FIDELITY
BALANCED
FUND
ANNUAL REPORT
JULY 31, 1998
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
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 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 29 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 33 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 38 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 39
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:
So far, 1998 has been a year of considerable volatility in the U.S.
stock and bond markets. In the first quarter, the U.S. stock market
soared as inflation and interest rates remained stable, while the
economy maintained strong growth. By summer, however, investors began
to exercise caution relative to the troublesome Asian economic climate
and reports of concerns about corporate earnings domestically. Market
volatility and low interest rates were also the main stories in the
bond market, with many investors moving assets to highly rated U.S.
Treasuries.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY BALANCED 14.54% 68.60% 228.20%
S&P 500 (REGISTERED TRADEMARK) 19.29% 180.53% 445.15%
LB AGGREGATE BOND 7.87% 38.97% 139.96%
BALANCED FUNDS AVERAGE 9.75% 89.19% 232.69%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks - and the performance of the Lehman Brothers Aggregate
Bond Index - a market value weighted performance benchmark for
investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of at least one year. To measure how the fund's performance
stacked up against its peers, you can compare it to the balanced funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past one
year average represents a peer group of 379 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY BALANCED 14.54% 11.01% 12.62%
S&P 500 (REGISTERED TRADEMARK) 19.29% 22.91% 18.48%
LB AGGREGATE BOND 7.87% 6.80% 9.15%
BALANCED FUNDS AVERAGE 9.75% 13.54% 12.71%
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.
$10,000 OVER 10 YEARS
Balanced S&P 500
LB Aggregate Bond FID Balanced Composite
00304 SP001
LB001 F0021
1988/07/31 10000.00 10000.00
10000.00 10000.00
1988/08/31 9952.61 9660.00
10026.00 9806.40
1988/09/30 10190.52 10071.52
10253.59 10146.09
1988/10/31 10344.34 10351.50
10446.36 10391.63
1988/11/30 10248.20 10203.48
10318.91 10251.76
1988/12/31 10365.89 10382.04
10330.26 10363.91
1989/01/31 10719.61 11142.00
10479.02 10878.79
1989/02/28 10641.01 10864.57
10403.57 10684.93
1989/03/31 10759.05 11117.71
10448.31 10852.68
1989/04/30 11107.72 11694.72
10666.67 11281.37
1989/05/31 11356.78 12168.36
10947.21 11674.18
1989/06/30 11526.39 12099.00
11280.00 11776.22
1989/07/31 11980.59 13191.54
11520.27 12514.58
1989/08/31 12051.24 13450.09
11349.77 12587.67
1989/09/30 12060.69 13394.95
11407.65 12582.38
1989/10/31 12101.58 13084.18
11688.28 12531.05
1989/11/30 12285.55 13351.10
11799.32 12732.04
1989/12/31 12408.90 13671.53
11831.18 12929.14
1990/01/31 11950.52 12754.17
11690.39 12347.07
1990/02/28 12037.83 12918.70
11727.79 12458.44
1990/03/31 12136.05 13261.04
11736.00 12660.01
1990/04/30 11970.11 12929.52
11628.03 12423.53
1990/05/31 12368.38 14190.14
11972.22 13297.40
1990/06/30 12423.39 14093.65
12164.98 13328.78
1990/07/31 12457.03 14048.55
12332.85 13376.76
1990/08/31 11930.04 12778.56
12167.59 12579.51
1990/09/30 11735.14 12156.25
12268.58 12253.70
1990/10/31 11678.29 12103.97
12424.39 12284.33
1990/11/30 12087.65 12885.89
12691.52 12866.12
1990/12/31 12351.18 13245.41
12889.51 13161.78
1991/01/31 12862.42 13822.91
13049.34 13571.38
1991/02/28 13443.38 14811.25
13160.26 14199.73
1991/03/31 13700.51 15169.68
13251.06 14445.10
1991/04/30 13924.14 15206.08
13394.17 14528.31
1991/05/31 14371.41 15862.99
13471.86 14938.58
1991/06/30 14110.11 15136.46
13465.12 14525.08
1991/07/31 14479.55 15841.82
13652.29 15011.97
1991/08/31 14813.23 16217.27
13947.18 15355.14
1991/09/30 14939.31 15946.44
14230.31 15325.96
1991/10/31 15273.49 16160.13
14388.26 15517.23
1991/11/30 15001.19 15508.87
14520.63 15199.13
1991/12/31 15659.01 17283.09
14951.90 16422.96
1992/01/31 15659.01 16961.62
14748.55 16150.34
1992/02/29 15887.24 17182.12
14844.42 16318.31
1992/03/31 15785.96 16847.07
14761.29 16090.83
1992/04/30 15978.47 17342.38
14867.57 16421.01
1992/05/31 16273.65 17427.35
15148.57 16593.43
1992/06/30 16222.63 17167.69
15357.62 16536.68
1992/07/31 16612.28 17869.85
15670.91 17077.43
1992/08/31 16703.20 17503.51
15829.19 16936.37
1992/09/30 16818.76 17710.06
16017.55 17136.90
1992/10/31 16738.16 17772.04
15804.52 17081.72
1992/11/30 16778.46 18378.07
15807.68 17432.58
1992/12/31 16903.20 18604.12
16059.02 17672.10
1993/01/31 17274.55 18760.39
16367.36 17896.89
1993/02/28 17742.17 19015.53
16653.79 18168.21
1993/03/31 18307.97 19416.76
16723.73 18428.74
1993/04/30 18892.27 18946.88
16840.80 18212.75
1993/05/31 19198.33 19454.65
16862.69 18515.09
1993/06/30 19213.47 19511.07
17167.91 18681.35
1993/07/31 19466.65 19433.03
17265.76 18679.11
1993/08/31 20099.60 20169.54
17567.91 19234.63
1993/09/30 19906.04 20014.23
17615.35 19166.54
1993/10/31 20068.12 20428.53
17680.52 19432.95
1993/11/30 19714.50 20234.46
17530.24 19256.11
1993/12/31 20161.69 20479.29
17624.90 19437.50
1994/01/31 20703.76 21175.59
17862.84 19938.99
1994/02/28 20342.38 20601.73
17552.03 19476.01
1994/03/31 19507.46 19703.49
17118.49 18774.09
1994/04/30 19340.21 19955.70
16981.54 18858.20
1994/05/31 19370.62 20282.97
16979.84 19043.01
1994/06/30 19170.80 19786.04
16942.49 18746.32
1994/07/31 19538.30 20435.02
17279.64 19264.47
1994/08/31 19722.04 21272.86
17300.38 19747.62
1994/09/30 19583.37 20751.67
17046.06 19341.22
1994/10/31 19352.07 21218.59
17030.72 19595.36
1994/11/30 19074.51 20445.80
16993.26 19149.92
1994/12/31 19090.27 20749.02
17110.51 19373.17
1995/01/31 19090.27 21287.04
17449.30 19828.01
1995/02/28 19509.67 22116.59
17864.59 20480.39
1995/03/31 19837.80 22769.25
17973.56 20892.99
1995/04/30 20041.66 23439.81
18225.19 21379.17
1995/05/31 20418.03 24376.70
18930.51 22222.83
1995/06/30 20640.88 24942.97
19068.70 22597.47
1995/07/31 20942.33 25770.08
19026.75 23027.18
1995/08/31 20989.92 25834.76
19256.97 23173.31
1995/09/30 21179.41 26924.99
19443.77 23849.97
1995/10/31 20986.87 26828.87
19696.54 23922.90
1995/11/30 21580.53 28006.65
19991.98 24696.57
1995/12/31 21935.32 28546.06
20271.87 25120.27
1996/01/31 22130.01 29517.77
20405.67 25699.64
1996/02/29 21724.40 29791.40
20050.61 25663.71
1996/03/31 21549.32 30078.29
19910.25 25740.14
1996/04/30 21614.96 30521.64
19798.76 25910.13
1996/05/31 21762.67 31308.80
19759.16 26290.33
1996/06/30 21927.92 31428.08
20023.93 26491.35
1996/07/31 21413.34 30039.59
20078.00 25817.72
1996/08/31 21662.33 30673.13
20043.86 26126.87
1996/09/30 22366.62 32399.41
20392.63 27190.96
1996/10/31 23088.67 33292.98
20845.34 27882.37
1996/11/30 24213.72 35809.60
21201.80 29337.67
1996/12/31 23983.72 35100.21
21004.62 28879.82
1997/01/31 24665.07 37293.27
21069.74 29998.28
1997/02/28 24920.58 37585.65
21122.41 30169.39
1997/03/31 24279.74 36041.26
20887.95 29291.64
1997/04/30 24882.00 38192.92
21201.27 30516.62
1997/05/31 26120.94 40518.11
21402.68 31747.29
1997/06/30 27021.32 42333.32
21657.37 32751.78
1997/07/31 28654.76 45701.78
22242.12 34669.13
1997/08/31 27803.29 43141.57
22053.07 33385.96
1997/09/30 29133.34 45504.43
22379.45 34680.73
1997/10/31 28544.42 43984.58
22703.95 34186.88
1997/11/30 29059.73 46020.63
22808.39 35199.29
1997/12/31 29607.23 46810.80
23038.76 35704.12
1998/01/31 29936.85 47328.53
23333.65 36123.85
1998/02/28 31138.98 50741.86
23314.99 37675.45
1998/03/31 32271.51 53340.35
23394.26 38884.30
1998/04/30 32486.65 53876.96
23515.91 39199.88
1998/05/31 32408.42 52950.81
23739.31 38944.54
1998/06/30 33017.28 55101.68
23941.09 40026.10
1998/07/31 32820.28 54514.84
23996.00 39803.96
IMATRL PRASUN SHR__CHT 19980731 19980819 155955 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Balanced Fund on July 31, 1988. As the chart
shows, by July 31, 1998, the value of the investment would have grown
to $32,820 - a 228.20% increase on the initial investment. For
comparison, look at how both the Standard & Poor's 500 Index, and the
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 $54,515 - a 445.15%
increase. If $10,000 was invested in the Lehman Brothers Aggregate
Bond Index, it would have grown to $23,996 - a 139.96% 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
While the Standard & Poor's 500
Index - a measure of the U.S.
stock market - returned 19.29%
for the 12-month period that
ended July 31, 1998, the bull
market came to an abrupt halt for
thousands of stocks as the period
drew to a close. The average
stock on the New York Stock
Exchange was down 24% from its
52-week high, and the Russell
2000 Index - a measure of small
company stock performance -
returned just 2.31% during the
past year. At the end of the period,
the Dow Jones Industrial Average
was down over 454 points, or
4.8%, since hitting a record of
9337.97 on July 17, 1998.
Investors worldwide flocked to the
perceived safe haven of U.S.
bonds, amid a sharp sell-off in
Russian bonds, weakness in
Asian markets and concerns
about corporate profits. The
Lehman Brothers Aggregate Bond
Index - a broad gauge of the U.S.
taxable bond market - returned
7.87% during the 12-month period
that ended July 31, 1998. In the
fourth quarter of 1997 and the first
half of 1998, global market
volatility and low interest rates
were the main stories behind bond
performance. As investors moved
assets from stocks and riskier
bonds to highly rated corporate
bonds and U.S. Treasuries, bond
yields - which move in the
opposite direction of bond prices
- - fell to their lowest levels in
decades.
An interview with Stephen DuFour (right photo), Lead Portfolio Manager
of Fidelity Balanced Fund, as well as Kevin Grant, Co-Manager for
fixed-income investments
Q. STEVE, HOW DID THE FUND PERFORM?
S.D. Since the fund is made up of stocks and bonds, its performance
typically falls between that of its two benchmark indexes, the
Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. That's what happened during the year. For the 12 months that
ended July 31, 1998, the fund returned 14.54%, while the S&P 500
returned 19.29% and the Lehman Brothers Aggregate Bond Index returned
7.87%. Compared to its competitors, the fund did very well. Its 14.54%
12-month return beat the 9.75% return of the balanced funds average
tracked by Lipper Analytical Services.
Q. WHAT HELPED THE FUND PERFORM BETTER THAN ITS PEERS?
S.D. The key factors were stock selection and its sector weightings
relative to the other funds. For the period, the fund benefited from
strong stock selection in both the technology and the media and
leisure sectors, as well as from having a higher concentration than
its competitors both in media and leisure and in finance stocks.
Having less invested in basic industries such as chemicals, paper and
steel also helped, as these industries were hurt by falling commodity
prices.
Q. CAN YOU TALK ABOUT SOME OF THE FUND'S LARGEST EQUITY SECTOR
INVESTMENTS?
S.D. While the finance sector was a good performer, I recently reduced
that equity stake due to the sector's deteriorating fundamentals, or
business prospects. With media and leisure, I sought to take advantage
of one of the few sectors that appeared to demonstrate some ability to
use price increases to improve revenues. In addition, cable companies,
one of my main focuses in the sector, have the potential to benefit
from increasing revenue resulting from selling diverse services -
including entertainment, Internet access and telephone service - over
systems they've already installed. Further, low interest rates have
helped these companies because they tend to carry a lot of debt. In
technology, the individual companies I've chosen follow two main
themes. First, I targeted companies that provide outsourcing for
computer services that have become too complex for firms to handle
in-house. Second, I've looked toward personal computer manufacturers
and parts suppliers because an inventory correction in that industry
earlier this year appeared to be ending.
Q. WHICH STOCKS PERFORMED WELL? WHICH DISAPPOINTED?
S.D. Unisys, the fund's largest equity holding, benefited from
bringing in a new CEO, who helped improve the company's profit margins
dramatically. Time Warner, another top holding, started to profit from
the acquisitions it has been making over the past 10 years, among
other factors. On the down side, MCN Energy Group was hurt by falling
oil prices and negative sentiment about its investments in India.
Also, Wisconsin Central saw its railroad interests in New Zealand
impaired by the turmoil in Asia, and suffered from a revenue slowdown
in its U.S operations. I've sold off that stock.
Q. TURNING TO YOU, KEVIN, WHAT DEVELOPMENTS MERIT MENTION FOR THE BOND
PORTION OF THE FUND?
K.G. The mortgage-backed sector deserves mention. At the beginning of
1998, the fund was underweighted in mortgage-backed issues relative to
the Lehman Brothers index because I felt that prices were high given
the level of risk involved. This proved to be an accurate analysis, as
mortgage-backed securities underperformed both Treasuries and
corporates in January 1998. When mortgage-backed issues became cheaper
on a relative basis, I changed my strategy, overweighting them
relative to the index. The fund was rewarded for this shift in
February and March, when the mortgage-backed sector finally shook off
its lethargy and performed well. Looking at corporate bonds,
industries with little or no business in Asia performed well, such as
cable companies and retailers that have imported ever-cheaper goods
from that region. Relative to the index, I've overweighted short-term
corporates from these industries.
Q. STEVE, WHAT'S YOUR OUTLOOK?
S.D. I believe it's going to be a volatile period until the end of the
year. Corporate earnings have not been stellar, hurt by a number of
weak economies around the world. However, investors still seem to want
to invest in the market, as evidenced by strong buying at market dips.
I believe that once the anniversary of the Asian crisis passes, those
countries recover and we see more global stability, the U.S. should
prove to be a strong market.
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 MANAGING IN
A VOLATILE MARKET:
"IN THE VOLATILE MARKET OF THE PAST
SEVERAL MONTHS, I'VE BEEN
DOUBLE-CHECKING THE UNDERLYING
THESIS FOR WHY I OWN A PARTICULAR
STOCK, MAKING SURE THAT I
UNDERSTAND WHERE THE RISKS ARE FOR
EACH INDIVIDUAL COMPANY.
SPECIFICALLY, I'VE BEEN KEEPING A
CLOSE EYE ON HOW ASIA, CURRENCIES,
INTEREST RATES AND COMMODITY
PRICES MIGHT AFFECT A PARTICULAR
COMPANY'S BUSINESS. IN THIS
ENVIRONMENT, THE MARKET HAS BEEN
SEVERELY PUNISHING ANY STOCK THAT
HAS SHOWN THE SLIGHTEST CRACKS IN
ITS EARNINGS STORY. NEVERTHELESS, I
DON'T WANT TO GET SO DEFENSIVE THAT I
GIVE UP THE REWARDS OF INVESTING IN
WHAT MAY PROVE TO BE SUCCESSFUL
STOCKS. AT THE SAME TIME, I'M
WORKING HARD TO MAKE SURE THAT I
OWN THE STOCKS THAT PROVIDE THE BEST
EARNINGS PROSPECTS.
"THE OUTGROWTH OF THIS PROCESS IS
THAT I'VE CONTINUED TO REDUCE THE
NUMBER OF STOCKS IN THE FUND. I'LL
PROBABLY KEEP DOING SO UNTIL I SEE
SIGNIFICANT SIGNS OF CHANGE IN THE
MARKET. RIGHT NOW, INVESTORS ARE
NOT BEING REWARDED FOR RISK, SO I'M
BEING CAREFUL NOT TO TAKE ON
INVESTMENTS THAT I PERCEIVE COME
WITH SIGNIFICANT RISK."
FUND FACTS
GOAL: SEEKS HIGH INCOME WITH
PRESERVATION OF CAPITAL BY
INVESTING IN A BROADLY
DIVERSIFIED PORTFOLIO OF
HIGH-YIELDING EQUITY AND DEBT
SECURITIES
FUND NUMBER: 304
TRADING SYMBOL: FBALX
START DATE: NOVEMBER 6, 1986
SIZE: AS OF JULY 31, 1998,
MORE THAN $4.9 BILLION
MANAGER: STEPHEN DUFOUR,
SINCE 1997; MANAGER, FIDELITY
CONVERTIBLE SECURITIES FUND,
JANUARY 1997-JULY 1997;
VARIOUS FIDELITY SELECT
PORTFOLIOS, 1993-1997;
JOINED FIDELITY IN 1992;
KEVIN GRANT, SINCE 1997;
JOINED FIDELITY IN 1993
(CHECKMARK)
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
UNISYS CORP. 2.8 1.8
BANC ONE CORP. 2.6 2.4
TIME WARNER, INC. 2.2 1.0
FANNIE MAE 2.1 2.3
WORLDCOM, INC. 2.0 1.4
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE BOND ISSUERS AS OF JULY 31, 1998
(WITH MATURITIES GREATER THAN ONE YEAR) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE BOND ISSUERS
6 MONTHS AGO
FANNIE MAE 11.6 10.8
U.S. TREASURY 6.4 4.1
GINNIE MAE 2.8 3.2
WORLDCOM, INC. 0.6 0.6
FORD MOTOR CREDIT CO. 0.6 0.6
</TABLE>
TOP FIVE MARKET SECTORS AS OF JULY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 24.8 25.7
UTILITIES 9.9 11.0
TECHNOLOGY 6.8 4.8
MEDIA & LEISURE 6.3 3.6
ENERGY 5.6 6.2
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JULY 31, 1998 * AS OF JANUARY 31, 1998 **
ROW: 1, COL: 1, VALUE: 53.4
ROW: 1, COL: 2, VALUE: 39.8
ROW: 1, COL: 3, VALUE: 1.9
ROW: 1, COL: 4, VALUE: 4.9
STOCKS 53.6%
BONDS 36.4%
CONVERTIBLE
SECURITIES 1.1%
SHORT-TERM
INVESTMENTS 8.9%
FOREIGN
INVESTMENTS 3.8%
STOCKS 54.4%
BONDS 39.8%
CONVERTIBLE
SECURITIES 0.9%
SHORT-TERM
INVESTMENTS 4.9%
FOREIGN
INVESTMENTS 4.0%
ROW: 1, COL: 1, VALUE: 52.6
ROW: 1, COL: 2, VALUE: 36.4
ROW: 1, COL: 3, VALUE: 2.1
ROW: 1, COL: 4, VALUE: 8.9
*
**
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 54.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.0%
Textron, Inc. 676,100 $ 49,947
BASIC INDUSTRIES - 0.9%
CHEMICALS & PLASTICS - 0.6%
du Pont (E.I.) de Nemours & Co. 209,100 12,964
Great Lakes Chemical Corp. 282,100 11,125
Hanna (M.A.) Co. 441,700 6,543
30,632
METALS & MINING - 0.3%
Aluminum Co. of America 199,300 13,814
TOTAL BASIC INDUSTRIES 44,446
CONSTRUCTION & REAL ESTATE - 1.6%
BUILDING MATERIALS - 1.0%
Owens Corning 1,189,000 49,046
ENGINEERING - 0.3%
IMS Health, Inc. 207,100 13,009
Nielsen Media Research, Inc. 100 0
13,009
REAL ESTATE INVESTMENT TRUSTS - 0.3%
Equity Office Properties Trust 187,200 4,657
Equity Residential Properties Trust (SBI) 152,200 6,392
Public Storage, Inc. 216,000 5,724
16,773
TOTAL CONSTRUCTION & REAL ESTATE 78,828
DURABLES - 2.2%
AUTOS, TIRES, & ACCESSORIES - 2.0%
Danaher Corp. 47,400 1,935
Federal-Mogul Corp. 163,700 9,843
Ford Motor Co. 809,400 46,085
Navistar International Corp. (a) 1,564,300 41,747
99,610
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - 0.2%
NIKE, Inc. Class B 268,500 $ 11,948
TOTAL DURABLES 111,558
ENERGY - 5.4%
OIL & GAS - 5.4%
Amoco Corp. 1,838,500 76,757
Burlington Resources, Inc. 347,600 12,601
Coastal Corp. (The) 302,260 9,899
ENI SpA sponsored ADR 142,300 9,196
Elf Aquitaine SA sponsored ADR 106,600 6,916
Exxon Corp. 142,300 9,979
Phillips Petroleum Co. 1,216,000 53,732
Texaco, Inc. 331,062 20,133
Tosco Corp. 796,900 22,313
Total SA:
Class B 332,867 38,056
sponsored ADR 216,900 12,404
271,986
FINANCE - 17.2%
BANKS - 8.2%
Banc One Corp. 2,483,870 128,385
Bank of New York Co., Inc. 1,240,700 79,405
Chase Manhattan Corp. 784,900 59,358
Citicorp 328,600 55,862
Mellon Bank Corp. 119,100 8,024
National City Corp. 214,300 14,331
NationsBank Corp. 218,727 17,444
Norwest Corp. 174,000 6,253
Providian Financial Corp. 168,400 13,230
U.S. Bancorp 552,800 25,429
407,721
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 1.7%
American Express Co. 481,000 $ 53,090
Associates First Capital Corp. Class A 102,594 7,970
Fleet Financial Group, Inc. 181,100 15,563
Household International, Inc. 193,900 9,647
86,270
FEDERAL SPONSORED CREDIT - 2.7%
Freddie Mac 441,600 20,866
Fannie Mae 1,712,800 106,193
SLM Holding Corp. 188,600 8,723
135,782
INSURANCE - 2.3%
Allmerica Financial Corp. 229,300 15,334
Allstate Corp. 468,542 19,884
American International Group, Inc. 318,700 48,064
Hartford Financial Services Group, Inc. 348,300 18,133
MBIA, Inc. 82,198 5,538
Torchmark Corp. 106,500 4,666
UNUM Corp. 91,000 4,795
116,414
SAVINGS & LOANS - 0.5%
Dime Bancorp., Inc. 99,000 2,945
Washington Mutual, Inc. 542,170 21,653
24,598
SECURITIES INDUSTRY - 1.8%
Lehman Brothers Holdings, Inc. 284,100 20,455
Morgan Stanley, Dean Witter, Discover and Co. 293,800 25,579
Travelers Group, Inc. (The) 631,500 42,311
88,345
TOTAL FINANCE 859,130
HEALTH - 3.3%
DRUGS & PHARMACEUTICALS - 2.3%
American Home Products Corp. 127,900 6,587
Amgen, Inc. (a) 71,100 5,221
Biomatrix, Inc. (a) 257,400 14,077
Lilly (Eli) & Co. 311,800 20,968
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Merck & Co., Inc. 166,000 $ 20,470
Pharmacia & Upjohn, Inc. 169,900 8,049
Schering-Plough Corp. 121,600 11,765
Warner-Lambert Co. 379,300 28,661
115,798
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Johnson & Johnson 94,900 7,331
McKesson Corp. 165,800 13,368
20,699
MEDICAL FACILITIES MANAGEMENT - 0.6%
Humana, Inc. (a) 213,300 5,799
United HealthCare Corp. 382,800 21,628
27,427
TOTAL HEALTH 163,924
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
ELECTRICAL EQUIPMENT - 0.4%
General Electric Co. 217,700 19,443
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Tyco International Ltd. 143,910 8,914
POLLUTION CONTROL - 0.2%
Waste Management, Inc. 219,200 12,083
