70 10270.61
1990/06/30 10476.00 10291.43
1990/07/31 10417.80 9838.77
1990/08/31 9379.90 8528.44
1990/09/30 8968.27 7773.76
1990/10/31 8816.43 7299.19
1990/11/30 9292.18 7855.75
1990/12/31 9585.72 8167.44
1991/01/31 10466.35 8906.05
1991/02/28 11397.59 9899.21
1991/03/31 12156.76 10596.00
1991/04/30 12622.38 10569.34
1991/05/31 12814.70 11073.13
1991/06/30 12045.42 10427.83
1991/07/31 12784.34 10793.76
1991/08/31 13138.61 11193.28
1991/09/30 13192.71 11280.93
1991/10/31 13653.40 11579.29
1991/11/30 13098.47 11043.73
1991/12/31 14019.94 11928.06
1992/01/31 15233.92 12894.55
1992/02/29 16211.56 13270.70
1992/03/31 15674.40 12821.51
1992/04/30 15824.80 12372.32
1992/05/31 15932.23 12536.84
1992/06/30 15545.48 11943.94
1992/07/31 16050.41 12359.35
1992/08/31 16007.44 12010.59
1992/09/30 16137.72 12287.78
1992/10/31 16406.50 12678.35
1992/11/30 17515.20 13648.50
1992/12/31 18079.01 14123.98
1993/01/31 18543.44 14602.03
1993/02/28 18384.85 14264.77
1993/03/31 18939.91 14727.65
1993/04/30 18758.67 14323.38
1993/05/31 19155.14 14957.18
1993/06/30 19223.10 15050.49
1993/07/31 19472.31 15258.29
1993/08/31 20163.30 15917.47
1993/09/30 20327.14 16366.66
1993/10/31 21075.97 16787.91
1993/11/30 20713.64 16235.37
1993/12/31 21733.10 16790.47
1994/01/31 22863.72 17316.90
1994/02/28 22851.16 17254.27
1994/03/31 21846.16 16343.28
1994/04/30 22034.60 16440.43
1994/05/31 21959.22 16255.82
1994/06/30 21645.16 15703.83
1994/07/31 22135.10 15961.84
1994/08/31 22964.22 16851.27
1994/09/30 23073.27 16794.85
1994/10/31 23252.45 16728.57
1994/11/30 22632.20 16052.95
1994/12/31 22778.19 16484.25
1995/01/31 22763.95 16276.27
1995/02/28 23418.83 16953.35
1995/03/31 23575.43 17245.32
1995/04/30 24344.19 17628.78
1995/05/31 24842.46 17931.89
1995/06/30 25796.30 18862.12
1995/07/31 27405.01 19948.62
1995/08/31 27661.27 20361.30
1995/09/30 28155.35 20724.91
1995/10/31 27354.31 19798.05
1995/11/30 28066.35 20629.85
1995/12/31 28448.62 21174.16
1996/01/31 28756.17 21151.47
1996/02/29 29678.83 21810.65
1996/03/31 30170.91 22254.62
1996/04/30 31431.88 23444.61
1996/05/31 32385.29 24368.50
1996/06/30 31770.18 23367.84
1996/07/31 30555.35 21326.81
1996/08/31 31724.05 22565.05
1996/09/30 32717.98 23446.88
1996/10/31 33317.40 23085.51
1996/11/30 35082.34 24036.74
1996/12/31 36098.62 24666.68
1997/01/31 36504.41 25159.64
1997/02/28 36927.11 24549.60
1997/03/31 36250.79 23391.20
1997/04/30 36200.07 23456.40
1997/05/31 38922.26 26065.92
1997/06/30 40494.70 27182.99
1997/07/31 42608.21 28447.87
1997/08/31 42963.28 29098.79
1997/09/30 45766.34 31228.66
1997/10/31 45019.86 29856.82
1997/11/30 45233.14 29663.71
1997/12/31 45748.92 30182.91
1998/01/30 45767.12 29706.57
IMATRL PRASUN SHR__CHT 19980131 19980225 150943 R00000000000101
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Low-Priced Stock Fund on December 27, 1989, when
the fund started, and the current 3% sales charge was paid. As the
chart shows, by January 31, 1998, the value of the investment would
have grown to $45,767 - a 357.67% 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 $29,707 - a 197.07% 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
With economic woes in Southeast
Asia and a resulting "flight to
quality" mentality on the part of
investors playing leading roles,
the previously surging U.S. stock
market cooled down during the
six-month period that ended
January 31, 1998. The Standard &
Poor's 500 Index returned 3.56%
during this time. After a prolonged
stretch of strong performance by
stocks of larger companies,
smaller-company stocks gained
momentum in August and
September due mainly to solid
earnings growth. In addition, many
large-cap stocks had become
expensive relative to smaller-cap
stocks and investors took
advantage of cheap buying
opportunities within the small-cap
universe. Thousands of miles away,
though, an imposing obstacle
loomed in the form of an economic
crisis in Southeast Asia. What
began as a trickle in June - with
several small Asian countries
devaluing their currencies -
transformed into a downpour in
October as larger markets such as
Hong Kong became affected. This
brought concern and volatility to
markets across the globe. In the
U.S., for instance, the Dow Jones
Industrial Average tumbled
550-plus points in one session,
only to bounce back significantly
the next. Since Southeast Asia is
an important technology hub,
many small semiconductor-related
stocks - prevalent in the small-cap
arena - suffered dramatically. As
the period came to a close,
investors had begun to favor the
reliability and liquidity of larger
stocks, retracing the steps they
took in 1996 and early 1997.
An interview with Joel Tillinghast, Portfolio Manager of Fidelity
Low-Priced Stock Fund
Q. HOW DID THE FUND PERFORM, JOEL?
A. Quite well. For the six months that ended January 31, 1998, the
fund returned 7.41%. This topped the small cap funds average tracked
by Lipper Analytical Services, which returned 2.19% during the period.
The Russell 2000 Index returned 4.42% in this time. For the 12 months
that ended January 31, 1998, the fund returned 25.37%, while the
Lipper group and index returned 15.79% and 18.07%, respectively.
Q. WHAT FACTORS HELPED THE FUND PERFORM SO WELL?
A. There were a few. First, good stock selection played an important
role as several individual positions advanced nicely. Second, the fund
- - by its nature - usually emphasizes stocks with low price-to-earnings
(P/E) ratios. A stock's P/E ratio indicates the price an investor pays
for earnings growth. In other words, if earnings stay the same, how
many years will it take you to earn back the amount you paid for the
stock? In many cases, a lower P/E is good and this was never more true
than in the past six months. With corporate earnings generally strong,
many low P/E companies had healthy earnings gains relative to many
high P/E, "glamour" stocks and increased investor attraction helped
them perform well. Lastly, with the problems we witnessed in Southeast
Asia during the period, domestic-oriented stocks enjoyed a dose of
prosperity. Many of the smaller companies in the portfolio had more of
a domestic flavor and were thus relatively immune to problems
overseas.
Q. WHEN YOU LAST SPOKE TO SHAREHOLDERS SIX MONTHS AGO, YOU MENTIONED
THE POSSIBILITY OF INVESTING MORE HEAVILY IN TECHNOLOGY STOCKS. DID
THIS STRATEGY COME TO FRUITION?
A. Fortunately, no. I had concerns over slumping earnings outlooks and
the effects of the Asian crisis. Many of the technology companies in
the low-priced universe make semiconductors, disk drives and other
electronic components used in personal computers. These companies were
hit hard by price competition from Asian suppliers. Positions that
hurt the fund's performance the most included semiconductor-makers
Zilog, Actel and Micro Linear, as well as disk drive supplier Quantum.
I was reluctant to add to holdings of component-oriented companies
with sluggish earnings outlooks, but did so where I saw signs of
stabilization. Better earnings growth prospects were offered by
software and services companies such as Affiliated Computer and
Symantec. My feeling was that these companies could benefit from the
trend toward falling computer prices.
Q. FINANCE STOCKS - WHICH ACCOUNTED FOR AROUND 14% OF THE FUND'S
ASSETS AT THE END OF THE PERIOD - HAVE HISTORICALLY BEEN PREVALENT IN
THE PORTFOLIO. WHAT'S BEHIND YOUR ATTRACTION?
A. One reason is that there are thousands of smaller banks in the U.S.
that occupy a significant spot in the low-priced universe. More
specifically, though, many finance stocks have done very well over the
past few years due to reasonable valuations and favorable
consolidation activity. Many smaller institutions have been annexed by
larger ones, and when this happens the smaller institution typically
gets a positive performance boost. Examples of this trend within the
portfolio were stocks such as Bank of Montreal and Life USA. Finally,
the strong economy kept credit losses at bay and overall earnings
growth within the group was healthy.
Q. WERE THERE ANY SECTORS THAT OFFERED GOOD OPPORTUNITIES DURING THE
PERIOD?
A. I tried to take advantage of the pleasant economic scenario of
moderate growth, low interest rates and very low inflation.
Beneficiaries of this type of climate tend to be those industries that
are more interest-rate sensitive. I increased the fund's positions in
several of these areas, most notably home-building companies, title
insurers and banks. Title insurers were a particularly intriguing
area, as home refinancings surged. New-property owners typically
receive title insurance, which validates their ownership of that
property. Home-buying in general was up during the period, and when
homeowners choose to refinance their mortgage, they frequently need
another title. Insurers such as Lawyer's Title, Stewart Information
Services and Investors Title contributed positively to performance.
Doral Financial, a Puerto Rico-based mortgage company, also benefited
from increased refinancing activity.
Q. AT THE END OF THE PERIOD, THE FUND'S SHORT-TERM INVESTMENTS -
INCLUDING ITS CASH POSITION - HOVERED IN THE 20% RANGE. WHY WAS IT
DIFFICULT TO STAY MORE FULLY INVESTED IN LONG-TERM OPPORTUNITIES?
A. There were a couple of reasons. First, the fund continued to
experience significant new cash inflows during the period. When new
money comes in at rapid rates, I try to maintain my normal investing
approach of seeking out the best opportunities. This process can take
time. Another factor behind the fund's cash level involved the
technology sector. At one point during the period, I had my eye on
several technology companies that I felt were attractive.
Unfortunately, business prospects for these companies soured and my
interest waned. This was an area that could have absorbed a good
portion of the fund's cash.
Q. PERCEIVING THEM TO BE A SORT OF SAFE HAVEN, MANY INVESTORS
GRAVITATED TO DOMESTIC, UTILITY-ORIENTED STOCKS AS GLOBAL TURMOIL
INCREASED. DID YOU FOLLOW SUIT?
A. I tried to sort out which utilities could best survive deregulation
unscathed. As U.S. electric utilities are deregulated, they often find
that they cannot recover "stranded costs," or investments that they
would have recovered as regulated utilities. Some utilities sold off
their power generation assets during the period, which are the main
sources of stranded costs. While this can cause huge losses from time
to time, it leaves the stable power distribution assets intact, some
of which can be attractive investments. The fund did have two utility
stocks among its top 10 holdings at the end of the period, but both
were based on foreign soil. Yorkshire Water and Hyder PLC - two
British water utility stocks - offered better valuations and were less
susceptible to deregulation concerns than many U.S.-based utility
stocks.
Q. WHAT ABOUT THE PERFORMANCE OF OTHER SECTORS DURING THE PERIOD?
A. Two other areas worth mentioning were energy service and airline
stocks. Energy service stocks suffered during the period as oil prices
dropped due to the Asian dilemma. Conversely, airline stocks performed
well due to the low fuel prices. Positions such as ASA Holdings,
Comair and Midwest Express - all regional airlines - benefited from
this cost savings as well as from increased passenger traffic due to
the strong economy.
Q. ASIDE FROM SOME OF THE STOCKS YOU'VE MENTIONED, WERE THERE ANY
PLEASANT SURPRISES? ANY OTHER DISAPPOINTMENTS?
A. Biomet - a manufacturer of hip and knee implants - was a very good
performer. The company has gained market share in the past several
years, and was in the process of expanding its operations in Europe.
On a negative note, glassware company Libbey was a major
disappointment. The company was hurt by reduced sales of its products
in large retail store chains as well as from delays in making internal
structural changes.
Q. WHAT'S YOUR OUTLOOK?
A. Stock prices were generally high toward the end of the period. I'll
try to keep that from being a risk by emphasizing moderately-valued
stocks within the fund's universe. The U.S. economy looks good from my
vantage point. In terms of technology stocks, I may try to find more
suitable opportunities. With the trend toward lower-priced personal
computers, PC distribution companies may hold promise.
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 ON HIS
APPROACH TO MANAGING A
LARGE NUMBER OF STOCKS:
"Some investors may worry about
changes in my approach as the
number of stocks held by the fund
has grown to over 1,000. What hasn't
changed is that most of the fund's
holdings are stocks of small- and
medium-sized companies. Also, as
has been the case since the fund's
start, most have cheaper valuations
than the market averages.
"While some managers can add
value through nimble trading, I've
usually had somewhat lower turnover
- - which can help defer recognition
of taxable gains and reduce
transaction costs - than the average
small-company fund. One reason is
that I look for growth stories that I
feel will be as good a few years from
now as when I buy them. These tend
to be companies that continuously
gain market share and earn profit
margins that support above-average
growth. Many also benefit from
continuing trends within their
industries, such as the popularity of
casual menswear in the retail sector
or the aging of America, which has
influenced medical-related stocks.
"There's always something to worry
about with any investment, but these
types of companies are less likely to
go wrong in a hurry. Even so, I
couldn't keep tabs on this many
holdings without the support of
Fidelity's research staff."
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 January 31, 1998,
more than $10.8 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 JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
KING WORLD PRODUCTIONS, INC. 1.0 0.8
GALLAHER GROUP PLC SPONSORED ADR 1.0 0.8
HYDER PLC 0.9 0.8
FIRST DATA CORP. 0.8 0.0
BIOMET, INC. 0.7 0.6
UICI 0.7 0.7
YORKSHIRE WATER PLC 0.7 0.8
NORDBANKEN HOLDING AB 0.7 0.3
VIAD CORP. 0.7 0.8
CANADIAN NATIONAL RAILWAY CO. 0.7 0.9
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 14.0 13.6
TECHNOLOGY 11.0 11.2
DURABLES 6.2 6.1
RETAIL & WHOLESALE 6.1 6.3
MEDIA & LEISURE 5.6 5.4
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1998* AS OF JULY 31, 1997 **
ROW: 1, COL: 1, VALUE: 20.1
ROW: 1, COL: 2, VALUE: 0.0
ROW: 1, COL: 3, VALUE: 79.90000000000001
STOCKS 82.1%
SHORT-TERM
INVESTMENTS 17.9%
FOREIGN
INVESTMENTS 20.6%
STOCKS 79.9%
SHORT-TERM
INVESTMENTS 20.1%
FOREIGN
INVESTMENTS 22.3%
ROW: 1, COL: 1, VALUE: 17.9
ROW: 1, COL: 2, VALUE: 0.0
ROW: 1, COL: 3, VALUE: 82.09999999999999
*
**
INVESTMENTS JANUARY 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 79.7%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.4%
Allied Research Corp. (a)(d) 454,000 $ 5,107
Doncasters PLC sponsored ADR 182,900 3,967
Gulfstream Aerospace Corp. (a) 233,000 7,936
Primex Technologies, Inc. (d) 354,000 12,346
Transtechnology Corp. (d) 311,500 8,138
37,494
DEFENSE ELECTRONICS - 0.3%
DBA Systems, Inc. (a) 67,200 525
DRS Technologies, Inc. (a)(d) 526,900 7,574
Ducommun, Inc. (a)(d) 568,500 18,512
Flir Systems, Inc. (a)(d) 464,000 8,236
34,847
SHIP BUILDING & REPAIR - 0.1%
Fred Olsen Energy ASA (a) 75,000 1,339
Newport News Shipbuilding, Inc. 561,200 14,100
15,439
TOTAL AEROSPACE & DEFENSE 87,780
BASIC INDUSTRIES - 3.3%
CHEMICALS & PLASTICS - 1.5%
AEP Industries, Inc. (a) 182,789 6,123
Albright & Wilson PLC 100,000 222
Aronkasei Co. Ltd. 500,000 1,516
CFC International, Inc. (a)(d) 237,000 2,577
Compass Plastics & Technologies, Inc. 65,000 418
European Colour PLC 700,000 649
Foamex International, Inc. (a) 42,600 549
Hawkins Chemicals, Inc. 36,600 366
Holliday Chemical Holdings PLC Class L 1,000,000 4,002
International Specialty Products, Inc. (a) 2,016,800 28,866
Lydall, Inc. (a) 42,100 839
Lyondell Petrochemical Co. 1,591,732 40,589
Martin Color-Fi, Inc. (a)(d) 553,000 2,454
Mining Services International Corp. 65,900 486
Mississippi Chemical Corp. 170,000 3,049
Nihon Kagaku Sangyo Co. Ltd. 200,000 591
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Nippon Chemical Industrial Co. Ltd. 150,000 $ 498
Peak International, Ltd. 205,900 4,530
Quixote Corp. 384,200 3,146
Solutia, Inc. 1,000,000 27,938
Spartech Corp. 1,130,500 18,229
Sybron Chemical Industry Corp. (a) 216,800 7,534
Tokyo Printing Ink Manufacturing Co. Ltd. 200,000 488
Wardle Stroeys PLC Class L 199,900 1,453
157,112
IRON & STEEL - 0.2%
Beltecno Corp. 70,000 268
Bunka Shutter Co. Ltd. 150,000 548
Chubu Steel Plate Co. Ltd. 900,000 1,772
Cold Metal Products, Inc. (a)(d) 495,300 2,291
Harris Steel Group, Inc. Class A 30,800 243
Japan Steel Tower Co. Ltd. 376,000 1,096
Kentucky Electric Steel, Inc. (a)(d) 252,500 1,610
Richardsons Westgarth PLC Class L 500,000 629
Roanoke Electric Steel Corp. 67,300 1,666
Samuel Manu-Tech, Inc. 500,000 8,846
Shiloh Industries, Inc. (a) 77,700 1,476
Steel of West Virginia, Inc. (a)(d) 663,000 5,304
Tadano Ltd. 25,000 83
Takigami Steel Construction Co. Ltd. 162,000 459
26,291
METALS & MINING - 0.8%
AFC Cable Systems, Inc. (a) 460,000 13,110
Acacia Resources Ltd. (a) 1,000,000 1,337
Acier Leroux, Inc. Class B (a) 125,000 412
Acier Leroux, Inc. Class B (a)(e) 200,000 659
Beijer & Alma Industri & Handel AB 58,700 1,491
Brush Wellman, Inc. 369,800 9,083
Cable Design Technology Corp. (a) 239,400 6,658
Chase Industries, Inc. (a)(d) 469,600 10,860
Commonwealth Industries, Inc. 500,000 7,000
Draka Holding NV 50,000 2,036
Elkem ASA 100,000 1,311
Essex International, Inc. 183,300 6,049
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
Fimalac SA (Fin Marc de Lacharriere) 25,000 $ 2,050
Major Drilling Group International, Inc. (a) 125,000 1,683
Metaleurop SA (a) 403,163 4,199
Metaleurop SA warrants 2/4/00 (a) 315,190 396
Nagahori Corp. 200,000 465
Nordic Aluminum OY 50,000 429
PK Cables OY 150,000 2,898
Special Metals Corp. 596,400 9,617
Superior Telecom, Inc. (a) 170,600 6,739
Toami Corp. 300,000 1,536
90,018
PACKAGING & CONTAINERS - 0.3%
Owens-Illinois, Inc. (a) 633,900 23,058
Silgan Holdings, Inc. 213,900 5,909
28,967
PAPER & FOREST PRODUCTS - 0.5%
ABT Building Products Corp. (a) 307,800 4,463
Clondalkin Group PLC unit 1,000,000 8,760
Enso OY Class R 1,200,000 9,749
FiberMark, Inc. (a) 144,300 3,283
Georgia Pacific Corp. (Timber Group) 173,700 4,039
Mercer International, Inc. (SBI) 82,700 682
Metsa-Serla Ltd. Class B 2,925,000 22,180
Rolland, Inc. 514,000 1,942
St. Laurent Paperboard, Inc. (e) 50,000 610
Uehara Sei Shoji Co. Ltd. 557,000 1,659
57,367
TOTAL BASIC INDUSTRIES 359,755
CONSTRUCTION & REAL ESTATE - 4.4%
BUILDING MATERIALS - 1.9%
Aggregate Industries PLC 9,768,876 8,138
American Precision Industries, Inc. (a) 268,900 5,580
American Woodmark Corp. 235,500 4,857
Asahi Concrete Works Co. Ltd. (a)(d) 675,000 2,531
Baynes (Charles) PLC 1,000,000 1,388
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
BUILDING MATERIALS - CONTINUED
Brampton Brick Ltd. Class A (a) 300,000 $ 1,103
Centex Construction Products, Inc. 807,300 24,824
Chart Industries, Inc. (d) 842,950 18,123
Coltec Industries, Inc. (a) 788,200 18,424
Devcon International Corp. (a) 217,700 952
Domco, Inc. (a) 725,000 9,215
Domco, Inc. warrants 11/6/98 (a) 175,000 842
Drew Industries, Inc. (a)(d) 1,070,800 13,385
Ebata Corp. 1,000 2
Emco Ltd. (a) 375,000 4,019
Engineered Support Systems, Inc. (d) 237,000 3,718
Florida Rock Industries, Inc. 7,100 153
Giant Cement Holding, Inc. (d) 540,700 11,963
Hibiya Engineering Ltd. 1,176,000 6,698
Ibstock Johnsen PLC 250,000 204
Kaynar Technologies, Inc. 97,700 2,613
Kingspan Group PLC 100,000 376
Kondotec, Inc. 250,000 1,375
Kyushu Fujisash Co. Ltd. 21,000 55
Lemarne Corp. Ltd. 50,000 97
Mark IV Industries, Inc. (a) 2,178,280 46,152
Matsuo Bridge Co. Ltd. 500,000 981
Norcros PLC Class L 50,000 54
Nichiha Corp. 250,000 1,969
Patrick Industries, Inc. (d) 450,000 6,863
Polynorm NV Ord. 25,000 2,394
Polypipe PLC 1,100,000 3,198
Raytech Corp. (a)(d) 327,800 1,782
Sherwin-Williams Co. 175,000 4,988
Velan, Inc. (sub-vtg.) (a)(e) 118,900 2,042
Yips Hang Cheung Holdings Ltd. 800,000 37
211,095
CONSTRUCTION - 2.0%
Aoki Marine Co. Ltd. (a) 158,000 361
Amec PLC Ord. 1,250,000 2,471
Beazer Homes USA, Inc. (a) 184,700 3,959
Bouygues Offshore SA sponsored ADR 520,000 9,912
Capital Pacific Holdings, Inc. (a) 35,600 87
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - CONTINUED
AAF Industries PLC (a)(d) 1,250,000 $ 449
Cavalier Homes, Inc. 566,440 6,231
Clayton Homes, Inc. 845,200 14,157
Crossman Communities, Inc. (a)(d) 1,080,900 25,401
Dominion Homes, Inc. (a)(d) 373,500 4,062
Engle Homes, Inc. (d) 800,000 11,550
Jacobs Engineering Group, Inc. (a) 517,000 13,927
Kaneshita Construction Co. Ltd. Ord. 214,000 1,362
M/I Schottenstein Homes, Inc. (a)(d) 880,000 18,700
Matsui Construction Co. Ltd. 400,000 1,229
McAlpine (Alfred) Ord. 40,000 93
Monaco Coach Corp. (a)(d) 371,900 12,040
NCI Building Systems, Inc. (a) 165,000 5,827
Oakwood Homes Corp. 175,000 6,289
Oriole Homes Corp. (a):
Class A 91,000 432Class B (d) 276,800 1,142
Redrow Group PLC Class L 25,000 62
Robertson Ceco Corp. (a) 565,800 4,809
Royal Lepage Ltd. (a) 150,000 319
Schult Homes Corp. (d) 435,920 9,645
Selmer AS 50,000 494
Sekisui House Hokuriku Ltd. 11,000 55
Southern Energy Homes, Inc. (a)(d) 1,306,900 11,762
Space Co. Ltd. 38,400 139
Swan Hill Group PLC 2,000,000 2,581
Takada Kiko Co. Ltd. 664,000 2,641
Technip SA (e) 50,000 5,192
Tay Homes PLC (d) 2,900,000 5,969
U.S. Home Corp. (a)(d) 600,645 22,787
Volker Wessels Stevin NV 200,000 6,429
Washington Homes, Inc. (a)(d) 501,400 1,880
Yokogawa Bridge Works 856,000 2,731
Yokogawa Construction Co. Ltd. 76,800 354
Yit-Yhtymae OY 125,000 1,433
218,963
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
ENGINEERING - 0.3%
Ataka Construction & Engineering Co. Ltd. 25,000 $ 98
Dai-Dan Co. Ltd. 150,000 1,029
EIS Group PLC ORD 250,000 1,295
Hoan Kogyo Co. Ltd. 402,000 1,159
Kawasaki Setsubi Kogyo Co. Ltd. 155,000 482
MYR Group, Inc. (d) 532,666 6,392
Metalrax Group PLC Class L 1,700,000 2,499
Ohba Co. Ltd. 66,000 276
Sanyo Engineering & Construction Co. 550,000 2,599
Sanshin Corp. 250,000 593
Taihei Dengyo Kaisha Ltd. 150,000 605
URS Corp. (a)(d) 1,034,378 13,899
30,926
REAL ESTATE - 0.1%
Chuo Warehouse Co. Ltd. 86,000 454
Echelon International Corp. (a) 302,300 6,292
FRM Nexus, Inc. (a)(d) 104,433 313
Hambro Countrywide PLC Class L 150,000 299
Kennedy-Wilson, Inc. (a)(d) 124,200 2,236
Meiwa Estate Co. Ltd. 50,000 512
Nagawa Co. Ltd. 423,000 1,999
12,105
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Banyan Strategic Land Trust (SBI)(d) 991,750 5,641
TOTAL CONSTRUCTION & REAL ESTATE 478,730
DURABLES - 6.2%
AUTOS, TIRES, & ACCESSORIES - 2.5%
Autocam Corp. (d) 592,181 8,365
AutoZone, Inc. (a) 1,846,700 50,669
Aviation Sales Co. (a) 140,600 5,264
Breed Technologies, Inc. 139,700 2,523
Castle Energy Corp. (d) 988,750 13,225
Collins Industries, Inc. 170,600 1,173
Cook (D.C.) Holdings PLC (d) 2,300,000 1,390
Dagenham Motors Group PLC Class L 200,000 337
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Dennis Group PLC 625,000 $ 2,797
Durakon Industries, Inc. (a)(d) 651,800 5,214
Excel Industries, Inc. 282,900 5,004
Federal Screw Works (d) 108,800 5,984
Federal Signal Co. 117,800 2,643
Gentex Corp. (a) 174,600 5,456
Global Motorsport Group, Inc. (a)(d) 526,100 6,576
Hahn Automotive Warehouse, Inc. 173,585 1,020
Intermet Corp. 675,500 11,230
Keiiyu Co. Ltd. 18,300 101
Kwik-Fit Holdings PLC Class L 400,000 2,401
Koito Industries Ltd. 1,044,000 4,227
Mayflower Corp. 50,000 138
Mercury Air Group (d) 593,740 3,600
Meritor Automotive, Inc. 27,300 625
Monro Muffler Brake, Inc. (d) 578,119 8,383
Murakami Corp. 538,000 2,670
Nissin Shoji Co. Ltd. 175,000 1,205
Owari Precise Products Co. Ltd. 50,000 108
Peugeot SA Ord. (a) 20,000 2,621
Quicks Group PLC 600,000 1,176
Rocla OY (a) 100,000 937
Strattec Security Corp. (a) 120,700 3,304
Superior Industries International, Inc. 458,000 12,080
Sylea SA 25,800 2,502
TBC Corp. (a)(d) 1,959,700 17,882
Tachi-S Co. Ltd. 400,000 2,344
Tochigi-Fuji Sangyo Co. Ltd. 532,000 1,488
Transpro, Inc. (d) 660,925 5,411
Travel Ports of America (a) 209,270 824
Uni Select, Inc. (d) 620,800 9,383
World Fuel Services Corp. (d) 1,216,206 24,172
Wynn's International, Inc. (d) 1,759,187 40,132
276,584
CONSUMER DURABLES - 0.5%
Aristocrat Leisure Ltd. 617,000 1,417
Asko Class A 650,000 11,512
Beijer AG (G&L), Series B 100,000 1,338
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER DURABLES - CONTINUED
Carclo Engineering Group PLC 350,000 $ 1,184
Libbey, Inc. 800,000 27,850
Lifetime Hoan Corp. 221,400 2,186
Mikasa, Inc. 511,000 7,026
Portmeirion Potteries Holdings PLC Class L 125,000 470
Sankyo Co. Ltd. (Gunma) 200,000 3,970
56,953
CONSUMER ELECTRONICS - 0.4%
Fossil, Inc. (a)(d) 1,000,000 24,187
Koss Corp. (a)(d) 200,000 2,150
LG Electronics, Inc. GDR (non-vtg) 371,200 668
Movado Group, Inc. (d) 746,312 16,046
Tulikivi OY Series A 35,000 645
43,696
HOME FURNISHINGS - 0.9%
BMTC Group, Inc. Class A (sub-vtg.) (d) 375,000 4,251
Beter Bed Holding NV 100,000 2,182
Bush Industries, Inc. Class A (d) 856,400 22,159
Carpetright PLC 570,000 4,330
Chromcraft Revington, Inc. (a) 100,800 2,911
Dorel Industries, Inc. (a)(e):
Class B (sub-vtg.) (d) 570,900 13,336
Class A (multi-vtg.) 125,000 2,838
Ladd Furniture, Inc. (a)(d) 437,900 6,404
Nakayanafuku Co. Ltd. 54,800 173
Nippon Filing Co. Ltd. 90,000 456
Rosebys PLC Class L 500,000 2,532
Rowe Furniture Corp. 63,800 526
Samas-Groep NV 25,000 1,224
Shelby Williams Industries, Inc. (d) 478,200 7,561
Stanley Furniture Co, Inc. (a)(d) 297,600 9,188
Toso Co. Ltd. 279,000 1,319
Winsloew Furniture, Inc. (a)(d) 729,400 14,132
95,522
TEXTILES & APPAREL - 1.9%
American Materials and Technologies Corp. (The) (a) 70,000 136
Carli Gry International AS (Reg.) 100,000 5,868
Carli Gry International AS (Reg.) (e) 41,500 2,435
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Black (Peter) Holdings PLC 75,000 $ 497
Berisford (S.W.) PLC 1,000,000 3,071
Boss (Hugo) AG 1,500 1,960
ChemFab Corp. (a) 35,800 727
Concord Fabrics, Inc. (a)(d):
Class A 167,100 1,462
Class B 112,700 972
Conso Products Co. (a)(d) 748,050 5,517
Consoltex Group, Inc. (sub-vtg.) (a) 325,000 815
Crown Crafts, Inc. 311,300 5,428
Culp, Inc. 320,800 6,416
Decorator Industries, Inc. (d) 302,332 2,721
Dewhirst (IJ) Group PLC Ord. 3,500,000 13,436
Dixie Group, Inc. (a) 341,500 3,842
Dyersburg Corp. (d) 1,152,500 11,885
Fila Holding Spa sponsored ADR 385,600 8,170
Galey & Lord, Inc. (a) 415,000 6,614
Gamma Holding 10,000 499
Guilford Mills, Inc. 220,000 5,830
Hampshire Group Ltd. (a)(d) 300,700 5,187
Intimate Brands, Inc. Class A 747,500 18,921
JLM Couture, Inc. (a)(d) 181,500 760
Lassila & Tikahoja OY 300,000 7,827
Nautica Enterprises, Inc. (a) 1,615,100 45,223
Novel Denim Holdings Ltd. 54,500 1,090
PCA Corp. 8,000 102
Supreme International Corp. (a) 307,900 3,194
Tandy Brands Accessories, Inc. (a)(d) 484,800 8,484
Tommy Hilfiger (a) 235,000 10,237
Tropical Sportswear International Corp. (a) 247,500 2,753
Tultex Corp. (a) 532,500 1,997
Worldtex Corp. (a)(d) 1,351,800 10,139
204,215
TOTAL DURABLES 676,970
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 2.1%
ENERGY SERVICES - 1.0%
Akita Drilling Ltd. Class A (non-vtg.) 850,000 $ 6,132
Artisan Corp. 50,000 344
Aztec Manufacturing Co. (d) 560,500 7,216
Carbo Ceramics, Inc. 601,200 16,984
Computalog Ltd. (a) 275,000 3,864
Dawson Geophysical Co. 50,000 788
Discoverer ASA (a) 50,000 1,910
Lufkin Industries, Inc. 216,000 6,588
Pe Ben Oilfield Services Ltd. (a)(d) 303,300 948
Petroleum Helicopters, Inc. (d) 204,100 4,184
Petroleum Helicopters, Inc. (non-vtg.) 299,500 5,990
Petrolia Drilling ASA (a) 200,000 922
Powell Industries, Inc. (a)(d) 1,063,500 13,958
RPC Energy Services, Inc. (d) 2,771,800 37,073
Superior Energy Services, Inc. (a) 659,800 5,278
112,179
OIL & GAS - 1.1%
Adams Resources and Energy, Inc. (d) 211,100 2,665
Australian Oil & Gas Corp. Ltd. (d) 3,706,000 4,269
Beau Canada Exploration Ltd. (a) 50,000 89
CEC Resources Ltd. (a)(d) 113,930 598
Cabot Oil & Gas Corp. Class A 118,100 2,340
Columbus Energy Corp. (a)(d) 390,382 3,367
Crown Central Petroleum Corp. Class A (a)(d) 510,000 10,551
Destiny Resource Services Corp. (a) 25,000 46
ENEX Resources Corp. (d) 144,300 1,587
Fletcher Challenge Ltd. (Energy Division) 1,500,000 5,594
Foremost Industries, Inc. (a)(d) 472,500 3,733
Giant Industries, Inc. (a) 189,500 3,222
Golden Triangle Industries, Inc. (a) 4,000 55
Hallwood Consolidated Resources Corp. (a) 107,850 1,887
Holly Corp. 110,800 2,895
Hokuriku Gas Co. 671,000 1,427
Markwest Hydrocarbon, Inc. (a)(d) 426,500 8,530
Maynard Oil Co. (a) 242,100 2,421
Novus Petroleum Ltd. 2,002,542 5,354
Penn West Petroleum Ltd. (a) 354,900 3,767
Petro-Canada 246,000 4,377
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Petroleum Development Corp. (a)(d) 1,430,000 $ 7,597
Premier Oil PLC 12,750,000 9,997
Santa Fe Energy Resources, Inc. 199,000 2,090
Swift Energy Co. (a)(d) 1,499,350 26,988
Torch Energy Royalty Trust unit 425,200 2,976
Ulster Petroleums Ltd. (a)(e) 100,000 855
119,277
TOTAL ENERGY 231,456
FINANCE - 13.9%
BANKS - 5.4%
Allied Irish Banks PLC (a) 50,000 527
Anglo-Irish Bank Corp. PLC 250,000 519
Banca Popolare di Milano 900,000 7,389
Bank Austria AG (a) 75,000 2,691
Bank of Ireland, Inc. 151,088 2,352
Bank of Montreal 1,000,000 46,099
Bank of The Ozarks, Inc. 114,100 2,902
Bank of Scotland 200,000 2,071
Bergensbanken ASA (d) 800,000 7,483
Bergensbanken ASA rights 2/27/98 (a) 800,000 74
CNB Financial Corp. 4,900 154
Canadian Western Bank 430,000 6,100
Cathay Bancorp, Inc. 183,800 6,490
Den Danske Bank Group AS 175,000 23,349
Dexia France 11,969 1,422
Den Norske Bank AS Class A Free shares 5,000,000 21,870
Den Norske Bank AS (e) 900,000 3,937
FPB Bank Holding Co. Ltd. 1,500,000 175
Firstbank Puerto Rico (d) 1,500,000 51,281
Fokus Bank AS 1,500,000 12,252
GBC Bancorp California (d) 501,700 28,848
Gronlandsbanken AS 20,000 565
Jyske Bank AS (Reg.) 225,000 26,953
Laurentian Bank 794,500 15,093
MIDT Bank A/S (a) 8,550 304
National Bank of Canada 3,894,100 60,463
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Nordvestbank (Reg.) 4,500 $ 505
Nordlandsbanken AS 200,000 4,980
Nordbanken Holding AB 13,766,000 76,882
Okobank Class A 278,000 4,517
Providian Financial Corp. 436,700 21,344
Ringkjobing Bank 6,000 1,300
Societe Generale Class A 125,000 16,220
SouthTrust Corp. 750,000 42,328
Spar Nord Holding 50,035 2,870
Sparebanken Norway primary shares certificates 675,000 23,033
Sparebanken More 24,286 624
Sparebanken Rogala Capital certificates 10,000 312
Sparebanken Rana Grunnfondsbevis (d) 30,000 605
Sterling Bancorp 250,500 5,949
Sumitomo Bank California 343,500 15,715
Summit Holdings Southeast, Inc. (d) 300,000 6,938
Svenska Handelsbanken 400,000 14,622
Syd-Sonderjylland Holding 360,000 20,039
Wing Hang Bank Ltd. 250,000 365
590,511
CREDIT & OTHER FINANCE - 1.1%
Amagerbanken AS (a) 28,600 1,387
Amagerbanken AS (New) 6,250 278
Amtsspar Fyn Holding AS 25,000 1,879
CIT Group, Inc. Class A 253,200 7,612
Compagnie Financiere de Credit Industriel et Commercial SA 50,000
3,945
Connor Clark Ltd., Class A (non-vtg.) 525,075 3,156
Connor Clark Ltd., Class A (non-vtg.) (e) 189,125 1,137
Credia Co. Ltd. 213,700 3,384
Doral Financial Corp. (d) 934,500 22,662
Equitilink Ltd. 1,000,000 418
FIH AS Class B (d) 900,000 26,727
Firstcity Financial Corp. (a) 55,000 1,561
Intrum Justitia NV (Reg.) 1,900,000 3,476
JCG Holdings Ltd. 7,104,000 1,906
Life Financial Corp. 82,900 912
Money Store, Inc. (The) 305,000 5,833
New Century Financial Corp. 113,300 963
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Nissin Co. Ltd. 126,800 $ 2,877
Paragon Group of Companies PLC Class L 1,250,000 4,104
Perpetual PLC 160,000 7,684
Proudfoot PLC (a) 100,000 58
Surrey Metro Savings Credit Union (non-vtg.) 560,000 4,501
Takefuji Corp. 50,000 2,536
WSFS Financial Corp. (a) 573,500 11,470
120,466
INSURANCE - 6.4%
Allmerica Financial Corp. 296,000 15,577
Amerus Life Holdings, Inc. 823,332 28,302
Assurances Banque Populaire SA 3,597 391
Blanch E.W. Holdings, Inc. 500,000 16,875
Centris Group, Inc. 253,000 5,566
Citizens Corp. 207,300 5,662
Commerce Group, Inc. 1,282,200 41,752
Cotton State Life & Health Insurance Co. 249,450 3,898
Desjardins-Laurentian Financial Corp. Class A (sub-vtg.) 200,100
2,543
FBL Financial Group, Inc. Class A 121,000 4,757
FPIC Insurance Group, Inc. (a) 208,300 5,416
FairFax Financial Holdings Ltd. rights 12/31/07 (a) 1,117,900 838
Farm Family Holdings, Inc. (a)(d) 525,300 16,810
Financial Industries Corp. (a) 132,700 2,521
First Central Financial Corp. (d) 420,500 8
Fishers International PLC 200,000 72
Fremont General Corp. 900,000 45,731
Frontier Insurance Group, Inc. 25,000 597
Gainsco, Inc. (d) 1,123,800 8,990
HCC Insurance Holdings Inc. 568,200 10,583
Hambro Insurance Services Group PLC Class A 300,000 505
Healthcare Recoveries, Inc. 200,000 4,275
Hogg Robinson Group 100,000 433
Independence Holding Co. 118,500 1,407
Independent Insurance PLC 75,000 1,415
Intercontinental Life Corp. (a)(d) 432,700 8,979
Investors Title Co. 82,000 2,070
IPC Holdings Ltd. (a) 822,500 24,572
Lambert Fenchurch Group PLC 1,350,000 2,343
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Lasalle Re Holdings Ltd. (d) 1,458,000 $ 49,390
Life USA Holding, Inc. (a)(d) 2,079,300 33,269
MMI Companies, Inc. (d) 1,402,649 34,277
Mobile America Corp. 252,800 3,508
NY Magic, Inc. 149,000 4,097
National Mutual Asia Ltd. 500,000 420
National Western Life Insurance Co. Class A (a) 153,100 14,889
Navigators Group, Inc. (a) 55,000 962
New Capital Reinsurance Corp. Holdings Ltd. (a) 150,000 252
PXRE Corp. (d) 725,063 24,562
Paula Financial (a) 57,100 1,356
Pembridge, Inc. (a) 500,000 6,905
Penn-America Group, Inc. 180,350 3,562
Philadelphia Consolidated Holding Corp. (a) 508,300 9,658
Protective Life Corp. 638,000 40,074
Renaissance Re Holdings Ltd. 588,100 24,553
SCPIE Holdings, Inc. (d) 762,300 21,726
Seibels Bruce Group, Inc. (a) 227,500 1,621
Stewart Information Services Corp. (d) 580,100 17,330
Stirling Cooke Brown Holdings Ltd. 304,500 7,536
Symons International Group, Inc. (a) 367,900 6,714
Terra Nova Holdings Ltd. (d) 1,427,200 36,037
Titan Holdings, Inc. 385,972 8,773
UICI (a)(d) 2,400,000 78,450
Unico America Corporation (d) 344,000 4,128
696,937
SAVINGS & LOANS - 0.8%
Bank United Corp. Class A 227,500 9,399
Crazy Woman Creek Bancorp., Inc. 30,000 476
Dime Financial Corp. (a) 249,800 7,213
First Home Bancorp., Inc. 86,666 2,557
Home Port Bancorp., Inc. 60,200 1,437
Independence Federal Savings Bank (d) 114,000 1,853
Iroquois Bancorp., Inc. 109,400 2,735
ML Bancorp, Inc. 357,700 10,507
Poncebank (d) 359,800 8,230
Washington Federal, Inc. 1,370,500 40,430
84,837
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - 0.2%
Charles JW Financial Services, Inc. (a) 183,234 $ 2,268
Daiko Shoken Business Co. 100,000 473
Globaly, Corp. 152,000 754
Harvey Norman Holdings Ltd. 400,000 1,700
London Pacific Group Ltd. 3,400,000 9,608
MFC Bancorp Ltd. 300,200 3,284
Nac Co. Ltd. 61,100 529
Norvestia OY Class B (d) 246,000 4,175
22,791
TOTAL FINANCE 1,515,542
HEALTH - 5.6%
DRUGS & PHARMACEUTICALS - 0.9%
Apothekers Cooperatie OPG 30,000 967
Astra AB sponsored ADR Series A 500,000 9,063
Fuji Pharmaceutical Co. Ltd. 200,000 630
Herbalife International, Inc.:
Class A (d) 895,966 21,951
Class B (non-vtg) 1,521,933 33,102
Hoshi Ito Co. Ltd. 126,000 491
Nature's Sunshine Products, Inc. 658,400 17,448
Riken Vitamin Oil Co. Ltd. 644,000 4,768
Technilab Pharma, Inc. (a)(e) 240,100 1,320
Twinlab Corp. (a) 227,900 6,267
96,007
MEDICAL EQUIPMENT & SUPPLIES - 2.8%
ADAC Laboratories (a) 889,000 18,780
Allegiance Corp. 318,700 10,218
Ballard Medical Products (d) 2,668,600 67,049
Biomet, Inc. 2,800,000 80,150
Cardiovascular Dynamics, Inc. (a) 73,000 310
Conmed Corp. (a) 43,000 938
Depuy, Inc. 547,800 14,859
Dianon Systems, Inc. (a) 160,500 1,465
Exactech, Inc. (a) 28,800 151
Focal, Inc. 100,000 1,425
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Getz Bros Co. Ltd., Japan 40,500 $ 203
HPSC, Inc. (a)(d) 315,000 1,693
ICU Medical, Inc. (a) 17,500 227
Invacare Corp. 232,900 4,658
Japan Engineering Consultants Co. Ltd. 239,000 734
Laser Industries Ltd. Ord. (a)(d) 824,100 22,560
Medstone International, Inc. (a)(d) 561,200 5,612
OEC Medical Systems, Inc. (a)(d) 1,122,000 24,824
Ocular Sciences, Inc. 242,500 6,457
Orthofix International (a)(d) 784,100 9,605
Oxford Instruments PLC 237,200 1,131
Respironics, Inc. (a) 500,000 11,500
Seton Healthcare Group PLC 25,000 216
Sofamor/Danek Group, Inc. (a) 200,300 12,544
Utah Medical Products, Inc. (a)(d) 838,000 6,128
303,437
MEDICAL FACILITIES MANAGEMENT - 1.9%
Advocat, Inc. (a) 251,400 2,090
Chronimed, Inc. (a) 327,500 3,643
Clinic Holdings Ltd. 502,174 214
Community Hospitals Group PLC Class L 300,000 1,926
Compdent Corp. (a)(d) 668,100 7,767
Corvel Corp. (a) 119,700 4,451
Cryolife, Inc. (a) 200,600 3,185
Foundation Health Systems, Inc. Class A (a) 175,800 4,560
Horizon Health Corp. (a) 197,550 4,198
Laboratory Specialists America, Inc. (a)(d) 331,100 1,697
Quest Diagnostics, Inc. (a)(d) 1,926,975 32,036
Quorum Health Group, Inc. (a) 482,100 12,052
Ramsay Health Care, Inc. (a) 195,000 682
Ramsay Managed Care Ltd. 1,198,300 1,725
Rehabcare Corp. (a)(d) 522,093 12,465
Res-Care, Inc. (a)(d) 900,000 25,931
Safeguard Health Enterprises, Inc. (a)(d) 367,700 3,034
Sonic Healthcare Ltd. (a) 150,000 185
Syncor International Corp. (a) 304,000 4,408
Trigon Healthcare, Inc. 485,900 12,087
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
United America Healthcare Corp. (a) 294,000 $ 772
Universal Health Services, Inc. Class B (a) 1,500,000 69,937
209,045
TOTAL HEALTH 608,489
HOLDING COMPANIES - 0.8%
DCC PLC 2,650,000 18,397
Fonciere Financiere et Part SA 25,000 1,186
Hunting Group PLC 1,283,100 4,506
Lagardere S.C.A. (Reg.) 150,000 5,306
Marine Wendel SA 74,976 9,179
Perry Group 550,000 1,514
Siparex (Societe de Particiations dans les Enterprises
Regionales en Expansion) 80,849 1,661
Union Assurancesfederale SA 300,088 39,673
VT Holding AS Class B 50,000 1,829
83,251
INDUSTRIAL MACHINERY & EQUIPMENT - 4.6%
ELECTRICAL EQUIPMENT - 1.8%
Alcatel Alsthom Compagnie Generale d'Electricite
SA sponsored ADR 250,000 6,516
Alpine Oil Services Corp. (a) 600,000 478
Aichi Electric Co. Ltd. 452,000 961
American Power Conversion Corp. (a) 1,000,000 26,187
BMC Industries, Inc. 515,000 8,369
Bairnco Corp. (d) 900,900 9,178
Blick PLC Class L 600,000 2,960
C&D Technologies, Inc. 37,400 1,828
Chase Corp. 183,600 2,662
Cherry Corp. Class A (a) 158,100 2,411
Choride Group PLC 400,000 278
Cobra Electronics Corp. (a)(d) 524,700 3,706
Communications Systems, Inc. (d) 658,500 11,853
Delco Remy International, Inc. Class A 425,000 5,366
Denyo Co. Ltd. 278,000 1,673
Emcee Broadcast Products, Inc. (a) 178,500 547
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Electro Rent Corp. (a) 90,000 $ 3,465
Fuji Heavy Industries Ltd. 200,000 740
Genlyte Group, Inc. (a) 308,900 5,483
Glenayre Technologies, Inc. (a) 110,000 1,451
Holophane Corp. (a) 338,900 8,091
Hughes Supply, Inc. 788,900 25,738
IEC Electronics Corp. (a)(d) 624,400 7,961
Inaba Denkisangyo Co. Ltd. 600,000 6,617
Noma Industries Ltd. Class A (e) 350,000 1,527
NovAtel, Inc. 175,000 1,269
QPL International Ltd. Ord. 1,000,000 339
Rofin Sinar Technologies, Inc. (a) 162,600 2,053
Siebe, PLC 350,000 5,974
Twentsche Kabel Holding NV 25,704 1,240
Valley Forge Corp. (d) 405,000 5,467
Vertex Communications Corp. (a)(d) 508,700 12,527
Woodhead Industries, Inc. (d) 539,000 9,971
Yaesu Musen Co. Ltd. 75,000 467
Yurtec Corp. 1,073,000 7,353
192,706
INDUSTRIAL MACHINERY & EQUIPMENT - 2.7%
AG Associates, Inc. (a) 147,900 592
Amadasonoike Co. Ltd. 200,000 567
Astec Industries, Inc. (a) 90,000 1,462
AVTEAM, Inc. Class A (a) 100,000 975
Baldwin Technology, Inc. Class A (a) 285,900 1,412
Brammer PLC Class L 50,000 464
CPAC, Inc. (a)(d) 733,800 7,384
Columbus McKinnon Corp. 311,100 7,078
Control Devices, Inc. (a) 266,666 3,800
DT Industries, Inc. (d) 600,000 21,375
Domnick Hunter Group PLC Class L (a) 65,000 322
Fansteel Inc. (a)(d) 859,900 6,879
Fuji Oozx, Inc. 160,000 367
Fukushima Industries Corp. 25,000 207
Gardner Denver Machinery, Inc. (a) 711,500 15,208
Gehl Co. (a)(d) 608,900 11,645
Glory Ltd. 13,000 221
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Hallmark Technologies, Inc. (a) 39,200 $ 350