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 40,440
MEDIA & LEISURE - 4.3%
BROADCASTING - 3.5%
MediaOne Group, Inc. (a) 1,131,400 54,661
Metromedia Fiber Network, Inc. Class A 5,600 314
Scripps E.W. Co. Class A 109,400 5,757
Time Warner, Inc. 1,233,100 111,056
171,788
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - 0.4%
Cinar Films, Inc. Class B (sub-vtg.) (a) 301,600 $ 6,623
News Corp. Ltd. ADR 510,300 14,863
21,486
PUBLISHING - 0.4%
Meredith Corp. 289,100 12,088
Washington Post Co. Class B 13,000 7,078
19,166
TOTAL MEDIA & LEISURE 212,440
NONDURABLES - 0.7%
FOODS - 0.6%
Heinz (H.J.) Co. 265,200 14,619
Quaker Oats Co. 263,100 13,911
28,530
HOUSEHOLD PRODUCTS - 0.1%
Rubbermaid, Inc. 161,700 5,387
TOTAL NONDURABLES 33,917
RETAIL & WHOLESALE - 1.7%
DRUG STORES - 0.2%
Rite Aid Corp. 300,000 11,850
GENERAL MERCHANDISE STORES - 1.5%
Dayton Hudson Corp. 9,200 440
Federated Department Stores, Inc. (a) 428,200 22,668
Penney (J.C.) Co., Inc. 704,300 41,334
Sears, Roebuck & Co. 149,500 7,587
72,029
TOTAL RETAIL & WHOLESALE 83,879
SERVICES - 0.8%
ADVERTISING - 0.5%
Interpublic Group of Companies, Inc. 147,700 8,899
Omnicom Group, Inc. 336,000 17,640
26,539
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
LEASING & RENTAL - 0.1%
United Rentals, Inc. 92,500 $ 3,139
SERVICES - 0.2%
Dunn & Bradstreet Corp. 205,000 5,625
Service Corp. International 156,100 5,912
11,537
TOTAL SERVICES 41,215
TECHNOLOGY - 6.3%
COMPUTER SERVICES & SOFTWARE - 0.4%
CBT Group PLC sponsored ADR (a) 44,000 2,552
DST Systems, Inc. (a) 113,600 7,129
HBO & Co. 189,800 5,593
Microsoft Corp. (a) 47,400 5,211
20,485
COMPUTERS & OFFICE EQUIPMENT - 3.5%
Apple Computer, Inc. (a) 194,400 6,731
Compaq Computer Corp. 915,900 30,110
Unisys Corp. (a) 5,059,300 139,447
176,288
ELECTRONIC INSTRUMENTS - 0.1%
Applied Materials, Inc. (a) 118,500 3,970
Varian Associates, Inc. 21,600 750
4,720
ELECTRONICS - 1.8%
Intel Corp. 474,000 40,024
Micron Technology, Inc. (a) 496,300 16,564
Motorola, Inc. 588,100 30,728
87,316
PHOTOGRAPHIC EQUIPMENT - 0.5%
Eastman Kodak Co. 270,000 22,714
TOTAL TECHNOLOGY 311,523
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.4%
Continental Airlines, Inc. Class B (a) 125,000 $ 6,687
Southwest Airlines Co. 360,000 11,858
Viad Corp. 97,700 2,351
20,896
RAILROADS - 0.3%
Union Pacific Corp. 365,200 15,338
TRUCKING & FREIGHT - 0.2%
CNF Transportation, Inc. 200,000 8,650
TOTAL TRANSPORTATION 44,884
UTILITIES - 7.3%
CELLULAR - 0.4%
Nextel Communications, Inc. Class A (a) 569,200 15,244
SkyTel Communications, Inc. (a) 378,900 7,388
22,632
ELECTRIC UTILITY - 0.7%
Central Maine Power Co. 187,800 3,557
Duke Energy Corp. 247,277 14,126
PG&E Corp. 579,068 17,625
35,308
GAS - 0.3%
Enron Corp. 192,200 10,175
MCN Energy Group, Inc. 184,400 4,575
14,750
TELEPHONE SERVICES - 5.9%
AT&T Corp. 293,000 17,763
Advanced Communications Group, Inc. 163,700 1,524
BellSouth Corp. 647,400 44,225
GTE Corp. 603,600 32,821
Level 3 Communications, Inc. (a) 50,000 4,125
MCI Communications Corp. 332,000 21,497
NEXTLINK Communications, Inc. Class A (a) 272,000 10,098
SBC Communications, Inc. 1,032,900 42,220
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Sprint Corp. 247,400 $ 17,318
WorldCom, Inc. (a) 1,914,773 101,244
292,835
TOTAL UTILITIES 365,525
TOTAL COMMON STOCKS
(Cost $2,140,462) 2,713,642
CONVERTIBLE PREFERRED STOCKS - 0.4%
FINANCE - 0.2%
CREDIT & OTHER FINANCE - 0.2%
Union Pacific Capital Trust $3.13 TIDES (a)(e) 200,000 9,000
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Loral Space & Communications Ltd.:
Series C, $3.00 (e) 19,600 1,455
Series C, $3.00 41,400 3,074
4,529
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 10,700 5,430
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $14,336) 18,959
CORPORATE BONDS - 17.1%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - 0.5%
RETAIL & WHOLESALE - 0.5%
DRUG STORES - 0.5%
Rite Aid Corp.:
5 1/4%, 9/15/02 - $ 3,000 $ 3,832
5 1/4%, 9/15/02 (e) Baa 15,000 19,153
TOTAL CONVERTIBLE BONDS 22,985
NONCONVERTIBLE BONDS - 16.6%
AEROSPACE & DEFENSE - 0.3%
DEFENSE ELECTRONICS - 0.3%
Raytheon Co. 6.45%, 8/15/04 Baa 13,000 13,103
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.3%
Praxair, Inc. 6.15%, 4/15/03 A3 15,000 14,904
CONSTRUCTION & REAL ESTATE - 0.5%
REAL ESTATE INVESTMENT TRUSTS - 0.5%
Equity Office Properties Trust:
6.625% 2/15/05 Baa 2,500 2,481
6.75% 2/15/08 Baa 4,100 4,043
7.25% 2/15/18 Baa 15,000 14,811
Centerpoint Properties Trust 6 3/4%, 4/1/05 Baa 2,600 2,599
23,934
DURABLES - 0.6%
TEXTILES & APPAREL - 0.6%
Levi Strauss & Co. 7%, 11/1/06 (e) Baa 14,500 14,536
Unifi, Inc. 6 1/2%, 2/1/08 A3 15,000 14,741
29,277
ENERGY - 0.2%
OIL & GAS - 0.2%
Petroleum Geo-Services ASA yankee
7 1/8%, 3/30/28 Baa 8,250 8,256
USX-Marathon Group 6.85%, 3/1/08 Baa 4,210 4,195
12,451
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 7.4%
ASSET BACKED SECURITIES - 1.2%
Capital Equipment Receivables Trust
6.48%, 10/15/06 Baa $ 4,680 $ 4,678
Chevy Chase Auto Receivable Trust
5.91%, 12/15/04 Aaa 3,595 3,590
Contimortgage Home Equity Loan Trust
6.26%, 7/15/12 Aaa 15,000 15,005
Ford Credit Auto Owner Trust:
6.40%, 5/15/02 A1 4,250 4,285
6.20%, 12/15/02 Baa 3,850 3,844
6.40%, 12/15/02 Baa 2,360 2,340
Green Tree Financial Corp. 6.10%, 4/15/27 Aaa 1,703 1,704
Key Plastics, Inc. 10 1/4%, 3/15/07 A2 5,890 5,908
Key Auto Finance Trust Class C 6.65%, 10/15/03 Baa 1,728 1,733
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 189 189
MBNA Master Credit Card Trust II Class A
6.55%, 1/15/07 Aaa 15,000 15,408
Premier Auto Trust 6%, 5/6/00 Aaa 2,386 2,388
Union Federal Savings Bank Grantor Trust:
7.275%, 10/10/00 Baa 305 305
8.20%, 1/10/01 Baa 231 232
61,609
BANKS - 2.7%
ABN Amro Bank NV 6 5/8%, 10/31/01 Aa3 6,750 6,860
Bank of New York Institutional Capital Trust A
7.78%, 10/1/26 (e) A1 10,000 10,444
Banc One Corp. 6.70%, 3/24/00 Aa3 5,300 5,358
Banco Latinoamericano Exportaciones SA euro
6.90%, 12/4/99 (e) Baa 2,300 2,328
BanPonce Financial Corp.:
6.88%, 6/16/00 A3 2,500 2,535
6.69%, 9/21/00 A3 500 506
6 3/4%, 8/9/01 A3 770 782
BanPonce Corp.:
5 3/4%, 3/1/99 A3 1,620 1,618
6.378%, 4/8/99 A3 2,980 2,986
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Barclays Bank PLC yankee:
5 7/8%, 7/15/00 A1 $ 11,000 $ 10,983
5.95%, 7/15/01 A1 12,450 12,433
Capital One Bank:
7.20%, 7/19/99 Baa 18,000 18,159
6 3/8%, 2/15/03 Baa 5,300 5,265
Chase Manhattan Corp. 5.5% 2/15/01 Aa3 2,400 2,371
Firstar Corp. 7.15%, 9/1/00 A3 6,210 6,215
MBNA Corp.:
6 7/8%, 11/15/02 Baa 8,350 8,493
6.34%, 6/2/03 Baa 1,800 1,798
Midland American Capital Corp. gtd.
12 3/4%, 11/15/03 Aa3 590 601
NB Capital Trust IV 8 1/4%, 4/15/27 Aa3 6,630 7,278
NationsBank NA 5.92%, 6/8/01 Aa2 6,500 6,499
Providian National Bank 6 1/4%, 5/7/01 Baa 3,250 3,250
Signet Banking Corp. 9 5/8%, 6/1/99 A2 4,469 4,595
Union Planters National Bank
6.81%, 8/20/01 A3 4,000 4,079
Zions Bancorp. 8 5/8%, 10/15/02 Baa 6,000 6,548
131,984
CREDIT & OTHER FINANCE - 2.9%
AT&T Capital Corp.:
6.41%, 8/13/99 Baa 7,500 7,523
6.16%, 12/3/99 Baa 2,750 2,753
Associates Corp. of North America:
6%, 4/15/03 Aa3 5,550 5,519
6%, 7/15/05 Aa3 20,000 19,802
BCH Cayman Islands Ltd. yankee 7.70%, 7/15/06 A2 690 737
BankBoston Capital Trust II 7 3/4%, 12/15/26 A2 3,250 3,355
BanPonce Trust I 8.327%, 2/1/27 (e) A3 7,150 7,690
Chase Capital I 7.67%, 12/1/26 Aa3 7,635 7,951
Chrysler Financial Corp. 6 3/8%, 1/28/00 A2 7,230 7,276
ERP Operating LP 6.55%, 11/15/01 A3 2,000 2,012
Finova Capital Corp. 6.12%, 5/28/02 Baa 5,000 5,024
First Security Capital I 8.41%, 12/15/26 A3 4,690 5,205
First Union Institutional Capital I 8.04%, 12/1/26 BBB 2,000 2,145
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Ford Motor Credit Co.:
euro 8 5/8%, 1/24/00 A1 $ 3,766 $ 3,900
5.73%, 2/23/00 A1 4,500 4,489
6.20%, 3/12/01 A1 20,000 20,094
General Electric Capital Corp.
6.94%, 4/13/09 (d) Aaa 7,000 7,048
General Motors Acceptance Corp.
6.65%, 5/24/00 A2 5,000 5,060
Household Finance Corp. 6%, 5/8/00 A2 15,000 15,049
JPM Capital Trust II 7.95%, 2/1/27 Aa3 2,480 2,656
KeyCorp Institutional Capital Series A
7.826%, 12/1/26 A1 4,000 4,190
Money Store, Inc. 7.30%, 12/1/02 A2 3,850 4,009
Union Acceptance Corp. 7.075%, 7/10/02 Baa 592 594
144,081
INSURANCE - 0.3%
Executive Risk Capital Trust 8 5/8%, 2/1/27 Baa 10,000 10,728
SunAmerica, Inc. 6.20%, 10/31/99 Baa 5,500 5,510
16,238
SAVINGS & LOANS - 0.2%
Great West Financial Trust II 8.206%, 2/1/27 A3 8,000 8,640
Long Island Savings Bank 6.20%, 4/2/01 Baa 3,750 3,757
12,397
SECURITIES INDUSTRY - 0.1%
Amvescap PLC 6 3/8%, 5/15/03 (e) A3 3,600 3,604
TOTAL FINANCE 369,913
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
Tyco International Group SA yankee
6 1/8%, 6/15/01 Baa 16,000 16,019
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc.:
6 1/4%, 4/1/99 Baa $ 8,500 $ 8,513
8 1/4%, 11/15/99 Baa 1,920 1,967
10,480
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 26,499
MEDIA & LEISURE - 2.0%
BROADCASTING - 1.6%
Clear Channel Communications, Inc.:
6 7/8%, 6/15/18 Baa 10,000 9,814
7 1/4%, 10/15/27 Baa 5,000 5,061
Continental Cablevision, Inc.:
8.30%, 5/15/06 Baa 500 553
9%, 9/1/08 Baa 4,040 4,731
Cox Communications, Inc. 6.4%, 8/01/08 Baa 5,110 5,071
TCI Communications, Inc.:
7 3/8%, 2/15/00 Baa 3,750 3,826
8.25%, 1/15/03 Baa 3,670 3,948
6.82%, 9/15/10 (g) Baa 5,000 5,004
8 3/4%, 8/1/15 Baa 16,950 20,153
Time Warner, Inc.:
7.95%, 2/1/00 Baa 6,700 6,877
6 7/8%, 6/15/18 Baa 4,770 4,737
6.85%, 1/15/26 Baa 10,000 10,239
80,014
PUBLISHING - 0.4%
News America Holdings, Inc. 8%, 10/17/16 Baa 13,000 14,140
News America, Inc.:
6 5/8%, 1/9/08 Baa 950 944
7 1/4%, 5/18/18 (e) Baa 5,000 5,052
20,136
RESTAURANTS - 0.0%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa 1,400 1,338
TOTAL MEDIA & LEISURE 101,488
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - 0.5%
FOODS - 0.2%
ConAgra, Inc. 7 1/8%, 10/1/26 Baa $ 5,000 $ 5,308
Dart and Kraft Finance NV 7 3/4%, 11/30/98 A2 3,750 3,766
9,074
TOBACCO - 0.3%
Philip Morris Companies, Inc.:
7%, 7/15/05 A2 7,000 7,177
6.95%, 6/1/06 A2 8,980 9,168
16,345
TOTAL NONDURABLES 25,419
RETAIL & WHOLESALE - 0.5%
GENERAL MERCHANDISE STORES - 0.2%
Dayton Hudson Corp. 6.40%, 2/15/03 A3 1,000 1,012
Federated Department Stores, Inc.:
8 1/2%, 6/15/03 Baa 4,000 4,344
6.79%, 7/15/27 Baa 6,000 6,169
11,525
GROCERY STORES - 0.3%
American Stores Co. 7 1/2%, 5/1/37 Baa 7,000 7,647
Kroger Co. 6%, 7/1/00 Baa 8,050 8,040
15,687
TOTAL RETAIL & WHOLESALE 27,212
TECHNOLOGY - 0.5%
COMPUTERS & OFFICE EQUIPMENT - 0.5%
Comdisco, Inc.:
9.45%, 6/8/00 Baa 6,000 6,368
9.3%, 6/27/00 Baa 3,750 3,970
6 3/8%, 11/30/01 Baa 12,000 12,039
22,377
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.2%
Delta Air Lines, Inc.:
9 7/8%, 5/15/00 Baa $ 2,000 $ 2,124
equipment trust certificate 8.54%, 1/2/07 Baa 826 902
pass thru trust certificate 9 7/8%, 4/30/08 Baa 4,765 5,482
8,508
RAILROADS - 0.5%
Burlington Northern Santa Fe Corp.:
6 7/8%, 12/1/27 Baa 5,000 5,050
6.53%, 7/15/37 Baa 12,000 12,246
Norfolk Southern Corp. 7.05%, 5/1/37 Baa 8,820 9,342
26,638
TOTAL TRANSPORTATION 35,146
UTILITIES - 2.6%
CELLULAR - 0.4%
AirTouch Communications, Inc. 6.35%, 6/1/05 Baa 15,000 15,026
360 Degrees Communications Co.:
7 1/8%, 3/1/03 Baa 1,985 2,056
7 1/2%, 3/1/06 Baa 4,250 4,475
21,557
ELECTRIC UTILITY - 1.2%
Avon Energy Partners Holdings:
7.05%, 12/11/07 (e) Baa 20,000 20,405
6.46%, 3/4/08 (e) Baa 6,800 6,803
DR Investment yankee
7.10%, 5/15/02 (e) Baa 7,500 7,574
Gulf States Utilities Co. 1st mortgage
6 3/4%, 10/1/98 Baa 1,000 1,001
Israel Electric Corp. Ltd.:
yankee 7 1/4%, 12/15/06 (e) A3 3,000 3,000
7 3/4%, 12/15/27 (e) A3 12,795 12,619
Texas Utilities Co. 6 3/8%, 1/1/08 Baa 8,055 7,934
Texas Utilities Electric Co. 9 1/2%, 8/1/99 Baa 1,000 1,033
60,369
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
GAS - 0.2%
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa $ 8,700 $ 9,725
TELEPHONE SERVICES - 0.8%
Cable & Wireless Communications PLC
6 3/8%, 3/6/03 Baa 9,150 9,170
WorldCom, Inc.:
8 7/8%, 1/15/06 Baa 9,592 10,377
7 3/4%, 4/1/07 Baa 17,870 19,206
38,753
TOTAL UTILITIES 130,404
TOTAL NONCONVERTIBLE BONDS 832,127
TOTAL CORPORATE BONDS
(Cost $842,226) 855,112
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 7.7%
U.S. TREASURY OBLIGATIONS - 6.4%
6 7/8%, 3/31/00 Aaa 101,150 103,283
6.375% 9/30/01 Aaa 10,300 10,540
5.875% 11/30/01 Aaa 29,230 29,509
7%, 7/15/06 Aaa 136,980 149,159
8 7/8%, 8/15/17 Aaa 8,035 10,853
9%, 11/15/18 Aaa 6,940 9,552
7 5/8%, 2/15/25 Aaa 4,440 5,526
318,422
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.3%
Federal Agricultural Mortgage Corporation:
7.01%, 2/10/05 Aaa 1,530 1,628
7.04%, 8/10/05 Aaa 2,400 2,566
Federal Home Loan Bank:
7.36%, 7/1/04 Aaa 2,990 3,220
7.46%, 9/9/04 Aaa 1,540 1,671
7.87%, 10/20/04 Aaa 6,400 7,079
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Freddie Mac:
8.115%, 1/31/05 Aaa $ 4,750 $ 5,335
6.783%, 8/18/05 Aaa 3,660 3,862
6.8% 3/19/07 Aaa 2,200 2,332
Fannie Mae:
7.49% 3/02/05 Aaa 11,000 11,999
6.72%, 8/1/05 Aaa 6,060 6,371
Financing Corporation 0%, 3/26/04 Aaa 4,574 3,312
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 391 392
Government Trust Certificates (assets of Trust
guaranteed by U.S. Government through
Defense Security Assistance Agency):
Class 1-C, 9 1/4%, 11/15/01 Aaa 6,418 6,792Class T-3, 9 5/8%,
5/15/02 Aaa 1,847 1,946
Private Export Funding Corp. secured
6.86%, 4/30/04 Aaa 1,446 1,484
U.S. Department of Housing and Urban Development
Government guaranteed participation certificates
Series 1995-A, 8.27%, 8/1/03 Aaa 6,270 6,933
66,922
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $380,766) 385,344
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 14.1%
FREDDIE MAC - 0.1%
7.00% 9/1/98 to 7/1/01 Aaa 2,137 2,158
FANNIE MAE - 11.2%
5.5% 11/1/08 to 8/1/12 Aaa 18,140 17,719
6% 1/1/01 to 4/1/28 Aaa 134,412 132,674
6.5% 7/1/08 to 4/1/28 Aaa 327,610 326,006
7% 11/1/22 to 11/1/25 Aaa 30,519 30,966
7% 8/1/28 (f) Aaa 41,168 41,759
7.5% 6/1/07 to 6/1/28 Aaa 2,225 2,279
8% 9/1/17 to 5/1/22 Aaa 264 274
8% 8/1/28 (f) Aaa 6,766 7,011
558,688
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
GINNIE MAE - 2.8%
7% 10/15/26 to 12/15/27 Aaa $ 96,798 $ 98,310
7.5% 1/15/26 to 3/15/28 Aaa 36,396 37,454
8% 1/15/17 to 8/15/25 Aaa 1,245 1,292
9% 11/15/14 to 8/15/22 Aaa 1,063 1,141
9.5% 6/15/09 to 11/15/24 Aaa 2,616 2,820
141,017
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $694,660) 701,863
COMMERCIAL MORTGAGE SECURITIES - 1.2%
CS First Boston Mortgage Securities Corp.:
Series 1997-C2 Class D, 7.27%, 4/17/11 Baa 5,790 5,897
floater Series 1998-FL1 Class E,
6.5180%, 1/10/13 (e)(g) Baa 12,180 12,180
Equitable Life Assurance Society of the United States (The):
Series 174 Class B1, 7.33%, 5/15/06 (e) Aa2 4,000 4,200
Series 1996-1 Class C1, 7.52%, 5/15/06 (e) A2 4,000 4,232
GS Mortgage Securities Corp. II Series 1998-GLII
Class E, 6.9696%, 4/13/31 (e)(g) Baa 5,000 4,895
Nomura Asset Securities Corp. Series 1998 - D6
Class A-4, 7.3499%, 3/15/30 (g) Baa 20,000 20,488
Oregon Commercial Mortgage, Inc. Series 1995-1
Class A, 7.15%, 6/25/26 (e)(g) AAA 398 397
Thirteen Affiliates of General Growth Properties, Inc.
sequential pay Series A-2,
6.602%, 11/15/12 (e) Aaa 8,000 8,149
Wells Fargo Capital Markets Apartment Financing
Trust 6.56%, 12/29/05 (e) Aaa 2,590 2,625
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $61,666) 63,063
SUPRANATIONAL OBLIGATIONS - 0.1%
Inter American Development Bank yankee
6.29%, 7/16/27
(Cost $2,981) Aaa 3,000 3,144
CERTIFICATES OF DEPOSIT - 0.1%
Canadian Imperial Bank of Commerce NY Branch
yankee 6.20%, 8/1/00
(Cost $4,507) Aa3 4,500 4,527
CASH EQUIVALENTS - 4.9%
SHARES VALUE (NOTE 1)
(000S)
Taxable Central Cash Fund (b)
(Cost $243,819) 243,818,676 $ 243,819
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,385,423) $ 4,989,473
SECURITY TYPE ABBREVIATIONS
TIDES - Term Income Deferred Equity
Securities
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.62%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(d) 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.
(e) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$160,341,000 or 3.2% of net assets.
(f) Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
(g) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 29.1% AAA, AA, A 29.0%
Baa 11.1% BBB 10.3%
Ba 0.0% 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%
The percentage not rated by Moody's or S&P amounted to 0.1%.
INCOME TAX INFORMATION
At July 31, 1998, the aggregate cost of investment securities for
income tax purposes was $4,387,704,000. Net unrealized appreciation
aggregated $601,769,000, of which $653,661,000 related to appreciated
investment securities and $51,892,000 related to depreciated
investment securities.
The fund hereby designates approximately $323,698,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $4,385,423) - $ 4,989,473
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 106,836
RECEIVABLE FOR FUND SHARES SOLD 7,491
DIVIDENDS RECEIVABLE 3,785
INTEREST RECEIVABLE 23,993
OTHER RECEIVABLES 461
TOTAL ASSETS 5,132,039
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 32,943
REGULAR DELIVERY
DELAYED DELIVERY 48,866
PAYABLE FOR FUND SHARES REDEEMED 6,925
ACCRUED MANAGEMENT FEE 1,836
OTHER PAYABLES AND ACCRUED EXPENSES 1,381
COLLATERAL ON SECURITIES LOANED, AT VALUE 77,405
TOTAL LIABILITIES 169,356
NET ASSETS $ 4,962,683
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 3,952,922
UNDISTRIBUTED NET INVESTMENT INCOME 5,932
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 399,777
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 604,052
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 297,798 SHARES OUTSTANDING $ 4,962,683
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $16.66
PER SHARE ($4,962,683 (DIVIDED BY) 297,798 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 43,524
DIVIDENDS
INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $343) 121,210
TOTAL INCOME 164,734
EXPENSES
MANAGEMENT FEE $ 19,959
TRANSFER AGENT FEES 10,276
ACCOUNTING AND SECURITY LENDING FEES 839
NON-INTERESTED TRUSTEES' COMPENSATION 28
CUSTODIAN FEES AND EXPENSES 183
REGISTRATION FEES 80
AUDIT 75
LEGAL 27
MISCELLANEOUS 22
TOTAL EXPENSES BEFORE REDUCTIONS 31,489
EXPENSE REDUCTIONS (1,265) 30,224
NET INVESTMENT INCOME 134,510
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 589,557
FOREIGN CURRENCY TRANSACTIONS (169) 589,388
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (108,336)
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 231 (108,105)
NET GAIN (LOSS) 481,283
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 615,793
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 134,510 $ 140,705
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 589,388 244,306
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (108,105) 764,886
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 615,793 1,149,897
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (143,536) (179,398)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (378,462) -
TOTAL DISTRIBUTIONS (521,998) (179,398)
SHARE TRANSACTIONS 1,387,837 848,181
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 512,005 174,028
COST OF SHARES REDEEMED (1,204,221) (1,841,701)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 695,621 (819,492)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 789,416 151,007
NET ASSETS
BEGINNING OF PERIOD 4,173,267 4,022,260
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 4,962,683 $ 4,173,267
INCOME OF $5,932 AND $13,939, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 86,120 58,807
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 33,230 12,375
REDEEMED (74,686) (129,888)
NET INCREASE (DECREASE) 44,664 (58,706)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 16.49 $ 12.90 $ 13.20 $ 12.76 $ 13.84
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .48 B .51 B .57 .62 .25
NET REALIZED AND 1.67 3.73 (.27) .27 (.17)
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT 2.15 4.24 .30 .89 .08
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.52) (.65) (.60) (.45) (.25)
FROM NET REALIZED GAIN (1.46) - - - (.50)
IN EXCESS OF NET REALIZED GAIN - - - - (.41)
TOTAL DISTRIBUTIONS (1.98) (.65) (.60) (.45) (1.16)
NET ASSET VALUE, END OF PERIOD $ 16.66 $ 16.49 $ 12.90 $ 13.20 $ 12.76
TOTAL RETURN A 14.54% 33.82% 2.25% 7.19% .37%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 4,963 $ 4,173 $ 4,022 $ 5,070 $ 5,390
(IN MILLIONS)
RATIO OF EXPENSES TO .70% .75% .82% .91% 1.02%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO .67% C .74% C .79% C .90% C 1.01% C
AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME 2.97% 3.58% 4.12% 5.33% 4.09%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 135% 70% 247% 269% 157%
AVERAGE COMMISSION RATE D $ .0428 $ .0415
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO
FINANCIAL STATEMENTS).
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C 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).
D FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1998
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, 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 require 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 and foreign currency options, 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 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."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
securities where the ex-dividend date may have passed, are recorded as
soon as the fund is informed of the ex-dividend date. 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.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Under the Plan, deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds, including shares of the fund.
Deferred amounts remain in the fund until distributed in accordance
with the Plan.
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,
options transactions, foreign currency transactions, market discount,
non-taxable dividends and losses deferred due to wash sales 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
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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.
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., 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.
2. OPERATING POLICIES - CONTINUED
OPTIONS. The fund may use options to manage its exposure to the stock
and bond markets and to fluctuations in interest rates and currency
values. Writing puts and buying calls tend to increase the fund's
exposure to the underlying instrument. Buying puts and writing calls
tend to decrease the fund's exposure to the underlying instrument, or
hedge other fund investments. Losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparties do not perform
under the contracts' terms. Gains and losses are realized upon the
expiration or closing of the options. Realized gains (losses) on
purchased options are included in realized gains (losses) on
investment securities, except purchased options on foreign currency
which are included in realized gains (losses) on foreign currency
transactions.
Exchange-traded options are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $6,120,658,000 and $5,843,239,000, respectively, of which
U.S. government and government agency obligations aggregated
$2,389,417,000 and $2,164,633,000, 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 annual 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES - CONTINUED
and shareholder servicing agent. FSC receives account fees and
asset-based fees that vary according to account size and type of
account. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. For the period, the
transfer agent fees were equivalent to an annual rate of .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 $880,000 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 $72,710,000 and
$77,405,000, 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 $892,000 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 $9,000 and $364,000, respectively, under these
arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Balanced Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Balanced Fund (a fund of Fidelity Puritan Trust) at July 31,
1998, the results of its operations, the changes in its net assets and
the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fidelity Balanced Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at
July 31, 1998 by correspondence with the custodian and brokers,
provide a reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 11, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Balanced Fund voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
PAY DATE 9/8/97 12/15/97 9/8/98
RECORD DATE 9/5/97 12/12/97 9/4/98
DIVIDENDS $ .15 $ .11 $ .10
SHORT-TERM
CAPITAL GAINS $ .25 $ .12 $ .15
LONG-TERM
CAPITAL GAINS $ .51 $ .58 $ 1.05
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 22.74% 43.76%
20% rate 77.26% 56.24%
A total of 12.40% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 19.31% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Stephen M. DuFour, 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
BAL-ANN-0998 60537
1.536127.101
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(registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
CORPORATE HEADQUARTERS
WWW.FIDELITY.COM
FIDELITY
GLOBAL BALANCED
FUND
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
ANNUAL REPORT
JULY 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 28 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 32 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 36 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 37
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:
So far, 1998 has been a year of considerable volatility in the U.S.
stock and bond markets. In the first quarter, the U.S. stock market
soared as inflation and interest rates remained stable, while the
economy maintained strong growth. By summer, however, investors began
to exercise caution relative to the troublesome Asian economic climate
and reports of concerns about corporate earnings domestically. Market
volatility and low interest rates were also the main stories in the
bond market, with many investors moving assets to highly rated U.S.
Treasuries.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY GLOBAL BALANCED 10.53% 54.84% 86.81%
MSCI WORLD 11.70% 102.29% 136.46%
SB WORLD GOVT BOND 5.27% 35.68% N/A
GLOBAL FLEXIBLE PORTFOLIO FUNDS AVERAGE 5.98% 67.62% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on February 1, 1993. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare the fund's returns to
the performance of the Morgan Stanley Capital International World
Index - a market capitalization weighted equity index of over 1,500
stocks traded in 22 world markets - and the performance of the Salomon
Brothers World Government Bond Index, Unhedged - a market
capitalization weighted index of debt issues traded in 14 world
government bond markets. Issues included in the Index have fixed-rate
coupons and maturities of at least one year. To measure how the fund's
performance stacked up against its peers, you can compare it to the
global flexible portfolio funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past one year average represents a peer
group of 86 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY GLOBAL BALANCED 10.53% 9.14% 12.04%
MSCI WORLD 11.70% 15.13% 16.95%
SB WORLD GOVT BOND 5.27% 6.29% N/A
GLOBAL FLEXIBLE PORTFOLIO FUNDS AVERAGE 5.98% 10.68% 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 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
1998/02/28 16715.28 21816.33
14062.52
1998/03/31 17176.02 22734.20
13923.31
1998/04/30 17497.47 22952.95
14145.91
1998/05/31 17390.32 22661.87
14179.05
1998/06/30 17604.62 23196.25
14199.99
1998/07/31 17808.20 23155.59
14218.83
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 July 31, 1998,
the value of the investment would have grown to $17,808 - a 78.08%
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 $23,156 - 131.56% increase. If $10,000 was
put in the Salomon Brothers World Government Bond Index, Unhedged, it
would have grown to $14,219 - a 42.19% 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 the exception of Asia and
most emerging markets, most stock
and bond markets around the globe
performed well during the 12-month
period that ended July 31, 1998.
Toward the end of the period,
however, the relative tranquility of
low interest rates and steady
economic growth gave way to
continued concerns about the
impact of the Asian crisis, political
and economic woes in Russia and
weak corporate earnings reports.
The Morgan Stanley World Index
returned 11.70% during the past
year, but returns from different
regions were wildly divergent.
While the Standard & Poor's 500
Index - a measure of U.S. stock
performance - returned 19.29%
over the past year, the index
returned a more modest 1.18%
during the last three months of the
period. The Morgan Stanley
Europe Index rose 33.87% for the
12-month period, with strong
performance seen across much of
the region's developed nations. In
comparison, the Asian crisis
battered returns throughout the Far
East, with the Morgan Stanley
Pacific Index down 34.09% for the
period. As investors moved assets
from stocks and higher-risk bonds,
it helped the performance of U.S.
and developed-nation bond
markets. The Lehman Brothers
Aggregate Bond Index - a
measure of the U.S. taxable bond
market - returned 7.87%, while
the Salomon Brothers World
Government Bond Index,
Unhedged returned 5.27% during
the period.
An interview with Rick Mace, Portfolio Manager of Fidelity Global
Balanced Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. For the 12-month period that ended July 31, 1998, the fund had a
return of 10.53%. The fund compares its performance to three measures:
a bond index, an equity index and a peer group of competitor funds.
The fund outperformed its bond-related benchmark - the Salomon
Brothers World Government Bond Index, Unhedged - which had a 12-month
return of 5.27% as of July 31. On the other hand, the fund trailed its
equity-related benchmark - the Morgan Stanley Capital International
World Index - which returned 11.70% during the same period. The global
flexible portfolio funds average, as tracked by Lipper Analytical
Services, had a 12-month return of 5.98%.
Q. WHAT FACTORS HELPED THE FUND'S PERFORMANCE?
A. For the most part, stock selection was the key. European financial
positions made particularly strong contributions to performance, as
low interest rates, benign inflation, improving economies and surging
securities markets provided a favorable environment for banks and
insurers. In addition, merger and acquisition activity within this
sector continued to boost valuations. Finally, the fund remained
significantly overweighted in equities, reflecting my belief that
equities generally offered better value than fixed-income securities,
as well as a superior risk-to-reward ratio. This strategy worked well
for the fund as the equity position significantly outperformed the
bond position.
Q. WHICH STOCKS PERFORMED WELL FOR THE FUND?
A. Particular standouts included companies that were among the fund's
25 largest holdings, including Swiss banking company Credit Suisse and
French bank Societe Generale. Telecommunications stocks also were
among the fund's more solid performers as continued consolidation
activity lifted share prices. Fund holdings of U.S.-based companies
MCI Communications and WorldCom were among the fund's top performers,
as was British cellular company Vodafone Group.
Q. WHICH INVESTMENTS DIDN'T TURN OUT AS WELL AS YOU WOULD HAVE LIKED?
A. The fund's holdings in Japanese financial services stocks hurt
performance. Because the Japanese economy remained stagnant and there
were continued concerns about asset quality, banks were especially
hard hit. Securities brokers were hurt by the equity market's poor
performance, because their fortunes are highly correlated with the
level of market activity. Similarly, real estate company holdings also
suffered from the general decline in the Asian economy, despite some
signs that real estate prices might be bottoming out. Among the fund's
financial holdings most hurt by these events were Sakura Bank, Nomura
Securities and Sumitomo Realty & Development Company.
Q. HAS YOUR STRATEGY WITH RESPECT TO THE BOND PORTION OF THE FUND
CHANGED OVER THE PAST YEAR?
A. Not really. The fund continues to hold a significant amount in U.S.
bonds, reflecting the vitality of the dollar. I have been reluctant to
expose the fund's fixed-income component to the risk of currency
impact as long as the U.S. dollar continues to strengthen against many
of the world's major currencies. This was one factor in my decision to
avoid holding Japanese bonds. The strong performance of the fund's
bond portfolio was largely generated by a substantial overweighted
position in long-term U.S. Treasury and agency bonds which accounted
for more than two-thirds of the total fixed-income portfolio. The
fund's U.S. Treasury positions continued to benefit from benign
inflation and an accommodating monetary policy. In addition, the
growing economic and currency crisis in Asia and heightened volatility
in the U.S. and international equity markets drove many investors to
the perceived "safe haven" of U.S. government bonds. These events sent
long-term yields on U.S. Treasury obligations to their lowest level in
over 20 years, pushing bond prices higher.
Q. WHAT'S YOUR OUTLOOK?
A. I think the European economies will continue to improve. However,
stock selection will be especially critical. Company earnings must
come through as expected in order to justify the lofty stock
valuations that the markets have placed on them. If earnings
disappoint, we run the risk of a stock correction. In Japan, I am
continuing to look for signs of an improvement in the economy and have
pinpointed a number of companies that could be early beneficiaries of
a turnaround as candidates for purchase. I will also be keeping a
close watch on the emerging markets, where we are beginning to see
some improvement in valuations. In general though, emerging markets
are more volatile than developed markets.
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
RESEARCH TEAM'S #1 RANKING IN
REUTERS SURVEY:
"FIDELITY'S INTERNATIONAL FUND
MANAGEMENT TEAM ONCE AGAIN HAS
BEEN RECOGNIZED AS ONE OF THE
WORLD'S BEST IN A RECENT REUTERS
INTERNATIONAL SURVEY OF FINANCE
DIRECTORS. BASED ON CRITERIA
INCLUDING COMPANY KNOWLEDGE,
SECTOR EXPERTISE AND THE QUALITY OF
CONTACT, RESPONDENTS RATED
FIDELITY THE #1 FUND MANAGEMENT
TEAM IN THE FOLLOWING AREAS: THE
SURVEY RANKED US THE #1 FUND
MANAGER IN CONTINENTAL EUROPE,
THE #1 MANAGEMENT GROUP FOR
LATIN AMERICAN EQUITIES AND THE #1
FUND MANAGEMENT GROUP FOR ASIAN
EQUITIES. WHILE THE ECONOMIC AND
INVESTMENT ENVIRONMENT IN LATIN
AMERICA AND ASIA HAS BEEN VERY
DIFFICULT, WE'RE PLEASED WITH OUR
RESULTS, AND I BELIEVE THEY CONFIRM
THE FUNDAMENTAL PRINCIPLES UPON
WHICH OUR INVESTMENT PHILOSOPHY
IS BASED. WE BELIEVE THAT ACTIVE
INVESTMENT MANAGEMENT, DRIVEN BY
FUNDAMENTAL RESEARCH IN AN
ENVIRONMENT OF TEAMWORK, CAN
PRODUCE SUPERIOR LONG-TERM RESULTS
FOR OUR INVESTORS. OUR RESEARCH
TEAM IS THE FOUNDATION OF OUR
EQUITY ORGANIZATION. THESE
PROFESSIONALS COMPILE AND ANALYZE
THE RESULTS OF THOUSANDS OF ON-SITE
COMPANY VISITS TO ENSURE THAT THE
INVESTMENT DECISIONS MADE BY
FIDELITY PORTFOLIO MANAGERS ARE
WELL-DEFINED AND CAREFULLY
SUBSTANTIATED BEFORE THEY ARE
MADE. THE DEPTH AND BREADTH OF
OUR TEAM ALLOWS US TO TAKE
ADVANTAGE OF OPPORTUNITIES THAT
OTHERS MAY HAVE OVERLOOKED."
FUND FACTS
GOAL: HIGH CURRENT INCOME
WITH REGARD FOR BOTH
PRESERVATION OF CAPITAL AND
POTENTIAL FOR GROWTH OF CAPITAL
BY INVESTING IN A BROADLY
DIVERSIFIED PORTFOLIO OF
HIGH-YIELDING EQUITY AND DEBT
SECURITIES
FUND NUMBER: 334
TRADING SYMBOL: FGBLX
START DATE: FEBRUARY 1, 1993
SIZE: AS OF JULY 31, 1998,
MORE THAN $94 MILLION
MANAGER: RICHARD MACE,
SINCE 1996; MANAGER, FIDELITY
INTERNATIONAL VALUE FUND, SINCE
1994; FIDELITY OVERSEAS FUND,
SINCE 1996; GROUP LEADER,
FIDELITY'S INTERNATIONAL FUNDS;
JOINED FIDELITY IN 1987
(CHECKMARK)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STOCKS AS OF JULY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
GENERAL ELECTRIC CO. (UNITED STATES OF AMERICA) 1.1 0.7
MICROSOFT CORP. (UNITED STATES OF AMERICA) 1.1 0.4
WAL-MART STORES, INC. (UNITED STATES OF AMERICA) 1.1 0.9
MCI COMMUNICATIONS CORP. 0.8 0.6
(UNITED STATES OF AMERICA)
AT&T CORP. (UNITED STATES OF AMERICA) 0.8 0.4
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE BOND ISSUERS AS OF JULY 31, 1998
(WITH MATURITIES GREATER THAN ONE YEAR) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE BOND ISSUERS
6 MONTHS AGO
U. S. TREASURY 9.1 9.4
FEDERAL HOME LOAN BANK 4.8 6.5
TREUHANDANSTALT 3.0 3.6
FANNIE MAE 2.0 2.7
UNITED KINGDOM, GREAT BRITAIN & 1.8 1.8
NORTHERN IRELAND
</TABLE>
TOP COUNTRIES AS OF JULY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE COUNTRIES
6 MONTHS AGO
UNITED STATES OF AMERICA 55.7 50.4
JAPAN 7.7 10.6
FRANCE 5.9 4.8
UNITED KINGDOM 5.8 8.5
GERMANY 5.6 5.3
TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY,
INCLUDING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT
RISKS.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JULY 31, 1998 * AS OF JANUARY 31, 1998 **
ROW: 1, COL: 1, VALUE: 11.7
ROW: 1, COL: 2, VALUE: 1.3
ROW: 1, COL: 3, VALUE: 23.5
ROW: 1, COL: 4, VALUE: 63.5
STOCKS AND
EQUITY FUTURES 63.5%
BONDS 26.7%
CONVERTIBLE
SECURITIES 0.7%
SHORT-TERM
INVESTMENTS 9.1%
FOREIGN
INVESTMENTS 49.6%
STOCKS AND
EQUITY FUTURES 64.4%
BONDS 23.5%
CONVERTIBLE
SECURITIES 0.3%
SHORT-TERM
INVESTMENTS 11.8%
FOREIGN
INVESTMENTS 44.3%
ROW: 1, COL: 1, VALUE: 9.1
ROW: 1, COL: 2, VALUE: 1.7
ROW: 1, COL: 3, VALUE: 26.7
ROW: 1, COL: 4, VALUE: 62.5
*
**
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 60.8%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.2%
Bansud SA Class B (a) 17,000 $ 135,216
Telecom Argentina Class B sponsored ADR 700 24,850
YPF Sociedad Anonima sponsored ADR representing
Class D shares 1,650 48,263
208,329
AUSTRALIA - 1.3%
AMP Ltd. (a) 4,800 63,441
Australia & New Zealand Banking Group Ltd. 15,338 99,217
Australian Gas Light Co. 7,115 47,025
Brambles Industries Ltd. 3,700 78,014
Broken Hill Proprietary Co. Ltd. (The) 4,329 35,050
Commonwealth Bank of Australia (d) 3,200 39,867
David Jones Ltd. 61,800 63,693
Mirvac Ltd. Rights 10/20/97 (a) 1,255 240
National Australia Bank Ltd. 5,400 75,034
News Corp. Ltd. 33,024 240,250
QNI Ltd. 50,000 21,522
Smith (Howard) Ltd. 4,800 28,227
TAB Ltd. (a) 23,200 37,554
Telestra Corp. Ltd. (g) 40,800 116,255
Western Mining Holdings Ltd. 9,900 29,649
Westpac Banking Corp. 18,900 119,279
Woodside Petroleum Ltd. 7,800 37,594
Woolworths Ltd. 26,200 79,419
1,211,330
BRAZIL - 0.7%
Centrais Electricas Brasileiras SA 1,702,000 54,136
Compania Energertica Minas Gerais 3,453,479 117,298
Compania Paulista de Forca Luz Ord. 105,000 13,272
Eletropaulo Metropolitana - Electricidade de Sao Paulo SA 88,000
6,280
Petrobras PN (Pfd. Reg.) 390,000 85,515
Telebras ON 3,000,000 265,704
Telesp PN (Pfd. Reg.) (a) 155,039 38,396
Telesp Celular SA Class B 720,000 73,984
654,585
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CANADA - 1.5%
ATI Technologies, Inc. (a) 3,000 $ 33,932
Alcan Aluminium Ltd. 400 10,279
Alliance Communications Corp. Class B (non-vtg.) (a) 4,000 77,389
BCE, Inc. 4,200 169,183
Bank of Nova Scotia 1,900 42,666
Boardwalk Equities, Inc. (a) 300 3,373
Bombardier, Inc. Class B 1,400 19,261
Breakwater Resources Ltd. (a) 1,300 1,341
Bro-X Minerals Ltd. (a) 600 -
Canadian National Railway Co. 400 21,100
Canadian Tire Corp. Ltd. Series A 400 10,729
CGI Group, Inc. Class A (sub vtg.) (a) 700 14,932
Chum Ltd. Class B 300 10,219
Donohue, Inc. 1,000 21,761
Dorel Industries, Inc. Class B (sub-vtg.) (a)(d) 200 6,595
Edperbrascan Corp. Ltd., Class A 300 4,792
Enerflex Systems Ltd. 100 2,027
Euro-Nevada Mining Ltd. 700 8,589
Falconbridge Ltd. 100 1,055
Franco-Nevada Mining Corp. 700 11,784
GST Telecommunications, Inc. (a) 800 10,600
Great-West Lifeco, Inc. 900 31,253
Imasco Ltd. 700 13,288
Imperial Oil Ltd. 500 8,268
Inco Ltd. 300 3,244
Intrawest Corp. 300 5,874
Ipsco Inc. 100 2,153
JDS Fitel, Inc. (a) 700 11,598
Linamar Corp. 600 9,961
Mackenzie Financial Corp. 1,000 13,295
Magellan Aerospace Corp. (a) 700 3,843
Maritime Telegraph & Telephone Co., Ltd. 500 12,832
Maax, Inc. (a) 600 7,302
Metro Richelieu, Inc. Class A 500 6,449
Mitel Corp. (a) 300 3,840
National Bank of Canada 10,600 189,725
Newcourt Credit Group, Inc. 600 29,963
Newtel Enterprises Ltd. 500 12,237
Noranda, Inc. 6,000 92,271
Northern Telecom Ltd. 300 17,601
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CANADA - CONTINUED
NOVA Corp. (a) 160 $ 2,640
Paramount Resources Ltd. 600 5,556
Penn West Petroleum Ltd. (a) 1,800 20,240
Potash Corp. of Saskatchewan 300 21,828
Power Corporation of Canada 1,800 39,587
Power Financial Corp. 1,200 26,272
Probe Exploration, Inc. (a) 600 1,607
Radiomutuel, Inc. Class A (a) 900 9,644
Richelieu Hardware Ltd. (a) 1,200 13,890
Rio Alto Exploration Ltd. (a) 1,200 12,104
Royal Bank of Canada 1,500 81,357
St. Laurent Paperboard, Inc. (a)(d) 5,700 51,840
St. Lawrence Cement, Inc. Class A 100 1,244
San Francisco Boutiques, Inc. Class A (a) 1,600 13,493
Sears Canada Inc. 400 7,077
Silcorp Ltd. (a) 900 10,775
Sportscene Restaurants, Inc. Class A (a) 10,000 42,994
Stelco, Inc. Series A 300 1,845
Teklogix International, Inc. (a) 900 6,310
Teleglobe, Inc. 700 17,826
Thomson Corp. 300 7,997
TransCanada PipeLines Ltd. 1,700 26,931
Upton Resources, Inc. (a) 1,600 2,381
Westburne, Inc. (a) 100 1,062
1,383,104
CHILE - 0.0%
Embotelladora Andina Class A sponsored ADR 1,100 21,313
Santa Isabel SA sponsored ADR 1,000 11,063
Supermercados Unimarc SA sponsored ADR 1,400 8,400
40,776
DENMARK - 0.2%
International Service Systems AS Class B 3,800 241,184
FINLAND - 1.4%
KCI (Konecranes International) 2,600 146,860
Merita Ltd., Series A 28,800 183,477
Metsa-Serla Ltd. Class B 10,300 84,884
Nokia Corp. AB, Series A 4,400 387,059
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINLAND - CONTINUED
Nokian Tyres Ltd. 2,500 $ 116,673
Raisio Group PLC 6,900 113,729
Sampo Insurance Co. Ltd. 2,200 123,712
Tieto Corp. Class B 5,400 200,011
1,356,405
FRANCE - 4.6%
Accor SA 900 241,148
Alcatel Alsthom Compagnie Generale d'Electricite SA 1,700 338,202
Axa SA 2,600 356,619
Atos SA 400 95,627
Axime SA Ex Segin (a)(d) 500 119,533
Cap Gemini Sogeti SA 2,100 306,724
Carbonne-Lorraine (Le) 2,500 172,501
Castorama Dubois Investissements SA 500 88,978
Elf Sanofi SA 1,300 156,485
France Telecom SA 1,500 102,292
Groupe Danone 700 211,181
L'Oreal Co. Ord. 463 272,678
Lafarge SA 1,400 138,437
Lagardere S.C.A. (Reg.) 4,900 222,933
Nationale Elf Aquitaine 1,900 246,571
Peugeot SA Ord. 760 150,303
Renault SA Ord. 1,900 101,085
(SGE) Societe Generale d'Entreprises SA 2,100 96,600
Societe Generale Class A 1,700 409,838
Total SA Class B 2,182 249,466
Vivendi SA 1,400 306,489
4,383,690
GERMANY - 1.8%
Allianz Aktiengesellschaft Holdings (Reg.) 300 107,381
BHF Bank AG 5,200 239,975
BASF AG 4,700 216,901
Daimler-Benz AG Ord. 3,500 357,810
Deutsche Telekom AG 1,400 41,011
Hannover Rueckversicherungs AG 1,400 184,371
Hoechst AG Ord. 2,100 94,195
Mannesmann AG Ord. 3,900 412,640
Philipp Holzmann AG (a) 330 70,574
1,724,858
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HONG KONG - 0.8%
Cheung Kong Holdings Ltd. 16,000 $ 69,372
China Telecom (Hong Kong) Ltd. 38,000 55,100
Dairy Farm International Holdings Ltd. 51,000 61,710
Hong Kong & China Gas Co. Ltd. 32,560 32,982
Hong Kong & China Gas Co. Ltd. warrants 9/30/99 (a) 1,480 61
Hong Kong Telecommunications Ltd. 51,447 94,855
Hutchison Whampoa Ltd. Ord. 28,000 134,409
JCG Holdings Ltd. 68,000 17,550
Johnson Electric Holdings Ltd. 22,000 94,535
Li & Fung Ltd. 26,000 38,583
National Mutual Asia Ltd. 38,000 21,330
Sun Hung Kai Properties Ltd. 10,000 37,035
Vtech Holdings Ltd. 20,000 90,328
747,850
INDIA - 0.0%
Dr. Reddy's Laboratories Ltd. sponsored GDR Unit (Reg. S) 500 6,000
State Bank of India GDR (Reg.) 1,000 10,500
16,500
IRELAND - 0.6%
Bank of Ireland, Inc. 14,100 286,152
CRH PLC 7,577 99,152
Irish Life PLC 19,100 171,515
556,819
ITALY - 1.6%
Alitalia Linee Aeree Italiane Class A (a) 43,200 155,500
Banca Di Roma Spa (a) 96,000 224,913
Credito Italiano Ord. 35,600 203,324
Finmeccanica Spa (a) 180,000 172,504
Istituto Bancario San Paolo 16,900 301,424
Istituto Nazionale Delle Assicurazioni Spa 42,000 134,026
Telecom Italia Spa 37,400 321,346
1,513,037
JAPAN - 7.4%
Acom Co. Ltd. 3,000 164,591
Aiwa Co. Ltd. 5,000 178,151
Asahi Breweries Ltd. 5,000 62,509
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Bank of Tokyo-Mitsubishi Ltd. 9,000 $ 89,851
Banyu Pharmaceutical Co. Ltd. 12,000 133,333
Benesse Corp. 2,000 79,839
Bridgestone Corp. 2,000 48,430
Canon, Inc. 5,000 114,155
Circle K Japan Co. Ltd. 1,100 36,758
Ddi Corp. Ord. 50 149,440
Daiwa House Industry Co. Ltd. 6,000 49,606
Daito Trust Construction Co. 5,000 41,511
Fuji Heavy Industries Ltd. 30,000 171,025
Fuji Photo Film Co. Ltd. 7,000 258,129
Fujitsu Ltd. 15,000 163,761
Hirose Electric Co. Ltd. 1,000 54,656
Honda Motor Co. Ltd. 7,000 261,035
Hoya Corp. 3,000 103,155
Ito En Ltd. 3,000 104,193
Japan Tobacco, Inc. 10 67,663
Kao Corp. 5,000 82,330
Kawasumi Laboratories, Inc. 8,000 147,226
Kokusai Securities Co. Ltd. 5,000 52,857
Konami Industry Co. Ltd. 3,000 74,720
Mabuchi Motor Co. 600 39,435
Marui Co. Ltd. 4,000 59,084
Matsushita Electric Industrial Co. Ltd. 5,000 79,909
Matsushita Communication Industrial Co. Ltd. 4,000 140,030
Matsumotokiyoshi Co. Ltd. 2,000 67,801
Minebea Co. Ltd. 25,000 265,497
Minolta Camera Co. Ltd. 26,000 168,548
Mitsubishi Estate Co. Ltd. 6,000 52,304
Mitsubishi Trust & Banking Corp. 10,000 72,783
Mitsui Mining & Smelting Co. Ltd. 7,000 31,285
Mori Seiki Co. Ltd. Ord. 3,000 36,011
Nichiei Co. Ltd. 3,200 240,210
Nichicon Corp. 1,000 12,107
Nintendo Co. Ltd. Ord. 1,500 142,694
Nippon Telegraph & Telephone Corp. Ord. 23 198,907
Nomura Securities Co. Ltd. 5,000 58,288
Nippon Soda Co. Ltd. 10,000 63,097
NTT Data Communications System 20 77,764
OKI Electric Industry Co. Ltd. 10,000 26,982
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Orix Corp. 4,500 $ 309,776
Osaka Gas Co. Ltd. 30,000 69,323
Paris Miki, Inc. 3,000 40,473
Rohm Co. Ltd. 3,000 323,578
Ryohin Keikaku Co. Ltd. 400 38,190
Sharp Corp. 23,000 168,991
Shin-Etsu Chemical Co. Ltd. 4,000 66,418
Sony Corp. 3,000 255,085
Sumitomo Special Metals Co. 2,000 39,781
TDK Corp. 2,000 147,364
Takeda Chemical Industries Ltd. 4,000 102,671
Takasago International Corp. 8,000 37,083
Takefuji Corp. 4,000 210,322
Terumo Corp. 6,000 101,079
THK Co. Ltd. 10,000 123,149
Tokyo Gas Co. Ltd. 30,000 63,097
Toyota Motor Corp. 3,000 73,682
Tokyo Electron Ltd. 3,000 83,230
Tokyo Seimitsu Co. Ltd. 2,000 80,116
Uni Charm Corp. Ord. 3,000 107,721
World Co. Ltd. 2,000 53,688
Yonekyu Corp. 4,000 52,719
7,069,196
KOREA (SOUTH) - 0.1%
Medison Co. Ltd. 8,600 77,578
MALAYSIA - 0.1%
Berjaya Sports Toto BHD 18,000 17,869
Carlsberg Brewery BHD 6,000 15,758
Oriental Holdings BHD 11,200 18,486
Rothmans of Pall Mall Malaysia BHD 10,000 70,478
Tenega Nasional BHD 6,000 5,060
YTL Corp. BHD 5,000 4,337
131,988
MEXICO - 0.4%
Apasco SA de CV 5,000 25,617
Cifra SA de CV, Series C 35,000 51,009
Desc SA de CV, Series C sponsored ADR 300 7,425
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
El Puerto Liverpool SA Class C 11,000 $ 13,935
Grupo Carso SA de CV Class A-1 5,000 21,300
Grupo Financiero Banamex-Accival Class B (a) 13,000 26,000
Grupo Financiero Inbursa SA Class B 6,000 17,388
Grupo Financiero Bancomer Class B 206,000 68,590
Grupo Televisa SA de CV sponsored ADR (a) 1,200 42,300
Telefonos de Mexico SA sponsored ADR representing Ord.