Hardinge, Inc. 314,300 10,372
IDEX Corp. 1,283,600 43,001
Kaydon Corp. 780,000 27,056
KCI (Konecranes International) 114,000 3,911
KCI (Konecranes International) (e) 118,000 4,048
Laperriere & Verreault Inc. 50,000 163
Lawson Products, Inc. 310,300 9,309
Linx Printing Technology 100,000 229
Makino Milling Machine Co. Ltd. 25,000 173
Mars Engineering Corp. 58,600 452
Mettler-Toledo International, Inc. 75,000 1,350
New Holland NV 1,386,500 34,922
Oilgear Co. 37,800 510
P&F Industries, Inc. Class A (a) 97,000 679
Powerscreen International PLC 3,500,000 14,808
Rauma OY 150,000 2,221
Regal-Beloit Corp. 806,000 24,331
Sansei Transport 721,000 2,527
Shin Nippon Machinery Co. Ltd. 445,000 789
Specialty Equipment Companies, Inc. (a) 548,000 9,316
Speizman Industries, Inc. (a)(d) 250,000 1,375
T B Wood's Corp. (d) 419,400 8,676
Trident International, Inc. (a) 70,000 1,006
Twin Disc, Inc. (d) 282,600 8,814
Wakita & Co. Ltd. 545,000 3,288
293,634
POLLUTION CONTROL - 0.1%
Met-Pro Corp. 193,500 2,999
NSC Corp. (d) 550,400 1,101
TETRA Technologies, Inc. (a) 165,500 3,538
Weston (Roy F.), Inc. Class A (a)(d) 393,800 1,280
8,918
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 495,258
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 5.6%
BROADCASTING - 0.8%
Ackerley Communications, Inc. 43,800 $ 714
Advanced Communication Systems, Inc. 63,000 594
Canwest Global Communications Corp.:
(sub-vtg.) 1,400,006 22,074
(non-vtg.) 111,000 1,746
Capital Radio PLC 400,000 3,600
Cogeco, Inc. (d) 1,388,800 11,450
Cogeco Cable, Inc. (d) 794,400 7,341
Matav-Cable System Media Ltd. sponsored ADR (a) 276,500 4,735
Moffat Communications Ltd. 925,000 10,073
Prime Television Ltd. 1,501,767 3,243
P4 Radio Hele Norge SA 100,000 751
Radiomutuel, Inc. Class A 350,000 2,405
Radio Pacific 300,000 657
Scottish Radio Holdings, Inc. 200,000 1,281
Scottish Television PLC 275,000 2,920
Southern Cross Broadcasting Australia Ltd. 375,742 1,739
TCA Cable TV, Inc. 185,000 8,649
Tele-Metropole, Inc. Class B (a) 339,000 7,395
91,367
ENTERTAINMENT - 1.2%
Airtours PLC 300,000 2,073
Alliance Communications Corp. Class B (non-vtg.) (a) 221,500 2,663
Alliance Communications Corp. Class B (non-vtg.) (a)(e) 157,200
1,890
Broendby IF, Class B 5,000 323
Compagnie des Alpes 25,000 652
European Leisure PLC 550,000 1,150
Granada Group PLC 100,000 1,573
Harveys Casino Resorts 140,500 3,188
King World Productions, Inc. (d) 1,853,400 109,698
Scientific Games Holdings Corp. (a) 211,100 4,169
Shingakukai Co. Ltd. 83,000 395
Sydney Aquarium Ltd. 59,450 146
Television & Media Services Ltd. 1,750,000 1,728
Vaughns, Inc. (a) 201,100 1,207
130,855
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.0%
Hamleys PLC 150,000 $ 632
Swing-n-Slide Corp. (a) 252,515 1,010
1,642
LODGING & GAMING - 0.4%
Choice Hotels Skandanavia ASA (a) 25,000 73
Jurys Hotel Group PLC 618,400 4,091
La Quinta Motor Inns, Inc. 250,000 5,328
Millennium & Copthorne Hotels PLC 150,000 1,103
Rio Hotel & Casino, Inc. (a) 123,100 3,170
Riviera Holdings Corp. (a) 147,200 2,153
Ryan Hotels Ltd. (d) 4,912,979 5,497
Sholodge, Inc. (a) 312,700 3,752
Scandic Hotels AB (a)(e) 100,000 2,515
Sun International Hotels Ltd. Ord. (a) 188,600 7,214
WMS Industries, Inc. 169,900 4,152
39,048
PUBLISHING - 1.7%
Adscene Group PLC Class L 500,000 1,225
A-Pressen AS, Series A 75,000 1,433
Asia Securities Printing Co. Ltd. 25,000 246
Bemrose 125,000 915
CMP Media, Inc. Class A 79,200 1,356
Creative Publishing PLC (a) 1,400,000 3,773
Dun & Bradstreet Corp. 2,000,000 63,750
Fine Art Developments PLC Class L 1,400,000 4,117
International Business Communications Holdings PLC Class L 1,100,000
6,828
Ilkka OY II 10,000 298
Independent Newspapers PLC 250,000 1,572
Johnston Press PLC 800,000 2,725
Journal Register Co. 1,077,100 21,205
Kauppakaari OY 75,000 1,205
Roto Smeets De Boer NV 65,000 2,490
Schibsted AS, Series B 475,000 7,760
Sterling Publishing Group PLC Class L (a) 1,000,000 294
Talentum OY Class B (d) 500,000 7,222
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - CONTINUED
VLT AB Class B 55,500 $ 1,163
WSOY (Werner Soderstrom Osakeyhtio) Class B (d) 750,000 33,446
World Color Press, Inc. (a) 704,800 19,382
182,405
RESTAURANTS - 1.5%
Applebee's International, Inc. 125,000 2,117
ARK Restaurants Corp. (a)(d) 200,000 2,525
Benihana, Inc. (a)(d) 362,500 4,486
Benihana, Inc. Class A (a) 244,800 2,938
Bertucci's, Inc. (a)(d) 500,400 3,034
Break For The Border Group PLC Class L 812,500 690
Consolidated Products, Inc. (a)(d) 1,050,225 16,804
Cooker Restaurant Corp. 80,600 720
Elxsi Corp. (a)(d) 286,000 3,039
Flanigans Enterprises, Inc. (a)(d) 90,700 657
IHOP Corp. (a)(d) 712,500 25,472
Logan's Roadhouse, Inc. (a) 120,800 2,205
M Corp, Inc. (d) 272,500 328
Morton's Restaurant Group, Inc. (a) 144,300 2,841
Nathans Famous, Inc. (a)(d) 350,500 1,314
Restaurant Brands NZ Ltd. 1,942,000 1,703
Ryan's Family Steak Houses, Inc. (a) 535,000 4,447
Sbarro, Inc. 119,000 3,488
Sonic Corp. (a)(d) 1,290,000 36,442
Tricon Global Restaurants, Inc. 1,200,000 32,700
Wendy's International, Inc. 750,000 16,734
Yoshinoya D&C Co. Ltd. Ord. 25 236
164,920
TOTAL MEDIA & LEISURE 610,237
NONDURABLES - 4.5%
AGRICULTURE - 0.2%
Fresh Del Monte Produce, Inc. 400,000 5,400
IAWS Group PLC 1,504,300 5,251
IAWS Group PLC Class A (Reg.) 342,400 1,174
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
AGRICULTURE - CONTINUED
Nutreco Holding NV (a) 125,000 $ 3,388
Sylvan Foods Holdings, Inc. (a)(d) 619,400 7,626
22,839
BEVERAGES - 0.1%
Aquapenn Spring Water, Inc. 278,100 3,615
Andres Wines Ltd. Class A 75,000 1,262
Shikoku Coca-Cola Bottling Co., Ltd. 53,600 562
Todhunter International, Inc. (d) 261,000 2,577
8,016
FOODS - 0.5%
Benson's Crisps PLC 1,900,000 1,257
Corn Products International, Inc. 279,200 8,934
Crean Ltd. (James) 50,000 106
Devro PLC 200,000 1,290
Fujicco Co. Ltd. 50,000 473
Hazlewood Foods PLC Ord. 350,000 1,052
Imperial Holly Corp. 276,764 2,387
Keebler Foods Co. 13,200 363
Laennen Tehtaat OY 50,000 686
Man (E D & F) Group PLC 750,000 3,124
Perkins Foods PLC 2,700,400 4,676
Riviana Foods, Inc. 713,700 14,631
Robert Wiseman Dairies PLC Class L 300,000 1,093
Raisio Group PLC 65,108 10,462
Saputo Group, Inc. (a)(e) 20,000 361
Sardus AB (a) 164,200 1,437
Shoei Foods Corp. 200,000 662
Smucker (J.M.) Co. 22,200 569
Super Coffeemix Manufacturing Ltd. 55,000 10
Thorn Apple Valley, Inc. 100,100 1,464
Tokatsu Foods Co. Ltd. 50,000 118
Western Beef, Inc. (a)(d) 378,500 3,028
Worthington Foods, Inc. 83,200 1,102
59,285
HOUSEHOLD PRODUCTS - 1.5%
Alberto-Culver Co. Class A 1,021,900 26,186
American Safety Razor Co. (a)(d) 1,151,800 24,620
BeautiControl Cosmetics, Inc. 279,000 2,180
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - CONTINUED
Carson, Inc. Class A (a) 217,000 $ 1,600
Comany, Inc. 50,000 355
DSG International Ltd. (a)(d) 789,000 6,509
Del Laboratories, Inc. 255,300 9,446
Helen of Troy Corp. (a)(d) 2,721,400 41,501
House of Rose Co. Ltd. 32,000 189
IWP International 450,000 2,033
IWP International (UK Reg.) 800,000 3,594
Jean Philippe Fragrances, Inc. (a) 373,800 2,617
Mayborn Group PLC 25,000 43
Mcbride PLC 500,000 1,470
Nutramax Products, Inc. (a)(d) 267,500 3,511
Oriflame International SA 398,700 2,638
Paterson Zochonis PLC Class L 25,000 182
Premark International, Inc. 805,000 22,490
Scholl PLC 100,000 422
Stephan Co. (d) 412,200 5,513
Swallowfield PLC Class L 50,000 186
York Group, Inc. 120,000 2,730
Yule Catto Ord. 200,000 993
Zotefoams PLC Class L 125,000 418
161,426
TOBACCO - 2.2%
BAT Industries PLC Ord. 2,500,049 22,788
Gallaher Group PLC sponsored ADR 4,675,000 108,109
Gallaher Group PLC 12,250,000 72,838
Imperial Tobacco Group PLC 200,000 1,460
RJR Nabisco Holdings Corp. 500,000 15,750
Standard Commercial Corp. (d) 1,038,700 17,009
237,954
TOTAL NONDURABLES 489,520
PRECIOUS METALS - 0.5%
Aurora Gold Ltd. (a) 150,000 192
De Beers Consolidated Mines Ltd. ADR 1,000,000 21,687
Great Central Mines NL 500,000 689
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
PRECIOUS METALS - CONTINUED
Industrias Penoles SA 4,700,000 $ 17,648
Normandy Mt. Leyshon Ltd. 620,000 701
Orogen Minerals Ltd. GDR (e) 265,000 5,830
Prime Resources Group, Inc. 100,000 776
Richmont Mines, Inc. (a) 600,000 1,402
Ross Mining NL 1,105,122 591
Sons of Gwalia NL 816,000 2,434
51,950
RETAIL & WHOLESALE - 6.1%
APPAREL STORES - 1.9%
Baker (J.), Inc. (d) 708,600 3,189
Buckle, Inc. (The) (a) 500,000 16,750
Charle Co. Ltd. 50,000 433
Chateau Stores of Canada Ltd. Class A (d) 192,900 1,358
Chicos Fas, Inc. (a)(d) 801,100 5,658
Claire's Stores, Inc. 1,713,525 30,415
Club Monaco, Inc. (a) 150,000 1,185
Dress Barn, Inc. (a) 708,300 19,036
Dylex Ltd. (a) 25,000 91
Footstar, Inc. (a)(d) 1,527,804 40,869
Gymboree Corp. (a)(d) 1,289,700 34,016
ICC International PLC (For. Reg.) 50,000 50
Kenneth Cole Productions, Inc. Class A (a)(d) 524,500 8,916
One Price Clothing Stores, Inc. (a)(d) 796,600 1,543
Pantorama Industries, Inc. (a) 100,000 86
Primesource Corp. 235,600 2,268
Ross Stores, Inc. 1,061,900 34,512
S & K Famous Brands, Inc. (a)(d) 506,600 6,451
San Francisco Boutiques, Inc. Class B (sub-vtg) (a)(d) 136,500 1,364
Shirmax Fashions Ltd. (a) 350,000 878
209,068
APPLIANCE STORES - 0.1%
Hirsch International Corp. Class A (a)(d) 639,800 13,276
DRUG STORES - 0.2%
Jean Coutu Group, Inc. Class A (d) 1,861,000 21,288
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - 1.2%
Algonquin Mercantile Corp. 24,700 $ 81
Allders PLC 200,000 791
Arnotts PLC 129,387 1,098
BJ'S Wholesale Club, Inc. 1,258,100 37,743
Consolidated Stores Corp. (a) 1,056,900 43,465
Daiwa Co. Ltd. 233,000 789
Homebase, Inc. (d) 2,155,400 14,549
Lechters, Inc. (a) 782,800 3,963
Nikku Sangyo Co. Ltd. 39,000 197
Shopko Stores, Inc. (a) 383,300 9,774
Stein Mart, Inc. (a) 518,600 13,062
Thanks Japan Corp. (a) 25,000 128
125,640
GROCERY STORES - 0.7%
Brake Brothers PLC 30,000 335
Budgens PLC 100,000 113
Food Lion, Inc. Class A 2,975,000 26,589
Hemkopskedjan AB, Series B (a) 200,000 2,441
Iceland Group PLC 5,000,000 9,638
Metro Richelieu, Inc. Class A (d) 2,490,000 27,371
Somerfield PLC 2,500,000 10,087
Watson & Philip PLC Class L 25,000 224
Whittard of Chelsea PLC 485,000 1,584
78,382
RETAIL & WHOLESALE, MISCELLANEOUS - 2.0%
Advanced Marketing Services, Inc. (a) 53,500 823
Art Vivant Co. Ltd. 50,000 571
Blair Co. (d) 621,400 11,107
Brookstone, Inc. (a)(d) 754,600 8,961
Cameron Ashley, Inc. (a) 416,700 6,980
Cole National Corp. Class A (a)(d) 1,068,500 35,394
Daisytek International Corp. (a) 42,500 1,997
Fabri-Centers of America, Inc. (a):
Class A (d) 575,250 14,022
Class B (non-vtg) 1,120,600 24,513
Farepak PLC 200,000 614
Finlay Enterprises, Inc. (a) 318,100 7,316
Finish Line, Inc. Class A (d) 1,796,300 22,903
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Flying Flowers Ltd. unit 125,000 $ 1,005
Friedmans, Inc. Class A (a) 541,800 7,619
Grafton Group PLC 50,000 890
Heiton Holdings Ltd. 1,178,143 3,838
Land's End, Inc. (a) 470,000 18,477
Partridge Fine Arts PLC 150,000 208
Piercing Pagoda, Inc. (a)(d) 603,200 18,096
Rex Stores Corp. (a) 170,000 1,721
Sound Advice, Inc. (a)(d) 362,800 431
Sound Advice, Inc. warrants 6/14/99 (a) 11,205 -
US Vision, Inc. 75,000 722
Viking Office Products, Inc. (a) 1,000,000 23,250
211,458
TRADING COMPANIES - 0.0%
Mitani Sangyo Co. Ltd. 51,000 175
TOTAL RETAIL & WHOLESALE 659,287
SERVICES - 3.1%
ADVERTISING - 0.1%
Metromail Corp. (a) 445,800 7,328
More Group PLC 300,000 3,489
Shandwick Ord. 750,000 674
11,491
EDUCATIONAL SERVICES - 0.0%
Childrens Comprehensive Services, Inc. (a) 69,100 1,192
Coutts Consulting Group PLC Class L 250,000 106
Educational Medical, Inc. (a) 12,000 120
Institution of General Education 220,000 1,179
Up, Inc. 288,000 964
3,561
LEASING & RENTAL - 0.2%
Aaron Rents, Inc. Class B 464,800 8,541
Globe Business Resources, Inc. (a) 202,000 3,888
Gowrings PLC 25,000 38
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
LEASING & RENTAL - CONTINUED
Nishio Rent All Co. Ltd. 500,000 $ 5,199
PLM AB 100,000 1,418
Rakentajain Konevuokraamo OY Class B 100,000 1,011
20,095
PRINTING - 1.0%
Adare Printing Group PLC (Ireland) 360,000 3,622
Adare Printing Group PLC 640,454 6,486
Devon Group, Inc. (a)(d) 678,600 29,689
Paris Corp. 90,000 143
Paxar Corp. (a) 160,700 2,290
Pubco Corp. (a)(d) 319,500 3,355
Reynolds & Reynolds Co. Class A 3,020,100 60,024
Unidigital, Inc. (a) 33,200 199
Valassis Communications, Inc. (a) 153,700 5,303
Wyndeham Press Group PLC 220,000 830
111,941
SERVICES - 1.8%
BA Merchant Services, Inc. Class A (a)(d) 902,300 15,226
Barbers Hairstyling for Men, Inc. (a) 29,550 277
Benesse Corp. 2,500 78
Borg Warner Security Corp. (a) 206,200 3,776
Caldwell Partners International Class A (non-vtg.) 600,000 2,886
Candle Australia Ltd. 125,009 231
Childtime Learning Centers, Inc. (a) 32,400 494
Chodai Co. Ltd. 121,500 656
Concord Career Colleges, Inc. (a) 250,000 469
Corporate Services Group PLC 300,000 1,142
Craig (Jenny), Inc. (a)(d) 1,048,500 5,832
Diversified Corporate Resources, Inc. (a)(d) 253,200 2,216
European Marketing Information Services NV (EMIS) 50,000 194
Eyeful Home Technology, Inc. 106,000 476
Failure Group, Inc. (a) 241,400 2,233
Fugro NV 130,100 3,936
Gardiner Group PLC 250,000 98
Halma PLC ORD 1,500,000 2,646
ICT Group, Inc. (a) 108,500 407
ICTS International NV (a) 150,000 1,050
Kelly Services, Inc. Class A 157,500 5,178
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
LCS Industries, Inc. 156,200 $ 2,284
Lamalie Associates, Inc. 95,900 1,630
Lawyers Title Corp. (d) 787,500 27,759
Morgan & Banks Ltd. 650,000 4,278
Norrell Corp. GA 250,000 4,969
Olsten Corp. 823,400 12,145
OroAmerica, Inc. (a)(d) 414,200 1,942
Pittston Co. (Brinks Group) 418,500 16,975
Programming & Systems, Inc. (a)(d) 313,300 -
Railtrack PLC Class L 500,000 7,951
Rathbone Brothers PLC 50,000 355
Rentokil Initial PLC 5,500,000 25,762
Right Management Consultants, Inc. (a)(d) 659,400 7,995
Seattle FilmWorks, Inc. (a)(d) 1,600,000 14,800
Stanley Technology Group, Inc. (a)(d) 300,000 2,113
TSB International, Inc. (a) 50,000 213
Tanabe Management Consulting Co. Ltd. 112,000 375
Thomas Group (a) 183,400 1,742
Wesco, Inc. 65,700 269
Winston Resources, Inc. (a)(d) 191,600 982
Zebra Technologies Corp. Class A (a) 123,700 3,433
187,473
TOTAL SERVICES 334.561
TECHNOLOGY - 11.0%
COMMUNICATIONS EQUIPMENT - 0.6%
Andrew Corp. (a) 1,200,000 33,000
Aspect Telecommunications Corp. (a) 389,500 9,689
Cabletron Systems, Inc. (a) 150,000 2,166
Circuit Systems, Inc. (a)(d) 393,000 1,707
IPC Information Systems, Inc. 365,500 7,401
Ktk Telecommunications Engineering Co. Ltd. 125,000 650
Kyosan Electric Manufacturing Co. Ltd. 400,000 1,137
Microlog Corp. (a) 182,500 1,095
Norstan, Inc. (a) 399,000 9,377
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT - CONTINUED
Trans Lux Corp. (d) 56,100 $ 813
67,035
COMPUTER SERVICES & SOFTWARE - 5.2%
Acxiom Corp. (a) 85,000 1,445
Affiliated Computer Services, Inc. Class A (a) 1,250,012 36,797
Alternative Resources Corp. (a) 36,400 728
American Business Information, Inc. (a)(d) 2,062,100 25,776
American Business Information, Inc. Class A (a) 1,990,600 24,385
Award Software International, Inc. (a)(d) 362,000 3,575
BancTec, Inc. (a)(d) 1,651,900 42,227
Black Box Corp. (a)(d) 1,300,000 42,250
Boole & Babbage, Inc. (a)(d) 1,029,137 33,061
Cimatron Ltd. (a) 62,500 203
CI Technologies Group Ltd. 1,000,000 1,344
Computer Power Group Ltd. 578,256 1,411
Daitec Co. Ltd. 178,800 3,253
Data Research Associates, Inc. (a) 261,500 3,465
Data Systems & Software (a)(d) 416,000 1,846
ECI Telecom Ltd. 1,353,000 33,825
EIS International, Inc. (a) 130,900 883
Edusoft Ltd. (a)(d) 452,900 3,170
Enea Data AB, Series B Free shares (d) 110,000 4,747
Equitrac Corp. (a)(d) 348,900 6,106
Eurodis Electron PLC 200,000 525
FDP Corp. (d) 574,300 5,887
FactSet Research Systems, Inc. (a) 107,500 3,010
Fair, Isaac & Co., Inc. 349,200 10,280
First Data Corp. 2,700,000 82,687
GSE Systems, Inc. (a)(d) 254,500 573
Group 1 Software, Inc. (a) 165,400 1,199
Hartco Enterprises, Inc. 269,800 2,391
Hummingbird Communications Ltd. (a) 25,000 768
Japan Process Development Co. Ltd. 25,000 124
Kewill Systems PLC 250,000 2,634
MARC, Inc. (d) 294,500 5,264
MPSI Systems, Inc. (a) 135,000 472
Mapix, Inc. 465,600 6,053
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Melita International Corp. 742,500 $ 7,332
MicroAge, Inc. 140,000 1,531
Misys PLC Ord. 200,000 7,628
Mysoftware Co. (a)(d) 388,200 1,165
New Dimension Software Ltd. (a)(d) 658,000 16,902
Oracle Corp. (a) 100,000 2,325
Orcad, Inc. (a)(d) 414,800 3,837
Project Software & Development, Inc. (a) 75,000 1,687
Rainbow Technologies, Inc. (a)(d) 494,100 12,229
Remedy Corp. 25,000 391
SPSS, Inc. (a)(d) 861,500 19,276
SPS Transaction Services, Inc. (a) 518,600 12,544
Sherwood Computers Services PLC Class L 130,000 1,179
Symantec Corp. (a) 2,534,000 59,866
Synopsys, Inc. (a) 33,191 1,027
TECNOST Spa 1,000,000 2,374
TT Teito OY 150,000 16,249
Verisign, Inc. 2,300 32
Walsh International, Inc. (a) 380,800 3,903
563,841
COMPUTERS & OFFICE EQUIPMENT - 1.3%
Advanced Digital Information Corp. (a)(d) 929,300 16,089
Amplicon, Inc. 240,800 4,274
Creative Technology Ltd. (a) 406,400 7,747
Cybex Corp. (a)(d) 328,400 7,553
Eltron International, Inc. (a)(d) 583,100 17,129
Encad, Inc. 66,000 1,584
Equinox Systems, Inc. (a) 93,400 1,775
Genicom Corp. (a)(d) 723,500 7,597
Intest Corp. (d) 397,500 2,484
Kronos, Inc. (a) 122,900 3,825
Madge NV 18,800 93
Maezawa Kasei Industries Co. Ltd. 115,700 1,458
Nam Tai Electronics, Inc. warrants 11/24/00 (a) 140,000 0
Nam Tai Electronics, Inc. 440,000 6,902
Pomeroy Computer Resources, Inc. (a) 35,100 625
Quantum Corp. (a) 1,250,000 30,469
Raster Graphics, Inc. (a)(d) 550,000 2,475
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
SED International Holdings, Inc. (a)(d) 930,000 $ 10,463
Scan-Optics, Inc. (a)(d) 455,000 4,152
Seagate Technology (a) 700,000 16,231
Skillgroup PLC 175,000 652
Western Digital Corp. (a) 250,000 4,672
148,249
ELECTRONIC INSTRUMENTS - 0.5%
BTU International, Inc. (a)(d) 392,300 2,011
DSP Technology, Inc. (a)(d) 160,800 1,316
Elscint Ltd. (a)(d) 1,167,200 7,806
HACH Co. Class A (non-vtg.) 14,000 121
Hurco Companies, Inc. (a)(d) 364,028 2,412
Lam Research Corp. (a) 201,300 4,592
Mesa Laboratories, Inc. (a) 128,400 754
Modern Controls, Inc. 271,800 2,956
Nanometrics, Inc. (a)(d) 548,200 4,660
ORBIT/FR, Inc. 17,600 286
Reliability, Inc. (d) 320,400 3,284
Sanderson Electronics PLC 200,000 274
Tech-Sym Corp. (a) 216,800 5,623
Toko Seiki Co. Ltd. 257,000 810
Wireless Telecom Group, Inc. (d) 1,565,100 9,684
X-Rite, Inc. 451,000 6,990
53,579
ELECTRONICS - 3.3%
AVX Corp. 185,700 3,784
Actel Corp. (a) 911,800 12,537
Align Rite International, Inc. (a)(d) 443,000 6,424
Apollo Electronics Co. Ltd. 100,000 803
Asia Electronics Holdings Co. Inc. 162,000 1,276
ASM Pacific Technology Ltd. 4,400,000 2,475
Atmel Corp. (a) 730,000 11,817
Audiovox Corp. Class A (a) 366,000 2,493
Benchmarq Microelectronics, Inc. (a) 245,400 2,715
Benefon Oy 10,000 123
Bergman & Beving AB Class B Free shares 600,000 10,134
Continental Circuits Corp. (a)(d) 723,450 10,128
Corcom, Inc. (a)(d) 381,400 3,361
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Dallas Semiconductor Corp. (d) 1,500,000 $ 70,875
Diodes, Inc. (a)(d) 432,900 3,896
Daidensha Co. Ltd. 76,000 498
General Semiconductor, Inc. (a)(d) 1,848,550 22,067
Griffon Corp. (a)(d) 2,885,500 43,102
Incap OY 2,000 23
Kingboard Chemical Holdings Ltd. 3,440,000 445
Kingboard Chemical Holdings Ltd. warrants 12/31/98 (a) 688,000 20
Methode Electronics, Inc. Class A 1,399,500 20,118
Micro Linear Corp. (a)(d) 1,150,000 8,984
Microchip Technology, Inc. (a) 50,000 1,155
Microsemi Corp. (a)(d) 870,800 17,634
Nichicon Corp. 50,000 492
NU Horizons Electronics Corp. (a) 352,500 2,357
Pacific Aerospace & Electronics, Inc. (a) 35,000 158
Pioneer Standard Electronics, Inc. 176,100 2,454
Power Intergrations, Inc. 100,000 1,225
Quality Semiconductor, Inc. (a) 310,900 1,535
Roxboro Group PLC 50,000 167
Sedgemoor PLC 1,000,000 833
Siliconix, Inc. (a) 179,300 7,620
Stoneridge, Inc. 494,700 7,421
Taitron Components, Inc. Class A (a)(d) 545,400 1,295
Techtronic Industries Co. Ord. 2,000,000 432