Class L shares 2,300 115,000
388,564
NETHERLANDS - 1.7%
AKZO Nobel NV 1,600 81,621
Ahold NV 52 1,604
ING Groep NV 6,149 465,610
Philips Electronics NV (Bearer) 3,900 316,337
Unilever NV Ord. 5,100 365,304
Vedior NV 5,600 176,939
VNU Ord. 4,100 174,568
1,581,983
NETHERLANDS ANTILLES - 0.0%
Schlumberger Ltd. 300 18,169
NORWAY - 0.1%
NCL Holdings AS (a) 19,666 107,168
PANAMA - 0.0%
Panamerican Beverages, Inc. Class A 600 18,638
PERU - 0.0%
Compania de Minas Buenaventura SA Class B
sponsored ADR 200 2,275
PORTUGAL - 0.5%
BPI-SGPS SA (Reg.) 2,200 86,918
Banco Pinto & Sotto Mayor SA (Reg.) 5,440 124,007
Electricidade de Portugal SA 7,000 164,765
Portugal Telecom SA sponsored ADR 2,000 112,000
487,690
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RUSSIA - 0.0%
Vimpel Communications sponsored ADR (a) 400 $ 16,800
SINGAPORE - 0.1%
Datacraft Asia Ltd. 20,000 47,800
Elec & Eltek International Co. Ltd. 4,400 17,160
Overseas Chinese Banking Corp. 1,000 3,500
United Overseas Bank Ltd. (For. Reg.) 1,000 2,870
71,330
SPAIN - 1.9%
Aguas de Barcelon SA 1,400 79,711
Banco Bilbao Vizcaya SA Ord. (Reg.) 14,700 277,689
Banco de Santander SA:
Ord. (Reg.) 7,200 203,778
rights 9/30/98 (cv ratio 1.00) (a) 7,200 3,967
rights 9/30/98 (cv ratio 0.01) (a) 7,200 239
Corp Financiera Reunida-Cofir 14,600 198,383
Mapfre Vida SA 2,400 125,830
Repsol SA Ord. 4,700 256,075
Telefonica de Espana SA Ord. 10,200 498,270
Viscofan Envolturas Celulo SA 2,400 117,558
1,761,500
SWEDEN - 1.4%
Assa Abloy AB Class B 2,500 108,268
Electrolux AB 5,500 87,936
Ericsson (L.M.) Telephone Co. Class B 9,400 263,897
Europolitan Holdings AB 1,900 189,444
ForeningsSparbanken AB, Series A 7,800 233,217
Skandinaviska Enskilda Banken Class A Free shares 6,300 109,055
Skandia Foersaekrings AB 19,000 325,308
1,317,125
SWITZERLAND - 2.7%
Credit Suisse Group (Reg.) 1,700 429,630
Julius Baer Holding AG 97 336,826
Nestle SA (Reg.) 215 446,214
Novartis AG (Reg.) 162 273,014
Roche Holding AG 17 182,906
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Union Bank of Switzerland (UBS) AG (Reg.) 1,146 $ 497,042
Zurich Allied AG (Reg.) 488 382,745
2,548,377
UNITED KINGDOM - 4.0%
Amec PLC Ord. 33,600 90,517
Bank of Scotland 14,400 157,523
British Aerospace PLC 23,708 180,767
British Petroleum PLC Ord. 8,657 114,912
British Telecommunications PLC Ord. 18,500 267,918
CGU PLC 7,000 135,661
Glaxo Wellcome PLC 13,900 428,473
HSBC Holdings PLC 5,600 131,752
HSBC Holdings PLC (Reg.) 6,700 157,632
Hazlewood Foods PLC Ord. 30,200 105,518
Lloyds TSB Group PLC 19,629 267,283
National Grid Co. PLC 15,555 108,190
Orange PLC (a) 10,500 127,375
Perpetual PLC 1,600 107,490
Prudential Corp. PLC 16,000 219,304
Royal & Sun Alliance Insurance Group PLC 46 500
Shell Transport & Trading Co. PLC (Reg.) 35,600 227,847
SmithKline Beecham PLC Ord. 25,634 297,572
Somerfield PLC 27,200 206,060
Vodafone Group PLC 36,500 503,268
3,835,562
UNITED STATES OF AMERICA - 25.7%
American International Group, Inc. 2,800 422,275
AFLAC, Inc. 5,000 171,875
AT&T Corp. 12,000 727,500
Abercrombie & Fitch Co. Class A (a) 150 6,966
Advanced Fibre Communication, Inc. (a) 100 1,994
Ahmanson (H.F.) & Co. 1,000 66,063
Alumax, Inc. 871 41,862
Aluminum Co. of America 1,000 69,313
America West Holdings Corp. Class B (a) 2,000 48,125
American Express Co. 5,000 551,875
American Home Products Corp. 7,000 360,500
American Standard Companies, Inc. (a) 4,000 190,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
AMP, Inc. 4,000 $ 117,500
Apple Computer, Inc. (a) 2,000 69,250
Associates First Capital Corp. Class A 524 40,708
Avon Products, Inc. 5,000 432,500
Bed Bath & Beyond, Inc. (a) 1,000 43,125
BJ Services Co. (a) 1,000 21,063
BMC Software, Inc. 2,300 113,419
Banc One Corp. 3,150 162,816
Bank of New York Co., Inc. 5,600 358,400
BankAmerica Corp. 5,000 448,750
Bausch & Lomb, Inc. 4,500 230,063
BEA Systems, Inc. (a) 3,000 58,875
Black & Decker Corp. 2,000 113,750
Burlington Resources, Inc. 4,000 145,000
CBS Corp. 5,000 169,688
CSX Corp. 2,500 101,094
CVS Corp. 4,000 164,000
Cardinal Health, Inc. 2,000 192,125
Cellular Communications International, Inc. (a) 2,000 120,000
Chesapeake Corp. 1,500 58,500
Ciena Corp. (a) 1,000 74,063
Cisco Systems, Inc. (a) 1,000 95,750
Citicorp 3,400 578,000
Clear Channel Communications, Inc. (a) 1,000 56,188
Clorox Co. 1,000 102,500
Comcast Corp. Class A special 1,000 45,406
Compaq Computer Corp. 8,000 263,000
Cooper Cameron Corp. (a) 4,000 140,250
Corn Products International, Inc. (a) 2,000 59,500
Crescent Real Estate Equities, Inc. 1,000 29,375
Dell Computer Corp. (a) 4,000 434,375
Disney (Walt) Co. 4,500 154,969
Dole Food, Inc. 4,000 188,500
Dresser Industries, Inc. 3,400 120,063
du Pont (E.I.) de Nemours & Co. 4,600 285,200
Duke Energy Corp. 2,500 142,813
EVI Weatherford, Inc. (a) 5,500 141,625
FPL Group, Inc. 1,800 109,463
Fannie Mae 3,000 186,000
Federated Department Stores, Inc. (a) 3,000 158,813
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Fleet Financial Group, Inc. 2,000 $ 171,875
Ford Motor Co. 4,000 227,750
Forest Laboratories, Inc. (a) 2,000 75,000
Fort James Corp. 2,500 84,375
Frontier Oil Corp. (a) 14,000 104,125
GTE Corp. 2,000 108,750
General Electric Co. 12,000 1,071,750
General Motors Corp. 1,000 72,313
Gillette Co. 11,400 597,075
Gulfstream Aerospace Corp. (a) 4,000 183,000
Hartford Financial Services Group, Inc. 2,000 104,125
HEALTHSOUTH Corp. (a) 2,000 50,250
Headlands Mortgage Co. (a) 3,000 55,875
Home Depot, Inc. 2,000 83,750
Household International, Inc. 7,293 362,827
Illinois Tool Works, Inc. 1,000 56,063
Intel Corp. 2,500 211,094
International Business Machines Corp. 1,200 159,000
Interpublic Group of Companies, Inc. 4,000 241,000
Jefferson Smurfit Corp. (a) 2,000 26,500
Johnson & Johnson 5,500 424,875
Leggett & Platt, Inc. 7,200 193,050
Lehman Brothers Holdings, Inc. 2,000 144,000
Lilly (Eli) & Co. 4,000 269,000
Limited, Inc. (The) 11,000 294,938
Lockheed Martin Corp. 1,300 129,594
Lucent Technologies, Inc. 2,000 184,875
MCI Communications Corp. 11,500 744,625
MGIC Investment Corp. 2,000 107,250
Masco Corp. 3,000 85,688
MediaOne Group, Inc. (a) 3,000 144,938
Medtronic, Inc. 3,000 185,813
Merck & Co., Inc. 1,500 184,969
Merrill Lynch & Co., Inc. 800 78,000
Microsoft Corp. (a) 9,500 1,044,406
Nalco Chemical Co. 3,000 102,938
National Mercantile Bancorp. warrants 6/2/99 (a) 2,403 -
Omnicom Group, Inc. 2,000 105,000
Oracle Corp. (a) 3,000 79,500
PG&E Corp. 2,000 60,875
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
PacifiCare Health Systems, Inc. Class B (a) 1,000 $ 71,750
PeopleSoft, Inc. (a) 2,000 75,375
Philip Morris Companies, Inc. 4,000 175,250
Promus Hotel Corp. (a) 2,000 75,250
Qwest Communications International, Inc. (a) 2,000 80,750
Resource Bancshares Mortgage Group, Inc. 3,000 58,313
Rite Aid Corp. 5,000 197,500
Rubbermaid, Inc. 5,000 166,563
Safeskin Corp. (a) 2,000 75,125
Sara Lee Corp. 3,000 150,375
Schawk, Inc. Class A 2,000 32,500
Schering-Plough Corp. 2,900 280,575
Siebel Systems, Inc. (a) 5,000 135,625
Starwood Hotels & Resorts Trust 1,500 61,594
Steris Corp. (a) 2,000 122,000
Stone Container Corp. (a) 3,000 39,188
Stryker Corp. 2,400 104,250
Sunbeam-Oster, Inc. 1,000 8,875
Sybron International Corp (a). 1,000 20,750
Tel-Save Holdings, Inc. (a) 5,000 62,500
Tele-Communications, Inc. (TCI Group), Series A (a) 1,000 41,750
Tenet Healthcare Corp. (a) 4,500 134,719
Texas Instruments, Inc. 300 17,794
Textron, Inc. 1,500 110,813
Time Warner, Inc. 3,000 270,188
Tosco Corp. 4,200 117,600
Transocean Offshore, Inc. 3,000 118,313
Travelers Group, Inc. (The) 2,400 160,800
Tyco International Ltd. 1,500 92,906
USX-Marathon Group 4,500 153,563
U.S. Bancorp 6,000 276,000
Unisys Corp. (a) 6,000 165,375
United HealthCare Corp. 1,500 84,750
U.S. WEST, Inc. 81 4,323
VLSI Technology, Inc. (a) 3,000 48,000
Wal-Mart Stores, Inc. 16,000 1,010,000
Warner-Lambert Co. 6,000 453,375
Washington Mutual, Inc. 4,900 195,694
Waters Corp. (a) 1,000 63,875
Wellpoint Health Networks, Inc. (a) 1,500 91,969
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - CONTINUED
Wells Fargo & Co. 300 $ 106,763
Western Atlas, Inc. 4,000 261,750
WorldCom, Inc. (a) 12,000 634,500
24,405,086
TOTAL COMMON STOCKS
(Cost $48,794,660) 57,877,496
PREFERRED STOCKS - 1.3%
CONVERTIBLE PREFERRED STOCKS - 0.1%
JAPAN - 0.1%
AJL participating trust $1.44 PEPS 15,000 96,563
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
AUSTRALIA - 0.1%
Star City Holdings Ltd. (a) 62,000 39,091
GERMANY - 0.8%
Dyckerhoff AG (non-vtg.) 200 87,683
Porsche AG 37 99,744
SAP AG (Systeme Anwendungen Produkte) 600 437,291
Wella AG 162 168,669
793,387
ITALY - 0.3%
Telecom Italia Mobile Spa 78,700 300,838
TOTAL NONCONVERTIBLE PREFERRED STOCKS 1,133,316
TOTAL PREFERRED STOCKS
(Cost $1,034,951) 1,229,879
CLOSED-END INVESTMENT COMPANIES - 0.1%
SHARES VALUE (NOTE 1)
EMERGING MARKETS - 0.0%
Templeton Dragon Fund, Inc. 1,000 $ 7,625
MULTI-NATIONAL - 0.0%
Morgan Stanley Asia-Pacific Fund, Inc. 1,500 9,750
PORTUGAL - 0.1%
Portugal Fund, Inc. 3,000 65,813
TOTAL CLOSED-END INVESTMENT COMPANIES
(Cost $80,055) 83,188
CONVERTIBLE BONDS - 0.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (B)
JAPAN - 0.2%
MBL International Finance of Bermuda 3%, 11/30/02
(Cost $277,225) A1 $ 240,000 229,800
GOVERNMENT OBLIGATIONS (F) - 23.7%
FRANCE - 1.3%
French Government Oat 5.5%, 4/25/04 Aaa FRF 7,100,000 1,255,627
GERMANY - 3.0%
Treuhandanstalt 6 5/8%, 7/9/03 Aaa DEM 4,650,000 2,873,456
ITALY - 0.6%
Italian Republic 10 1/2%, 9/1 /05 (c) Aa3 ITL 700,000 535,363
SWEDEN - 0.9%
Swedish Kingdom 10 1/4%, 5/5 /03 Aa1 SEK 5,000,000 779,832
UNITED KINGDOM - 1.8%
United Kingdom, Great Britain & Northern Ireland
9 1/2%, 4/18/05 Aaa GBP 900,000 1,747,245
GOVERNMENT OBLIGATIONS (F) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
UNITED STATES OF AMERICA - 16.1%
Federal Home Loan Bank:
5.67%, 1/14/00 Aaa $ 2,985,000 $ 2,985,925
5.53%, 2/3/00 Aaa 1,625,000 1,621,701
Fannie Mae 5.43%, 1/27/00 Aaa 1,950,000 1,942,083
U.S. Treasury Bills, yield at date of purchase
4.9519 to 4.9894% 10/08/98 (e) - 115,000 113,966
U.S. Treasury Bonds:
7 1/4%, 2/ 15/23 Aaa 1,350,000 1,579,284
8 1/8%, 8/15/19 Aaa 1,300,000 1,660,542
12 3/4%, 11/15/10 (callable) Aaa 880,000 1,246,714
13 7/8%, 5/15/11 (callable) Aaa 980,000 1,478,271
U.S. Treasury Notes:
6.5% 10/15/06 Aaa 1,900,000 2,011,321
7 7/8%, 8/15/01 Aaa 640,000 680,998
15,320,805
TOTAL GOVERNMENT OBLIGATIONS
(Cost $22,527,147) 22,512,328
CASH EQUIVALENTS - 13.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury Obligations), in a joint
trading account at 5.62%, dated
7/31/98 due 8/3/98 $ 13,206,182 13,200,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $85,914,038) $ 95,132,691
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
8 S & P 500 Stock Index Contracts Sep 98 $ 2,189,233 $ 56,767
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 2.3%
SECURITY TYPE ABBREVIATIONS
PEPS - Participating Equity Preferred
Shares/Premium Exchangeable
Participating Shares
CURRENCY ABBREVIATIONS
AUD - Australian dollar
GBP - British pound
FRF - French franc
DEM - German deutsche mark
ITL - Italian lira
SEK - Swedish krona
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless
otherwise noted.
(c) Principal amount in thousands.
(d) 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 $217,835
or 0.2% of net assets.
(e) 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 $113,966.
(f) 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.
(g) Purchased on an installment basis. Market value reflects only
those payments made through 11/17/97. The remaining installment
aggregating AUD 55,080 is due 11/17/1998.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 23.7% AAA, AA, A 23.7%
Baa 0.0% BBB 0.0%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
of the sovereign credit of the issuing government.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment
in Securities
Basic Industries 1.8%
Cash Equivalents 13.9
Construction & Real Estate 1.3
Durables 2.8
Energy 2.8
Finance 15.8
Government Obligations 23.7
Health 5.6
Industrial Machinery & Equipment 3.4
Media & Leisure 2.3
Nondurables 4.6
Retail & Wholesale 3.2
Services 1.4
Technology 7.7
Utilities 8.1
Others (Individually less than 1%) 1.6
100.0%
INCOME TAX INFORMATION
At July 31, 1998, the aggregate cost of investment securities for
income tax purposes was $85,988,639. Net unrealized appreciation
aggregated $9,144,052, of which $12,290,112 related to appreciated
investment securities and $3,146,060 related to depreciated investment
securities.
At July 31, 1998, the fund had a capital loss carryforward of
approximately $6,552,000 which will expire on July 31, 2004.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 95,132,691
AGREEMENTS OF $13,200,000) (COST $85,914,038) -
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE (COST $62,443) 62,240
RECEIVABLE FOR INVESTMENTS SOLD 2,624,831
RECEIVABLE FOR FUND SHARES SOLD 766,288
DIVIDENDS RECEIVABLE 82,231
INTEREST RECEIVABLE 357,376
OTHER RECEIVABLES 762
TOTAL ASSETS 99,026,419
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 33,359
PAYABLE FOR INVESTMENTS PURCHASED 3,363,726
PAYABLE FOR FUND SHARES REDEEMED 497,517
ACCRUED MANAGEMENT FEE 58,789
PAYABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 12,600
OTHER PAYABLES AND ACCRUED EXPENSES 99,915
TOTAL LIABILITIES 4,065,906
NET ASSETS $ 94,960,513
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 91,632,934
UNDISTRIBUTED NET INVESTMENT INCOME 742,283
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (6,683,048)
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 9,268,344
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 5,715,271 SHARES OUTSTANDING $ 94,960,513
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $16.62
PER SHARE ($94,960,513 (DIVIDED BY) 5,715,271 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 818,823
DIVIDENDS
INTEREST 1,748,915
2,567,738
LESS FOREIGN TAXES WITHHELD (67,278)
TOTAL INCOME 2,500,460
EXPENSES
MANAGEMENT FEE $ 555,880
TRANSFER AGENT FEES 218,691
ACCOUNTING FEES AND EXPENSES 62,162
CUSTODIAN FEES AND EXPENSES 92,024
REGISTRATION FEES 46,543
AUDIT 66,595
LEGAL 324
MISCELLANEOUS 1,446
TOTAL EXPENSES BEFORE REDUCTIONS 1,043,665
EXPENSE REDUCTIONS (10,619) 1,033,046
NET INVESTMENT INCOME 1,467,414
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 6,456,352
FOREIGN CURRENCY TRANSACTIONS (12,499)
FUTURES CONTRACTS 189,858 6,633,711
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (785,416)
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 3,490
FUTURES CONTRACTS 56,767 (725,159)
NET GAIN (LOSS) 5,908,552
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 7,375,966
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 1,467,414 $ 1,735,993
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 6,633,711 4,042,959
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (725,159) 10,328,422
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 7,375,966 16,107,374
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (1,895,825) (2,871,377)
SHARE TRANSACTIONS 66,298,210 36,337,493
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 1,827,302 2,728,128
COST OF SHARES REDEEMED (53,263,687) (65,467,695)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 14,861,825 (26,402,074)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 20,341,966 (13,166,077)
NET ASSETS
BEGINNING OF PERIOD 74,618,547 87,784,624
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 94,960,513 $ 74,618,547
INCOME OF $742,283 AND $1,038,716, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 4,236,702 2,664,438
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 124,912 214,058
REDEEMED (3,475,772) (4,847,773)
NET INCREASE (DECREASE) 885,842 (1,969,277)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 15.45 $ 12.91 $ 12.40 $ 11.99 $ 11.98
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .30 B .31 B .31 .28 .32 B
NET REALIZED AND UNREALIZED 1.27 2.68 .25 .13 .25
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS 1.57 2.99 .56 .41 .57
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.40) (.45) (.05) - (.15)
FROM NET REALIZED GAIN - - - - (.11)
IN EXCESS OF NET REALIZED GAIN - - - - (.20)
RETURN OF CAPITAL - - - - (.10)
TOTAL DISTRIBUTIONS (.40) (.45) (.05) - (.56)
NET ASSET VALUE, END OF PERIOD $ 16.62 $ 15.45 $ 12.91 $ 12.40 $ 11.99
TOTAL RETURN A 10.53% 23.93% 4.52% 3.42% 4.58%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 94,961 $ 74,619 $ 87,785 $ 148,831 $ 313,246
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 1.39% 1.51% 1.39% 1.34% 1.68%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE NET 1.37% C 1.49% C 1.36% C 1.33% C 1.67% C
ASSETS AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO 1.95% 2.28% 2.94% 4.68% 2.56%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 81% 57% 189% 242% 226%
AVERAGE COMMISSION RATE D $ .0074 $ .0089
</TABLE>
E 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).