Tower Semiconductor Ltd. 512,500 5,253
Unitrode Corp. (a) 642,500 11,645
Video Display Corp. (a)(d) 213,600 2,002
Varitronix International Ltd. 2,447,000 4,081
Wongs Industrial International 7,250,000 1,097
Wongs International Holdings warrants 5/31/00 (a) 1,000,000 16
Zero Corp. 422,300 10,821
Zilog, Inc. (a)(d) 2,023,400 38,824
356,615
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
PHOTOGRAPHIC EQUIPMENT - 0.1%
Imation Corp. (a) 850,400 $ 11,853
Nihon Jumbo Co. Ltd. 10,000 101
Photo Me International PLC 150,000 399
12,353
TOTAL TECHNOLOGY 1,201,672
TRANSPORTATION - 4.2%
AIR TRANSPORTATION - 2.1%
America West Holding Corp. Class B (a) 1,037,900 22,639
ASA Holdings, Inc. (d) 1,800,000 62,100
CHC Helicopter Corp. Class A 250,000 1,795
Comair Holdings, Inc. 1,259,300 35,497
Kitty Hawk, Inc. (a) 25,000 503
Midwest Express Holdings, Inc. (a)(d) 636,800 26,467
National Express Group PLC Class L 50,000 577
Transat AT, Inc. (a) 250,000 1,838
Viad Corp. 3,750,000 74,531
225,947
RAILROADS - 0.7%
Canadian National Railway Co. 1,475,000 73,672
SHIPPING - 0.0%
Brovig Offshore AS 50,000 395
Farstad Shipping ASA 250,000 1,350
Isewan Terminal Service Co. Ltd. 442,000 1,177
Meiko Kaiun Kaisha Ltd, Nagoya 109,000 452
Ocean Wilsons Holding PLC 350,000 532
Tokyo Kisen Co. Ltd. 205,000 630
Ugland International Holdings PLC (UIH) 262,800 341
4,877
TRUCKING & FREIGHT - 1.4%
Air Express International Corp. 1,335,200 35,466
Arnold Industries, Inc. (d) 1,934,400 33,852
Baltrans Holdings Ltd. 1,500,000 169
Boyd Brothers Transportation, Inc. (a) 183,800 1,792
Cannon Express, Inc. Class A (a)(d) 314,200 3,260
Circle International Group, Inc. 394,500 8,580
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - CONTINUED
Frozen Food Express Industries, Inc. 130,500 $ 1,305
Daiwa Logistics Co. Ltd. 252,000 1,586
Goodfellow, Inc. (d) 325,000 2,278
Hub Group, Inc. Class A (a) 44,500 1,168
Landstar System, Inc. (a) 53,100 1,387
Mark VII, Inc. 317,000 4,993
Marten Transport Ltd. (a)(d) 444,000 6,438
MTL, Inc. (a)(d) 452,000 12,374
Old Dominion Freight Lines, Inc. (a)(d) 512,000 7,808
P.A.M. Transportation Services, Inc. (a) 169,500 1,631
Pittston Co. (Burlington Group) 659,100 14,171
Sakai Moving Service Co. Ltd. 50,700 399
USFreightways Corp. 477,600 16,716
155,373
TOTAL TRANSPORTATION 459,869
UTILITIES - 3.0%
CELLULAR - 0.6%
Century Telephone Enterprises, Inc. 1,000,000 52,750
Europolitan Holdings AB (a) 100,000 4,500
Smartone Telecommunications Holdings Ltd. 1,370,000 2,710
Vodafone Group PLC 425,000 3,199
63,159
ELECTRIC UTILITY - 0.3%
Bangor Hydro-Electric Co. 45,600 299
Central Maine Power Co. 596,900 9,886
Maine Public Service Co. 25,000 323
National Grid Co. PLC 960,800 4,536
Niagara Mohawk Power Corp. (a) 411,800 4,453
Scottish Power PLC ADR 300,000 2,575
Scottish Hydro-Electric PLC Ord. 1,250,000 11,169
33,241
GAS - 0.3%
Aquila Gas Pipeline Corp. 1,025,900 10,900
Atrion Corp. 18,000 239
Midcoast Energy Resources, Inc. 224,500 5,079
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - CONTINUED
Otaki Gas Co. Ltd. 123,000 $ 365
Southwestern Energy Co. (d) 1,638,600 18,025
34,608
TELEPHONE SERVICES - 0.2%
Atlantic Tele-Network, Inc. (a)(d) 490,920 4,541
Davel Communications Group, Inc. (a)(d) 364,300 7,787
Emerging Communications, Inc. (d) 1,227,300 8,284
20,612
WATER - 1.6%
Brockhampton Holdings PLC Class A (non-vtg.)(a) 3,200,000 5,227
Hyder PLC 5,800,000 93,796
South West Water PLC Ord. 112,200 1,706
Yorkshire Water PLC 10,000,000 77,265
177,994
TOTAL UTILITIES 329,614
TOTAL COMMON STOCKS
(Cost $6,629,504) 8,673,941
PREFERRED STOCKS - 0.2%
CONVERTIBLE PREFERRED STOCKS - 0.0%
CONSTRUCTION & REAL ESTATE - 0.0%
BUILDING MATERIALS - 0.0%
Bird Corp. $1.85 87,250 1,723
ENERGY - 0.0%
OIL & GAS - 0.0%
Goodrich Petroleum Corp., Series A, $8.00 76,200 655
TOTAL CONVERTIBLE PREFERRED STOCKS 2,378
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
FINANCE - 0.1%
BANKS - 0.1%
Bank Austria AG (New I) 135,912 $ 7,284
Bank Austria AG (New II) 66,664 3,593
10,877
NONDURABLES - 0.0%
FOODS - 0.0%
Chips AB OY (a) 5,000 365
UTILITIES - 0.1%
TELEPHONE SERVICES - 0.1%
Telecom Italia Mobile Spa de Risp 1,500,000 4,437
TOTAL NONCONVERTIBLE PREFERRED STOCKS 15,679
TOTAL PREFERRED STOCKS
(Cost $10,077) 18,057
CONVERTIBLE BONDS - 0.0%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (000S)
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Mercury Air Group, Inc. 7 3/4%, 2/1/06 B- $ 500 507
TECHNOLOGY - 0.0%
COMMUNICATIONS EQUIPMENT - 0.0%
Trans-Lux Corp. 7 1/2%, 12/1/06 - 535 613
TOTAL CONVERTIBLE BONDS
(Cost $1,211) 1,120
U.S. TREASURY OBLIGATIONS - 0.0%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000)
U.S. Treasury Bill, yield at date of purchase 5.16%, 4/30/98
(Cost $247) $ 250 $ 247
CASH EQUIVALENTS - 20.1%
SHARES
Taxable Central Cash Fund (b) 2,165,369,267 2,165,369
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.59%, dated
1/30/98 due 2/2/98 $ 18,358 18,349
TOTAL CASH EQUIVALENTS
(Cost $2,183,718) 2,183,718
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $8,824,757) $ 10,877,083
LEGEND
1. Non-income producing
2. At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.63%. 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. 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 $50,532,000 or
0.5% 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 77.7%
United Kingdom 6.3
Canada 4.2
Finland 1.4
Bermuda 1.3
Japan 1.2
Sweden 1.2
Denmark 1.1
France 1.0
Others (individually less than 1%) 4.6
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1998, the aggregate cost of investment securities for
income tax purposes was $8,825,201,000. Net unrealized appreciation
aggregated $2,051,882,000, of which $2,349,053,000 related to
appreciated investment securities and $297,171,000 related to
depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JANUARY 31, 1998 (UNAUDITED)
6.ASSETS 7. 8.
9.INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE 10. $ 10,877,083
AGREEMENTS OF $18,349) (COST $8,824,757) -
SEE ACCOMPANYING SCHEDULE
11.CASH 12. 754
13.FOREIGN CURRENCY HELD AT VALUE (COST $2,240) 14. 2,240
15.RECEIVABLE FOR INVESTMENTS SOLD 16. 76,086
17.RECEIVABLE FOR FUND SHARES SOLD 18. 28,665
19.DIVIDENDS RECEIVABLE 20. 7,677
21.INTEREST RECEIVABLE 22. 10,282
23.REDEMPTION FEES RECEIVABLE 24. 4
25.OTHER RECEIVABLES 26. 178
27. 28.TOTAL ASSETS 29. 11,002,969
30.LIABILITIES 31. 32.
33.PAYABLE FOR INVESTMENTS PURCHASED $ 118,446 34.
35.PAYABLE FOR FUND SHARES REDEEMED 55,422 36.
37.ACCRUED MANAGEMENT FEE 6,618 38.
39.OTHER PAYABLES AND ACCRUED EXPENSES 2,722 40.
41. 42.TOTAL LIABILITIES 43. 183,208
44.45.NET ASSETS 46. $ 10,819,761
47.NET ASSETS CONSIST OF: 48. 49.
50.PAID IN CAPITAL 51. $ 8,491,894
52.UNDISTRIBUTED NET INVESTMENT INCOME 53. 3,163
54.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 55. 272,499
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
56.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 57. 2,052,205
INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
58.59.NET ASSETS, FOR 430,342 SHARES OUTSTANDING 60. $ 10,819,761
61.62.NET ASSET VALUE AND REDEMPTION PRICE PER SHARE 63. $25.14
($10,819,761 (DIVIDED BY) 430,342 SHARES)
64.MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF 65. $25.92
$25.14)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
66.INVESTMENT INCOME 68. $ 46,058
67.DIVIDENDS (INCLUDING $6,864 RECEIVED FROM AFFILIATED
ISSUERS)
69.INTEREST 70. 56,486
71. 72. 102,544
73.LESS FOREIGN TAXES WITHELD 74. (3,411)
75. 76.TOTAL INCOME 77. 99,133
78.EXPENSES 79. 80.
81.MANAGEMENT FEE $ 32,337 82.
BASIC FEE
83. PERFORMANCE ADJUSTMENT 4,766 84.
85.TRANSFER AGENT FEES 9,504 86.
87.ACCOUNTING FEES AND EXPENSES 410 88.
89.NON-INTERESTED TRUSTEES' COMPENSATION 25 90.
91.CUSTODIAN FEES AND EXPENSES 595 92.
93.REGISTRATION FEES 859 94.
95.AUDIT 43 96.
97.LEGAL 26 98.
99.MISCELLANEOUS 35 100.
101. TOTAL EXPENSES BEFORE REDUCTIONS 48,600 102.
103. EXPENSE REDUCTIONS (644) 47,956
104.105.NET INVESTMENT INCOME 106. 51,177
107.REALIZED AND UNREALIZED GAIN (LOSS) 109. 110.
108.NET REALIZED GAIN (LOSS) ON:
111. INVESTMENT SECURITIES (INCLUDING REALIZED GAIN OF 476,181 112.
$53,939 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)
113. FOREIGN CURRENCY TRANSACTIONS (628) 114.
115. FUTURES CONTRACTS 57 475,610
116.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 117. 118.
ON:
119. INVESTMENT SECURITIES 145,835 120.
121. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (70) 145,765
122.123.NET GAIN (LOSS) 124. 621,375
125.126.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 127. $ 672,552
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1998 JULY 31,
(UNAUDITED) 1997
128.INCREASE (DECREASE) IN NET ASSETS
129.OPERATIONS $ 51,177 $ 83,162
NET INVESTMENT INCOME
130. NET REALIZED GAIN (LOSS) 475,610 472,073
131. CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 145,765 1,502,767
132. 672,552 2,058,002
133.NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
134.DISTRIBUTIONS TO SHAREHOLDERS (106,819) (53,737)
FROM NET INVESTMENT INCOME
135. FROM NET REALIZED GAIN (591,878) (357,058)
136. 137.TOTAL DISTRIBUTIONS (698,697) (410,795)
138.SHARE TRANSACTIONS 2,420,803 3,683,464
NET PROCEEDS FROM SALES OF SHARES
139. REINVESTMENT OF DISTRIBUTIONS 685,226 402,041
140. COST OF SHARES REDEEMED (934,588) (1,079,186)
141.142. 2,171,441 3,006,319
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
143. 1,155 1,242
REDEMPTION FEES
144. 2,146,451 4,654,768
145.TOTAL INCREASE (DECREASE) IN NET ASSETS
146.NET ASSETS 147. 148.
149. BEGINNING OF PERIOD 8,673,310 4,018,542
150. $ 10,819,761 $ 8,673,310
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $3,163 AND $62,129, RESPECTIVELY)
151.OTHER INFORMATION 153. 154.
152.SHARES
155. SOLD 95,501 170,807
156. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 27,796 20,738
157. REDEEMED (37,080) (49,663)
158. NET INCREASE (DECREASE) 86,217 141,882
</TABLE>
FINANCIAL HIGHLIGHTS
159. SIX MONTHS ENDED YEARS ENDED JULY 31,
JANUARY 31, 1998
160. (UNAUDITED) 1997 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
161.SELECTED PER-SHARE DATA
162.NET ASSET VALUE, $ 25.20 $ 19.87 $ 19.25 $ 17.62 $ 17.19 $ 14.94
BEGINNING OF PERIOD
163.INCOME FROM
INVESTMENT OPERATIONS
164. NET INVESTMENT .13 D .30 D .26 .20 .06 .15
INCOME
165. NET REALIZED AND 1.67 6.93 1.83 3.57 2.15 2.88
UNREALIZED GAIN
(LOSS)
166. TOTAL FROM 1.80 7.23 2.09 3.77 2.21 3.03
INVESTMENT
OPERATIONS
167.LESS DISTRIBUTIONS
168. FROM NET (.28) (.24) (.23) (.09) (.16) (.10)
INVESTMENT
INCOME
169. FROM NET REALIZED (1.58) (1.66) (1.24) (2.05) (1.62) (.69)
GAIN
170. TOTAL DISTRIBUTIONS (1.86) (1.90) (1.47) (2.14) (1.78) (.79)
171.REDEMPTION FEES - - - - - .01
ADDED TO PAID IN
CAPITAL
172.NET ASSET VALUE, $ 25.14 $ 25.20 $ 19.87 $ 19.25 $ 17.62 $ 17.19
END OF PERIOD
173.TOTAL RETURNB, C 7.41% 39.45% 11.50% 23.81% 13.67% 21.32%
174.RATIOS AND SUPPLEMENTAL DATA
175.NET ASSETS, END OF $ $ $ $ $ $ $ $ $ $ $
PERIOD (IN MILLIONS) $10,820 8,673 4,019 2,947 2,167 2,116
176.RATIO OF EXPENSES .97% A 1.02% 1.05% 1.12% 1.14% 1.12%
TO AVERAGE NET ASSETS
177.RATIO OF EXPENSES .96% A, E 1.01% E 1.04% E 1.11% E 1.13% E 1.12%
TO AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
178.RATIO OF NET 1.02% A 1.36% 1.46% 1.31% .51% 1.00%
INVESTMENT INCOME TO
AVERAGE NET ASSETS
179.PORTFOLIO TURNOVER 47% A 45% 79% 65% 54% 47%
RATE
180.AVERAGE $ $ $ $
COMMISSION RATE .0262 .0230
F
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E 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 January 31, 1998 (Unaudited)
6. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement date on purchases and sales of securities. 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
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INCOME TAXES - CONTINUED
schedule of investments includes information regarding income taxes
under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. 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
among 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.
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.
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 Fidelity Investments Money Management, Inc.
(formerly FMR Texas, Inc.), 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 earned
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, the fund had no investments in restricted
securities (excluding 144A issues).
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock market and to fluctuations in currency values.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends 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 or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
8. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,827,940,000 and $1,902,784,000, respectively.
The market value of futures contracts opened and closed during the
period amounted to $12,871,000 and $12,928,000, respectively.
9. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. In the event that these rates were lower than
the contractual rates in effect during the period, FMR voluntarily
implemented the above rates, as they resulted in the same or a lower
management fee. The annual individual fund fee rate is .35%. The basic
fee is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annualized rate of .74% of average
net assets after the performance adjustment.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC),
an affiliate of FMR and the general distributor of the fund, received
sales charges of $6,460,000 on sales of shares of the fund of which
$8,000 was paid to securities dealers, banks and other financial
institutions.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annualized rate of .19% 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 $469,000 for the
period.
10. 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 $558,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized
5. EXPENSE REDUCTIONS -
CONTINUED
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 $18,000 and $68,000, respectively,
under these arrangements.
11. 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 MARKET
AFFILIATE COST COST INCOME VALUE
AAF Industries PLC $ - $ - $ - $ 449
ABT Building Products Corp. - 1,182 - -
Adams Resources and Energy, Inc. - - - 2,665
Advanced Digital Information Corp. 7,520 390 - 16,089
Advocat, Inc. - 2,584 - -
Alamco, Inc. - 1,899 - -
Align Rite International, Inc. 193 148 - 6,424
All American Communications, Inc. - 12,275 - -
Allied Research Corp. 23 - - 5,107
American Business Information, Inc. 763 - - 25,776
American Indemnity Financial Corp. - 1,028 12 -
American Safety Razor Co. - 921 - 24,620
ARK Restaurants Corp. - - - 2,525
Arnold Industries, Inc. 12,332 - 343 33,852
ASA Holdings, Inc. - 3,453 378 62,100
Asahi Concrete Work Co., Ltd. 26 - - 2,531
Atlantic Tele-Network, Inc. 2,636 - - 4,541
Australian Oil & Gas Corp. Ltd. - - 104 4,269
Autocam Corp. 292 - 34 8,365
Award Software International, Inc. 119 - - 3,575
Aztec Manufacturing Co. - 174 - 7,216
BA Merchant Services, Inc. Class A 1,157 - - 15,226
Bairnco Corp. 4,559 - 32 9,178
Baker (J.), Inc. - 774 22 3,189
Ballard Medical Products 14,091 - 119 67,049
BancTec, Inc. 8,431 2,091 - 42,227
Banyan Strategic Land Trust (SBI) - - 198 5,641
BeautiControl Cosmetics, Inc. - 4,954 81 -
Belmont Homes, Inc. - 3,113 - -
Benihana Inc. 1,390 - - 4,486
Bergensbanken ASA 1,272 - - 7,483
Bertucci's, Inc. - 1,235 - 3,034
Black Box Corp. 3,163 - - 42,250
Blair Co. 3,109 - 84 11,107
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
BMTC Group, Inc. Class A (sub-vtg.) $ - $ - $ 34 $ 4,251
Boole & Babbage, Inc. - 1,927 - 33,061
Brookstone, Inc. - - - 8,961
BTU International, Inc. 197 428 - 2,011
Bush Industries, Inc. Class A 9,228 - 25 22,159
Cannon Express, Inc. Class A 269 - - 3,260
Castle Energy Corp. - - 297 13,225
CEC Resources Ltd. - 12 - 598
CFC International, Inc. - 2,103 - 2,577
Chart Industries, Inc. 786 - - 18,123
Chase Industries, Inc. 3,718 - - 10,860
Chateau Stores of Canada Ltd. Class A - - 9 1,358
Chicos Fas, Inc. 2,725 - - 5,658
Circuit Systems, Inc. 950 221 - 1,707
Cobra Electronics Corp. 1,510 - - 3,706
Cogeco Cable, Inc. 652 - 28 7,341
Cogeco, Inc. 2,872 - 42 11,450
Cold Metal Products, Inc. - 410 - 2,291
Cole National Corp. Class A 6,046 1,229 - 35,394
Columbus Energy Corp. 531 - - 3,367
Communications Systems, Inc. - 735 123 11,853
Compdent Corp. 2,778 - - 7,767
Computer Data Systems, Inc. - 1,657 37 -
Concord Fabrics Inc Class B 226 - - 972
Concord Fabrics, Inc. Class A - 422 - 1,462
Conso Products Co. 436 - - 5,517
Consolidated Products, Inc. 2,375 457 - 16,804
Continental Circuits Corp. 3,577 1,273 - 10,128
Continental Homes Holding Corp. - 8,033 33 -
ConVest Energy Corp. 16 47 - -
Cook (D.C.) Holdings PLC 58 - 34 1,390
Corcom, Inc. 188 - - 3,361
CPAC, Inc. - - - 7,384
Craig (Jenny), Inc. 1,198 2,584 - 5,832
Crossman Communities, Inc. 3,221 - - 25,401
Crown Central Petroleum Corp.
Class A 166 - - 10,551
Custom Chrome, Inc. - 6,016 - -
Cybex Corp. 1,147 - - 7,553
Dallas Semiconductor Corp. 973 - 103 70,875
Data Research Associates, Inc. - 630 - -
Data Systems & Software - 256 - 1,846
Davel Communications Group, Inc. - 765 - 7,787
Decorator Industries, Inc. - - 42 2,721
Devon Group, Inc. 1,987 - - 29,689
DH Technology, Inc. - 925 - -
Diagnostic Retrieval Systems, Inc. 1,279 3,193 - -
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Diodes, Inc. $ 2,311 $ - $ - $ 3,896
Diversified Corporate Resources, Inc. 578 - - 2,216
Dominion Homes, Inc. 1,205 572 - 4,062
Doral Financial Corp. - - - 22,662
Dorel Industries, Inc.
Class B (sub-vtg.) - 838 - 13,336
Drew Industries, Inc. - - - 13,385
DRS Technologies, Inc. 3,098 376 - 7,574
DSG International Ltd. - 153 - 6,509
DSP Technology, Inc. - - - 1,316
DT Industries, Inc. 847 1,335 13 21,375
Ducommun, Inc. 4,625 710 - 18,512
Durakon Industries, Inc. - - - 5,214
Dyersburg Corp. - 486 24 11,885
Echelon International Corp. - 725 - -
Edusoft Ltd. 1,565 - - 3,170
Elscint Ltd. - 27 - 7,806
Eltron International, Inc. 5,031 - - 17,129
Elxsi Corp. - - - 3,039
Emerging Communications, Inc. 5,063 - - 8,284
Enea Data AB, Series B Free shares - - - 4,747
ENEX Resources Corp. - - 36 1,587
Engineered Support Systems, Inc. 1,322 - 3 3,718
Engle Homes, Inc. 1,581 109 55 11,550
Equitrac Corp. 704 - - 6,106
Excel Industries, Inc. 231 7,934 98 -
Fabri-Centers of America, Inc. Class A 2,170 - - 14,022
Fansteel, Inc. 870 - - 6,879
Farm Family Holdings, Inc. - - - 16,810
Farr Co. - 1,041 - -
FDP Corp. 2,912 - 5 5,887
Federal Screw Works - - 196 5,984
FIH AS Class B 2,706 - - 26,727
Finish Line, Inc. Class A 13,186 - - 22,903
First Central Financial Corp. - 1,166 - 8
Firstbank Puerto Rico - - 324 51,281
Flanigans Enterprises, Inc. 384 - - 657
Flir Systems, Inc. - 342 - 8,236
Footstar, Inc. 7,184 6,506 - 40,869
Foremost Industries, Inc. 58 - - 3,733
Fossil, Inc. 1,559 129 - 24,187
FRM Nexus, Inc. - - - 313
Gainsco, Inc. - 2,226 40 8,990
Galey & Lord, Inc. 3,357 5,085 - -
Gateway Data Sciences Corp. - 1,256 - -
GBC Bancorp California - - 120 28,848
Gehl Co. 2,276 - - 11,645
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
General Semiconductor, Inc. $ - $ - $ - $ 22,067
Genicom Corp. - 2,345 - 7,597
Giant Cement Holding, Inc. 1,283 251 - 11,963
Global Motorsport Group, Inc. 4,169 - - 6,576
Goodfellow, Inc. 562 - 25 2,278
Graphic Industries, Inc. - 3,645 13 -
Griffon Corp. 378 - - 43,102
GSE Systems, Inc. - 1,147 - 573
Gymboree Corp. 195 - - 34,016
Hampshire Group Ltd. 1,879 - - 5,187
Helen of Troy Corp. - - - 41,501
Herbalife International, Inc. Class A 7,151 - - 21,951
Hirsch International Corp. Class A 5,459 - - 13,276
Homebase, Inc. 1,903 452 - 14,549
HPSC, Inc. - 10 - 1,693
Hurco Companies, Inc. 209 - - 2,412
IEC Electronics Corp. 3,175 - - 7,961
IHOP Corp. 516 2,283 - 25,472
Independence Federal Savings Bank - 56 - 1,853
Intercontinental Life Corp. 161 - - 8,979
International Imaging Materials, Inc. - 4,218 - -
Intest Corp. 607 - - 2,484
IPC Information Systems, Inc. - 4,228 - -
Jean Coutu Group, Inc. Class A - - 91 21,288
Jean Philippe Fragrances, Inc. - 3,093 - -
JLM Couture, Inc. 515 - - 760
Journal Register Co. - - - -
Kennedy-Wilson, Inc. 83 - - 2,236
Kenneth Cole Productions, Inc.
Class A 1,291 - - 8,916
Kentucky Electric Steel, Inc. - 198 - 1,610
King World Productions, Inc. - - - 109,698
Koss Corp. - - - 2,150
Laboratory Specialists America, Inc. 248 - - 1,697
Ladd Furniture, Inc. 482 80 - 6,404
Lasalle Re Holdings Ltd. 22,964 - 974 49,390
Laser Industries Ltd. Ord 1,219 - - 22,560
Lawyers Title Corp. - 2,299 85 27,759
Lechters, Inc. - 1,705 - -
Libbey, Inc. - - - -
Life USA Holding, Inc. 2,050 - - 33,269
M Corp, Inc. - - - 328
M/I Schottenstein Homes, Inc. - - - 18,700
MacFrugals Bargains Closeouts, Inc. - 20,384 - -
MARC, Inc. - - 22 5,264
Markwest Hydrocarbon, Inc. - - - 8,530
Marten Transport Ltd. - - - 6,438
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Martin Color-Fi, Inc. $ 1,312 $ - $ - $ 2,454
Medstone International, Inc. 2,414 - - 5,612
Melita International Corp. - - - -
Mercury Air Group - 615 - 3,600
Metro Richelieu, Inc. Class A - - - 27,371
Micro Linear Corp. - 377 - 8,984
Microsemi Corp. - - - 17,634
Midwest Express Holdings, Inc. 428 657 - 26,467
MMI Companies, Inc. 8,950 - 98 34,277
Monaco Coach Corp. 607 585 - 12,040
Monro Muffler Brake, Inc. - 2,067 - 8,383
Movado Group, Inc. 763 - 29 16,046
MTL, Inc. - - - 12,374
MYR Group, Inc. 1,339 - 32 6,392
Mysoftware Co. - 143 - 1,165
Nanometrics, Inc. 1,230 - - 4,660
Nathans Famous, Inc. 60 - - 1,314
Natural Alternatives International, Inc. - 902 - -
New Dimension Software Ltd. 2,819 1,702 - 16,902
North American Mortgage Co. - 11,083 72 -
Norvestia OY Class B - - - 4,175
NSC Corp. - - 83 1,101
Nutramax Products, Inc. - 2,573 - 3,511
OEC Medical Systems, Inc. 2,431 - - 24,824
Old American Stores, Inc. - 1,618 - -
Old Dominion Freight Lines, Inc. 779 - - 7,808
One Price Clothing Stores, Inc. - 1,381 - 1,543
ORBIT/FR, Inc. - - - -
Orcad, Inc. - 2,696 - 3,837
Oriole Homes Corp. Class B - - - 1,142
OroAmerica, Inc. - - - 1,942
Orthofix International 58 - - 9,605
Patrick Industries, Inc. - 131 36 6,863
Pe Ben Oilfield Services Ltd. - 37 - 948
Petroleum Development Corp. 2,572 - - 7,597
Petroleum Helicopters, Inc. - 36 15 4,184
Piercing Pagoda, Inc. 1,001 - - 18,096
Poncebank - 1,235 133 8,230
Powell Industries, Inc. 3,993 - - 13,958
Premier Choix Tvec, Inc. Class A - 266 - -
Primex Technologies, Inc. - - 106 12,346
Programming & Systems, Inc. - - - -
Pubco Corp. 1,338 - - 3,355
PXRE Corp. - 50 334 24,562
Qualix Group, Inc. - 1,047 - -
Quest Diagnostics, Inc. 1,029 - - 32,036
Quixote Corp. - 339 - -
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Rainbow Technologies, Inc. $ - $ 6,856 $ - $ 12,229
Raster Graphics, Inc. 1,731 1,335 - 2,475
Raytech Corp. 248 - - 1,782
Rehabcare Corp. - - - 12,465
Reliability, Inc. - 869 - 3,284
Res-Care, Inc. 2,361 320 - 25,931
Right Management Consultants, Inc. - - - 7,995
RPC Energy Services, Inc. 7,849 - 117 37,073
Ryan Hotels Ltd. - - 49 5,497
S&K Famous Brands, Inc. 338 - - 6,451
Saevik Supply AS 419 1,619 - -
Safegaurd Health Enterprises, Inc. 1,805 - - 3,034
San Francisco Boutiques, Inc.
Class B (sub-vtg.) 109 - - 1,364
Scan-Optics, Inc. 919 - - 4,152
Schult Homes Corp. - 249 44 9,645
SCPIE Holdings, Inc. 2,755 589 68 21,726
Seattle FilmWorks, Inc. 8,029 235 - 14,800
SED International Holdings, Inc. 5,551 - - 10,463
Seibels Bruce Group, Inc. - - - -
Shelby Williams Industries, Inc. - - 43 7,561
Shelter Components Corp. - 1,517 - -
Sonic Corp. - 1,503 - 36,442
Sound Advice, Inc. - - - 431
Southern Electronics Corp. 3,576 3,489 - -
Southern Energy Homes, Inc. - 1,151 - 11,762
Southwestern Energy Co. - 571 199 18,025
Sparebanken Rana Grunnfondsbevis - - - 605
Special Metals Corp. - - - -
Speizman Industries, Inc. 431 - - 1,375
SPSS, Inc. 9,344 - - 19,276
Standard Commercial Corp. 2,446 - - 17,009
Stanley Furniture Co., Inc. 303 - - 9,188
Stanley Technology Group, Inc. - - - 2,113
Steel of West Virginia, Inc. - - - 5,304
Stephan Co. - - 16 5,513
Stewart Information Services Corp. - 557 83 17,330
Summit Holdings Southeast, Inc. - - - 6,938
Superior Energy Services, Inc. - 1,195 - -
Swift Energy Co. 11,945 1,104 - 26,988
Sybron Chemical Industry Corp. 684 2,099 - -
Sylvan Foods Holdings, Inc. - 36 - 7,626
T B Wood's Corp. 24 - 67 8,676
Taitron Components, Inc. Class A 572 - - 1,295
Talentum OY Class B - - - 7,222
Tandy Brands Accessories, Inc. 3,078 - - 8,484
Tay Homes PLC 2,066 - 209 5,969
6. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
TBC Corp. $ - $ 241 $ - $ 17,882
Terra Nova Holdings Ltd. - - - 36,037
Thomas Group - 1,356 - -
Todhunter International, Inc. 140 - - 2,577
Torch Energy Royalty Trust unit - 2,310 - -
Trans Lux Corp. 53 - 4 813
Transpro, Inc. - - 66 5,411
Transtechnology Corp. 38 1,805 48 8,138
Twin Disc, Inc. 4,053 - 62 8,814
UICI 3,459 - - 78,450
Uni Select, Inc. - - 52 9,383
Unico America Corporation 211 - - 4,128
Unionamerica Holdings PLC
sponsored ADR - 7,917 22 -
URS Corp. 3,883 - - 13,899
U.S. Home Corp. - - - 22,787
USX-Delhi Group - 4,265 41 -
Utah Medical Products, Inc. 1,346 - - 6,128
Valley Forge Corp. 47 - 32 5,467
Vertex Communications Corp. 2,100 - - 12,527
Vestcom International, Inc. - - - -
Video Display Corp. 586 974 - 2,002
Virginia First Financial Corp. 103 232 16 -
Warren Bancorp., Inc. - 1,830 32 -
Washington Homes, Inc. - - - 1,880
Western Beef, Inc. 17 - - 3,028
Weston (Roy F.), Inc. Class A - - - 1,280
Winsloew Furniture, Inc. 3,519 - - 14,132
Winston Resources, Inc. 187 - - 982
Wireless Telecom Group, Inc. 7,244 - 138 9,684
Woodhead Industries, Inc. - - - 9,971
World Fuel Services Corp. - - - 24,172
Worldtex Corp. - 268 - 10,139
WSOY (Werner Soderstrom
Osakeyhtio) Class B - - - 33,446
Wynn's International, Inc. 2,255 - 180 40,132
Zilog, Inc. 312 - - 38,824
TOTALS $ 360,766 $ 222,986 $ 6,864 $3,145,718
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
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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 500
Merrimack, NH 03054-0500
(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 500
Merrimack, NH 03054-0500
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
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CONNECTICUT
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GEORGIA
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HAWAII
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ILLINOIS
One North Franklin Street
Chicago, IL
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Oak Brook, IL
1700 East Golf Road
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3232 Lake Avenue
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INDIANA
4729 East 82nd Street
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LOUISIANA
201 St. Charles Avenue
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MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
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1 West Pennsylvania Ave.
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MASSACHUSETTS
470 Boylston Street
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155 Congress Street
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25 State Street
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300 Granite Street
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MICHIGAN
280 North Woodward Ave.
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29155 Northwestern Hwy.
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MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
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200 North Broadway
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NEW JERSEY
150 Essex Street
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56 South Street
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501 Route 17, South
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1271 Avenue of the Americas
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350 Park Avenue
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NORTH CAROLINA
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OHIO
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PENNSYLVANIA
1735 Market Street
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439 Fifth Avenue
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TENNESSEE
6150 Poplar Road
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TEXAS
10000 Research Boulevard
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1155 Dairy Ashford Street
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2701 Drexel Drive
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400 East Las Colinas Blvd.
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14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
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-ADVISER
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
Abigail Johnson, Vice President
Joel C. Tillinghast, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
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
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export and Multinational Fund
Fidelity Fifty
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Stock Selector
TechnoQuant Growth Fund
SM
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
FIDELITY
(REGISTERED TRADEMARK)
PURITAN(registered trademark)
FUND
SEMIANNUAL REPORT
JANUARY 31, 1998
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 49 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 53 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 57 THE AUDITORS' OPINION.
ACCOUNTANTS
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As we entered 1998, the pesky economic and currency crises in
Southeast Asia were still very much with us. Adding to these concerns
was the possibility that U.S. corporate earnings might decline in the
face of lower global product demand. But the news wasn't all bad as
low inflation, low interest rates and moderate economic growth
continued to prevail. The bond market performed well, as it benefited
from the favorable economic backdrop and a "flight-to-safety"
mentality on the part of stock investors.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
FIDELITY PURITAN 2.69% 19.34% 107.48% 284.84%
S&P 500 (REGISTERED TRADEMARK) 3.56% 26.91% 152.28% 410.11%
LB AGGREGATE BOND 4.90% 10.72% 42.55% 135.42%
BALANCED FUNDS AVERAGE 2.73% 16.52% 84.74% 229.66%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you 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 six
months average represents a peer group of 380 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 JANUARY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY PURITAN 19.34% 15.72% 14.43%
S&P 500 26.91% 20.33% 17.69%
LB AGGREGATE BOND 10.72% 7.35% 8.94%
BALANCED FUNDS AVERAGE 16.52% 13.01% 12.60%
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 19980131 19980305 155641 S00000000000001
Puritan S&P 500
LB Aggregate Bond
00004 SP001
LB001
1988/01/31 10000.00 10000.00
10000.00
1988/02/29 10302.53 10466.00
10118.70
1988/03/31 10113.27 10142.60
10023.74
1988/04/30 10254.54 10255.18
9969.65
1988/05/31 10429.05 10344.40
9902.63
1988/06/30 10807.13 10819.21
10141.54
1988/07/31 10832.46 10778.10
10088.35
1988/08/31 10722.70 10411.64
10114.80
1988/09/30 11027.84 10855.18
10343.79
1988/10/31 11207.92 11156.95
10538.53
1988/11/30 11130.74 10997.41
10410.51
1988/12/31 11208.34 11189.86
10422.23
1989/01/31 11761.73 12008.96
10572.18
1989/02/28 11656.32 11709.94
10495.55
1989/03/31 11868.06 11982.78
10540.93
1989/04/30 12269.31 12604.69
10761.51
1989/05/31 12679.48 13115.18
11044.30
1989/06/30 12768.14 13040.42
11380.57
1989/07/31 13473.46 14217.97
11622.49
1989/08/31 13563.89 14496.64
11450.29
1989/09/30 13414.35 14437.21
11508.90
1989/10/31 13013.22 14102.26
11792.28
1989/11/30 13255.76 14389.95
11904.68
1989/12/31 13405.02 14735.31
11936.53
1990/01/31 12837.51 13746.57
11794.69
1990/02/28 12974.49 13923.90
11832.85
1990/03/31 12993.17 14292.88
11841.57
1990/04/30 12675.29 13935.56
11733.08
1990/05/31 13380.58 15294.28
12080.48
1990/06/30 13308.96 15190.28
12274.31
1990/07/31 13187.97 15141.67
12444.10
1990/08/31 12391.45 13772.86
12277.92
1990/09/30 11816.06 13102.12
12379.49
1990/10/31 11611.10 13045.78
12536.66
1990/11/30 12266.98 13888.54
12806.53
1990/12/31 12553.76 14276.03
13006.07
1991/01/31 13116.33 14898.47
13166.85
1991/02/28 13876.85 15963.71
13279.24
1991/03/31 13969.05 16350.03
13370.60
1991/04/30 14085.37 16389.27
13515.45
1991/05/31 14772.72 17097.28
13594.48
1991/06/30 14260.16 16314.23
13587.57
1991/07/31 14753.74 17074.47
13775.99
1991/08/31 15011.26 17479.14
14074.11
1991/09/30 15023.87 17187.24
14359.30
1991/10/31 15241.61 17417.54
14519.17
1991/11/30 14719.04 16715.62
14652.30
1991/12/31 15623.96 18627.88
15087.45
1992/01/31 15756.56 18281.40
14882.20
1992/02/29 16198.53 18519.06
14978.96
1992/03/31 16119.36 18157.94
14894.52
1992/04/30 16645.84 18691.78
15002.10
1992/05/31 16836.27 18783.37
15285.19
1992/06/30 16745.57 18503.50
15495.55
1992/07/31 17255.76 19260.30
15811.70
1992/08/31 17085.70 18865.46
15971.87
1992/09/30 17294.03 19088.07
16161.20
1992/10/31 17163.47 19154.88
15946.93
1992/11/30 17626.38 19808.06
15950.53
1992/12/31 18034.33 20051.70
16204.17
1993/01/31 18548.20 20220.14
16514.91
1993/02/28 18927.49 20495.13
16804.00
1993/03/31 19675.92 20927.58
16874.02
1993/04/30 20047.16 20421.13
16991.53
1993/05/31 20319.40 20968.42
17013.16
1993/06/30 20456.90 21029.22
17321.49
1993/07/31 20757.18 20945.11
17419.46
1993/08/31 21357.75 21738.93
17724.79
1993/09/30 21210.74 21571.54
17773.47
1993/10/31 21762.19 22018.07
17839.88
1993/11/30 21412.49 21808.90
17688.12
1993/12/31 21902.17 22072.78
17783.99
1994/01/31 22875.60 22823.26
18024.10
1994/02/28 22625.28 22204.75
17710.96
1994/03/31 21783.15 21236.62
17274.31
1994/04/30 22021.76 21508.45
17136.37
1994/05/31 22162.11 21861.19
17133.97
1994/06/30 21990.57 21325.59
17096.11
1994/07/31 22542.46 22025.07
17435.69
1994/08/31 23207.55 22928.10
17457.33
1994/09/30 22707.16 22366.36
17200.38
1994/10/31 22973.43 22869.60
17185.06
1994/11/30 22248.58 22036.69
17146.89
1994/12/31 22292.96 22363.49
17265.30
1995/01/31 22187.59 22943.38
17606.98
1995/02/28 22864.96 23837.48
18025.60
1995/03/31 23395.63 24540.93
18136.19
1995/04/30 23865.97 25263.66
18389.53
1995/05/31 24381.82 26273.45
19101.15
1995/06/30 24655.68 26883.78
19241.19
1995/07/31 25480.08 27775.24
19198.22
1995/08/31 25602.21 27844.96
19429.92
1995/09/30 25969.03 29020.02
19618.94
1995/10/31 25551.18 28916.42
19874.08
1995/11/30 26464.27 30185.85
20171.90
1995/12/31 27077.13 30767.23
20454.98
1996/01/31 27459.17 31814.54
20590.82
1996/02/29 27809.37 32109.46
20232.90
1996/03/31 28272.31 32418.68
20092.26
1996/04/30 28288.34 32896.53
19979.26
1996/05/31 28464.64 33744.93
19938.69
1996/06/30 28593.73 33873.50
20206.46
1996/07/31 28043.85 32376.97
20261.75
1996/08/31 28302.62 33059.80
20227.79
1996/09/30 29425.16 34920.40
20580.30
1996/10/31 30139.36 35883.51
21036.18
1996/11/30 31657.04 38595.94
21396.50
1996/12/31 31180.50 37831.36
21197.56
1997/01/31 32247.59 40195.06
21262.47
1997/02/28 32735.91 40510.19
21315.36
1997/03/31 31640.75 38845.62
21079.16
1997/04/30 32936.31 41164.71
21394.70
1997/05/31 34268.36 43670.82
21596.95
1997/06/30 35544.01 45627.27
21853.29
1997/07/31 37475.75 49257.83
22442.60
1997/08/31 35819.98 46498.41
22251.17
1997/09/30 37262.13 49045.12
22579.34
1997/10/31 36499.34 47407.02
22906.90
1997/11/30 37376.55 49601.49
23012.38
1997/12/31 38149.18 50453.15
23244.08
1998/01/30 38483.82 51011.16
23542.49
IMATRL PRASUN SHR__CHT 19980131 19980305 155645 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Puritan Fund on January 31, 1988. As the chart
shows, by January 31, 1998, the value of the investment would have
grown to $38,484 - a 284.84% 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 $51,011 - a 410.11% increase. If $10,000 was put in the
bond index, it would have grown to $23,542 - a 135.42% 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
Economic woes in Southeast Asia
and a resulting "flight to quality"
mentality on the part of investors
played leading roles in the
performance of the U.S. stock and
bond markets during the
six-month period that ended
January 31, 1998. During that
period, the Standard & Poor's 500
Index - a measure of the U.S.
stock market based on the
average performance of 500 widely
held stocks - returned 3.56%,
and the Lehman Brothers
Aggregate Bond Index - a
measure of the U.S. taxable bond
market - returned 4.90%. What
began as a trickle in June - with
several small Asian countries
devaluing their currencies -
transformed into a downpour in
October as larger markets such as
Hong Kong became affected. This
crisis brought volatility to markets
across the globe. The previously
surging U.S. stock market cooled
down as a result. Investors
reversed fields, gravitating toward
larger-capitalization stocks
because of their reliable earnings
growth and liquidity. Earlier,
smaller-cap stocks had performed
best due to their superior earnings
growth. In the bond market, an
already-positive environment -
due to a lack of inflationary
pressure - was bolstered as wary
stock investors sought
investments offering lower volatility.
U.S. Treasury securities - with
their reputation as one of the
highest-quality bond investments
in the world - were the most
notable beneficiaries of this flight
to quality.
An interview with Bettina Doulton, Portfolio Manager of Fidelity
Puritan Fund
Q. HOW DID THE FUND PERFORM, BETTINA?
A. For the six months that ended January 31, 1998, the fund returned
2.69%. As such, the fund lagged the 3.56% return of the Standard &
Poor's 500 Index and the 4.90% return of the Lehman Brothers Aggregate
Bond Index. Performance was more comparable with that of the balanced
funds average, which returned 2.73% during the period, according to
Lipper Analytical Services. For the 12 months that ended January 31,
1998, the fund returned 19.34%, while the S&P 500 and Lehman Brothers
index returned 26.91% and 10.72%, respectively. Given the fund's mix
of equities and bonds, performance typically falls between these two
benchmarks. The fund's 12-month return compared more favorably with
the 16.52% return of the Lipper peer group.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE OVER THE PAST SIX
MONTHS?
A. As I've mentioned before, I'm a firm believer that individual stock
selection is the key performance driver. Over the past six months, it
was both the best of times and the worst of times for some of the
fund's top positions. First, the good news. Pharmaceutical stocks -
such as Bristol-Myers Squibb, Schering-Plough and American Home
Products - performed well as investors gravitated to their strong,
predictable earnings prospects and limited international business
risk. Speculation over increased consolidation activity within the
sector also provided a performance boost. Home-mortgage financer
Freddie Mac also performed well as interest rates declined and its
business prospects improved as refinancing activity increased. Now the
bad news. Large holdings such as Philip Morris, Citicorp, Royal Dutch
Petroleum and AlliedSignal detracted from performance. Philip Morris
was plagued by continued uncertainty over the ongoing tobacco industry
settlement negotiations; Citicorp was affected by its exposure to the
Asian crisis; Royal Dutch traded down in conjunction with declining
oil prices; and AlliedSignal's stock was punished when its
third-quarter earnings results fell short of expectations. Quite
frankly, I'm disappointed by the mixed performance delivered by the
fund's top positions over this time period but I remained confident in
their long-term prospects.
Q. THE CRISIS IN SOUTHEAST ASIA WAS WELL-DOCUMENTED DURING THE PERIOD.
HOW WAS THE FUND AFFECTED, AND WHAT PARTICULAR STRATEGIES DID YOU
PURSUE?
A. Overall, I'd say the impact on the fund was mixed. One of the more
significant developments that sprang from the Asian crisis was a
"flight to quality" by investors. As a result, health care and finance
stocks, along with stocks of larger companies - areas in which the
fund was amply represented - benefited. But the Asian situation also
harmed the fund in a couple of ways. First, a few of the fund's larger
finance holdings - namely Citicorp, Chase Manhattan and BankAmerica -
came under pressure as concerns rose that problems in their Asian
operations would trigger higher credit losses and earnings shortfalls.
Second, related to the flight to quality effect, domestic telephone
and electric utility stocks rallied, enjoying a nice late-period
surge. Unfortunately, the fund was limited in its exposure to these
groups due to my concerns about their business fundamentals.
Q. DESPITE THE RECENT VOLATILITY WITH SOME OF THE FUND'S LARGER
BANK-RELATED STOCKS, YOU REMAIN COMMITTED TO THE FINANCE AREA. WHY?
A. In recent years, the finance sector has proven to be a fertile
source of investment opportunity for the fund. Generally, the stocks
have offered many of the characteristics that I look for: attractive
valuations, solid-to-improving business prospects and reasonable
dividend yields. While the sector has experienced a significant upward
revaluation over the past couple of years - that is, investors were
willing to pay more for the stocks - I am still optimistic that
certain investments remain compelling. For example, I remained
confident during the period that Citicorp, despite its recent
underperformance, was well-positioned to leverage its global
franchises, improve returns and generate significant excess capital
over the long term. I'd like to emphasize - as I have in the past -
that any investments made in the finance sector reflect individual
stock selection and fundamental research. I don't make bets on
interest-rate directions or short-term market disruptions.
Q. WHEN OIL PRICES SLUMPED DURING THE PERIOD, ENERGY-RELATED STOCKS
SIMULTANEOUSLY SUFFERED. DID YOU REDUCE THE FUND'S ENERGY POSITIONS AS
A RESULT?
A. I began reducing the fund's energy holdings during October. My
selling of some energy stocks was executed in the context of a more
general move to reduce the fund's exposure to cyclical stocks, or
those that are more sensitive to the pace of economic growth. The
shift away from cyclicals - and specifically energy stocks - reflected
concerns that slowdowns in the Southeast Asian economies would result
in low demand for commodities. The outlook for supply and demand
balances within the energy group further deteriorated as the
Organization of Petroleum Exporting Countries (OPEC) raised its
production quotas and the resumption of Iraqi oil exports appeared
more likely. Now that oil prices have fallen below their historical
trading ranges - dragging the stocks down as well - and the stock
prices appear to reflect somewhat of a discount due to these problems,
these stocks may offer attractive opportunities going forward.
Q. HOW WAS THE BOND PORTION OF THE FUND STRUCTURED DURING THE PERIOD?
A. The fund typically focuses on three sectors of the investment-grade
bond market: government bonds, corporate bonds and mortgage-backed
securities. U.S. government bonds were far and away the best of the
three during the period as they benefited from a flight to quality on
the part of investors. U.S. government bonds were also attractive
because the U.S. government - for the first time in many years -
showed signs of a potential budget surplus for 1998. Such a scenario
would reduce the need for the government to borrow money. Corporate
bonds, on the other hand were hurt by the events that occurred in
Southeast Asia. As interest rates continued to drop - and homeowners
took advantage of the lower rates by refinancing their mortgages - I
increased the fund's mortgage-related positions. Even though
prepayment activity can be a risk to the fund - since the bondholder
must turn around and invest assets at prevailing interest rate levels
- - the mortgage market remained attractively priced through much of the
period.