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1998
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 require 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 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 schedule of investments
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INCOME TAXES - CONTINUED
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 futures transactions, foreign currency transactions,
passive foreign investment companies (PFIC), non-taxable dividends,
capital loss carryforwards, and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
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
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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 $59,716,522 and $54,412,071, respectively, of which U.S.
government and government agency obligations aggregated $8,921,704 and
$6,843,829, respectively.
The market value of futures contracts opened and closed during the
period amounted to $6,319,279 and $4,319,904, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
group fee rate plus a fixed individual fund fee rate applied to the
average net assets of the fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net
assets of all the mutual funds advised by FMR. The rates ranged from
.2500% to .5200% for the period. The annual individual fund fee rate
is .45%. In the event that these rates were lower than the contractual
rates in effect during the period, FMR voluntarily implemented the
above rates, as they resulted in the same or a lower management fee.
For the period, the management fee was equivalent to an annual rate of
.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., Fidelity International
Investment Advisors (FIIA), and Fidelity Investments Japan Limited. In
addition, FIIA entered into a sub-
advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (FIIA(U.K.)L). 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 FIIA(U.K.)L a fee based on costs incurred
for either service.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .29% 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 $6,426 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $10,383 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 $27 and $209, respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Global Balanced Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Global Balanced Fund (a fund of Fidelity Puritan Trust) at
July 31, 1998, and the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fidelity
Global Balanced Fund 's management; our responsibility is to express
an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included
confirmation of securities at July 31, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 11, 1998
DISTRIBUTIONS
A total of 36.24% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 7.79% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides 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.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1
For mutual fund and brokerage trading.
2
For quotes.*
3
For account balances and holdings.
4
To review orders and mutual
fund activity.
5
To change your PIN.
*0
To speak to a Fidelity representative.
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.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 and we'll send you an America Online CD or disk with up
to 50 free hours of Web access.
(COMPUTER_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
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
GBL-ANN-0998 60505
1.536134.101
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 (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
CORPORATE HEADQUARTERS
82 Devonshire St., Boston, MA 02109
WWW.FIDELITY.COM
FIDELITY
LOW-PRICED STOCK
FUND
ANNUAL REPORT
JULY 31, 1998
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
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 47 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 51 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 63 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 64
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:
So far, 1998 has been a year of considerable volatility in the U.S.
stock and bond markets. In the first quarter, the U.S. stock market
soared as inflation and interest rates remained stable, while the
economy maintained strong growth. By summer, however, investors began
to exercise caution relative to the troublesome Asian economic climate
and reports of concerns about corporate earnings domestically. Market
volatility and low interest rates were also the main stories in the
bond market, with many investors moving assets to highly rated U.S.
Treasuries.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY LOW-PRICED STOCK 10.53% 141.86% 385.53%
FIDELITY LOW-PRICED STOCK 7.22% 134.61% 370.96%
(INCL. 3.00% SALES CHARGE)
RUSSELL 2000 (REGISTERED TRADEMARK) 2.31% 90.76% 191.06%
SMALL CAP FUNDS AVERAGE 2.64% 101.66% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or or
since the fund started on December 27, 1989. For example, if you had
invested $1,000 in a fund that had a 5% return over the past year, the
value of your investment would be $1,050. You can compare the fund's
returns to the performance of the Russell 2000 Index - an unmanaged
index of 2,000 small capitalization stocks. To measure how the fund's
performance stacked up against its peers, you can compare it to the
small cap funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Analytical Services,
Inc. The past one year average represents a peer group of 550 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY LOW-PRICED STOCK 10.53% 19.32% 20.18%
FIDELITY LOW-PRICED STOCK 7.22% 18.60% 19.75%
(INCL. 3.00% SALES CHARGE)
RUSSELL 2000 2.31% 13.79% 13.23%
SMALL CAP FUNDS AVERAGE 2.64% 14.86% 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
Low-Priced Stock 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 12359.54
1992/08/31 16007.44 12010.77
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
1998/01/31 45767.12 29706.57
1998/02/28 48279.40 31903.16
1998/03/31 50063.48 33218.93
1998/04/30 50773.47 33402.75
1998/05/31 49608.36 31603.78
1998/06/30 49371.69 31670.26
1998/07/31 47096.08 29106.43
IMATRL PRASUN SHR__CHT 19980731 19980817 090321 R00000000000107
$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 3.00% sales charge was paid. As the
chart shows, by July 31, 1998, the value of the investment would have
grown to $47,096 - a 370.96% 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 would have grown to $29,106 - a 191.06% 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
For the most part, the past 12
months have been witness to solid
gains and record-setting stock
market performance in the U.S.
Despite that, the final few weeks
of the period ending July 31, 1998,
left many investors asking "What
have you done for me lately?" For
the 12-month period, the Standard
& Poor's 500 Index - a measure
of the U.S. stock market -
produced a return of 19.29%. But
whether one of the longest
running bull markets in recent
history is now an endangered
species remains to be seen.
There have been some
extraordinary highs and lows in
the equity market over the past 12
months. In late October, the Dow
Jones Industrial Average fell
550-plus points in one trading
session. That, however, was
quickly overcome by the first
quarter of 1998 as investors in
stocks were rewarded with strong
gains and an upward trend in
stock prices. But despite low
interest rates, a strong economy
and tame inflation domestically,
investor uncertainty over
corporate earnings reports and
the Asian market upheaval
began to have a tangible effect on
our markets at home. After hitting
a record of 9337.97 on July 17,
1998, the Dow Jones Industrial
Average racked up losses of over
400 points the week of July
20th. Still, the 12-month S&P
return of 19.29% is nearly twice
that of the stock market's historical
annual performance.
An interview with Joel Tillinghast, Portfolio Manager of Fidelity
Low-Priced Stock Fund
Q. HOW DID THE FUND PERFORM, JOEL?
A. It was a tough year for small-company stocks, but the fund fared
well relative to its comparative benchmarks. For the 12 months that
ended July 31, 1998, the fund returned 10.53%. The small cap funds
average returned 2.64% during that time, according to Lipper
Analytical Services. The Russell 2000 Index returned 2.31% during the
12-month period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Good stock selection helped the fund outperform its comparative
index. I tried to emphasize companies with steady, predictable
earnings growth and reasonable valuations. While several individual
positions performed poorly due to disappointing earnings, the fund's
exposure to several weaker areas - namely energy and energy service;
metals; real estate investment trusts; and semiconductor capital
equipment - was low. We also witnessed a very narrow stock market,
with stocks of larger companies accounting for much of the gains. This
also hurt the overall performance of the low-priced universe.
Q. WHICH MARKET SECTORS OFFERED GOOD EARNINGS GROWTH PROSPECTS DURING
THE PERIOD? WHICH SECTORS PROVED DISAPPOINTING?
A. Homebuilding and insurance companies were particularly attractive.
Homebuilding is a purely domestic business with no import competition,
and pricing trends were quite firm throughout the period. Homebuilding
stocks within the portfolio that performed well included Crossman
Communities and U.S. Homes. Insurance companies - especially insurance
brokers and Bermuda-based companies -were also an area of emphasis.
Specialized insurance brokers benefited from growing demand for new
risk-transfer mechanisms, while Bermuda companies benefited from lower
taxes as well as a strong flow of business from both the U.S. and
London insurance markets. Examples of fund positions included
insurance broker E.W. Blanch and Bermuda insurance firms Renaissance
Re Holdings and Terra Nova. Each of these stocks performed well during
the period. For disappointments, I'd point to the fund's textile- and
semiconductor-related holdings. The textile industry is very much a
global one, and increased competition and pricing pressure hurt stocks
such as Galey & Lord and Dyersburg. Semiconductor makers also were
hurt by the extreme pricing pressure - or inability to raise prices -
with Quality Semiconductor and Micro Linear taking it on the chin.
Q. WERE THERE ANY OTHER SECTORS THAT CAUGHT YOUR INTEREST?
A. Domestic regional airlines were appealing, primarily because their
travel volumes did not suffer from lack of demand from Asia. Many also
benefited from the drastic decline in oil prices. Portfolio examples
included Comair, ASA Holdings and Midwest Express.
Q. THE FUND CONTINUED TO HAVE CONSIDERABLE EXPOSURE TO BANK STOCKS.
WHAT WAS YOUR INVESTMENT STRATEGY WITHIN THIS SECTOR?
A. I tried to focus on banks that I felt could grow internally - as
well as by merger - since internal growth is often more consistent,
can carry lower risks and can be more profitable. Banks that focus on
customer service often earn the loyalty that allows them to grow
faster. For some banks, that could mean targeting certain ethnic
groups, particularly first generation Americans. For others, it may
mean having lending authority nearby rather than far away. One example
within the portfolio was Firstbank Puerto Rico, which performed very
well during the period.
Q. USEC IS ONE OF THE LARGER NEW POSITIONS IN THE PORTFOLIO. WHAT WAS
APPEALING ABOUT THIS STOCK?
A. USEC is a recent privatization of the U.S. government's uranium
processing business. The company sells enriched uranium to utilities
on long-term contracts, and thus its business prospects tend to be
fairly predictable. As a private business, USEC has also been quite
active in cutting costs, particularly in the areas of electricity
usage and labor. The company also has a development project called
AVLIS that may help reduce costs further.
Q. EFFECTIVE APRIL 3, 1998, THE FUND WAS CLOSED TO NEW INVESTORS. WHY
WAS THIS MOVE MADE AND HOW WILL IT BENEFIT SHAREHOLDERS?
A. Our primary intent was to stabilize the fund's cash flows. Since
the fund invests mainly in stocks priced $35 or lower, many of its
investment opportunities involve smaller-sized companies. Given this,
we felt limiting the fund's asset growth would allow me to stay more
fully invested as I try to find good opportunities within the
low-priced universe. Current shareholders still can purchase shares of
the fund.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. As the period came to an end, a tight labor market and falling
demand from overseas had translated into a slowdown for corporate
earnings. Moreso than large companies, small-company stocks are
selling at prices that reflect this bad news. For now, I'll continue
to look for companies that I feel offer steady, predictable earnings
growth at moderate prices, as they are least likely to be hurt by a
profit slowdown.
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 EXPLORES
GLOBAL MARKET VOLATILITY AND
HOW IT HAS AFFECTED THE
LOW-PRICED UNIVERSE:
"By now, investors are no doubt
aware of the continuing economic
sagas in both Southeast Asia and
Japan. As these respective
situations have played out,
they've had both a direct and an
indirect impact on low-priced
stocks.
"The direct, absolute impact is
obvious. Many small companies
with business ties to Southeast
Asia - and the fund held a few
during the period - got hit hard
as business continued to slump
in that region. But the difficulties
weren't restricted to companies
with direct Asian business exposure.
"Most Asian countries have
devalued their currencies,
producing lower dollar prices on
exported products. This caused a
high degree of pricing pressure in
American basic manufacturing
industries, particularly the textile
sector. Semiconductor makers
encountered the same problems.
"While I can't foresee all the
indirect effects of the Asian slump,
I am trying to insulate the fund by
avoiding highly competitive
commodity industries and favoring
companies with differentiated
products and steady demand."
FUND FACTS
GOAL: to increase the value of
the fund's shares by investing
mainly in low-priced common
stocks ($35 or less at time
of purchase)
FUND NUMBER: 316
TRADING SYMBOL: FLPSX
START DATE: December 27, 1989
SIZE: as of July 31, 1998,
more than $10.5 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
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JULY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
GALLAHER GROUP PLC SPONSORED ADR 1.2 1.0
USEC, INC. 1.1 0.0
HYDER PLC 1.1 0.9
KING WORLD PRODUCTIONS, INC. 1.0 1.0
NORDBANKEN HOLDING AB 0.9 0.7
VIAD CORP. 0.8 0.7
BIOMET, INC. 0.8 0.7
YORKSHIRE WATER PLC 0.8 0.7
FIRSTBANK PUERTO RICO 0.8 0.5
UNIVERSAL HEALTH SERVICES, INC. CLASS B 0.7 0.6
</TABLE>
TOP FIVE MARKET SECTORS AS OF JULY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 16.9 14.0
TECHNOLOGY 10.3 11.0
DURABLES 7.1 6.2
RETAIL & WHOLESALE 6.5 6.1
HEALTH 6.4 5.6
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JULY 31, 1998 * AS OF JANUARY 31, 1998 **
ROW: 1, COL: 1, VALUE: 89.2
ROW: 1, COL: 2, VALUE: 10.8
STOCKS 79.9%
SHORT-TERM
INVESTMENTS 20.1%
FOREIGN
INVESTMENTS 22.3%
STOCKS 89.2%
SHORT-TERM
INVESTMENTS 10.8%
FOREIGN
INVESTMENTS 25.6%
ROW: 1, COL: 1, VALUE: 79.90000000000001
ROW: 1, COL: 2, VALUE: 20.1
*
**
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 89.1%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.7%
AEROSPACE & DEFENSE - 0.4%
Allied Research Corp. (a)(d) 472,000 $ 4,720
Doncasters PLC sponsored ADR (a) 149,000 3,837
Gulfstream Aerospace Corp. (a) 335,000 15,326
Primex Technologies, Inc. 218,300 10,096
Transtechnology Corp. 264,600 6,747
40,726
DEFENSE ELECTRONICS - 0.2%
DRS Technologies, Inc. (a) 42,500 468
Ducommun, Inc. (a)(d) 1,120,500 22,410
Flir Systems, Inc. (a)(d) 302,500 5,067
27,945
SHIP BUILDING & REPAIR - 0.1%
Newport News Shipbuilding, Inc. 245,400 6,181
Vosper Thornycroft Holdings PLC 50,000 690
6,871
TOTAL AEROSPACE & DEFENSE 75,542
BASIC INDUSTRIES - 5.3%
CHEMICALS & PLASTICS - 2.9%
AEP Industries, Inc. (a) 37,500 764
Aronkasei Co. Ltd. 650,000 1,524
CFC International, Inc. (a) 112,000 1,400
European Colour PLC 1,000,000 914
Foamex International, Inc. 240,000 4,140
Hawkins Chemicals, Inc. 24,000 255
International Specialty Products, Inc. (a) 2,000,000 34,125
Lyondell Petrochemical Co. 1,330,000 32,585
Martin Color-Fi, Inc. (a)(d) 553,000 1,452
McKechnie PLC 200,000 1,322
Nihon Kagaku Sangyo Co. Ltd. 200,000 498
Nippon Chemical Industrial Co. Ltd. 300,000 718
Octel Corp. (a)(d) 1,472,000 29,900
OM Group, Inc. 25,000 927
Quixote Corp. (d) 636,700 8,755
Solutia, Inc. 1,525,000 45,273
Spartech Corp. 1,000,000 19,000
Sybron Chemical Industry Corp. (a) 144,200 4,038
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Tokyo Printing Ink Manufacturing Co. Ltd. 375,000 $ 742
USEC, Inc. (a)(d) 8,400,000 119,700
Wardle Stroeys PLC Class L 224,900 1,469
309,501
IRON & STEEL - 0.4%
Beltecno Corp. 100,000 266
Bunka Shutter Co. Ltd. 150,000 407
Chubu Steel Plate Co. Ltd. 1,000,000 1,536
Cold Metal Products, Inc. (a)(d) 428,000 2,087
Fansteel, Inc. (a)(d) 851,700 6,068
Harris Steel Group, Inc. Class A 147,200 1,120
Hawk Corp. Class A (a) 288,800 4,946
Japan Steel Tower Co. Ltd. 500,000 1,003
Nittetsu Steel Drum Co. Ltd. 100,000 280
Richardsons Westgarth PLC Class L (d) 3,415,000 2,676
Roanoke Electric Steel Corp. 421,000 7,157
Samuel Manu-Tech, Inc. 1,000,000 7,606
Steel of West Virginia, Inc. (a)(d) 663,000 5,636
Tadano Ltd. 25,000 70
Takigami Steel Construction Co. Ltd. 300,000 789
41,647
METALS & MINING - 1.0%
AFC Cable Systems, Inc. (a)(d) 800,000 25,500
Acacia Resources Ltd. 1,250,000 1,516
Acier Leroux, Inc. Class B (a) 125,000 508
Acier Leroux, Inc. Class B 200,000 814
Billiton PLC 3,000,000 6,772
Brush Wellman, Inc. 413,900 6,571
Cable Design Technology Corp. (a) 714,200 14,954
Chase Industries, Inc. (a)(d) 801,150 13,620
Draka Holding NV 86,000 3,090
Elkem ASA 100,000 1,207
Fimalac SA (Fin Marc de Lacharriere) 50,000 6,010
Major Drilling Group International, Inc. (a) 75,000 322
Metaleurop SA (a) 110,063 887
Metaleurop SA warrants 02/4/00 (a) 315,190 267
Nagahori Corp. 200,000 304
PK Cables OY 150,000 5,273
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
QNI Ltd. 750,000 $ 323
Special Metals Corp. (a) 525,000 7,941
Superior Telecom, Inc. 249,050 8,592
Toami Corp. 350,000 1,562
106,033
PACKAGING & CONTAINERS - 0.4%
Boxmore International 440,000 1,422
M Y Holdings PLC 100,000 129
Owens-Illinois, Inc. (a) 633,900 27,971
Silgan Holdings, Inc. (a) 400,000 10,625
40,147
PAPER & FOREST PRODUCTS - 0.6%
ABT Building Products Corp. (a) 127,500 1,737
CVG (Crown Van Gelder) 300,000 5,241
Clondalkin Group PLC unit 1,000,000 8,064
Enso OY Class R 1,300,000 12,543
FiberMark, Inc. (a) 93,600 1,234
Mercer International, Inc. (SBI) 247,200 2,256
Metsa-Serla Ltd. Class B 3,000,000 24,723
Rolland, Inc. 325,000 1,720
Uehara Sei Shoji Co. Ltd. 1,000,000 2,498
60,016
TOTAL BASIC INDUSTRIES 557,344
CONSTRUCTION & REAL ESTATE - 5.8%
BUILDING MATERIALS - 1.8%
Aggregate Industries PLC 8,000,000 7,706
American Precision Industries, Inc. (a) 109,600 1,747
American Woodmark Corp. 197,500 5,481
Anglian Group PLC 200,000 731
Asahi Concrete Works Co. Ltd. (d) 900,000 2,677
Baynes (Charles) PLC 1,000,000 963
Beijer Alma AB Series B 34,600 762
Brampton Brick Ltd. Class A (a)(d) 375,000 1,054
Centex Construction Products, Inc. 705,600 30,694
Chart Industries, Inc. (d) 1,150,000 13,225
Ciments Francais Class A 15,000 894
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
BUILDING MATERIALS - CONTINUED
Devcon International Corp. (a) 217,700 $ 653
Domco, Inc. 725,000 6,594
Domco, Inc. warrants 11/6/98 (a) 175,000 544
Drew Industries, Inc. (a)(d) 1,135,200 15,893
Emco Ltd. (a) 150,000 987
Engineered Support Systems, Inc. (d) 330,750 5,995
Florida Rock Industries, Inc. 64,600 1,768
Giant Cement Holding, Inc. (a)(d) 587,100 15,998
Heywood Williams Group PLC 300,000 1,112
Hibiya Engineering Ltd. 1,500,000 6,538
Ibstock Johnsen PLC 750,000 612
Kaynar Technologies, Inc. (a)(d) 369,700 6,747
Kingspan Group PLC 100,000 410
Komai Tekko, Inc. 125,000 236
Kondotec, Inc. 275,000 1,123
Kyushu Fujisash Co. Ltd. 100,000 221
Mark IV Industries, Inc. 1,640,080 31,573
Matsuo Bridge Co. Ltd. 500,000 816
Nichiha Corp. 300,000 1,629
Owens Corning 150,000 6,188
Patrick Industries, Inc. (d) 588,500 8,828
Polynorm NV Ord. 30,000 3,130
Polypipe PLC 1,101,900 2,249
Raytech Corp. (a)(d) 327,800 1,619
Richelieu Hardware Ltd. (a) 41,900 485
Westburne, Inc. (a) 150,000 1,592
189,474
CONSTRUCTION - 3.2%
Aoki Marine Co. Ltd. 200,000 381
American Buildings Co. (a) 150,200 4,525
Amec PLC Ord. 2,100,000 5,657
Beazer Homes USA, Inc. (a)(d) 408,400 9,980
Beazer Group PLC 50,000 146
Bovis Homes Group PLC (a) 400,000 1,371
Cavalier Homes, Inc. 530,000 5,598
Clayton Homes, Inc. 1,350,000 24,216
Crossman Communities, Inc. (a)(d) 1,112,600 34,491
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - CONTINUED
D.R. Horton, Inc. 350,000 $ 7,569
Dominion Homes, Inc. (a)(d) 500,000 6,531
Engle Homes, Inc. (d) 993,000 15,392
Fortress Group, Inc. 127,500 717
Jacobs Engineering Group, Inc. (a) 1,225,000 35,984
Kaneshita Construction Co. Ltd. Ord. 400,000 1,896
M/I Schottenstein Homes, Inc. (d) 880,000 20,955
Matsui Construction Co. Ltd. 400,000 891
McAlpine (Alfred) Ord. 50,000 110
Monaco Coach Corp. (a)(d) 389,100 9,484
Monterey Homes Corp. (a) 263,000 4,652
NCI Building Systems, Inc. (a) 200,000 4,625
Oakwood Homes Corp. (d) 3,100,000 62,775