Q. WHAT'S YOUR OUTLOOK?
A. Generally, I remain optimistic. This favorable outlook reflects my
belief that the supportive tripod of growing corporate profits,
continuing mutual fund inflows and low interest rates will remain
intact. This optimism, though, could be tempered by concerns that the
Asian crises are slowing global trade and are likely to cause some
earnings disappointments. At the very least, volatility in the markets
is likely to persist as investors react to the latest news on
Southeast Asia, domestic labor markets or rising tensions with Iraq.
Should the U.S. economy sustain its growth track, the European
economic recovery continue and the "Asian flu" be contained, investors
may begin to focus on opportunities more tied to improving global
economies than the safe opportunities that have performed well
recently.
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 HOW
EUROPE CAN PLAY A KEY ROLE IN
THE FUTURE DIRECTION OF GLOBAL
MARKETS:
"When the problems in Southeast
Asia arrived, I expected the recent
European economic recovery to
falter since many European
countries have significant
exporting relationships with Asia.
As the period came to a close,
however, I was pleasantly
surprised.
"As I've talked with companies, all
indications are that consumer
confidence in Europe is stabilizing
and that the underlying economies
are solid. A healthy situation in
Europe could help world markets
offset the negative ramifications
from Asia.
"Going forward, it may make some
sense to consider investment
opportunities in Europe. Many
companies there are initiating
western-style restructuring
programs and could be
beneficiaries of improved local
economies. While investing overseas
certainly has its share of unique
risks - one of those being that the
continued strength of the U.S.
dollar could cut into foreign gains
for dollar-based investors -
Europe could present some
hard-to-turn-down opportunities."
FUND FACTS
GOAL: high income with
preservation of capital. The
fund also considers the
potential for the growth of
capital.
FUND NUMBER: 004
TRADING SYMBOL: FPURX
START DATE: April 16, 1947
SIZE: as of January 31, 1998,
more than $23.0 billion
MANAGER: Bettina Doulton,
since 1996; manager, Fidelity
Equity-Income II Fund, since
1996; joined Fidelity in 1986
(checkmark)
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
GENERAL ELECTRIC CO. 2.6 2.7
CITICORP 2.5 2.7
PHILIP MORRIS COMPANIES, INC. 2.4 2.6
AMERICAN HOME PRODUCTS CORP. 2.3 1.2
BANKAMERICA CORP. 2.0 2.2
TOP FIVE BOND ISSUERS AS OF JANUARY 31, 1998
<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
FANNIE MAE 7.3 3.8
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 2.3 2.3
U.S. TREASURY 2.0 8.1
WORLDCOM, INC. (VARIOUS ISSUES) 0.4 0.3
RAYTHEON CO. (VARIOUS ISSUES) 0.3 -
</TABLE>
TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 21.9 21.0
HEALTH 8.4 7.9
NONDURABLES 7.9 8.8
UTILITIES 6.9 3.3
ENERGY 6.4 7.8
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1998 * AS OF JULY 31, 1997 **
ROW: 1, COL: 1, VALUE: 58.1
ROW: 1, COL: 2, VALUE: 31.7
ROW: 1, COL: 3, VALUE: 1.7
ROW: 1, COL: 4, VALUE: 8.5
STOCKS 63.8%
BONDS 33.4%
CONVERTIBLE
SECURITIES 0.6%
SHORT-TERM
INVESTMENTS 2.2%
FOREIGN
INVESTMENTS 10.9%
STOCKS 59.1%
BONDS 31.7%
CONVERTIBLE
SECURITIES 0.7%
SHORT-TERM
INVESTMENTS 8.5%
FOREIGN
INVESTMENTS 9.3%
ROW: 1, COL: 1, VALUE: 63.8
ROW: 1, COL: 2, VALUE: 32.4
ROW: 1, COL: 3, VALUE: 1.6
ROW: 1, COL: 4, VALUE: 2.2
*
**
INVESTMENTS JANUARY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 57.7%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 3.4%
AEROSPACE & DEFENSE - 2.5%
AlliedSignal, Inc. 7,342,100 $ 285,883
Lockheed Martin Corp. 1,496,200 155,698
Sundstrand Corp. 1,047,500 57,023
Textron, Inc. 565,400 33,818
United Technologies Corp. 908,200 74,132
606,554
DEFENSE ELECTRONICS - 0.5%
Raytheon Co. Class B 2,304,600 120,127
SHIP BUILDING & REPAIR - 0.4%
General Dynamics Corp. 1,132,100 97,644
TOTAL AEROSPACE & DEFENSE 824,325
BASIC INDUSTRIES - 1.3%
CHEMICALS & PLASTICS - 0.7%
Air Products & Chemicals, Inc. 1,068,800 85,571
Monsanto Co. 1,036,800 49,183
Praxair, Inc. 750,500 31,099
165,853
METALS & MINING - 0.2%
Aluminum Co. of America 735,000 56,136
PAPER & FOREST PRODUCTS - 0.4%
Kimberly-Clark Corp. 1,976,500 103,149
TOTAL BASIC INDUSTRIES 325,138
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.2%
Masco Corp. 1,134,900 55,894
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Equity Office Properties Trust 252,700 7,660
Equity Residential Properties Trust (SBI) 152,900 7,817
Public Storage, Inc. 133,700 4,395
19,872
TOTAL CONSTRUCTION & REAL ESTATE 75,766
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 0.6%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Goodyear Tire & Rubber Co. 49,100 $ 3,075
Ford Motor Co. 749,600 38,230
41,305
CONSUMER DURABLES - 0.4%
Minnesota Mining & Manufacturing Co. 1,325,800 110,704
TOTAL DURABLES 152,009
ENERGY - 6.1%
ENERGY SERVICES - 0.1%
Halliburton Co. 450,000 20,222
Schlumberger Ltd. 83,000 6,116
26,338
OIL & GAS - 6.0%
Amoco Corp. 893,200 72,684
British Petroleum PLC:
Ord. 9,670,794 130,643
ADR 3,586,089 288,008
Chevron Corp. 1,115,100 83,423
Exxon Corp. 1,400,700 83,079
Harcor Energy, Inc. warrants 7/24/00 (a) 165,000 21
Mobil Corp. 1,152,600 78,521
Royal Dutch Petroleum Co. Ord. 592,800 30,983
Royal Dutch Petroleum Co. (NY shares) 6,517,600 334,027
Texaco, Inc. 3,551,900 184,921
Total SA:
Class B 290,700 30,233
sponsored ADR 353,200 18,322
USX-Marathon Group 3,487,600 117,053
1,451,918
TOTAL ENERGY 1,478,256
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 15.8%
BANKS - 8.0%
Banc One Corp. 1,526,000 $ 85,265
Bank of New York Co., Inc. 1,420,100 76,952
BankAmerica Corp. 6,647,800 472,409
Chase Manhattan Corp. 2,406,300 257,925
Citicorp 5,087,400 605,401
National City Corp. 239,304 14,403
NationsBank Corp. 3,753,400 225,204
U.S. Bancorp 882,500 96,634
Wells Fargo & Co. 279,300 86,304
1,920,497
CREDIT & OTHER FINANCE - 2.5%
American Express Co. 5,575,627 466,610
Beneficial Corp. 613,600 47,631
First Chicago NBD Corp. 450,000 33,581
Household International, Inc. 300,400 37,400
Olympic Financial Ltd. warrants 3/15/07 (a) 361 4
Transamerica Corp. 105,700 10,861
596,087
FEDERAL SPONSORED CREDIT - 2.9%
Freddie Mac 9,074,900 403,833
Fannie Mae 4,809,450 296,984
700,817
INSURANCE - 2.0%
Allstate Corp. 2,457,522 217,491
American International Group, Inc. 403,900 44,555
Hartford Financial Services Group, Inc. 1,562,300 140,607
St. Paul Companies, Inc. (The) 574,500 49,981
Travelers Group, Inc. (The) 799,999 39,600
492,234
SAVINGS & LOANS - 0.4%
Washington Mutual, Inc. 1,524,560 97,953
SECURITIES INDUSTRY - 0.0%
ECM Corp. LP (a)(g) 6,318 693
TOTAL FINANCE 3,808,281
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 8.3%
DRUGS & PHARMACEUTICALS - 7.5%
American Home Products Corp. 5,918,100 $ 564,809
Bristol-Myers Squibb Co. 4,434,900 442,104
Glaxo PLC sponsored ADR 735,600 39,584
Merck & Co., Inc. 2,303,800 270,121
Schering-Plough Corp. 3,450,400 249,723
SmithKline Beecham PLC ADR 3,698,900 233,262
1,799,603
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Baxter International, Inc. 1,700,100 94,674
Johnson & Johnson 1,550,000 103,753
198,427
MEDICAL FACILITIES MANAGEMENT - 0.0%
Tenet Healthcare Corp. (a) 113,900 3,930
TOTAL HEALTH 2,001,960
HOLDING COMPANIES - 0.1%
CINergy Corp. 343,900 11,865
INDUSTRIAL MACHINERY & EQUIPMENT - 5.1%
ELECTRICAL EQUIPMENT - 3.1%
Emerson Electric Co. 956,600 57,874
General Electric Co. 8,100,900 627,820
Honeywell, Inc. 765,100 53,605
739,299
INDUSTRIAL MACHINERY & EQUIPMENT - 1.3%
Cooper Industries, Inc. 1,771,104 93,979
Tyco International Ltd. 4,913,132 218,020
311,999
POLLUTION CONTROL - 0.7%
Browning-Ferris Industries, Inc. 4,140,400 143,103
Waste Management, Inc. 1,248,500 29,340
172,443
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,223,741
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 0.5%
BROADCASTING - 0.2%
Benedek Communications Corp. warrants 7/1/00 (a) 51,900 $ 104
CS Wireless Systems, Inc. (a)(g) 911 -
Orion Network Systems, Inc. warrants 1/15/07 (a) 8,090 105
Orion Network Systems, Inc. warrants 1/15/07 (a) 41,555 457
Teletrac Holdings, Inc. warrants 8/1/07 (a) 7,220 361
Time Warner, Inc. 673,500 43,230
UIH Australia/Pacific, Inc. warrants 5/15/06 (a) 26,110 313
44,570
ENTERTAINMENT - 0.0%
Cedar Fair LP (depositary unit) 300,000 7,931
Live Entertainment, Inc.:
$2.00 warrants 3/28/98 (a)(h) 256,000 -
$2.72 warrants 3/28/98 (a)(h) 244,705 -
7,931
LEISURE DURABLES & TOYS - 0.0%
IHF Capital, Inc.:
Series H warrants 11/15/04 (a)(g) 10,225 1,534
Series I warrants 11/14/99 (a)(g) 5,050 202
1,736
LODGING & GAMING - 0.0%
Bally Gaming International, Inc. warrants 7/29/98 (a) 135,000 84
Motels of America, Inc. (a) 3,000 75
159
PUBLISHING - 0.3%
McGraw-Hill, Inc. 784,600 54,775
TOTAL MEDIA & LEISURE 109,171
NONDURABLES - 7.3%
BEVERAGES - 0.0%
Coca-Cola Co. (The) 180,300 11,674
FOODS - 1.4%
Flowers Industries, Inc. 1,546,600 35,668
Heinz (H.J.) Co. 2,446,000 135,600
Nabisco Holdings Corp. Class A 1,316,200 54,458
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
FOODS - CONTINUED
Quaker Oats Co. 40,100 $ 2,155
Sara Lee Corp. 2,062,100 112,513
340,394
HOUSEHOLD PRODUCTS - 2.8%
Gillette Co. 224,700 22,189
Procter & Gamble Co. 2,383,000 186,768
Renaissance Cosmetics, Inc. warrants 8/31/06 (a)(g) 10,000 -
Unilever:
PLC Ord. 10,615,600 83,538
NV Ord. 600,000 34,385
NV ADR 6,120,600 349,257
676,137
TOBACCO - 3.1%
Philip Morris Companies, Inc. 14,045,240 582,877
RJR Nabisco Holdings Corp. 5,183,700 163,287
746,164
TOTAL NONDURABLES 1,774,369
RETAIL & WHOLESALE - 1.7%
APPAREL STORES - 0.0%
Lamonts Apparel, Inc. (a) 50,220 6
Lamonts Apparel, Inc. warrants 6/10/99 (a) 92,674 -
6
DRUG STORES - 0.4%
CVS Corp. 544,000 35,666
Rite Aid Corp. 828,200 51,711
87,377
GENERAL MERCHANDISE STORES - 1.2%
Penney (J.C.) Co., Inc. 1,065,000 71,754
Wal-Mart Stores, Inc. 5,596,700 223,168
294,922
GROCERY STORES - 0.1%
American Stores Co. 556,500 12,104
Food 4 Less Holdings, Inc. (a) 235,622 3,475
15,579
TOTAL RETAIL & WHOLESALE 397,884
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 0.7%
LEASING & RENTAL - 0.1%
Ryder Systems, Inc. 548,300 $ 18,368
PRINTING - 0.6%
Deluxe Corp. 1,186,000 39,138
Donnelley (R.R.) & Sons Co. 3,244,900 121,075
160,213
TOTAL SERVICES 178,581
TECHNOLOGY - 2.2%
COMPUTERS & OFFICE EQUIPMENT - 2.2%
International Business Machines Corp. 837,200 82,621
Pitney Bowes, Inc. 6,932,480 318,028
Xerox Corp. 1,756,300 141,163
541,812
TRANSPORTATION - 0.3%
RAILROADS - 0.3%
Burlington Northern Santa Fe Corp. 391,300 33,945
Union Pacific Corp. 677,400 40,644
74,589
UTILITIES - 4.0%
CELLULAR - 0.0%
McCaw International Ltd. warrants 4/15/07 (a)(g) 40,280 101
Microcell Telecommunications, Inc. warrants 6/1/06 (a)(g) 110,880
1,457
Powertel, Inc. warrants 2/1/06 (a) 25,856 259
1,817
ELECTRIC UTILITY - 0.4%
Allegheny Energy, Inc. 244,700 7,494
CMS Energy Corp. 1,616,800 68,815
Duke Energy Corp. 205,000 11,108
87,417
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - 0.1%
Consolidated Natural Gas Co. 453,700 $ 24,642
TELEPHONE SERVICES - 3.5%
AT&T Corp. 4,336,900 271,598
ALLTEL Corp. 611,900 26,159
Ameritech Corp. 2,722,800 116,910
BCE, Inc. 1,585,400 49,668
BellSouth Corp. 604,200 36,592
Frontier Corp. 422,700 11,017
GTE Corp. 2,478,200 135,217
Hyperion Telecommunications, Inc. warrants
4/15/01 (a)(g) 19,130 1,148
Optel Communications Corp. warrants 12/29/04 (a)(h) 1,706,343 506
RSL Communications Ltd. /RSL Communications PLC
warrants 11/15/06 (a) 5,920 509
SBC Communications, Inc. 2,396,300 186,312
Sprint Corp. 200,000 11,875
847,511
TOTAL UTILITIES 961,387
TOTAL COMMON STOCKS
(Cost $10,014,460) 13,939,134
PREFERRED STOCKS - 1.8%
CONVERTIBLE PREFERRED STOCKS - 0.4%
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Republic Industries, Inc. $1.55 521,000 11,071
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Loral Space & Communications Ltd., Series C, $3.00 (g) 300,000
19,013
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.0%
Benedek Communications Corp. 15% (a) 54,064 $ 7,461
LODGING & GAMING - 0.2%
Host Marriott Financial Trust $3.375 QUIPS (g) 534,900 28,818
TOTAL MEDIA & LEISURE 36,279
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 63,000 21,735
TOTAL CONVERTIBLE PREFERRED STOCKS 88,098
NONCONVERTIBLE PREFERRED STOCKS - 1.4%
FINANCE - 0.0%
INSURANCE - 0.0%
American Annuity Group Capital Trust II 8 3/4% 6,030 6,589
SIG Capital Trust I 9 1/2% 560 605
7,194
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp. 8% (a)(h) 2,581 2,006
Echostar Communications Corp.
12 1/8%, pay-in-kind 1,499 1,641
3,647
MEDIA & LEISURE - 0.8%
BROADCASTING - 0.7%
Adelphia Communications Corp. $13 38,030 4,430
American Radio Systems Corp. 11 3/8%, pay-in-kind 145,331 16,713
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Cablevision Systems Corp. pay-in-kind:
11 1/8%, depositary shares 238,294 $ 27,344
Series H, $11.75 123,363 14,433
Capstar Broadcasting Partners, Inc. 12%, pay-in-kind 12,073 1,370
Chancellor Media Corp.:
12%, pay-in-kind 52,902 6,256
Series A, 12 1/4% 64,300 9,131
Citadel Broadcasting Co., Series B, 13 1/4%, pay-in-kind 81,565
9,706
Granite Broadcasting Corp. 12 3/4%, pay-in-kind 5,832 6,794
SFX Broadcasting, Inc. 12 5/8% 14,965 1,743
Time Warner, Inc., Series M, 10 1/4%, pay-in-kind 58,583 67,370
165,290
PUBLISHING - 0.1%
Primedia, Inc.:
Series B, $11.625, pay-in-kind 42,829 4,518
Series D, $10 161,300 16,937
21,455
TOTAL MEDIA & LEISURE 186,745
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Renaissance Cosmetics, Inc. 14%, pay-in-kind 11,904 2,143
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.2%
Intermedia Communications, Inc. 13 1/2%, pay-in-kind 28,370 34,966
UTILITIES - 0.4%
CELLULAR - 0.1%
Nextel Communications, Inc., Series D, 13%, pay-in-kind 21,515
24,957
ELECTRIC UTILITY - 0.0%
Entergy Gulf States, Inc., Series A, adj. rate 34,800 3,497
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - 0.3%
American Communications Services, Inc.:
12 3/4%, pay-in-kind 7,546 $ 8,527
14 3/4%, pay-in-kind 2,170 2,550
Hyperion Telecommunications, Inc. 12 7/8%,
pay-in-kind (Reg.) 10,725 11,932
ICG Holdings, Inc. 14 1/4%, pay-in-kind 14,354 17,153
NEXTLINK Communications, Inc. 14%, pay-in-kind 486,525 30,165
Winstar Communications, Inc. 14 1/2% (a)(g) 8,276 9,683
80,010
TOTAL UTILITIES 108,464
TOTAL NONCONVERTIBLE PREFERRED STOCKS 343,159
TOTAL PREFERRED STOCKS
(Cost $384,486) 431,257
CORPORATE BONDS - 17.5%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) (I) AMOUNT (000S) (D)
CONVERTIBLE BONDS - 0.3%
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.2%
Time Warner, Inc. liquid yield option notes
0%, 6/22/13 Ba1 $ 94,450 48,583
RETAIL & WHOLESALE - 0.1%
GENERAL MERCHANDISE STORES - 0.1%
Federated Department Stores, Inc.
5%, 10/1/03 Baa 16,700 22,305
TECHNOLOGY - 0.0%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Unisys Corp. 8 1/4%, 3/15/06 B3 4,000 9,965
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
CONVERTIBLE BONDS - CONTINUED
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
GST Telecommunications, Inc. 0%,
12/15/05 (e)(g) - $ 40 $ 39
TOTAL CONVERTIBLE BONDS 80,892
NONCONVERTIBLE BONDS - 17.2%
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.4%
Alliant Techsystems, Inc. 11 3/4%, 3/1/03 B2 730 802
Argo-Tech Corp. 8 5/8%, 10/1/07 B3 3,140 3,218
Fairchild Corp. 12%, 10/15/01 B- 1,250 1,250
Lockheed Martin Corp. 7.20%, 5/1/36 A3 74,700 82,208
RHI Holdings, Inc. 11 7/8%, 3/1/99 B2 1,533 1,533
89,011
DEFENSE ELECTRONICS - 0.4%
Raytheon Co.:
6.30%, 8/15/00 Baa 49,000 49,444
6.45%, 8/15/04 Baa 33,950 34,452
Tracor, Inc. 8 1/2%, 3/1/07 B1 4,990 5,196
89,092
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, Inc.:
8 5/8%, 12/1/06 Ba2 370 394
9 1/4%, 12/1/06 B1 2,430 2,600
2,994
TOTAL AEROSPACE & DEFENSE 181,097
BASIC INDUSTRIES - 1.0%
CHEMICALS & PLASTICS - 0.4%
Atlantis Group, Inc. 11%, 2/15/03 B2 5,260 5,405
Freedom Chemical Co. 10 5/8%, 10/15/06 B3 12,920 15,116
Huntsman Corp. 9 1/2%, 7/1/07 (g) B2 14,540 14,976
Koppers Industries, Inc. 9 7/8%, 12/1/07 (g) B2 4,345 4,562
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Methanex Corp. yankee 8 7/8%, 11/15/01 A2 $ 25,455 $ 26,792
Sovereign Specialty Chemicals, Inc.
9 1/2%, 8/1/07 (g) B3 250 263
Sterling Chemicals Holdings, Inc.:
11 3/4%, 8/15/06 B3 10,710 10,978
11 1/4%, 4/1/07 B3 9,730 9,876
87,968
IRON & STEEL - 0.1%
GS Technologies Operating, Inc.
12 1/4%, 10/1/05 B2 3,560 4,009
Republic Engineered Steels, Inc.
9 7/8%, 12/15/01 Caa 13,590 13,556
WCI Steel, Inc. 10%, 12/1/04 B2 5,980 6,234
23,799
METALS & MINING - 0.0%
Commonwealth Aluminum Corp.
10 3/4%, 10/1/06 B2 8,140 8,608
PACKAGING & CONTAINERS - 0.1%
Crown Cork & Seal, Inc. 5 7/8%, 4/15/98 Baa 15,250 15,256
Gaylord Container Corp., Series B,
9 3/4%, 6/15/07 B3 2,040 2,076
Huntsman Packaging Corp.
9 1/8%, 10/1/07 (g) B2 880 912
Norampac, Inc. 9 1/2%, 2/1/08 (g) B2 530 541
18,785
PAPER & FOREST PRODUCTS - 0.4%
APP Finance II Mauritius Ltd. 12%, 3/15/04 B3 13,365 10,024
Ainsworth Lumber Co. Ltd.
12 1/2%, 7/15/07 pay-in-kind B3 3,600 3,600
American Pad & Paper Co., Inc.
13%, 11/15/05 B3 4,980 5,217
Doman Industries Ltd.:
yankee 8 3/4%, 3/15/04 B1 14,850 14,367
9 1/4%, 11/15/07 (g) B1 4,440 4,318
Great Northern Nekoosa Corp. 9 1/8%, 2/1/98 Baa 7,800 7,800
Indah Kiat Finance Mauritius Ltd. 10%, 7/1/07 B2 6,000 4,620
Mail-Well Corp. 10 1/2%, 2/15/04 B 1,160 1,232
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Omega Cabinets Ltd. 10 1/2%, 6/15/07 B3 $ 2,140 $ 2,276
Paperboard Industries International, Inc.
8 3/8%, 9/15/07 (g) Ba3 220 228
Pindo Deli Finance Mauritius Ltd.
10 1/4%, 10/1/02 (g) Caa 2,740 2,082
SD Warren Co., Series B, 12%, 12/15/04 B1 4,920 5,492
Stone Container Corp.:
12 5/8%, 7/15/98 B2 13,030 13,323
11 7/8%, 12/1/98 B2 4,340 4,465
10 3/4%, 10/1/02 B1 7,700 8,143
Tembec Finance Corp. yankee 9 7/8%, 9/30/05 B1 3,545 3,740
Tjiwi Kimia Mauritius Ltd. 10%, 8/1/04 (g) Ba3 6,930 5,267
96,194
TOTAL BASIC INDUSTRIES 235,354
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
American Architectural Products, Inc.
11 3/4%, 12/1/07 (g) Caa 4,710 4,863
American Standard, Inc. 7 3/8%, 2/1/08 Ba3 11,885 11,855
Insiloc Corp. 10 1/4%, 8/15/07 B3 2,990 3,188
19,906
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Blue Bird Body Co. 10 3/4%, 11/15/06 B2 2,350 2,579
HOME FURNISHINGS - 0.1%
Guitar Center Management Co., Inc.