Oriole Homes Corp. (a):
Class A 44,200 210
Class B (d) 276,800 1,315
Redrow Group PLC Class L 1,100,000 2,460
Robertson Ceco Corp. (a)(d) 984,800 9,786
Royal LePage Ltd. (a) 50,000 190
Southern Energy Homes, Inc. (a)(d) 1,426,000 13,547
Swan Hill Group PLC 2,000,000 2,057
Takada Kiko Co. Ltd. 700,000 2,325
Tay Homes PLC (d) 2,900,000 5,398
Technip SA (a) 5,000 613
Technip SA (a)(e) 50,000 6,128
U.S. Home Corp. (a)(d) 600,645 22,487
Volker Wessels Stevin NV 93,500 2,497
Willbros Group, Inc. (a) 318,800 3,985
Wimpey George PLC 600,000 1,058
Writer Corp. (a) 77,000 188
Yokogawa Bridge Works 1,000,000 2,442
Yokogawa Construction Co. Ltd. 250,000 683
Yit-Yhtymae OY 125,000 1,870
337,185
ENGINEERING - 0.4%
Ataka Construction & Engineering Co. Ltd. 50,000 159
Dai-Dan Co. Ltd. 300,000 1,737
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
ENGINEERING - CONTINUED
Hoan Kogyo Co. Ltd. 500,000 $ 1,574
Japan Engineering Consultants Co. Ltd. 300,000 621
Kawasaki Setsubi Kogyo Co. Ltd. 200,000 444
MYR Group, Inc. (d) 535,000 8,527
Metalrax Group PLC Class L 2,000,000 2,939
Ohba Co. Ltd. 125,000 369
Sanyo Engineering & Construction Co. 800,000 2,784
Sanshin Corp. 250,000 386
Taihei Dengyo Kaisha Ltd. 200,000 721
URS Corp. (a)(d) 1,250,000 21,329
41,590
REAL ESTATE - 0.1%
Chuo Warehouse Co. Ltd. 200,000 934
Echelon International Corp. (a) 265,000 6,658
FRM Nexus, Inc. (a)(d) 156,649 470
Hambro Countrywide PLC Class L 250,000 441
Kennedy Wilson, Inc. (a)(d) 300,000 3,450
Meiwa Estate Co. Ltd. 50,000 422
Nagawa Co. Ltd. 850,000 3,058
15,433
REAL ESTATE INVESTMENT TRUSTS - 0.3%
AMRESCO Capital Trust, Inc. 500,000 5,937
Anthracite Capital, Inc. 250,000 3,000
Banyan Strategic Land Trust (SBI) (d) 979,250 6,610
Bedford Property Investors, Inc. 100,000 1,869
Redwood Trust, Inc. 322,200 4,833
SL Green Realty Corp. 200,000 4,400
26,649
TOTAL CONSTRUCTION & REAL ESTATE 610,331
DURABLES - 7.0%
AUTOS, TIRES, & ACCESSORIES - 2.8%
Autocam Corp. (d) 596,250 10,509
AutoZone, Inc. (a) 1,700,000 58,223
Breed Technologies, Inc. 89,700 1,306
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Cook (D.C.) Holdings PLC (d) 2,300,000 $ 1,502
Copart, Inc. (a) 64,000 1,368
Dagenham Motors Group PLC Class L 250,000 478
Dennis Group PLC 700,000 4,337
Durakon Industries, Inc. (a)(d) 651,800 8,229
FCC Co. Ltd. 50,000 432
Federal Screw Works (d) 108,800 5,277
Fuji Heavy Industries Ltd. 250,000 1,425
Gentex Corp. (a) 250,000 3,859
Global Motorsport Group, Inc. (a)(d) 526,100 10,588
Hahn Automotive Warehouse, Inc. (a) 173,585 955
Intermet Corp. 230,400 4,464
Keiiyu Co. Ltd. 150,000 1,007
Kwik-Fit Holdings PLC Class L 450,000 3,641
Koito Industries Ltd. 1,044,000 3,467
Mercury Air Group (d) 651,240 5,210
Meritor Automotive, Inc. 723,400 14,649
Monro Muffler Brake, Inc. (d) 607,024 7,702
Murakami Corp. (d) 700,000 2,712
Nissin Shoji Co. Ltd. 200,000 1,128
Owari Precise Products Co. Ltd. 173,000 287
Peugeot SA Ord. 200,000 39,553
Piolax, Inc. 367,000 2,514
Quicks Group PLC 1,100,000 2,389
Rocla OY 100,000 1,093
Sanderson Bramall Motor Group PLC 300,000 960
Strattec Security Corp. (a)(d) 363,900 10,189
Superior Industries International, Inc. 150,000 3,909
Sylea SA 23,415 2,146
TBC Corp. (a)(d) 1,829,700 11,436
Tachi-S Co. Ltd. 750,000 3,243
Tochigi-Fuji Sangyo Co. Ltd. 600,000 1,420
Transpro, Inc. (d) 660,925 4,585
Travel Ports of America 226,011 678
Uni Select, Inc. (d) 650,000 12,253
World Fuel Services Corp. (d) 1,216,206 20,676
Wynn's International, Inc. (d) 1,774,000 32,265
302,064
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER DURABLES - 0.6%
Aristocrat Leisure Ltd. 617,000 $ 1,459
Asko Class A 800,000 16,001
Beijer AG (G&L), Series B 125,000 2,109
Carclo Engineering Group PLC 107,700 268
Libbey, Inc. 750,000 26,062
Mgi Coutier Sa 5,000 264
Mikasa, Inc. 500,000 6,594
Portmeirion Potteries Holdings PLC Class L 125,000 418
Sankyo Co. Ltd. 200,000 3,563
Swedish Match Co. 200,000 637
57,375
CONSUMER ELECTRONICS - 0.6%
Boston Acoustics, Inc. 9,000 360
Fantom Technologies, Inc. (a) 75,000 791
Fossil, Inc. (a)(d) 1,600,100 36,602
Haw Par Brothers International Ltd. 500,000 474
Koss Corp. (a)(d) 210,000 2,428
LG Electronics, Inc. GDR (non-vtg.) (a) 371,200 575
Movado Group, Inc. (d) 750,012 18,000
Tulikivi OY Series A 45,600 1,022
60,252
HOME FURNISHINGS - 1.1%
BMTC Group, Inc. Class A (sub-vtg.) (d) 400,000 6,350
Beter Bed Holding NV 131,666 5,225
Bush Industries, Inc. Class A (d) 999,800 21,870
Chromcraft Revington, Inc. (a) 537,400 9,875
Dorel Industries, Inc. (a)(e):
Class A (multi-vtg.) 125,000 4,031
Class B (sub-vtg.) 501,500 16,536
Ekornes ASA (Reg.) 50,000 620
Ladd Furniture, Inc. (a) 256,600 6,223
Martela OY Class A 15,000 653
Meadowcraft, Inc. 245,900 3,089
Nakayanafuku Co. Ltd. 54,800 140
Nippon Filing Co. Ltd. 100,000 403
Rosebys PLC Class L 500,000 1,633
Samas-Groep NV 50,000 2,942
Shelby Williams Industries, Inc. (d) 600,000 9,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
HOME FURNISHINGS - CONTINUED
Silentnight Holdings PLC 100,000 $ 416
Stanley Furniture Co., Inc. (a)(d) 620,200 13,799
Toso Co. Ltd. 402,000 1,585
Winsloew Furniture, Inc. (a)(d) 669,500 15,901
120,291
TEXTILES & APPAREL - 1.9%
Berisford (S.W.) PLC 1,300,000 4,553
Boss (Hugo) AG 1,000 2,085
ChemFab Corp. (a) 75,200 1,640
Concord Fabrics, Inc. (a)(d):
Class A 177,100 1,461
Class B 122,700 997
Conso Products Co. (a)(d) 748,050 5,330
Culp, Inc. 141,900 1,304
Decorator Industries, Inc. (d) 377,915 4,015
Dewhirst (IJ) Group PLC Ord. 5,264,000 16,072
Dyersburg Corp. (d) 700,100 3,413
Fila Holding Spa sponsored ADR 500,000 4,938
Galey & Lord, Inc. (a) 135,100 1,672
Gamma Holding 20,000 1,063
Gerber Childrenswear, Inc. (a) 125,000 1,898
Hampshire Group Ltd. (a)(d) 335,800 6,044
Impact 21 Co. Ltd. 50,000 363
Intimate Brands, Inc. Class A 1,055,000 24,133
JLM Couture, Inc. (a)(d) 181,500 545
Jeans Mate Corp. 25,000 413
Lassila & Tikahoja OY 275,000 7,741
Nautica Enterprises, Inc. (a)(d) 2,600,000 67,032
Novel Denim Holdings Ltd. 220,000 4,813
PCA Corp. 10,000 134
Polo Ralph Lauren Corp. Class A (a) 209,000 5,669
Quiksilver (a) 140,200 2,506
St. John Knits, Inc. 85,000 2,901
Supreme International Corp. (a)(d) 432,500 7,623
Tandy Brands Accessories, Inc. (a)(d) 556,200 10,220
Tropical Sportswear International Corp. (a) 231,000 4,995
Worldtex Corp. (a)(d) 1,269,300 6,584
202,157
TOTAL DURABLES 742,139
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 2.5%
COAL - 0.2%
RJB Mining PLC 1,250,000 $ 2,373
Zeigler Coal Holding Co. 815,000 13,040
15,413
ENERGY SERVICES - 1.0%
Akita Drilling Ltd. Class A (non-vtg.) 863,500 4,741
Aztec Manufacturing Co. (d) 482,900 4,829
Carbo Ceramics, Inc. 600,000 18,900
Computalog Ltd. (a) 300,000 2,500
Dawson Geophysical Co. (a) 159,500 2,692
Discoverer ASA 300,000 1,989
Lufkin Industries, Inc. 252,500 7,465
Northern Offshore ASA 75,000 194
Pe Ben Oilfield Services Ltd. (a)(d) 300,000 764
Peak Energy Services Ltd. (a) 4,300 6
Petroleum Helicopters, Inc. 184,200 3,270
Petroleum Helicopters, Inc. (non-vtg.) 300,000 5,550
Petrolia Drilling ASA 200,000 782
Powell Industries, Inc. (a)(d) 1,063,500 13,560
RPC Energy Services, Inc. (d) 2,894,500 33,104
Seitel, Inc. (a) 500,000 6,813
Superior Energy Services, Inc. (a) 750,000 3,188
110,347
OIL & GAS - 1.3%
Adams Resources and Energy, Inc. (d) 351,200 3,336
Australian Oil & Gas Corp. Ltd. (d) 3,900,559 3,429
Beau Canada Exploration Ltd. (a) 47,000 53
Cabot Oil & Gas Corp. Class A 140,000 2,398
Castle Energy Corp. (d) 408,750 7,000
Columbus Energy Corp. (a)(d) 429,420 3,140
Crown Central Petroleum Corp. Class A (a)(d) 500,000 5,875
Elf Gabon 10,000 1,561
ENERTEC Resource Services, Inc. (a) 50,000 248
ENEX Resources Corp. (d) 144,300 2,020
Ensign Resource Service Group Ord. 25,000 312
FINA, Inc. Class A 180,900 12,007
Fletcher Challenge Ltd. (Energy Division) 1,250,000 3,292
Foremost Industries, Inc. (a)(d) 447,500 2,087
Hallwood Consolidated Resources Corp. (a)(d) 200,350 2,755
Holly Corp. (d) 425,000 10,253
Hokuriku Gas Co. 1,320,000 2,639
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Markwest Hydrocarbon, Inc. (a) 406,500 $ 6,021
Maynard Oil Co. (a)(d) 294,600 2,872
Novus Petroleum Ltd. 1,552,542 2,005
Penn West Petroleum Ltd. (a) 500,000 5,622
Petro-Canada 246,000 3,523
Petroleum Development Corp. (a)(d) 1,524,500 7,337
Premier Oil PLC 12,500,000 7,959
Santa Fe Energy Resources, Inc. 325,000 2,864
Swift Energy Co. (a)(d) 1,644,700 18,503
Tarragon Oil & Gas Ltd. (a) 100,000 939
Torch Energy Royalty Trust Unit 303,400 1,896
Vastar Resources, Inc. 75,800 3,240
YPF Sociedad Anonima sponsored ADR representing
Class D shares 425,000 12,431
137,617
TOTAL ENERGY 263,377
FINANCE - 16.9%
BANKS - 6.1%
Australia & New Zealand Banking Group Ltd. 1,022,556 6,615
Bank of Ireland, Inc. 151,088 3,066
Bank of Montreal 975,000 47,497
Bank of Scotland 300,000 3,282
Bank of The Ozarks, Inc. 107,000 2,795
Bergensbanken ASA (d) 1,200,000 10,660
Canadian Western Bank (d) 775,000 11,688
Cathay Bancorp, Inc. 210,000 8,216
Den Norske Bank AS Class A Free shares 4,000,000 21,904
Den Norske Bank AS (e) 900,000 4,928
Finansbanken ASA (Reg.) 150,000 786
Firstbank Puerto Rico (d) 2,925,000 79,522
Fokus Bank AS 1,657,563 14,066
GBC Bancorp California (d) 900,000 22,275
Gronlandsbanken AS 20,000 635
Hanmi Bank (a) 131,590 2,369
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Jyske Bank AS (Reg.) 250,000 $ 29,152
Laurentian Bank 888,500 16,896
MIDT Bank A/S 10,050 368
National Bank of Canada 4,147,300 74,340
Nordvestbank (Reg.) 4,500 510
Nordlandsbanken AS 300,000 7,160
Nordbanken Holding AB 13,400,000 96,156
Okobank Class A 279,000 5,529
Providian Financial Corp. 200,000 15,713
Ringkjobing Bank 15,865 3,583
Societe Generale Class A 100,000 24,108
SouthTrust Corp. 1,000,000 40,438
Sparebanken More 26,586 635
Sparebanken Nord-Norge 5,850 133
Sparebanken Norway primary shares certificates 625,000 18,645
Sparebanken Rogala Capital certificates 25,000 736
Sparebanken Rana Grunnfondsbevis (d) 31,150 644
Spar Nord Bankaktielskab 36,035 1,862
Sterling Bancorp 347,000 8,697
Sumitomo Bank California 323,500 12,212
Svenska Handelsbanken 400,000 19,262
Syd-Sonderjylland Holding 340,000 19,823
T R Financial Corp. 286,000 10,797
Wing Hang Bank Ltd. 500,000 626
648,329
CREDIT & OTHER FINANCE - 1.3%
Amagerbanken AS 34,850 1,595
Amtsspar Fyn Holding AS 45,000 2,962
CIT Group, Inc. Class A 314,700 10,424
Compagnie Financiere de Credit Industriel et Commercial SA 50,000
4,961
Connor Clark Ltd., Class A (non-vtg.) 681,500 3,358
Credia Co. Ltd. 300,000 3,944
Doral Financial Corp. 2,000,000 37,250
Equitilink Ltd. 1,000,000 394
FIH AS Class B (d) 1,100,139 26,550
Firstcity Financial Corp. (a) 200,000 5,650
Home Capital Group, Inc. Class B (sub-vtg.) (a) 25,000 61
JCG Holdings Ltd. 11,452,000 2,956
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Life Financial Corp. (a) 284,200 $ 4,085
New Century Financial Corp. (a) 138,300 1,565
Nissin Co. Ltd. 150,000 2,729
Paragon Group of Companies PLC Class L 1,690,625 5,659
Resource Bancshares Mortgage Group, Inc. 150,000 2,916
Surrey Metro Savings Credit Union (non-vtg.) 565,000 5,568
Takefuji Corp. 50,000 2,629
Takefuji Corp. (e) 150,000 7,887
WSFS Financial Corp. 483,500 9,247
142,390
INSURANCE - 8.4%
Allied Group, Inc. 18,600 877
Allmerica Financial Corp. 275,000 18,391
American Safety Insurance Group Ltd. 75,000 844
Amerin Corp. (a) 240,000 6,465
Amerus Life Holdings, Inc. 761,332 23,744
Assurances Banque Populaire SA 9,997 1,041
Blanch E.W. Holdings, Inc. 537,200 20,044
Centris Group, Inc. 164,800 1,854
Citizens Corp. 269,900 7,776
Commerce Group, Inc. 1,231,900 37,880
Cotton State Life & Health Insurance Co. (d) 402,700 5,663
Desjardins-Laurentian Financial Corp. Class A (sub-vtg.) (d) 482,500
7,101
Erie Indemnity Co. Class A 116,000 3,524
FBL Financial Group, Inc. Class A 111,100 2,771
FPIC Insurance Group, Inc. (a) 274,500 9,470
FairFax Financial Holdings Ltd. rights 12/31/07 (a) 1,117,900 559
Farm Family Holdings, Inc. (a)(d) 525,300 20,684
Financial Industries Corp. (a) 156,700 3,016
First Central Financial Corp. (a)(d) 420,500 -
Fishers International PLC 300,000 156
Fremont General Corp. 900,000 51,469
Gainsco, Inc. 218,400 1,338
General Re Corp. 109,300 25,904
HCC Insurance Holdings, Inc. 1,075,000 21,769
Healthcare Recoveries, Inc. (a) 417,500 6,837
Hogg Robinson Group 150,000 682
Independence Holding Co. 146,000 1,971
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Independent Insurance PLC 1,150,000 $ 6,102
Intercontinental Life Corp. (a)(d) 433,900 10,522
Investors Title Co. 98,000 2,475
IPC Holdings Ltd. (d) 2,415,500 64,010
John Alden Financial Corp. 560,500 12,366
Lambert Fenchurch Group PLC 1,250,000 2,000
Lasalle Re Holdings Ltd. (d) 1,464,400 51,253
Life USA Holding, Inc. (d) 2,010,700 22,746
MMI Companies, Inc. (d) 1,400,000 28,175
Medical Assurance, Inc. 70,200 1,895
Mobile America Corp. 160,300 1,443
NY Magic, Inc. 235,300 6,588
National Mutual Asia Ltd. 600,000 337
National Western Life Insurance Co. Class A (a)(d) 170,000 20,655
PXRE Corp. (d) 725,063 19,577
Paula Financial 57,100 999
Penn-America Group, Inc. 100,050 1,326
Philadelphia Consolidated Holding Corp. (a)(d) 880,000 16,610
Poe & Associates, Inc. 103,200 4,283
Protective Life Corp. 1,452,800 56,204
RenaissanceRe Holdings Ltd. 621,000 27,751
SCPIE Holding, Inc. (d) 747,200 22,136
Sedgwick Group PLC 100,000 263
Seibels Bruce Group, Inc. (a) 25,000 181
Stewart Information Services Corp. (d) 518,700 24,314
Stirling Cooke Brown Holdings Ltd. 304,500 7,308
Summit Holdings Southeast, Inc. (a)(d) 579,000 18,456
Symons Inernational Group, Inc. (a) 317,900 5,583
Terra Nova (Bermuda) Holdings Ltd. (d) 1,552,150 49,669
UICI (a)(d) 2,900,000 68,150
Unico America Corporation (d) 346,500 5,024
Union Assurances Federales SA 300,088 44,838
885,069
SAVINGS & LOANS - 0.8%
Albank Financial Corp. 25,000 1,728
Crazy Woman Creek Bancorp., Inc. 30,000 521
Dime Financial Corp. (d) 403,600 13,571
First Home Bancorp., Inc. 86,666 2,470
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - CONTINUED
Home Port Bancorp., Inc. 78,200 $ 1,955
Independence Federal Savings Bank (d) 119,000 1,815
Iroquois Bancorp., Inc. 109,400 2,629
PBOC Holdings, Inc. (a) 251,900 3,212
Ringerikes Sparebank 1,100 28
Washington Federal, Inc. 2,040,000 53,040
80,969
SECURITIES INDUSTRY - 0.3%
Choice Hotels International, Inc. (a) 50,000 613
Daiko Shoken Business Co. 100,000 381
Globaly, Corp. 408,000 2,018
Harvey Norman Holdings Ltd. 67,900 360
JWGenesis Financial Corp. (a) 183,234 1,672
London Pacific Group Ltd. 3,340,000 10,796
MFC Bancorp Ltd. 430,000 4,193
McDonald & Co. Investments, Inc. 130,000 4,290
Nac Co. Ltd. 110,000 419
Norvestia OY Class B (d) 246,000 3,854
Ragen Mackenzie Group Inc. (a) 17,300 225
28,821
TOTAL FINANCE 1,785,578
HEALTH - 6.4%
DRUGS & PHARMACEUTICALS - 0.8%
Apothekers Cooperatie OPG 82,300 2,383
Fuji Pharmaceutical Co. Ltd. 200,000 558
Herbalife International, Inc.:
Class A 1,037,500 19,777
Class B (non-vtg.) 1,775,000 28,067
Hoshi Ito Co. Ltd. 200,000 664
Medco Research, Inc. (a) 192,500 4,716
Natrol, Inc. (a) 15,900 262
Nature's Sunshine Products, Inc. (d) 1,025,000 21,269
Optek Technology, Inc. (a) 72,500 1,450
Riken Vitamin Oil Co. Ltd. 750,000 7,046
Seikagaku Corp. 50,000 242
86,434
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 3.1%
ADAC Laboratories (a)(d) 1,200,000 $ 32,700
Ballard Medical Products (d) 2,775,900 56,906
Bio-Rad Laboratories, Inc. Class A (a) 22,400 613
Biomet, Inc. 2,625,000 82,030
Depuy, Inc. 847,700 29,034
Dianon Systems, Inc. (a) 139,500 1,081
ESC Medical Systems Ltd. (a) 618,075 16,031
Getz Bros Co. Ltd., Japan 100,000 291
HPSC, Inc. (a)(d) 309,500 2,940
ICU Medical, Inc. (a)(d) 422,000 6,119
Medstone International, Inc. (a)(d) 561,200 4,770
OEC Medical Systems, Inc. (d) 1,274,000 28,028
Ocular Sciences, Inc. (a) 386,200 11,441
Orthofix International (a)(d) 877,200 11,404
Respironics, Inc. (a) 1,400,000 20,913
Sofamor/Danek Group, Inc. (a) 200,300 17,051
Utah Medical Products, Inc. (a)(d) 838,000 6,023
Wesley Jessen Visioncare, Inc. (a) 100,000 2,438
329,813
MEDICAL FACILITIES MANAGEMENT - 2.5%
American Oncology Resources, Inc. (a) 440,000 5,225
Chronimed, Inc. (a) 490,500 5,947
Clinic Holdings Ltd. 502,174 189
Community Hospitals Group PLC Class L 325,000 2,786
Compdent Corp. (a)(d) 808,100 13,536
Corvel Corp. (a) 150,000 5,644
Cryolife, Inc. (a) 370,000 4,995
Foundation Health Systems, Inc. Class A (a) 659,700 13,606
Horizon Health Corp. (a) 300,000 3,825
Laboratory Specialists America, Inc. (a)(d) 331,100 1,407
Quest Diagnostics, Inc. (a)(d) 1,960,000 40,180
Quorum Health Group, Inc. (a) 665,000 16,791
Ramsay Health Care, Inc. (a) 195,000 463
Ramsay Managed Care Ltd. 1,248,300 1,279
Rehabcare Corp. (a)(d) 565,000 11,018
Res-Care, Inc. (a)(d) 1,340,000 22,948
Safeguard Health Enterprises, Inc. (a)(d) 377,700 2,125
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
Sonic Healthcare Ltd. 150,000 $ 191
Syncor International Corp. (a) 302,000 5,474
Trigon Healthcare, Inc. (a) 350,000 10,959
United Dental Care, Inc. (a)(d) 897,000 17,155
Universal Health Services, Inc. Class B (a) 1,500,000 76,874
262,617
TOTAL HEALTH 678,864
HOLDING COMPANIES - 0.5%
DCC PLC 2,600,000 21,225
Ferguson Industrial Holdings PLC 200,000 206
Fonciere Financiere et Part SA 25,000 2,300
Hunting Group PLC 1,400,000 6,206
Lagardere S.C.A. (Reg.) 150,000 6,824
Marine Wendel SA 70,976 13,072
Perry Group 1,000,000 2,988
Siparex (Societe de Particiations dans les Enterprises
Regionales en Expansion) 80,849 2,048
54,869
INDUSTRIAL MACHINERY & EQUIPMENT - 4.3%
ELECTRICAL EQUIPMENT - 1.7%
Alpine Oil Services Corp. (a) 550,000 455
Aichi Electric Co. Ltd. 1,000,000 2,387
American Power Conversion Corp. (a) 1,335,000 43,054
Astronics Corp. (a) 159,500 1,755
BMC Industries, Inc. 500,000 3,500
Bairnco Corp. (d) 900,900 6,137
Blick PLC Class L 1,000,000 7,347
Chase Corp. (d) 302,500 3,970
Cherry Corp. Class A (a) 465,600 6,868
Choride Group PLC 600,000 460
Cobra Electronics Corp. (a)(d) 524,700 2,361
Communications Systems, Inc. 220,000 2,970
Delco Remy International, Inc. Class A (a) 169,200 2,369
Denyo Co. Ltd. 300,000 1,328
Emcee Broadcast Products, Inc. (a) 170,000 425
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Emess PLC 100,000 $ 41
Genlyte Group, Inc. (a) 491,900 11,744
Holophane Corp. (a) 306,100 7,289
Hughes Supply, Inc. 700,000 21,481
IEC Electronics Corp. (a) 205,300 1,373
Inaba Denkisangyo Co. Ltd. 700,000 7,119
Noma Industries Ltd. Class A (a)(e) 425,800 1,901
Norbain PLC 100,000 413
NovAtel, Inc. (a) 273,500 1,145
QPL International Ltd. Ord. 1,000,000 129
Siebe PLC 475,000 8,562
Twentsche Kabel Holding NV 50,004 1,959
Ultra Electronics Holdings PLC 50,000 298
Valley Forge Corp. (d) 411,500 5,967
Vertex Communications Corp. (a)(d) 510,000 11,220
Woodhead Industries, Inc. 289,700 3,911
Yurtec Corp. 1,150,000 6,047
Yaesu Musen Co. Ltd. 75,000 405
176,390
INDUSTRIAL MACHINERY & EQUIPMENT - 2.6%
Amadasonoike Co. Ltd. 200,000 580
AVTEAM, Inc. Class A 100,000 1,150
Baldwin Technology, Inc. Class A (a) 431,400 2,508
Brammer PLC Class L 50,000 432
CPAC, Inc. (a)(d) 702,000 6,845
Coltec Industries, Inc. (a) 932,600 15,912
Columbus McKinnon Corp. 230,300 5,844
CompX International, Inc. (a) 225,000 5,386
Control Devices, Inc. 358,332 4,837
DT Industries, Inc. 420,000 8,348
Domnick Hunter Group PLC Class L 200,000 1,159
Fedders Corp. 47,800 317
Fuji Oozx, Inc. 200,000 412
Fukushima Industries Corp. 25,000 125
FKI PLC 50,000 136
Fuji Technica, Inc. 25,000 124
Gardner Denver Machinery, Inc. (a)(d) 1,025,000 24,600
Gehl Co. (a)(d) 609,900 11,550
Glory Ltd. 50,000 754
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Hardinge, Inc. (d) 511,250 $ 12,909
IDEX Corp. (d) 1,470,000 41,804
Kaydon Corp. 780,000 29,396
KCI (Konecranes International) 100,000 5,648
KCI (Konecranes International) (e) 100,000 5,648
Laperriere & Verreault, Inc. 50,000 150
Lawson Products, Inc. 166,900 3,807
Linx Printing Technology 100,000 220
Mark VII, Inc. (a)(d) 495,000 8,539
Mars Engineering Corp. 50,200 271
Mettler-Toledo International, Inc. 125,000 2,641
New Holland NV 1,335,000 20,526
Oilgear Co. 46,800 655
P&F Industries, Inc. Class A (a) 202,500 2,126
Powerscreen International PLC 3,252,900 5,470
Rauma OY 150,000 2,958
Rotork PLC 300,000 1,626
Sansei Transport 750,000 2,776
Shin Nippon Machinery Co. Ltd. 500,000 664
Specialty Equipment Companies, Inc. (a) 657,200 14,787
Speizman Industries, Inc. (a)(d) 226,000 989
Strongco, Inc. (a) 75,000 650
T B Wood's Corp. (d) 408,800 7,307
Thermo Sentron, Inc. (a) 35,200 400
Trident International, Inc. (a) 80,000 1,250
Twin Disc, Inc. (d) 282,600 7,683
Wakita & Co. Ltd. 750,000 2,958
274,877
POLLUTION CONTROL - 0.0%
Met-Pro Corp. 146,600 1,888
NSC Corp. (d) 550,400 894
Weston (Roy F.), Inc. Class A (a) 223,800 853
3,635
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 454,902
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 5.8%
BROADCASTING - 1.2%
Canwest Global Communications Corp.:
(non-vtg.) 50,000 $ 777
(sub-vtg.) 1,400,006 22,734
Capital Radio PLC 550,000 6,421
Cogeco, Inc. (sub-vtg.) (d) 1,391,500 15,232
Cogeco Cable, Inc. (d) 1,000,000 10,815
GWR Group PLC 25,000 94
Matav-Cable System Media Ltd. sponsored ADR 276,500 7,224
Moffat Communications Ltd. (d) 1,160,000 15,883
MovieFone, Inc. Class A (a) 58,100 566
Nielsen Media Research, Inc. 850,000 3,506
Prime Television Ltd. 1,519,128 2,072
P4 Radio Hele Norge SA 700,000 3,712
Radiomutuel, Inc. Class A (a) 350,000 3,750
Radio Pacific 300,000 583
Regional Cablesystems, Inc. (a) 50,000 422
Scottish Radio Holdings, Inc. 400,000 3,709
Scottish Television PLC 600,000 7,621