11%, 7/1/06 B1 4,367 4,847
Interlake Corp. 12 1/8%, 3/1/02 B3 10,815 11,194
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
HOME FURNISHINGS - CONTINUED
Knoll, Inc. 10 7/8%, 3/15/06 B1 $ 2,661 $ 3,014
Sealy Mattress Co.:
0%, 12/15/07 (e)(g) B3 3,530 2,277
9 7/8%, 12/15/07 (g) B3 1,700 1,798
23,130
TEXTILES & APPAREL - 0.3%
Levi Strauss & Co.:
6.80%, 11/1/03 (g) Baa 30,210 31,151
7%, 11/1/06 (g) Baa 4,600 4,688
Nine West Group, Inc.:
8 3/8%, 8/15/05 (g) Ba2 5,850 5,850
9%, 8/15/07 (g) Ba3 4,030 4,000
Pillowtex Corp. 9%, 12/15/07 (g) B2 310 325
Polymer Group, Inc. 9%, 7/1/07 B2 12,000 12,420
Synthetic Industries, Inc. 9 1/4%, 2/15/07 B2 5,820 6,184
Westpoint Stevens, Inc. 8 3/4%, 12/15/01 Ba3 3,900 4,075
Worldtex, Inc. 9 5/8%, 12/15/07 (g) B1 5,620 5,873
74,566
TOTAL DURABLES 100,275
ENERGY - 0.3%
ENERGY SERVICES - 0.0%
DI Industries, Inc. 8 7/8%, 7/1/07 B1 4,390 4,599
OIL & GAS - 0.3%
Belden & Blake Corp. 9 7/8%, 6/15/07 B3 3,785 3,785
Canadian Forest Oil Ltd.:
8 3/4%, 9/15/07 (g) B2 1,250 1,261
8 3/4%, 9/15/07 B2 410 411
Chesapeake Energy Corp.:
7 7/8%, 3/15/04 Ba3 640 630
9 1/8%, 4/15/06 Ba3 1,860 1,897
8 1/2%, 3/15/12 Ba3 450 446
Cross Timbers Oil Co.:
9 1/4%, 4/1/07 B2 8,560 9,009
8 3/4%, 11/1/09 B2 2,970 3,029
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Flores & Rucks, Inc. 9 3/4%, 10/1/06 B3 $ 7,925 $ 8,638
Harcor Energy, Inc. 14 7/8%, 7/15/02 B3 6,530 7,510
Occidental Petroleum Corp. 8 1/2%, 11/9/01 Baa 5,900 6,409
Ocean Energy, Inc. 8 7/8%, 7/15/07 B3 8,420 8,862
Pennzoil Co. 9 5/8%, 11/15/99 Baa 5,410 5,731
Plains Resources, Inc.:
Series B, 10 1/4%, 3/15/06 B2 3,510 3,791
Series D, 10 1/4%, 3/15/06 B2 1,905 2,048
Southwest Royalties, Inc. 10 1/2%,
10/15/04 (g) B3 640 598
64,055
TOTAL ENERGY 68,654
FINANCE - 6.1%
ASSET-BACKED SECURITIES - 1.4%
Airplanes Pass Through Trust Class D
10 7/8%, 3/15/19 Ba2 11,560 12,918
Arcadia Automobile Receivables Trust
6 1/2%, 6/17/02 Aaa 15,835 16,008
Capital Equipment Receivables Trust
6.11%, 7/15/99 Aaa 76,770 77,157
Chase Manhattan Grantor Trust:
6.61%, 9/15/02 Aaa 24,323 24,543
6.76%, 9/15/02 A3 6,370 6,424
Chevy Chase Auto Receivables Trust:
6.60%, 12/15/02 Aaa 10,468 10,563
5.90%, 7/15/03 Aaa 25,733 25,753
Contimortgage Home Equity Loan Trust
6.26%, 7/15/12 Aaa 34,000 34,186
Ford Credit Auto Owner Trust
6.40%, 5/15/02 A1 19,240 19,510
Ford Credit Grantor Trust 5.90%, 10/15/00 Aaa 6,626 6,636
General Motors Acceptance Corp. Grantor Trust
1995-A, 7.15%, 3/15/00 Aaa 2,904 2,916
Key Auto Finance Trust Class C 6.65%, 10/15/03 Baa 6,800 6,828
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
ASSET-BACKED SECURITIES - CONTINUED
Key Plastics, Inc. 10 1/4%, 3/15/07 A2 $ 23,190 $ 23,384
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 641 637
MBNA Master Credit Card Trust II Class A
6.55%, 1/15/07 Aaa 34,000 35,159
Premier Auto Trust:
4.90%, 12/15/98 Aaa 118 118
4.95%, 2/2/99 A2 513 512
Sears Credit Account Master Trust II
6 1/2%, 10/15/03 Aaa 34,060 34,390
Standard Credit Card Master Trust I
7.65%, 2/15/00 A2 3,800 3,804
Union Federal Savings Bank Grantor Trust
8.20%, 1/10/01 Baa 546 553
341,999
BANKS - 1.9%
ABN Amro Bank NV
6 5/8%, 10/31/01 Aa3 28,500 29,159
Banc One Corp. 6.70%, 3/24/00 Aa3 23,130 23,524
Bank of New York Institutional Capital Trust A
7.78%, 10/1/26 (g) A1 50,000 52,227
Banco Latinoamericano Exportaciones SA
euro 6.90%, 12/4/99 (g) Baa 10,550 10,745
Banponce Financial Corp.:
6.66%, 3/26/01 A3 10,000 10,171
6 3/4%, 8/9/01 A3 18,240 18,609
Capital One Bank:
6.74%, 5/31/99 Baa 14,195 14,380
7.20%, 7/19/99 Baa 22,000 22,385
6.42%, 11/12/99 Baa 25,000 25,211
Citicorp. 7.20%, 6/15/07 A1 19,730 20,895
First Chicago Institutional Capital B
7 3/4%, 12/1/26 (g) A1 35,000 37,056
First Fidelity Bancorp. 8 1/2%, 4/1/98 A2 7,485 7,516
First Maryland Bancorp 10 3/8%, 8/1/99 A3 8,345 8,882
First USA Bank 6 1/2%, 12/23/99 Aa2 29,500 29,863
Firstar Corp. 7.15%, 9/1/00 A3 11,970 12,049
Hartford National Corp. 9.85%, 6/1/99 A3 2,000 2,096
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Kansallis-Osake-Pankki 10%, 5/1/02 A3 $ 5,285 $ 6,041
Merchants National Corp. 9 7/8%, 10/1/99 A2 6,850 7,286
Midlantic Corp.:
9 7/8%, 12/1/99 A3 18,227 19,458
9.2%, 8/1/01 A3 11,550 12,702
NB Capital Trust IV 8 1/4%, 4/15/27 A1 11,600 12,604
NationsBank Corp. 5 1/8%, 9/15/98 Aa3 1,642 1,636
Provident Bank
6 1/8%, 12/15/00 A3 27,500 27,609
Shawmut National Corp. 8 5/8%, 12/15/99 A3 7,440 7,792
Signet Banking Corp.:
5 7/8%, 4/15/98 (j) A2 6,210 6,202
9 5/8%, 6/1/99 A2 7,500 7,840
Summit Bancorp. 8 5/8%, 12/10/02 BBB 6,750 7,452
Union Planters National Bank
6.81%, 8/20/01 A3 13,000 13,228
United Virginia Bankshares, Inc.
8 5/8%, 4/15/98 Baa 1,522 1,530
456,148
CREDIT & OTHER FINANCE - 2.4%
AT&T Capital Corp.:
6.65%, 4/30/99 Baa 40,260 40,666
6.41%, 8/13/99 Baa 6,500 6,544
Ahmanson Capital Trust I 8.36%, 12/1/26 (g) Baa 15,500 17,106
Arcadia Financial Ltd. 11 1/2%, 3/15/07 B2 1,940 1,901
Associates Corp. of North America
6 1/2%, 9/9/98 Aa3 50,000 50,244
BankBoston Capital Trust II 7 3/4%, 12/15/26 Baa 37,000 37,628
CIT Group Holdings, Inc. 6 1/4%, 9/30/99 Aa3 45,890 46,226
Chase Capital I 7.67%, 12/1/26 A1 45,040 45,852
Chrysler Financial Corp. 6 3/8%, 1/28/00 A3 29,710 29,994
Cityscape Financial Corp. 12 3/4%, 6/1/04 Caa 7,410 3,483
Delta Financial Corp. 9 1/2%, 8/1/04 B1 1,550 1,488
Finova Capital Corp. 6.27%, 9/29/00 Baa 2,080 2,094
First Security Capital I 8.41%, 12/15/26 A3 22,920 25,416
First Union Institutional Capital I 8.04%, 12/1/26 A1 15,000 15,962
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 3,520 3,623
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Fleet Mortgage Group, Inc. 6 1/2%, 6/15/00 A2 $ 3,900 $ 3,956
Ford Motor Credit Co. euro 8 5/8%, 1/24/00 A1 7,250 7,594
General Electric Capital Corp.
6.94%, 4/13/09 (f) Aaa 25,630 25,953
General Motors Acceptance Corp.:
8 5/8%, 6/15/99 A3 6,400 6,630
8%, 10/1/99 A3 11,200 11,583
6.65%, 5/24/00 A3 5,950 6,052
Imperial Credit Capital Trust I
10 1/4%, 6/14/02 (g) B2 3,600 3,564
Imperial Credit Industries, Inc. 9 7/8%, 1/15/07 B2 9,577 9,385
JPM Capital Trust II 7.95%, 2/1/27 Aa2 24,420 25,697
KeyCorp Institutional Capital Series A
7.826%, 12/1/26 A1 19,000 19,718
MCN Investment Corp. 5.84%, 2/1/99 Baa 11,820 11,819
Nordstrom Credit, Inc. 7 1/4%, 4/30/02 A2 21,150 22,285
Ocwen Capital Trust 10 7/8%, 8/1/27 B2 3,540 3,894
Olympic Financial Ltd. 11 1/2%, 3/15/07 B2 6,750 6,581
PNC Institutional Capital Trust
8.315%, 5/15/27 (g) A2 19,000 20,888
U.S. West Capital Funding, Inc. 6.95%, 1/15/37 Baa 16,000 16,650
Wells Fargo Capital C Capital Securities
7.73%, 12/1/26 (g) A1 50,000 52,642
583,118
INSURANCE - 0.2%
SunAmerica, Inc.:
6.20%, 10/31/99 Baa 48,500 48,759
SAVINGS & LOANS - 0.2%
First Nationwide Holdings, Inc.:
9 1/8%, 1/15/03 Ba3 1,930 2,041
10 5/8%, 10/1/03 Ba3 5,620 6,294
First Nationwide Parent Holdings Ltd.
12 1/2%, 4/15/03 B3 17,680 20,111
Great Western Financial Corp.
6 3/8%, 7/1/00 A3 1,330 1,340
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
SAVINGS & LOANS - CONTINUED
Home Savings of America Irwindale Calif. FSB
6%, 11/1/00 A3 $ 10,500 $ 10,498
Long Island Savings Bank FSB Melville NY
7%, 6/13/02 Baa 14,850 15,362
55,646
SECURITIES INDUSTRY - 0.0%
ECM Corp. extendible 14%, 6/1/02 (g) - 386 385
TOTAL FINANCE 1,486,055
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Graham-Field Health Products, Inc.
9 3/4%, 8/15/07 (g) B3 2,030 2,172
Wright Medical Technology, Inc.
11 3/4%, 7/1/00 (j) Caa 6,440 6,376
8,548
MEDICAL FACILITIES MANAGEMENT - 0.1%
Integrated Health Services, Inc.:
9 1/2%, 9/15/07 B2 3,290 3,492
9 1/4%, 1/15/08 (g) B2 6,950 7,289
Tenet Healthcare Corp.:
8%, 1/15/05 Ba1 3,490 3,569
8 5/8%, 1/15/07 Ba3 990 1,035
Vencor, Inc. 8 5/8%, 7/15/07 B1 1,740 1,792
17,177
TOTAL HEALTH 25,725
HOLDING COMPANIES - 0.2%
Gray Communications System, Inc.
10 5/8%, 10/1/06 B3 4,490 4,917
Norfolk Southern Corp. 7.05%, 5/1/37 Baa 39,550 41,837
46,754
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
ELECTRICAL EQUIPMENT - 0.2%
Amphenol Corp. 9 7/8%, 5/15/07 B2 $ 770 $ 832
Echostar Communications Corp. secured discount
0%, 6/1/04 (e) B2 24,840 23,350
Motors & Gears, Inc.:
10 3/4%, 11/15/06 B3 10,230 11,100
10 3/4%, 11/15/06 (g) B3 1,020 1,109
36,391
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Calmar, Inc. 11 1/2%, 8/15/05 B3 1,430 1,544
Continental Global Group, Inc. 11%, 4/1/07 B2 3,380 3,617
Goss Graphic System, Inc. 12%, 10/15/06 B2 6,900 7,883
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 B1 2,790 2,898
10 3/4%, 11/1/03 B3 8,019 8,580
24,522
POLLUTION CONTROL - 0.1%
Envirosource, Inc. 9 3/4%, 6/15/03 B3 4,190 4,263
WMX Technologies, Inc.:
6 1/4%, 4/1/99 Baa 10,000 10,007
7.10%, 8/1/26 Baa 10,860 11,260
25,530
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 86,443
MEDIA & LEISURE - 2.4%
BROADCASTING - 1.7%
ACME Television/ACME Financial Corp.
0%, 9/30/04 (e)(g) B3 7,200 5,652
Adelphia Communications Corp.:
9 1/2%, 2/15/04 B3 6,900 7,104
9 7/8%, 3/1/07 B3 4,460 4,884
Ascent Entertainment Group, Inc.
0%, 12/15/04 (e)(g) B3 8,560 5,029
Bell Cablemedia PLC 0%, 7/15/04 (e) Baa 6,500 6,169
Benedek Communications Corp.
0%, 5/15/06 (e) B3 200 158
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
CS Wireless Systems, Inc. 0%, 3/1/06 (e) Caa $ 6,520 $ 1,434
Capstar Broadcasting Partners, Inc.:
9 1/4%, 7/1/07 B2 8,110 8,556
0%, 2/1/09 (e) B3 10,400 7,722
Century Communications Corp.
0%, 1/15/08 (g) Ba3 15,105 6,420
Chancellor Media Corp. 8 3/4%, 6/15/07 B2 4,650 4,836
Chancellor Radio Broadcasting Company
8 1/8%, 12/15/07 (g) - 7,130 7,210
Continental Cablevision, Inc.:
8.30%, 5/15/06 Baa 2,325 2,562
9%, 9/1/08 Baa 15,990 18,783
Echostar Satellite Broadcasting Corp.
0%, 3/15/04 (e) B3 7,190 6,345
Falcon Holdings Group LP 11%, 9/15/03
pay-in-kind - 17,843 19,082
FrontierVision Holdings LP/ FrontierVision
Holdings Capital Corp. 0%, 9/15/07 (e) Caa 1,830 1,402
Granite Broadcasting Corp.:
10 3/8%, 5/15/05 B3 1,780 1,896
9 3/8%, 12/1/05 B3 3,565 3,690
Hearst-Argyle Television, Inc. 7 1/2%, 11/15/27 Baa 28,500 29,108
Intermedia Capital Partners IV LP/
Intermedia Partners IV Capital Corp.
11 1/4%, 8/1/06 B2 370 416
International Cabletel, Inc. 0%, 2/1/06 (e) B3 13,290 10,665
Lenfest Communications, Inc.
8 1/4%, 2/15/08 (g) B2 590 588
Olympus Communications LP/ Olympus
Capital Corp. 10 5/8%, 11/15/06 B1 10,275 11,508
Orion Network Systems, Inc.:
11 1/4%, 1/15/07 B2 8,090 9,445
0%, 1/15/07 (e) B2 45,435 34,871
Rogers Cablesystems Ltd. yankee
10 1/8%, 9/1/12 Ba3 1,360 1,503
SFX Broadcasting, Inc. 10 3/4%, 5/15/06 B3 6,210 6,916
Satellites Mexicanos SA de cv 10 1/8%,
11/1/04 (f)(g) B3 6,600 6,782
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
TCI Communication, Inc.:
7 1/4%, 6/15/99 Ba1 $ 6,700 $ 6,799
6 3/8%, 9/15/99 Ba1 50,000 50,260
6.82%,9/15/10 (j) Ba1 26,000 26,116
Telewest PLC 0%, 10/1/07 (e) B1 4,690 3,705
Time Warner, Inc.:
7 3/4%, 6/15/05 Ba1 22,000 23,473
8.18%, 8/15/07 Ba1 12,000 13,214
6.85%, 1/15/26 Ba1 19,000 19,686
UIH Australia/Pacific, Inc.:
Series B, 0%, 5/15/06 (e) B2 26,730 19,513
0%, 5/15/06 (e) B3 800 584
United International Holdings, Inc.:
0%, 11/15/99 B- 3,570 3,151
0%, 2/15/08 (g) B3 15,650 9,252
Viacom International, Inc., Series B 7%, 7/1/03 B1 1,070 1,061
Young Broadcasting, Inc., Series B,
8 3/4%, 6/15/07 B2 6,660 6,860
414,410
ENTERTAINMENT - 0.3%
AMC Entertainment, Inc. 9 1/2%, 3/15/09 B2 9,170 9,583
AMF Group, Inc., Series B:
10 7/8%, 3/15/06 B2 8,815 9,774
0%, 3/15/06 (e) B2 4,341 3,467
Cinemark USA, Inc.:
9 5/8%, 8/1/08 B2 4,860 5,127
8 1/2%, 8/1/08 (g) B2 4,670 4,693
Paramount Communications, Inc.
5 7/8%, 7/15/00 Ba2 11,400 11,241
Regal Cinemas, Inc. 8 1/2%, 10/1/07 B1 360 367
Viacom, Inc.:
6 3/4%, 1/15/03 Ba2 11,360 11,428
8%, 7/7/06 B1 25,260 25,923
81,603
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.0%
ICON Fitness Corp. 0%, 11/15/06 (e) Caa $ 1,100 $ 605
LODGING & GAMING - 0.2%
Grand Casinos, Inc. 9%, 10/15/04 (g) B2 770 793
HMC Acquisition Properties, Inc. 9%, 12/15/07 Ba3 17,230 18,221
HMH Properties, Inc.:
9 1/2%, 5/15/05 Ba3 12,930 13,803
8 7/8%, 7/15/07 Ba3 9,220 9,796
KSL Recreation Group, Inc. 10 1/4%, 5/1/07 B3 2,040 2,224
Sun International Hotels Ltd./Sun International
North America, Inc. yankee 9%, 3/15/07 Ba3 9,170 9,697
54,534
PUBLISHING - 0.1%
Big Flower Press Holdings, Inc.:
8 7/8%, 7/1/07 B2 14,030 14,486
8 7/8%, 7/1/07 (g) B2 2,570 2,654
Hollinger International Publishing, Inc.
9 1/4%, 3/15/07 B1 4,010 4,291
News America, Inc. 6 5/8%, 1/9/08 (g) Baa 4,425 4,361
Perry Judds, Inc. 10 5/8%, 12/15/07 (g) B3 790 829
26,621
RESTAURANTS - 0.1%
AFC Enterprises, Inc. 10 1/4%, 5/15/07 B3 2,750 2,915
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa 2,820 2,743
Host Marriott Travel Plazas, Inc. 9 1/2%, 5/15/05 Ba3 12,670 13,525
SC International Services, Inc.
9 1/4%, 9/1/07 (g) B2 6,350 6,636
25,819
TOTAL MEDIA & LEISURE 603,592
NONDURABLES - 0.6%
FOODS - 0.1%
ConAgra, Inc. 7 1/8%, 10/1/26 Baa 22,725 24,230
Dart and Kraft Finance NV 7 3/4%, 11/30/98 A2 7,239 7,348
Del Monte Foods Co. 0%, 12/15/07 (g) Caa 4,820 2,964
34,542
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.2%
Renaissance Cosmetic, Inc. 11 3/4%, 2/15/04 Caa $ 11,240 $ 7,868
Revlon Consumer Products Corp.:
10 1/2%, 2/15/03 B3 10,020 10,571
8 5/8%, 2/1/08 B3 17,920 17,987
36,426
TOBACCO - 0.3%
North Atlantic Trading, Inc. 11%, 6/15/04 B3 2,220 2,331
Philip Morris Companies, Inc.:
7%, 7/15/05 A2 50,500 51,774
6.95%, 6/1/06 A2 20,550 21,191
75,296
TOTAL NONDURABLES 146,264
PRECIOUS METALS - 0.0%
Centaur Mining & Exploration Ltd.
11%, 12/1/07 (g) B1 7,060 7,060
RETAIL & WHOLESALE - 1.0%
APPAREL STORES - 0.1%
Lamonts Apparel, Inc. 10 1/4%, 11/1/99
pay-in-kind (c)(g) - 3,082 108
Mothers Work, Inc. 12 5/8%, 8/1/05 B3 8,300 8,964
Specialty Retailers, Inc.:
8 1/2%, 7/15/05 Ba3 3,920 4,047
9%, 7/15/07 B2 8,660 8,963
22,082
GENERAL MERCHANDISE STORES - 0.5%
Dayton Hudson Corp.:
6.80%, 10/1/01 Baa 2,850 2,923
6 3/4%, 1/1/28 Baa 15,610 15,408
Federated Department Stores, Inc.:
8 1/2%, 6/15/03 Baa 60,285 66,423
6.79%, 7/15/27 Baa 11,500 11,827
Penney (J.C.) Co.,Inc. 6.95%, 4/1/00 A2 22,220 22,712
119,293
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 0.3%
American Stores Co. 7 1/2%, 5/1/37 Baa $ 32,000 $ 35,625
Food 4 Less Holdings, Inc. 13 5/8%, 6/15/07 - 1,358 1,619
Pathmark Stores, Inc.:
11 5/8%, 6/15/02 Caa 2,140 1,958
9 5/8%, 5/1/03 Caa 8,590 8,203
Penn Traffic Co. 8 5/8%, 12/15/03 B3 2,760 2,339
Pueblo Xtra International, Inc.:
9 1/2%, 8/1/03 B3 10,845 10,276
Series C, 9 1/2%, 8/1/03 B3 600 566
60,586
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Big 5 Corp. 10 7/8%, 11/15/07 (g) B2 7,165 7,308
Central Tractor Farm & Country, Inc.
10 5/8%, 4/1/07 B2 4,780 5,115
J Crew Operating Corp.:
10 3/8%, 10/15/07 (g) B3 8,530 8,104
0%,10/15/08 (e)(g) Caa 9,570 4,641
25,168
TOTAL RETAIL & WHOLESALE 227,129
SERVICES - 0.1%
LEASING & RENTAL - 0.1%
Hollywood Entertainment Corp.
10 5/8%, 8/15/04 B3 13,890 13,994
PRINTING - 0.0%
Sullivan Graphics, Inc. 12 3/4%, 8/1/05 Caa 10,910 11,128
SERVICES - 0.0%
Iron Mountain, Inc. 8 3/4%, 9/30/09 B3 3,660 3,761
Outsourcing Solutions, Inc. 11%, 11/1/06 B3 1,190 1,309
5,070
TOTAL SERVICES 30,192
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.8%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc.
0%, 7/15/07 (e) B2 $ 4,250 $ 3,103
Jordan Telecommunication Products, Inc.:
0%, 8/1/07 (e) B3 8,550 7,182
9 7/8%, 8/1/07 B3 3,450 3,657
13,942
COMPUTER SERVICES & SOFTWARE - 0.0%
Concentric Network Corp. 12 3/4%, 12/15/07
unit (g) - 2,290 2,508
DecisionOne Corp. 9 3/4%, 8/1/07 B3 1,160 1,183
DecisionOne Holdings Corp.
0%, 8/1/08 unit (e) Caa 6,035 3,862
Federal Data Corp. 10 1/8%, 8/1/05 B3 1,210 1,257
8,810
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Comdisco, Inc.:
6.44%, 3/8/99 Baa 20,000 20,156
6 1/2%, 4/30/99 Baa 13,250 13,338
6.70%, 8/6/99 Baa 6,750 6,848
9.28%, 6/5/00 Baa 2,000 2,152
9.3%, 6/27/00 Baa 2,000 2,153
9 1/4%, 7/6/00 Baa 7,625 8,220
6 3/8%, 11/30/01 Baa 24,500 24,768
9 1/2%, 1/28/02 Baa 2,580 2,909
Dictaphone Corp. 11 3/4%, 8/1/05 Caa 5,740 5,797
Unisys Corp. 10 5/8%, 10/1/99 B1 2,250 2,284
88,625
ELECTRONIC INSTRUMENTS - 0.0%
Fisher Scientific International, Inc.
9%, 2/1/08 (g) B3 3,670 3,766
Wavetek Corp. 10 1/8%, 6/15/07 B3 1,210 1,270
5,036
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONICS - 0.3%
Communications Instruments, Inc.
10%, 9/15/04 (g) B3 $ 3,800 $ 4,009
Motorola, Inc. 6 1/2%, 9/1/25 Aa3 30,050 31,434
Texas Instruments, Inc. 6 7/8%, 7/15/00 A3 32,100 32,805
68,248
TOTAL TECHNOLOGY 184,661
TRANSPORTATION - 0.4%
AIR TRANSPORTATION - 0.1%
AMR Corp. 9 1/2%, 7/15/98 Baa 5,690 5,785
Atlas Air, Inc. pass through trust
12 1/4%, 12/1/02 Ba3 4,810 5,363
Kitty Hawk, Inc. 9.95%, 11/15/04 (g) B1 5,820 6,140
US Air, Inc. euro pass through trust
8 5/8%, 9/1/98 B1 3,000 3,019
20,307
RAILROADS - 0.3%
Burlington Northern Santa Fe Corp.:
6 7/8%, 12/1/27 Baa 12,000 11,955
7.29%, 6/1/36 Baa 22,430 24,400
6.53%, 7/15/37 Baa 20,000 20,546
Transtar Holdings LP/Transtar Capital Corp.
0%, 12/15/03 (e) B- 9,742 8,768
65,669
SHIPPING - 0.0%
Holt Group, Inc. 9 3/4%, 1/15/06 (g) Caa 3,755 3,802
International Shipholding Corp.
7 3/4%, 10/15/07 (g) Ba3 1,680 1,672
5,474
TOTAL TRANSPORTATION 91,450
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - 2.5%
CELLULAR - 0.6%
Cencall Communications Corp.
0%, 1/15/04 (e) B3 $ 1,240 $ 1,201
McCaw International Ltd. 0%, 4/15/07 (e) CCC 40,280 25,981
Microcell Telecommunications, Inc.
0%, 6/1/06 (e) B3 8,640 6,178
Millicom International Cellular SA 0%, 6/1/06 (e) B3 55,670 42,588
Nextel Communications, Inc.
0%, 8/15/04 (e) B3 16,220 15,571
Pagemart Nationwide, Inc. 0%, 2/1/05 (e) B3 4,925 4,309
Pagemart Wireless, Inc. 0%, 2/1/08 (e)(g) Caa 27,500 16,637
Rogers Communications, Inc. 8 7/8%, 7/15/07 B2 6,030 6,030
Telesystem International Wireless, Inc. (e)(g):
0%, 6/30/07 Caa 7,960 5,313
0%, 11/1/07 Caa 2,600 1,566
Teletrac, Inc. 14%, 8/1/07 Caa 7,220 7,040
360 Degrees Communications Co.
7 1/8%, 3/1/03 Ba1 7,780 7,992
USA Mobile Communications, Inc. II:
9 1/2%, 2/1/04 B2 2,640 2,310
14%, 11/1/04 B2 2,805 2,819
145,535
ELECTRIC UTILITY - 0.8%
AES Corp.:
8 3/8%, 8/15/07 Ba1 855 876
8 1/2%, 11/1/07 (g) Ba1 6,850 7,004
Avon Energy Partners Holdings (g):
6.73%, 12/11/02 Baa 17,000 17,415
7.05%, 12/11/07 Baa 18,000 18,689
British Columbia Hydro & Power Authority yankee
12 1/2%, 1/15/14 Aa2 8,660 9,519
DR Investment yankee 7.10%, 5/15/02 (g) Baa 32,000 32,976
Israel Electric Corp. Ltd. (g):
7 3/4%, 12/15/27 A3 59,410 60,799
7 1/4%, 12/15/06 A3 9,250 9,571
Ohio Edison Co. 8 3/4%, 2/15/98 Baa 8,580 8,584
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Texas Utilities Co., Series C,
6 3/8%, 1/1/08 (g) Baa $ 24,900 $ 24,402
Texas Utilities Electric Co. 9 1/2%, 8/1/99 Baa 2,000 2,102
Virginia Electric & Power Co. 6.35%, 6/8/98 A3 10,000 10,020
201,957
GAS - 0.2%
Kern River Funding Corp. 6.72%, 9/30/01 (g) A3 20,000 20,568
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa 20,650 23,442
44,010
TELEPHONE SERVICES - 0.9%
American Communications Services, Inc.
0%, 4/1/06 - 1,140 901
Brooks Fiber Properties, Inc. 11 7/8%, 11/1/06 - 31,925 26,019
Flag Ltd. 8 1/4%, 1/30/08 (g) Ba3 1,550 1,589
GST USA, Inc. 0%, 12/15/05 (e) - 5,620 4,651
GST Equipment Funding, Inc. 13 1/4%, 5/1/07 - 3,570 4,230
GST Telecommunications, Inc.
12 3/4%, 11/15/07 - 6,520 7,441
Hyperion Telecommunications, Inc.:
Series B, 0%, 4/15/03 (e) B 16,480 12,442
12 1/4%, 9/1/04 B 5,010 5,711
KMC Telecom Holdings, Inc. 0%, 2/15/08
units (g) - 2,430 1,397
McLeodUSA, Inc. 0%, 3/1/07 (e) B3 9,940 7,592
Netia Holdings BV:
10 1/4%, 11/1/07 (g) B3 3,150 3,158
0%, 11/1/07 (e)(g) B3 5,240 3,458
NEXTLINK Communications, Inc.
9 5/8%, 10/1/07 B3 1,830 1,954
Optel Communications Corp. 15%, 12/29/04 (h) - 8,000 7,494
Winstar Communications, Inc.:
14 1/2%, 10/15/05 Caa 9,570 13,063
0%, 10/15/05 (e) Caa 5,230 4,341
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
WorldCom, Inc.:
9 3/8%, 1/15/04 Ba1 $ 6,127 $ 6,536
8 7/8%, 1/15/06 Ba1 28,746 31,525
7 3/4%, 4/1/07 Ba1 62,000 66,914
210,416
TOTAL UTILITIES 601,918
TOTAL NONCONVERTIBLE BONDS 4,142,529
TOTAL CORPORATE BONDS
(Cost $4,098,466) 4,223,421
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 3.5%
U.S. TREASURY OBLIGATIONS - 2.0%
5 1/2%, 11/15/98 Aaa 21,965 21,979
6%, 8/15/99 Aaa 10,500 10,597
7 1/4%, 5/15/04 Aaa 8,210 8,981
12 3/8%, 5/15/04 Aaa 15,756 21,458
13 3/4%, 8/15/04 Aaa 80,000 115,838
11 5/8%, 11/15/04 Aaa 48,000 64,372
6 1/2%, 8/15/05 Aaa 6,910 7,316
7%, 7/15/06 Aaa 80,600 88,270
7 1/4%, 2/ 15/23 Aaa 18,435 21,373
6 7/8%, 8/15/25 Aaa 104,840 118,879
TOTAL U.S. TREASURY OBLIGATIONS 479,063
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.5%
Federal Agricultural Mortgage Corporation:
7.01%, 8/10/03 Aaa 1,040 1,106
7.01%, 8/10/04 Aaa 1,340 1,430
7.04%, 8/10/05 Aaa 5,100 5,481
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Federal Farm Credit Bank:
6.10%, 9/24/01 Aaa $ 11,000 $ 11,189
6.55%, 2/7/04 Aaa 3,920 4,110
Federal Home Loan Banks:
5.78%, 2/16/01 Aaa 11,000 11,072
6 3/4%, 4/5/04 Aaa 5,435 5,733
7.56%, 9/1/04 Aaa 1,340 1,475
8.195%, 12/22/04 Aaa 10,000 11,361
8.09%, 12/28/04 Aaa 3,500 3,957
Freddie Mac 5.035%, 4/28/03 Aaa 35,000 34,883
Fannie Mae:
6.71%, 7/24/01 Aaa 11,500 11,920
6.79%, 6/2/04 Aaa 43,335 45,630
6.72%, 8/1/05 Aaa 27,260 28,776
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 10,688
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 23,811 25,412
Class 2-E, 9.40%, 5/15/02 Aaa 15,670 16,697
Class T-3, 9 5/8%, 5/15/02 Aaa 17,888 19,041
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 1,056 1,063
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 4,906 5,039
Overseas Private Investment Corp. U.S. Government
guaranteed participation Series 1996-A1,
6.726%, 9/15/10 (callable) - 30,000 31,378
Private Export Funding Corp. secured:
7.90%, 3/31/00 Aaa 12,750 13,370
6.86%, 4/30/04 Aaa 3,049 3,148
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
8%, 11/15/01 Aaa 14,490 15,675
6 1/8%, 3/15/03 Aaa 7,210 7,345
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
State of Israel (guaranteed by U.S. Government
through Agency for International Development): - continued
5 5/8%, 9/15/03 Aaa $ 19,160 $ 19,198
7 5/8%, 8/15/04 Aaa 8,330 9,200
U.S. Department of Housing and Urban Development
Government guaranteed participation certificates
Series 1995-A, 8.27%, 8/1/03 Aaa 11,375 12,711
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 368,088
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $828,354) 847,151
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 9.3%
FREDDIE MAC - 0.2%
5 1/2%, 11/1/98 to 7/1/03 Aaa 19,669 19,356
7%, 9/1/98 to 7/1/01 Aaa 25,493 25,881
8%, 10/1/16 to 4/1/20 . Aaa 3,113 3,270
8 1/2%, 9/1/19 Aaa - -
48,507
FANNIE MAE - 6.8%
5 1/2%, 8/1/02 to 2/1/26 Aaa 310,668 304,376
6%, 3/1/01 to 2/1/28 Aaa 354,198 348,719
6%, 2/1/13 (k) Aaa 112,200 111,793
6 1/2%, 1/1/24 to 2/1/28 Aaa 678,054 675,448
7%, 2/1/28 Aaa 195,200 198,005
7 1/2%, 8/1/07 to 5/1/08 Aaa 4,248 4,383
8%, 6/1/07 Aaa 78 81
8 1/2%, 1/1/09 to 7/1/21 Aaa 89 94
10%, 8/1/17 Aaa 98 107
1,643,006
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.3%
6%, 9/15/08 to 12/15/10 Aaa 29,262 29,326
6 1/2%, 6/15/02 to 8/15/25 Aaa 25,516 25,475
7%, 10/15/17 to 12/15/23 Aaa 104,727 106,564
7 1/2%, 8/15/21 to 2/15/26 Aaa 160,043 164,605
7 1/2%, 2/15/28 (k) Aaa 75,000 77,613
8%, 4/15/00 to 10/15/25 Aaa 100,604 104,733
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - CONTINUED
8 1/2%, 11/15/05 to 11/15/22 Aaa $ 7,101 $ 7,549
9%, 3/15/10 to 5/15/22 Aaa 1,335 1,448
9 1/2%, 11/15/09 to 11/15/24 Aaa 10,429 11,332
10%, 11/15/09 to 1/15/26 Aaa 15,121 16,839
11%, 3/15/10 to 7/15/20 Aaa 5,218 5,950
551,434
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $2,211,030) 2,242,947
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.2%
U.S. GOVERNMENT AGENCY - 0.2%
Freddie Mac:
planned amortization class Series 1645
Class ZA, 5 1/2%, 4/15/05 Aaa 13,539 13,482
sequential pay Series 1838 Class A,
6 1/2%, 12/15/02 Aaa 6,432 6,462
Fannie Mae planned amortization class
Series 1993-129 Class D, 6.10%, 6/25/05 Aaa 24,500 24,538
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $43,804) 44,482
COMMERCIAL MORTGAGE SECURITIES - 1.0%
ACP Mortgage LP floater Series E,
7.389%, 2/28/28 (g)(j) BB 2,014 1,912
American Southwest Financial Securities
Series 1994-C2 Class B2, 8%,
12/25/01 (g)(j) - 3,250 3,324
Berkeley Federal Bank & Trust FSB Series 1994
Class 1-B, 7.7802%, 8/1/24 (g)(j) - 6,065 4,755
CBM Funding Corp. sequential pay:
Series 1996-1 Class A-1, 7.55%, 7/1/99 AA 953 964
Series 1996-1B Class C, 7.86%, 2/1/08 BBB 12,500 13,535
CS First Boston Mortgage Securities Corp.:
Series 1997-C2 Class D, 7.27%, 4/17/11 Baa 22,200 22,602
Series 1995-AEWI Class E, 8.8936%,
11/25/27 (g)(j) - 2,000 2,027
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
CS First Boston Mortgage Securities Corp.: - continued
Series 1995-WF1 Class A-2,
6.648%, 12/21/27 Aaa $ 31,981 $ 31,961
DLJ Mortgage Acceptance Corp. Series 1993-MF12
Class B-2, 10.10%, 9/18/03 (g) - 2,800 2,885
Equitable Life Assurance Society of the United
States (The) Series 1996-1 Class C1,
7.52%, 5/15/06 (g) A2 6,000 6,460
First Chicago/Lennar Trust I Series 1997-CHL1:
Class E, 8.0985%, 2/28/11 (j) - 2,900 2,552
Class D, 8.0985%, 5/29/08 (j) - 3,500 3,512
First Union-Lehman Brothers Commercial Mortgage
Trust sequential pay Series 1997-C2 Class A3,
6.65%, 12/18/07 Aaa 49,000 50,317
General Motors Acceptance Corp. Commercial
Mortgage Securities, Inc. Series:
1996-C1 Class F, 7.86%, 11/15/06 (g) Ba3 2,500 2,437
1997-C2 Class E, 7.624%, 4/15/11 Baa 19,013 19,463
Morgan Stanley Capital One, Inc. Series
1996-MBL1 Class E, 8.661%, 5/25/21 (g) - 3,746 3,550
Oregon Commercial Mortgage, Inc. commercial
Series 1995 Class E, 10.0583%, 6/25/26 (g)(j) BB 3,208 3,289
Penn Mutual Life Insurance Co. (The)
Series 1996-PML Class K,
7.90%, 11/15/26 (g) - 6,500 4,829
Resolution Trust Corp.:
Series 1991-M2 Class A-3,
7.5417%, 9/25/20 (j) Ba3 1,469 1,263
Series 1995-C2 Class D, 7%, 5/25/27 Baa 3,731 3,763
Structured Asset Securities Corp.:
commercial Series 1992-M1
Class C, 7.05%, 11/25/02 B2 2,200 2,100
commercial Series 1995-C1
Class A1-A, 7 3/8%, 9/25/24 Aaa 37 38
Series 1995-C1
Class E, 7 3/8%, 9/25/24 (g) BB 7,896 7,679
sequential pay Series 1993-C1
Class A-1A, 6.60%, 10/25/24 AA+ 22 22
Series 1993-C1
Class E, 6.60%, 10/25/24 (g) B 3,250 1,300
commercial Series 1996-CFL
Class E, 7 3/4%, 2/25/28 BB+ 11,188 11,499
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (I) AMOUNT (000S) (D) (000S)
Structured Asset Securities Corp.: - continued
Series 1996-CFL
Class G, 7 3/4%, 2/25/28 (g) - $ 3,500 $ 3,254
Thirteen Affiliates of General Growth Properties, Inc.
sequential pay Series A-2, 6.602%,
11/15/12 (g) Aaa 32,000 32,556
Whitehall Partners commercial Series 1995-C1
Class E, 8.01%, 7/20/25 (g) - 8,892 8,918
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $240,605) 252,766
FOREIGN GOVERNMENT OBLIGATIONS (L) - 0.3%
Export Development Corp. yankee
8 1/8%, 8/10/99 Aa2 8,700 8,999
Manitoba Province:
yankee 6 3/8%, 10/15/99 A1 25,795 25,993
6 3/4%, 3/1/03 A1 5,000 5,165
Quebec Province yankee (e):
6.86%, 4/15/26 A2 16,750 17,547
7.22%, 7/22/36 A2 12,920 14,318
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $69,073) 72,022
SUPRANATIONAL OBLIGATIONS - 0.2%
African Development Bank:
6 3/4%, 7/30/99 Aa1 10,200 10,360
9.30%, 7/1/00 Aa1 15,000 16,147
Inter American Development Bank yankee
6.29%, 7/16/27 Aaa 10,850 11,522
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $37,491) 38,029
CERTIFICATES OF DEPOSIT - 0.1%
Canadian Imperial Bank of Commerce NY Branch
yankee 6.20%, 8/1/00 (Cost $21,032) - 21,000 21,172
CASH EQUIVALENTS - 8.4%
SHARES VALUE (NOTE 1)
(000S)
Taxable Central Cash Fund (b)
(Cost $2,043,142) 2,043,142 $ 2,043,142
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $19,991,943) $ 24,155,523
SECURITY TYPE ABBREVIATIONS
QUIPS - Quarterly Income Preferred
Securities
LEGEND
1. Non-income producing
2. At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.63%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.
4. Principal amount is stated in United States dollars unless
otherwise noted.
5. Debt obligation initially issued in zero coupon form which converts
to coupon form at a specified rate and date. The rate shown is the
rate at period end.
6. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.
7. 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 $790,402,000 or
3.4% of net assets.
8. 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
Live Entertainment, Inc.:
$2.00 warrants
3/28/98 3/23/93 $ 230
$2.72 warrants
3/28/98 3/23/93 $ 241
Optel Communication Corp.
15%, 12/29/04 12/31/97 $ 7,494
Optel Communication Corp.
warrants 12/29/04 12/31/97 $ 506
9. Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
10. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
11. Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
12. 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 19.9% AAA, AA, A 18.1%
Baa 4.4% BBB 6.7%
Ba 2.0% BB 1.1%
B 3.9% B 3.9%
Caa 0.6% CCC 0.5%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
of the sovereign credit of the issuing government. The percentage not
rated by Moody's or S&P amounted to 0.6%. FMR has determined that
unrated debt securities that are lower quality account for 0.0% of the
total value of investment in securities.
INCOME TAX INFORMATION
At January 31, 1998, the aggregate cost of investment securities for
income tax purposes was $20,004,370,000. Net unrealized appreciation
aggregated $4,151,153,000, of which $4,295,687,000 related to
appreciated investment securities and $144,534,000 related to
depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JANUARY 31, 1998
13.ASSETS 14. 15.
16.INVESTMENT IN SECURITIES, AT VALUE (COST $19,991,943) - 17. $ 24,155,523
SEE ACCOMPANYING SCHEDULE
18.CASH 19. 1,184
20.RECEIVABLE FOR INVESTMENTS SOLD 21. 94,121
22.RECEIVABLE FOR FUND SHARES SOLD 23. 32,479
24.DIVIDENDS RECEIVABLE 25. 21,205
26.INTEREST RECEIVABLE 27. 106,920
28.OTHER RECEIVABLES 29. 262
30. 31.TOTAL ASSETS 32. 24,411,694
33.LIABILITIES 34. 35.
36.PAYABLE FOR INVESTMENTS PURCHASED $ 1,125,142 37.
REGULAR DELIVERY
38. DELAYED DELIVERY 189,406 39.
40.PAYABLE FOR FUND SHARES REDEEMED 29,069 41.
42.ACCRUED MANAGEMENT FEE 8,426 43.
44.OTHER PAYABLES AND ACCRUED EXPENSES 4,533 45.
46. 47.TOTAL LIABILITIES 48. 1,356,576
49.50.NET ASSETS 51. $ 23,055,118
52.NET ASSETS CONSIST OF: 53. 54.
55.PAID IN CAPITAL 56. $ 18,418,564
57.UNDISTRIBUTED NET INVESTMENT INCOME 58. 64,136
59.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 60. 408,872
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
61.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 62. 4,163,546
INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
63.64.NET ASSETS, FOR 1,179,371 SHARES OUTSTANDING 65. $ 23,055,118
66.67.NET ASSET VALUE, OFFERING PRICE AND REDEMPTION 68. $19.55
PRICE
PER SHARE ($23,055,118 (DIVIDED BY) 1,179,371 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1998
69.INVESTMENT INCOME 71. $ 151,282
70.DIVIDENDS
72.INTEREST 73. 308,298
74. 75.TOTAL INCOME 76. 459,580
77.EXPENSES 78. 79.
80.MANAGEMENT FEE $ 49,519 81.
82.TRANSFER AGENT FEES 20,917 83.
84.ACCOUNTING FEES AND EXPENSES 506 85.
86.NON-INTERESTED TRUSTEES' COMPENSATION 68 87.
88.CUSTODIAN FEES AND EXPENSES 204 89.
90.REGISTRATION FEES 526 91.
92.AUDIT 109 93.
94.LEGAL 62 95.
96.INTEREST 3 97.
98.MISCELLANEOUS 100 99.
100. TOTAL EXPENSES BEFORE REDUCTIONS 72,014 101.
102. EXPENSE REDUCTIONS (1,589) 70,425
103.104.NET INVESTMENT INCOME 105. 389,155
106.REALIZED AND UNREALIZED GAIN (LOSS) 108. 109.
107.NET REALIZED GAIN (LOSS) ON:
110. INVESTMENT SECURITIES 904,881 111.
112. FOREIGN CURRENCY TRANSACTIONS (57) 904,824
113.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 114. 115.
ON:
116. INVESTMENT SECURITIES (685,824) 117.
118. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 24 (685,800)
119.120.NET GAIN (LOSS) 121. 219,024
122.123.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 124. $ 608,179
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
JANUARY 31, JULY 31,
1998 1997
125.INCREASE (DECREASE) IN NET ASSETS
126.OPERATIONS $ 389,155 $ 702,583
NET INVESTMENT INCOME
127. NET REALIZED GAIN (LOSS) 904,824 721,599
128. CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (685,800) 4,188,442
129. 608,179 5,612,624
130.NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
131.DISTRIBUTIONS TO SHAREHOLDERS (404,322) (692,744)
FROM NET INVESTMENT INCOME
132. FROM NET REALIZED GAIN (1,073,228) (1,497,701)
133. 134.TOTAL DISTRIBUTIONS (1,477,550) (2,190,445)
135.SHARE TRANSACTIONS 2,172,045 4,085,647
NET PROCEEDS FROM SALES OF SHARES
136. REINVESTMENT OF DISTRIBUTIONS 1,416,851 2,090,783
137. COST OF SHARES REDEEMED (1,991,026) (3,970,707)
138.139. 1,597,870 2,205,723
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
140. 728,499 5,627,902
141.TOTAL INCREASE (DECREASE) IN NET ASSETS
142.NET ASSETS 143. 144.
145. BEGINNING OF PERIOD 22,326,619 16,698,717
146. $ 23,055,118 $ 22,326,619
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $64,136 AND $79,303, RESPECTIVELY)
147.OTHER INFORMATION 149. 150.
148.SHARES
151. SOLD 111,313 228,546
152. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 73,838 127,174
153. REDEEMED (102,093) (222,372)
154. NET INCREASE (DECREASE) 83,058 133,348
</TABLE>
FINANCIAL HIGHLIGHTS
155. SIX MONTHS ENDED YEARS ENDED JULY 31,
JANUARY 31,
156. 1998 1997 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
157.SELECTED PER-SHARE DATA
158.NET ASSET VALUE, $ 20.37 $ 17.34 $ 16.69 $ 15.93 $ 16.59 $ 15.22
BEGINNING OF PERIOD
159.INCOME FROM
INVESTMENT OPERATIONS
160. NET INVESTMENT .37 D .66 D .64 .42 .46 .72
INCOME
161. NET REALIZED AND .13 4.57 1.00 1.53 .88 2.14
UNREALIZED GAIN
(LOSS)
162. TOTAL FROM .50 5.23 1.64 1.95 1.34 2.86
INVESTMENT
OPERATIONS
163.
164.LESS DISTRIBUTIONS (.36) (.66) (.55) (.44) (.51) (.80)
FROM NET INVESTMENT
INCOME
165. FROM NET (.96) (1.54) (.44) (.75) (1.49) (.69)
REALIZED GAIN
166. TOTAL DISTRIBUTIONS (1.32) (2.20) (.99) (1.19) (2.00) (1.49)
167.NET ASSET VALUE, $ 19.55 $ 20.37 $ 17.34 $ 16.69 $ 15.93 $ 16.59
END
OF PERIOD
168.TOTAL RETURN B, C 2.69% 33.63% 10.06% 13.03% 8.60% 20.29%
169.RATIOS AND SUPPLEMENTAL DATA
170.NET ASSETS, END OF $ 23,055 $ 22,327 $ 16,699 $ 14,387 $ 10,899 $ 7,828
PERIOD (IN MILLIONS)
171.RATIO OF EXPENSES .65% A .67% .74% .77% .80% .74%
TO AVERAGE NET ASSETS
172.RATIO OF EXPENSES .63% A, E .66% E .72% E .77% .79% E .74%
TO AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
173.RATIO OF NET 3.49% A 3.69% 3.44% 3.50% 4.00% 4.89%
INVESTMENT INCOME TO
AVERAGE
NET ASSETS
174.PORTFOLIO TURNOVER 83% A 80% 139% 76% 74% 76%
RATE
175.AVERAGE $ .0457 $ .0441
COMMISSION RATE F
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
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 January 31, 1998
12. 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
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, and gains and losses between
trade date and settlement date on purchases and sales of securities.
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 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
among 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, 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.
13. 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.
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 Fidelity Investments Money Management, Inc.
(formerly FMR Texas, Inc.), 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 earned
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. The market value of the securities purchased or sold on a
delayed delivery basis are identified as such in the fund's schedule
of investments. 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.
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 $10,006,000 or 0.0% of net assets.
14. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $8,878,163,000 and $8,864,378,000, respectively, of which
U.S. government and government agency obligations aggregated
$3,594,531,000 and $4,207,086,000, respectively.
15. 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 annualized rate of .44% 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 annualized rate of .19% 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 $736,000 for the
period.
16. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted
to $19,482,000. The weighted average interest rate was 5.87%.
17. 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 $1,059,000 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 $5,000 and $525,000, respectively, under these
arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Puritan Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Puritan Trust: Fidelity Puritan Fund, including the
schedule of portfolio investments, as of January 31, 1998, and the
related statement of operations for the six months then ended, the
statements of changes in net assets for the six months then ended and
for the year ended July 31, 1997, and the financial highlights for the
six months ended January 31, 1998 and for each of the five years in
the period ended July 31, 1997. These financial statements and
financial highlights are the responsibility of the fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of January 31, 1998 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Puritan Trust: Fidelity Puritan Fund as
of January 31, 1998, the results of its operations for the six months
then ended, the changes in its net assets for the six months then
ended and for the year ended July 31, 1997, and the financial
highlights for the six months ended January 31, 1998 and for each of
the five years in the period ended July 31, 1997, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 11, 1998
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 500
Merrimack, NH 03054-0500
(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 500
Merrimack, NH 03054-0500
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
48 West Putnam Avenue
Greenwich, CT
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
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
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
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
OREGON
16850 SW 72 Avenue
Tigard, 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
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Robert A. Lawrence, Vice President
Bettina Doulton, Vice President
Kevin E. Grant, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
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(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