Southern Cross Broadcasting Australia Ltd. 800,000 3,153
Spice Entertainment Co., Inc. (a) 400,000 2,438
TCA Cable TV, Inc. 185,000 10,649
TVA Group, Inc. Class B (a) 1,075,000 9,244
130,605
ENTERTAINMENT - 1.2%
Airtours PLC 300,000 2,116
Alliance Communications Corp. (a):
Class B (non-vtg.) 221,500 4,285
Class B (non-vtg.) (e) 157,200 2,963
Broendby IF, Class B 5,000 572
Compagnie des Alpes 25,000 797
European Leisure PLC 550,000 1,105
King World Productions, Inc. (a)(d) 3,700,000 103,600
Scientific Games Holdings Corp. (a) 196,600 3,907
Shingakukai Co. Ltd. 125,000 363
TAB Ltd. (a) 1,500,000 2,428
Television & Media Services Ltd. 1,750,000 1,538
Vaughns, Inc. (a) 161,600 1,172
124,846
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.0%
Hamleys PLC 100,000 $ 253
Playcore, Inc. (a) 245,515 1,013
1,266
LODGING & GAMING - 0.3%
Choice Hotels Skandanavia ASA (a) 150,000 457
Hanover International PLC 416,500 791
Jurys Hotel Group PLC 400,000 3,331
Krasnapolsky Hotels & Restaurants NV 2,000 182
Millennium & Copthorne Hotels PLC 50,000 376
Ryan Hotels Ltd. (d) 4,812,979 5,658
Sholodge, Inc. (a) 288,000 2,160
Stakis PLC 2,250,000 4,151
Sun International Hotels Ltd. Ord. (a) 188,600 8,250
25,356
PUBLISHING - 1.6%
Adscene Group PLC Class L 500,000 1,078
A-Pressen AS, Series A 100,000 1,856
Asia Securities Printing Co. Ltd. 25,000 277
Bemrose 200,000 1,267
CMP Media, Inc. Class A 82,500 1,403
Creative Publishing PLC 1,250,000 4,735
Fine Art Developments PLC Class L 1,500,000 4,580
International Business Communications Holdings PLC Class L 1,750,000
14,143
Ilkka OY II 10,000 343
Independent Newspapers PLC 350,000 1,611
Johnston Press PLC 1,350,000 4,629
Journal Register Co. (a) 1,076,700 17,631
Kauppakaari OY 125,000 2,199
Pulitzer Publishing Co. 135,000 11,450
R.H. Donnelley Corp. 2,550,000 7,013
Roto Smeets De Boer NV 150,000 6,604
Schibsted AS, Series B 525,000 8,910
South China Morning Post Holdings 100,000 52
Sterling Publishing Group PLC Class L 750,000 208
Talentum OY Class B (d) 550,000 10,288
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - CONTINUED
VLT AB Class B 55,800 $ 1,419
Wegener Tijil NV 50,000 1,056
WSOY (Werner Soderstrom Osakeyhtio) Class B (d) 725,000 57,062
World Color Press, Inc. (a) 350,000 11,922
171,736
RESTAURANTS - 1.5%
Applebee's International, Inc. (d) 1,825,000 40,606
ARK Restaurants Corp. (a)(d) 270,000 3,240
Benihana, Inc. (a)(d) 360,500 3,290
Benihana, Inc. Class A (a) 244,800 2,081
Break For The Border Group PLC Class L 825,000 889
Consolidated Products, Inc. (a)(d) 1,200,000 22,125
Cooker Restaurant Corp. 65,300 551
Cracker Barrel Old Country Store, Inc. 60,000 1,815
Elxsi Corp. (a)(d) 286,000 3,110
Flanigans Enterprises, Inc. (a)(d) 90,700 952
IHOP Corp. (a)(d) 717,500 28,432
Logan's Roadhouse, Inc. (a) 217,500 5,138
M Corp, Inc. (a)(d) 272,500 369
Morton's Restaurant Group, Inc. (a)(d) 361,000 8,280
Restaurant Brands NZ Ltd. 1,250,000 524
Sonic Corp. (a)(d) 1,935,000 38,216
Yoshinoya D&C Co. Ltd. Ord. 25 223
159,841
TOTAL MEDIA & LEISURE 613,650
NONDURABLES - 5.3%
AGRICULTURE - 0.2%
Fresh Del Monte Produce, Inc. 300,000 5,625
IAWS Group PLC 1,504,300 5,320
IAWS Group PLC Class A (Reg.) 442,400 1,697
Northland Cranberries, Inc. Class A 75,000 919
Nutreco Holding NV 100,000 3,719
Sylvan Foods Holdings, Inc. (a)(d) 644,000 8,895
26,175
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
BEVERAGES - 0.1%
National Beverage Corp. (a) 227,000 $ 2,468
Shikoku Coca-Cola Bottling Co. Ltd. 53,600 564
Todhunter International, Inc. (a) 216,500 2,057
Vaux Group PLC 200,000 1,104
6,193
FOODS - 0.8%
Agribrands International, Inc. 387,230 11,811
Benson's Crisps PLC 1,900,000 1,241
Bernard Matthews 350,000 706
Corn Products International, Inc. (a) 500,000 14,875
GoodMark Foods, Inc. 90,000 2,520
Greencore Group PLC 25,000 118
Greggs PLC 70,000 2,972
Laennen Tehtaat OY 50,000 741
Man (E D & F) Group PLC 1,100,000 6,304
Omega Protein Corp. 50,000 700
Perkins Foods PLC 2,050,320 5,289
Pilgrims Pride Corp. 145,500 2,737
Riviana Foods, Inc. 716,200 16,383
Robert Wiseman Dairies PLC Class L 400,000 1,195
Raisio Group PLC 600,000 9,889
Shoei Foods Corp. 200,000 581
Super Coffeemix Manufacturing Ltd. 1,250,000 177
Tokatsu Foods Co. Ltd. 50,000 86
Western Beef, Inc. (a)(d) 423,400 3,969
82,294
HOUSEHOLD PRODUCTS - 1.6%
Alberto-Culver Co. Class A (d) 1,171,600 26,653
American Safety Razor Co. (a)(d) 1,029,400 12,610
Carson, Inc. Class A (a) 112,000 693
Comany, Inc. 100,000 574
DSG International Ltd. (a)(d) 685,000 4,110
Del Laboratories, Inc. (d) 475,266 12,595
Helen of Troy Corp. (a)(d) 2,700,000 61,087
House of Rose Co. Ltd. 50,000 208
IWP International 525,000 2,600
IWP International (UK Reg.) 800,000 3,723
Jean Philippe Fragrances, Inc. (a) 268,800 2,066
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - CONTINUED
Mayborn Group PLC 100,000 $ 171
McBride PLC 200,000 598
Oriflame International SA 450,000 2,792
Paterson Zochonis 50,000 327
Paterson Zochonis PLC Class L 25,000 182
Premark International, Inc. 815,000 25,265
Stephan Co. (d) 413,200 5,268
Swallowfield PLC Class L 100,000 160
Yule Catto Ord. 650,443 3,133
Zotefoams PLC Class L 125,000 439
165,254
TOBACCO - 2.6%
BAT Industries PLC Ord. 5,000,049 55,186
Gallaher Group PLC 10,000,000 64,369
Gallaher Group PLC sponsored ADR 5,000,000 128,125
RJR Nabisco Holdings Corp. 750,000 18,328
Standard Commercial Corp. (a)(d) 1,248,900 12,489
UST, Inc. 25,000 675
279,172
TOTAL NONDURABLES 559,088
PRECIOUS METALS - 0.4%
De Beers Consolidated Mines Ltd. ADR 1,000,000 16,359
Great Central Mines NL 1,100,000 1,000
Industrias Penoles SA 4,700,000 15,280
Normandy Mt. Leyshon Ltd. 1,000,000 849
Normandy NFM Ltd. 250,000 705
Orogen Minerals Ltd. GDR (e) 265,000 3,544
Richmont Mines, Inc. (a) 745,000 1,873
Ross Mining NL 1,490,000 750
Sons of Gwalia NL 1,545,289 3,858
44,218
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 6.5%
APPAREL STORES - 2.0%
Austin Reed Group PLC 100,000 $ 248
Baker (J.), Inc. 518,600 5,348
Charle Co. Ltd. 75,000 586
Chateau Stores of Canada Ltd. Class A (d) 192,900 1,276
Chicos Fas, Inc. (a)(d) 547,500 7,939
Claire's Stores, Inc. 2,000,000 41,750
Dress Barn, Inc. (a) 300,000 6,975
Dylex Ltd. (a) 100,000 377
Fast Retailing Co. Ltd. 25,000 244
Footstar, Inc. (a)(d) 1,550,404 57,461
Goldlion Holdings Ltd. 2,000,000 235
Gymboree Corp. (a)(d) 1,250,000 15,000
Happy Kids, Inc. 138,000 1,501
ICC International PLC (For. Reg.) 50,000 49
Kenneth Cole Productions, Inc. Class A (a)(d) 625,000 12,852
Matalan (e) 300,000 1,210
Noda Corp. 100,000 387
Primesource Corp. (d) 390,600 3,467
Ross Stores, Inc. 1,000,000 42,062
S & K Famous Brands, Inc. (a)(d) 475,000 6,650
San Francisco Boutiques, Inc. Class B (sub-vtg.) (a)(d) 274,000
1,876
Shirmax Fashions Ltd. (a) 450,000 1,667
United Retail Group, Inc. (a) 300,000 3,394
Wedins Norden AB Series B 25,000 293
212,847
APPLIANCE STORES - 0.0%
Hirsch International Corp. Class A (a)(d) 600,000 3,075
DRUG STORES - 0.3%
Jean Coutu Group, Inc. Class A (d) 1,861,000 29,665
Vitalink Pharmacy Services, Inc. (a) 100,000 2,213
31,878
GENERAL MERCHANDISE STORES - 0.7%
Arnotts PLC 100,387 881
BJ's Wholesale Club, Inc. 1,400,000 51,800
Daiwa Co. Ltd. 300,000 830
Galeries Lafayette SA 1,500 1,408
New Look Group PLC (e) 1,000,000 2,204
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Nikku Sangyo Co. Ltd. 50,000 $ 225
Shopko Stores, Inc. (a) 282,500 8,263
Stein Mart, Inc. (a) 1,200,000 12,675
78,286
GROCERY STORES - 1.2%
Eagle Food Centers, Inc. (a) 57,500 173
Food Lion, Inc. Class A 3,400,000 37,825
Iceland Group PLC 5,000,000 16,980
Metro Richelieu, Inc. Class A (d) 2,990,000 38,565
Performance Food Group Co. (a)(d) 650,200 13,735
Schultz Sav-O Stores, Inc. 8,500 132
Somerfield PLC 2,500,000 18,939
Whittard of Chelsea PLC 485,000 1,243
127,592
RETAIL & WHOLESALE, MISCELLANEOUS - 2.3%
Advanced Marketing Services, Inc. 102,000 1,683
Blair Co. (d) 807,500 26,395
Brookstone, Inc. (a)(d) 754,600 10,281
Cameron Ashley, Inc. (a) 362,000 5,860
Cole National Corp. Class A (a)(d) 1,060,000 34,980
Daisytek International Corp. (a) 470,000 11,163
Elcom International, Inc. (a) 150,000 520
Fabri-Centers of America, Inc. (a):
Class A (d) 575,250 13,446
Class B (non-vtg.) 1,120,600 23,953
Farepak PLC 650,000 2,027
Finlay Enterprises, Inc. (a) 250,000 5,750
Finish Line, Inc. Class A (a)(d) 1,650,900 35,700
Flying Flowers Ltd. unit 100,000 438
Friedmans, Inc. Class A (a) 620,000 7,363
Grafton Group PLC 100,000 2,405
Heiton Holdings Ltd. 600,000 1,783
Homebase, Inc. (d) 2,000,000 15,500
Land's End, Inc. (a) 375,000 9,867
PC Connection, Inc. 100,000 2,025
Partridge Fine Arts PLC 150,000 208
Piercing Pagoda, Inc. (a)(d) 603,200 21,564
Rex Stores Corp. (a)(d) 500,000 5,656
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Shop At Home, Inc. (a) 150,000 $ 563
Sound Advice, Inc. (a)(d) 230,300 748
Sound Advice, Inc. warrants 6/14/99 (a) 11,205 -
Sportman's Guide, Inc. (a) 150,000 713
US Vision, Inc. (a) 75,000 863
241,454
TRADING COMPANIES - 0.0%
Mitani Sangyo Co. Ltd. 100,000 353
TOTAL RETAIL & WHOLESALE 695,485
SERVICES - 3.1%
ADVERTISING - 0.1%
Grey Advertising, Inc. 12,100 4,380
International Public Relations PLC 750,000 776
5,156
EDUCATIONAL SERVICES - 0.0%
Childrens Comprehensive Services, Inc. (a) 69,100 751
Coutts Consulting Group PLC Class L 300,000 157
Educational Medical, Inc. (a) 219,700 2,074
Institution of General Education 300,000 936
Up, Inc. 400,000 1,035
4,953
LEASING & RENTAL - 0.2%
Aaron Rents, Inc. Class B 400,000 8,100
Cort Business Services Corp. (a) 81,800 2,510
Gowrings PLC 200,000 385
Nishio Rent All Co. Ltd. 500,000 4,047
PLM AB 175,000 2,490
Rainbow Rentals, Inc. (a) 50,000 500
Rakentajain Konevuokraamo OY Class B 100,000 1,333
19,365
PRINTING - 0.9%
Adare Printing Group PLC (IR) 415,000 5,284
Adare Printing Group PLC 660,004 8,513
Pubco Corp. (a)(d) 319,500 3,594
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
PRINTING - CONTINUED
Reynolds & Reynolds Co. Class A (d) 4,125,000 $ 69,352
Tryckinvest i Norden AB (a) 200,000 4,243
Valassis Communications, Inc. (a) 153,700 5,831
Wyndeham Press Group PLC 500,000 2,204
99,021
SERVICES - 1.9%
Aktiv Kapital ASA 50,000 663
Amkor Technology, Inc. 400,000 2,963
BA Merchant Services, Inc. Class A (a)(d) 1,000,000 18,063
Balanced Care Corp. 100,000 650
Barbers Hairstyling for Men, Inc. (a) 117,575 1,102
Caldwell Partners International Class A (non-vtg.) 600,000 3,135
Candle Australia Ltd. 127,660 112
Chodai Co. Ltd. 200,000 681
Compass International Services Corp. 250,000 2,734
Concord Career Colleges, Inc. (a) 250,000 375
Corporate Services Group PLC 656,250 2,368
Corrections Corp. of America (a) 50,000 897
Craig (Jenny), Inc. (a) 1,000,000 5,750
Diversified Corporate Resources, Inc. (a)(d) 257,200 2,894
Dunn & Bradstreet Corp. 2,150,000 58,991
Euromoney Publications PLC 25,000 969
Eyeful Home Technology, Inc. 250,000 1,123
Exponent Inc. (a) 284,700 2,206
Fugro NV 130,100 4,935
Go-Ahead Group (The) PLC 250,000 2,939
Halma PLC ORD 1,750,000 3,657
ICT Group, Inc. (a) 75,500 198
ICTS International NV (a) 112,500 731
Johnson Service Group PLC 150,000 715
LCS Industries, Inc. 226,200 3,393
Lamalie Associates, Inc. 175,000 2,789
Morgan & Banks Ltd. 1,800,000 3,383
Norrell Corp. GA 372,400 7,145
Olsten Corp. 250,000 2,313
Pittston Co. (Brinks Group) 540,500 19,289
Prism Rail PLC 125,000 755
Programming & Systems, Inc. (a)(d) 313,300 -
Proudfoot PLC 250,000 169
RCO Holdings PLC 50,000 158
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Right Management Consultants, Inc. (a)(d) 663,900 $ 8,465
Seattle FilmWorks, Inc. (a)(d) 1,470,000 9,004
Stanley Technology Group, Inc. (a)(d) 375,000 2,852
Tanabe Management Consulting Co. Ltd. 200,000 553
Thomas Group (a) 183,400 1,765
TT Group PLC 1,550,000 6,757
Unifirst Corp. 422,200 11,004
Wesco, Inc. 200,000 484
Winston Resources, Inc. (a)(d) 278,900 1,639
200,768
TOTAL SERVICES 329,263
TECHNOLOGY - 10.3%
COMMUNICATIONS EQUIPMENT - 0.6%
Andrew Corp. (a) 1,325,000 23,353
Aspect Telecommunications Corp. (a) 389,500 12,427
Circuit Systems, Inc. (a) 59,500 171
DSC Communications Corp. (a) 200,000 6,069
KTK Telecommunications Engineering Co. Ltd. 100,000 363
Kyosan Electric Manufacturing Co. Ltd. 500,000 1,162
Norstan, Inc. (a) 445,000 10,235
Perceptron, Inc. (a) 10,000 65
Plantronics, Inc. (a) 82,900 5,067
Tollgrade Communications, Inc. (a) 69,500 1,720
60,632
COMPUTER SERVICES & SOFTWARE - 5.3%
Affiliated Computer Services, Inc. Class A (a) 1,136,412 41,195
Aladdin Knowledge Systems Ltd. 247,000 2,871
American Business Information, Inc. (a)(d) 1,995,000 19,701
American Business Information, Inc. Class A (a)(d) 1,925,600 19,497
Asymetrix Learning Systems, Inc. 80,000 740
Award Software International, Inc. (a)(d) 604,500 6,725
BancTec, Inc. (a)(d) 1,751,300 28,130
Black Box Corp. (a)(d) 1,427,600 45,950
Boole & Babbage, Inc. (d) 1,500,055 34,501
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
CI Technologies Group Ltd. 1,000,000 $ 1,825
CompuCom Systems, Inc. (a) 250,000 1,688
Computer Power Group Ltd. 578,256 1,525
Daitec Co. Ltd. 375,200 5,321
Data Research Associates, Inc. 200,000 3,600
ECI Telecom Ltd. 805,000 27,471
Edusoft Ltd. (d) 472,000 2,773
Electric Farms ASA 35,000 107
Equitrac Corp. (a)(d) 348,900 6,804
Eurodis Electron PLC 500,000 1,037
FDP Corp. (d) 574,300 6,963
Fair, Isaac & Co., Inc. 616,000 23,639
First Data Corp. 1,900,000 54,980
GSE Systems, Inc. (a) 197,000 665
Group 1 Software, Inc. (a) 52,000 709
Hartco Enterprises, Inc. 269,800 2,775
Inacom Corp. (a) 500,000 13,531
Kewill Systems PLC 260,000 4,585
MARC, Inc. 3,800 58
MPSI Systems, Inc. (a) 135,000 338
Mapix, Inc. 425,600 7,874
Melita International Corp. (a)(d) 782,500 9,439
MicroAge, Inc. (a) 675,000 9,408
Mysoftware Co. (a)(d) 323,000 1,615
NetVantage, Inc. Class A (a) 97,500 634
New Dimension Software Ltd. (a) 548,000 15,002
Orcad, Inc. (a)(d) 458,700 3,842
Orbotech Ltd. (a) 80,000 2,690
Project Software & Development, Inc. (a) 94,000 1,716
Rainbow Technologies, Inc. (a)(d) 700,150 10,415
Remedy Corp. (a)(d) 1,500,000 17,906
SPSS, Inc. (a)(d) 861,500 19,384
SPS Transaction Services, Inc. (a) 1,349,100 42,158
Symantec Corp. (a) 2,000,000 48,500
TECNOST Spa 632,500 1,916
Tieto Corp. Class B 134,200 4,971
USCS International, Inc. (a) 48,900 1,149
Unigraphics Solutions, Inc. Class A (a)(d) 573,500 5,950
564,273
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 1.4%
ATL Products, Inc. Class A (a) 40,000 $ 1,093
Adaptec, Inc. (a) 1,500,000 17,438
Advanced Digital Information Corp. (a)(d) 949,300 9,612
Amplicon, Inc. 522,000 7,439
Creative Technology Ltd. (a) 350,000 4,288
Cybex Corp. (d) 545,000 15,328
Diebold, Inc. 63,300 1,598
Eltron International, Inc. (a)(d) 765,400 21,956
Equinox Systems, Inc. (a)(d) 307,600 2,807
HMT Technology Corp. (a) 100,000 906
Intest Corp. (a)(d) 416,000 2,028
Kronos, Inc. (a)(d) 609,000 21,162
Maezawa Kasei Industries Co. Ltd. 200,000 2,560
Nam Tai Electronics, Inc. warrants 11/24/00 (a) 140,000 -
Nam Tai Electronics, Inc. 350,000 4,375
Pomeroy Computer Resources, Inc. (a) 410,000 10,096
Quantum Corp. (a) 1,125,000 19,688
SED International Holdings, Inc. (a)(d) 1,000,000 5,875
Scan-Optics, Inc. (a)(d) 500,000 2,469
150,718
ELECTRONIC INSTRUMENTS - 0.4%
ADE Corp. (a) 17,000 217
BTU International, Inc. (a) 337,300 1,181
DSP Technology, Inc. (a)(d) 224,100 1,849
Elscint Ltd. (a)(d) 853,400 5,920
HACH Co. Class A (non-vtg.) 39,000 390
Hurco Companies, Inc. (a)(d) 364,028 2,548
Mesa Laboratories, Inc. (a) 128,400 642
Modern Controls, Inc. 247,500 1,547
Nanometrics, Inc. (a)(d) 858,500 6,813
Reliability, Inc. (a) 250,000 1,938
Sanderson Electronics PLC 1,664,980 3,806
Tech-Sym Corp. (a)(d) 352,400 9,911
Toko Seiki Co. Ltd. 300,000 548
Wireless Telecom Group, Inc. (d) 1,565,100 3,913
X-Rite, Inc. 355,000 3,728
44,951
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - 2.6%
AVX Corp. 495,600 $ 7,434
Actel Corp. (a) 950,000 9,738
Align Rite International, Inc. (a)(d) 443,000 6,147
Apollo Electronics Co. Ltd. 100,000 678
Asia Electronics Holdings Co. Inc. 19,000 34
ASM Pacific Technology Ltd. 3,500,000 1,366
Atmel Corp. (a) 675,000 7,003
Audiovox Corp. Class A (a) 280,000 1,295
Benchmarq Microelectronics, Inc. (a)(d) 410,400 5,489
Bergman & Beving AB Class B Free shares 650,000 13,093
C.P. Clare Corp. (a) 41,500 389
Dallas Semiconductor Corp. (d) 2,310,000 74,208
Diodes, Inc. (a)(d) 498,400 3,240
Daidensha Co. Ltd. 100,000 407
General Semiconductor, Inc. (a)(d) 2,859,350 26,806
Griffon Corp. (a)(d) 2,657,300 29,894
Kingboard Chemical Holdings Ltd. 3,440,000 364
Kingboard Chemical Holdings Ltd. warrants 12/31/98 (a) 500,000 2
Methode Electronics, Inc. Class A 1,400,000 20,344
Micro Linear Corp. (a)(d) 1,150,000 5,750
Microsemi Corp. (a)(d) 870,800 8,164
Nichicon Corp. 75,000 908
NU Horizons Electronics Corp. (a) 352,500 1,785
PhoneTel Technologies, Inc. (a) 400,000 1,000
Quality Semiconductor, Inc. (a) 250,000 406
Richey Electronics, Inc. (a) 243,500 1,826
Roxboro Group PLC 400,000 1,450
Semtech Corp. (a) 27,400 317
Sedgemoor PLC 1,100,000 844
Siliconix, Inc. (a) 294,500 5,448
Stoneridge, Inc. 400,000 8,750
Supertex, Inc. (a) 107,500 1,048
Taitron Components, Inc. Class A (a)(d) 577,400 1,155
Techtronic Industries Co. Ord. 2,000,000 511
Tower Semiconductor Ltd. 640,000 4,320
3D Labs, Inc. Ltd. 99,600 504
Video Display Corp. (a)(d) 289,100 2,765
Varitronix International Ltd. 2,000,000 4,362
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Wongs Industrial International (a) 9,500,000 $ 1,765
Wongs International Holdings warrants 5/31/00 (a) 1,000,000 18
Zero Corp. 337,300 9,360
270,387
TOTAL TECHNOLOGY 1,090,961
TRANSPORTATION - 4.7%
AIR TRANSPORTATION - 2.4%
Alpha Airports Group PLC 600,000 882
America West Holdings Corp. Class B (a) 675,000 16,242
ASA Holdings, Inc. (d) 1,655,000 70,338
Comair Holdings, Inc. 1,550,000 48,922
Midwest Express Holdings, Inc. (a)(d) 850,000 26,775
Transat AT, Inc. (a) 250,000 1,389
Viad Corp. 3,700,000 89,031
253,579
RAILROADS - 0.5%
Canadian National Railway Co. 1,125,000 59,344
SHIPPING - 0.1%
Brovig Offshore AS 50,000 411
Farstad Shipping ASA 150,000 626
Isewan Terminal Service Co. Ltd. 1,000,000 2,082
Meiko Kaiun Kaisha Ltd., Nagoya 200,000 782
Ocean Wilsons Holding PLC 500,000 800
Tokyo Kisen Co. Ltd. 400,000 1,121
Ugland International Holdings PLC (UIH) 500,000 727
6,549
TRUCKING & FREIGHT - 1.7%
Air Express International Corp. 1,700,000 37,506
Arnold Industries, Inc. (d) 2,150,000 29,025
Baltrans Holdings Ltd. 1,500,000 137
Boyd Brothers Transportation, Inc. (a) 188,800 1,487
Cannon Express, Inc. Class A (a)(d) 319,200 2,673
Circle International Group, Inc. 378,300 8,654
Daiwa Logistics Co. Ltd. 300,000 1,225
Frozen Food Express Industries, Inc. 96,500 784
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - CONTINUED
Goodfellow, Inc. (d) 350,000 $ 2,107
Hub Group, Inc. Class A (a) 158,900 3,168
Japan Logistic Systems Corp. 100,000 243
Landstar System, Inc. (a) 78,100 2,734
Marten Transport Ltd. (a)(d) 444,000 6,660
Old Dominion Freight Lines, Inc. (a)(d) 529,500 8,207
P.A.M. Transportation Services, Inc. (a) 139,000 1,129
Pittston Co. (Burlington Group) 1,500,000 17,906
Sakai Moving Service Co. Ltd. 100,000 768
Transcom Co. Ltd. 213,000 589
USFreightways Corp. 1,100,000 27,500
XTRA Corp. 412,900 25,548
178,050
TOTAL TRANSPORTATION 497,522
UTILITIES - 3.6%
CELLULAR - 0.7%
Century Telephone Enterprises, Inc. 1,250,000 62,188
Europolitan Holdings AB 75,000 7,478
Smartone Telecommunications Holdings Ltd. 424,000 1,228
70,894
ELECTRIC UTILITY - 0.4%
Bangor Hydro-Electric Co. (a) 367,400 3,398
Central Maine Power Co. 573,700 10,864
Maine Public Service Co. 80,600 1,149
Nevada Power Co. 100,000 2,363
Niagara Mohawk Power Corp. (a) 200,000 3,038
Scottish Power PLC ADR 200,000 1,938
Scottish Hydro-Electric PLC Ord. 1,250,000 12,153
Sierra Pacific Resources 100,000 3,538
38,441
GAS - 0.4%
Aquila Gas Pipeline Corp. 865,800 8,442
Atrion Corp. 61,500 538
Bay State Gas Co. 22,200 857
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - CONTINUED
Essex County Gas Co. 10,000 $ 455
Midcoast Energy Resources, Inc. 246,950 5,526
Otaki Gas Co. Ltd. 211,000 563
Sempra Energy (a) 300,000 7,556
Southwestern Energy Co. (d) 1,680,600 15,125
39,062
TELEPHONE SERVICES - 0.2%
Atlantic Tele-Network, Inc. (a)(d) 490,920 6,382
Davel Communications Group, Inc. (a) 228,400 5,510
Emerging Communications, Inc. (a)(d) 1,227,300 10,509
Peoples Telephone Co., Inc. (a) 209,300 1,033
23,434
WATER - 1.9%
Brockhamton Holdings PLC Class A (non-vtg.) 4,700,000 6,523
Hyder PLC 6,850,000 112,902
Yorkshire Water PLC 9,725,000 80,978
200,403
TOTAL UTILITIES 372,234
TOTAL COMMON STOCKS
(Cost $7,588,747) 9,425,367
PREFERRED STOCKS - 0.1%
CONVERTIBLE PREFERRED STOCKS - 0.0%
ENERGY - 0.0%
OIL & GAS - 0.0%
Goodrich Petroleum Corp., Series A, $8.00 73,800 498
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
UTILITIES - 0.1%
TELEPHONE SERVICES - 0.1%
Telecom Italia Mobile Spa 1,500,000 5,734
TOTAL PREFERRED STOCKS
(Cost $2,287) 6,232
CONVERTIBLE BONDS - 0.0%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Mercury Air Group, Inc. 7 3/4%, 2/1/06 B- $ 500 $ 565
TECHNOLOGY - 0.0%
COMMUNICATIONS EQUIPMENT - 0.0%
Trans-Lux Corp. 7 1/2%, 12/1/06 - 535 538
TOTAL CONVERTIBLE BONDS
(Cost $1,211) 1,103
CASH EQUIVALENTS - 10.8%
SHARES
Taxable Central Cash Fund (b)
(Cost $1,140,914) 1,140,913,709 1,140,914
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $8,733,159) $ 10,573,616
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.62%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(d) Affiliated company (see Note 7 of Notes to Financial Statements).
(e) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$56,980,000 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 74.4%
United Kingdom 7.5
Canada 4.7
Bermuda 1.9
Finland 1.7
Japan 1.5
France 1.5
Sweden 1.4
Norway 1.0
Others (individually less than 1%) 4.4
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1998, the aggregate cost of investment securities for
income tax purposes was $8,735,796,000. Net unrealized appreciation
aggregated $1,837,820,000, of which $2,473,867,000 related to
appreciated investment securities and $636,047,000 related to
depreciated investment securities.
The fund hereby designates approximately $424,517,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $8,733,159) - $ 10,573,616
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE (COST $389) 388
RECEIVABLE FOR INVESTMENTS SOLD 36,237
RECEIVABLE FOR FUND SHARES SOLD 7,014
DIVIDENDS RECEIVABLE 11,033
INTEREST RECEIVABLE 6,915
REDEMPTION FEES RECEIVABLE 3
OTHER RECEIVABLES 196
TOTAL ASSETS 10,635,402
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 752
PAYABLE FOR INVESTMENTS PURCHASED 78,648
PAYABLE FOR FUND SHARES REDEEMED 30,813
ACCRUED MANAGEMENT FEE 7,100
OTHER PAYABLES AND ACCRUED EXPENSES 2,995
TOTAL LIABILITIES 120,308
NET ASSETS $ 10,515,094
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 7,832,320
UNDISTRIBUTED NET INVESTMENT INCOME 70,720
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 771,738
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,840,316
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 406,429 SHARES OUTSTANDING $ 10,515,094
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $25.87
($10,515,094 (DIVIDED BY) 406,429 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $25.87) $26.67
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 124,557
DIVIDENDS (INCLUDING $18,691 RECEIVED FROM
AFFILIATED ISSUERS)
INTEREST 109,431
233,988
LESS FOREIGN TAXES WITHELD (10,956)
TOTAL INCOME 223,032
EXPENSES
MANAGEMENT FEE $ 69,532
BASIC FEE
PERFORMANCE ADJUSTMENT 10,960
TRANSFER AGENT FEES 20,906
ACCOUNTING FEES AND EXPENSES 827
NON-INTERESTED TRUSTEES' COMPENSATION 47
CUSTODIAN FEES AND EXPENSES 1,275
REGISTRATION FEES 1,011
AUDIT 90
LEGAL 47
INTEREST 1
MISCELLANEOUS 40
TOTAL EXPENSES BEFORE REDUCTIONS 104,736
EXPENSE REDUCTIONS (1,283) 103,453
NET INVESTMENT INCOME 119,579
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING REALIZED GAIN OF 975,854
$115,138 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (897)
FUTURES CONTRACTS (694) 974,263
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (66,036)
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (88) (66,124)
NET GAIN (LOSS) 908,139
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,027,718
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 119,579 $ 83,162
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 974,263 472,073
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (66,124) 1,502,767
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,027,718 2,058,002
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (106,826) (53,737)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (591,880) (357,058)
TOTAL DISTRIBUTIONS (698,706) (410,795)
SHARE TRANSACTIONS 3,991,908 3,683,464
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 685,260 402,041
COST OF SHARES REDEEMED (3,166,447) (1,079,186)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,510,721 3,006,319
FROM SHARE TRANSACTIONS
REDEMPTION FEES 2,051 1,242
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,841,784 4,654,768
NET ASSETS
BEGINNING OF PERIOD 8,673,310 4,018,542
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 10,515,094 $ 8,673,310
INCOME OF $70,720 AND $62,129, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 153,618 170,807
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 27,797 20,738
REDEEMED (119,111) (49,663)
NET INCREASE (DECREASE) 62,304 141,882
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 25.20 $ 19.87 $ 19.25 $ 17.62 $ 17.19
BEGINNING OF PERIOD
INCOME FROM
INVESTMENT OPERATIONS
NET INVESTMENT INCOME .29 C .30 C .26 .20 .06
NET REALIZED AND 2.24 6.93 1.83 3.57 2.15
UNREALIZED GAIN (LOSS)
TOTAL FROM 2.53 7.23 2.09 3.77 2.21
INVESTMENT OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.28) (.24) (.23) (.09) (.16)
FROM NET REALIZED GAIN (1.58) (1.66) (1.24) (2.05) (1.62)
TOTAL DISTRIBUTIONS (1.86) (1.90) (1.47) (2.14) (1.78)
REDEMPTION FEES ADDED - - - - -
TO PAID IN CAPITAL
NET ASSET VALUE, $ 25.87 $ 25.20 $ 19.87 $ 19.25 $ 17.62
END OF PERIOD
TOTAL RETURN A, B 10.53% 39.45% 11.50% 23.81% 13.67%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 10,515 $ 8,673 $ 4,019 $ 2,947 $ 2,167
(IN MILLIONS)
RATIO OF EXPENSES TO .97% 1.02% 1.05% 1.12% 1.14%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO .95% D 1.01% D 1.04% D 1.11% D 1.13% D
AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO 1.10% 1.36% 1.46% 1.31% .51%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 47% 45% 79% 65% 54%
AVERAGE COMMISSION RATE E $ .0270 $ .0230
</TABLE>
I 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).
J TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
K NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
L 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).
M FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Low-Priced Stock Fund (the fund) is a fund of Fidelity
Puritan Trust (the trust) and is authorized to issue an unlimited
number of shares. Effective the close of business on April 3, 1998,
the fund was closed to new accounts. The trust is registered under the
Investment Company Act of 1940 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 require 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 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 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.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Under the Plan, deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds, including shares of the fund.
Deferred amounts remain in the fund until distributed in accordance
with the Plan.
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,
partnerships, futures transactions, passive foreign investment
companies (PFIC), non-taxable dividends and losses deferred due to
wash sales. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 90 days are subject to a short-term trading fee equal to 1.5% of
the proceeds of the redeemed shares. The fee, which is retained by the
fund, is accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
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., 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.
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.
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
2. OPERATING POLICIES -
CONTINUED
RESTRICTED SECURITIES - CONTINUED
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 $5,521,003,000 and $4,146,449,000, respectively.
The market value of futures contracts opened and closed during the
period amounted to $72,736,000 and $72,042,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .35%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .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 $9,911,000on sales of shares of the fund of which
$9,890,000 was retained.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .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 $968,000 for the
period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted
to $2,208,000. The weighted average interest rate was 5.94%.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $1,051,000 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 $31,000 and $201,000, respectively, under these
arrangements.
7. TRANSACTIONS WITH
AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
AAF Industries PLC $ - $ 290 $ - $ -
ABT Building Products Corp. - 1,182 - -
ADAC Laboratories 4,218 - - 32,700
Adams Resources and Energy, Inc. 1,789 - - 3,336
Advanced Digital Information Corp. 7,851 390 - 9,612
Advocat, Inc. - 2,584 - -
AFC Cable Systems, Inc. 4,433 - - 25,500
Alamco, Inc. - 1,899 - -
Alberto-Culver Co. Class A 1,461 8 70 26,653
Align Rite International, Inc. 193 148 - 6,147
All American Communications, Inc. - 12,275 - -
Allied Research Corp. 231 - - 4,720
American Business Information, Inc. 763 - - 39,198
American Indemnity Financial Corp. - 1,028 12 -
American Safety Razor Co. 451 3,258 - 12,610
Applebee's International, Inc. 7,326 - - 40,606
ARK Restaurants Corp. 823 - - 3,240
Arnold Industries, Inc. 16,600 790 801 29,025
ASA Holdings, Inc. - 6,886 761 70,338
Asahi Concrete Works Co. Ltd. 958 - 59 2,677
Atlantic Tele-Network, Inc. 2,636 - - 6,382
7. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Australian Oil & Gas Corp. Ltd. $ 219 $ - $ 203 $ 3,429
Autocam Corp. 371 - 46 10,509
Award Software International, Inc. 2,564 - - 6,725
Aztec Manufacturing Co. 589 1,196 61 4,829
BA Merchant Services, Inc. Class A 2,873 - - 18,063
Bairnco Corp. 4,559 - 122 6,137
Baker (J.), Inc. - 931 22 -
Ballard Medical Products 16,154 - 252 56,906
BancTec, Inc. 11,712 2,955 - 28,130
Banyan Strategic Land Trust (SBI) - 68 435 6,610
BeautiControl Cosmetics, Inc. - 4,954 81 -
Beazer Homes USA, Inc. 1,719 - - 9,980
Belmont Homes, Inc. - 3,113 - -
Benchmarq Microelectronics, Inc. 957 372 - 5,489
Benihana, Inc. 1,390 28 - 3,290
Bergensbanken ASA 4,717 - 450 10,660
Bertucci's, Inc. - 3,806 - -
Black Box Corp. 7,480 - - 45,950
Blair Co. 8,064 - 291 26,395
BMTC Group, Inc. Class A (sub-vtg.) 384 - 34 6,350
Boole & Babbage, Inc. - 2,618 - 34,501
Brampton Brick Ltd. Class A 109 - - 1,054
Brookstone, Inc. - - - 10,281
BTU International, Inc. 197 515 - -
Bush Industries, Inc. Class A 13,018 - 106 21,870
Canadian Western Bank 4,920 - - 11,688
Cannon Express, Inc. Class A 311 - - 2,673
Castle Energy Corp. - 8,607 507 7,000
CEC Resources Ltd. - 147 - -
CFC International, Inc. - 2,591 - -
Chart Industries, Inc. 1,865 2,671 113 13,225
Chase Corp. 1,492 - - 3,970
Chase Industries, Inc. 5,948 321 - 13,620
Chateau Stores of Canada Ltd. Class A - - 40 1,276
Chicos Fas, Inc. 2,764 1,887 - 7,939
Circuit Systems, Inc. 950 1,029 - -
Cobra Electronics Corp. 1,510 - - 2,361
Cogeco Cable, Inc. 2,770 - 125 10,815
Cogeco, Inc. 2,902 - 163 15,232
Cold Metal Products, Inc. - 1,083 - 2,087
Cole National Corp. Class A 6,046 1,497 - 34,980
Columbus Energy Corp. 531 - - 3,140
Communications Systems, Inc. - 3,834 181 -
Compdent Corp. 4,888 - - 13,536
Computer Data Systems, Inc. - 1,657 37 -
Concord Fabrics, Inc. Class A & Class B 226 303 - 2,458
Conso Products Co. 436 - - 5,330
Consolidated Products, Inc. 5,259 457 - 22,125
7. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Continental Circuits Corp. $ 3,577 $ 6,017 $ - $ -
Continental Homes Holding Corp. - 8,033 33 -
ConVest Energy Corp. 16 47 - -
Cook (D.C.) Holdings PLC 58 - 34 1,502
Corcom, Inc. 188 1,383 - -
Cotton States Life & Health
Insurance Co. 1,138 - 14 5,663
CPAC, Inc. - 33 - 6,845
Craig (Jenny), Inc. 1,198 2,791 - -
Crossman Communities, Inc. 4,181 - - 34,491
Crown Central Petroleum Corp.
Class A 166 210 - 5,875
Custom Chrome, Inc. - 6,016 - -
Cybex Corp. 2,280 - - 15,328
Dallas Semiconductor Corp. 30,141 1,030 247 74,208
Data Research Associates, Inc. - 630 - -
Data Systems & Software - 618 - -
Davel Communications Group, Inc. - 2,310 - -
Decorator Industries, Inc. - - 85 4,015
Del Laboratories, Inc. 2,843 - 30 12,595
Desjardins-Laurentian Financial
Corp., Class A (sub-vtg.) 3,558 - 7 7,101
Devon Group, Inc. 1,987 5,069 - -
DH Technology, Inc. - 925 - -
Diagnostic Retrieval Systems, Inc. 1,279 3,193 - -
Dime Financial Corp. 893 - 48 13,571
Diodes, Inc. 3,041 - - 3,240
Diversified Corporate Resources, Inc. 624 - - 2,894
Dominion Homes, Inc. 2,775 698 - 6,531
Dorel Industries, Inc.
Class B (sub-vtg.) - 838 - -
Drew Industries, Inc. 840 - - 15,893
DRS Technologies, Inc. 3,098 3,271 - -
DSG International Ltd. - 1,717 - 4,110
DSP Technology, Inc. 627 - - 1,849
DT Industries, Inc. 847 3,042 13 -
Ducommun, Inc. 10,293 710 - 22,410
Durakon Industries, Inc. - - - 8,229
Dyersburg Corp. - 3,766 43 3,413
Echelon International Corp. - 725 - -
Edusoft Ltd. 1,712 - 178 2,773
Elscint Ltd. - 4,585 - 5,920
Eltron International, Inc. 9,940 - - 21,956
Elxsi Corp. - - - 3,110
Emerging Communications, Inc. 5,063 - - 10,509
Enea Data AB, Series B Free shares - 952 39 -
ENEX Resources Corp. - - 36 2,020
7. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Engineered Support Systems, Inc. $ 1,322 $ 422 $ 9 $ 5,995
Engle Homes, Inc. 4,575 109 127 15,392
Equitrac Corp. 704 - - 6,804
Equinox Systems, Inc. 726 - - 2,807
Excel Industries, Inc. 231 7,934 98 -
Fabri-Centers of America, Inc. Class A 2,170 - - 13,446
Fansteel, Inc. 870 86 - 6,068
Farm Family Holdings, Inc. - - - 20,684
Farr Co. - 1,041 - -
FDP Corp. 2,912 - 19 6,963
Federal Screw Works - - 218 5,277
FIH AS Class B 7,511 185 681 26,550
Finish Line, Inc. Class A 15,134 2,642 - 35,700
First Central Financial Corp. - 1,166 - -
Firstbank Puerto Rico - 819 723 79,522
Flanigans Enterprises, Inc. 384 - - 952
Flir Systems, Inc. - 3,299 - 5,067
Footstar, Inc. 8,918 7,222 - 57,461
Foremost Industries, Inc. 58 236 - 2,087
Fossil, Inc. 6,404 1,963 - 36,602
FRM Nexus, Inc. - - - 470
Gainsco, Inc. - 9,768 58 -
Galey & Lord, Inc. 3,357 10,744 - -
Gardner Denver Machinery, Inc. 5,495 - - 24,600
Gateway Data Sciences Corp. - 1,256 - -
GBC Bancorp California 85 1,214 263 22,275
Gehl Co. 2,491 224 - 11,550
General Semiconductor, Inc. 13,617 - - 26,806
Genicom Corp. - 3,266 - -
Giant Cement Holding, Inc. 2,386 251 - 15,998
Global Motorsport Group, Inc. 4,169 - - 10,588
Goodfellow, Inc. 740 - 51 2,107
Graphic Industries, Inc. - 3,645 13 -
Griffon Corp. 798 3,756 - 29,894
GSE Systems, Inc. - 1,219 - -
Gymboree Corp. 195 983 - 15,000
Hallwood Consolidated
Resources Corp. 973 - - 2,755
Hampshire Group Ltd. 2,533 - - 6,044
Hardinge, Inc. 784 468 74 12,909
Helen of Troy Corp. 188 259 - 61,087
Hirsch International Corp. Class A 5,459 1,015 - 3,075
Holly Corp. 96 - - 10,253
Homebase, Inc. 2,257 2,196 - 15,500
HPSC, Inc. - 32 - 2,940
Hurco Companies, Inc. 209 - - 2,548
ICU Medical, Inc. 370 - - 6,119
IDEX Corp. - - - 41,804
7. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
IEC Electronics Corp. $ 3,175 $ 3,822 $ - $ -
IHOP Corp. 814 2,347 - 28,432
Independence Federal Savings Bank 85 56 29 1,815
Intercontinental Life Corp. 193 - - 10,522
International Imaging Materials, Inc. - 4,218 - -
Intest Corp. 747 - - 2,028
IPC Holdings Ltd. 23,907 - - 64,010
IPC Information Systems, Inc. - 4,228 - -
Jean Coutu Group, Inc. Class A - - 179 29,665
Jean Philippe Fragrances, Inc. - 3,093 - -
JLM Couture, Inc. 515 - - 545
Journal Register Co. 431 1,035 - -
Kaynar Technologies, Inc. 4,785 - - 6,747
Kennedy Wilson, Inc. 83 240 - 3,450
Kenneth Cole Productions, Inc. Class A 4,195 1,021 - 12,852
Kentucky Electric Steel, Inc. - 648 - -
King World Productions, Inc. 4,550 4,981 - 103,600
Koss Corp. 126 1,355 - 2,428
Kronos, Inc. 2,754 - - 21,162
Laboratory Specialists America, Inc. 248 - - 1,407
Ladd Furniture, Inc. 482 927 - -
Lasalle Re Holdings Ltd. 24,054 884 3,142 51,253
Laser Industries Ltd. Ord 1,219 2,265 - -
Lawyers Title Corp. - 8,633 124 -
Lechters, Inc. - 1,705 - -
Libbey, Inc. - - - -
Life USA Holding, Inc. 2,050 884 101 22,746
M Corp, Inc. - - - 369
M/I Schottenstein Homes, Inc. - - 88 20,955
MacFrugals Bargains Closeouts, Inc. - 20,384 - -
MARC, Inc. - 981 88 -
Mark VII, Inc. 724 - - 8,539
Markwest Hydrocarbon, Inc. - 84 - -
Marten Transport Ltd. - - - 6,660
Martin Color-Fi, Inc. 1,312 - - 1,452
Maynard Oil Co. 519 - - 2,872
Medstone International, Inc. 2,414 - - 4,770
Melita International Corp. 5,971 739 - 9,439
Mercury Air Group 394 615 - 5,210
Metro Richelieu, Inc. Class A 6,438 - 178 38,565
Micro Linear Corp. - 377 - 5,750
Microsemi Corp. - - - 8,164
Midwest Express Holdings, Inc. 678 2,396 - 26,775
MMI Companies, Inc. 8,950 65 322 28,175
Moffat Communications Ltd. 812 - 29 15,883
Monaco Coach Corp. 607 3,149 - 9,484
Monro Muffler Brake, Inc. - 2,067 - 7,702
Morton's Restaurant Group - - - 8,280
Movado Group, Inc. 874 - 59 18,000
7. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
MTL, Inc. $ - $ 4,028 $ - $ -
Murakami Corp. 183 - 22 2,712
MYR Group, Inc. 1,370 - 69 8,527
Mysoftware Co. - 412 - 1,615
Nanometrics, Inc. 4,292 - - 6,813
Nathans Famous, Inc. 60 462 - -
National Western Life
Insurance Co. Class A 473 - - 20,655
Natural Alternatives International, Inc. - 902 - -
Nature's Sunshine Products, Inc. 2,031 - - 21,269
Nautica Enterprises, Inc. 16,493 - - 67,032
New Dimension Software Ltd. 2,819 2,676 - -
North American Mortgage Co. - 11,083 72 -
Norvestia OY Class B - - 224 3,854
NSC Corp. - - 83 894
Nutramax Products, Inc. - 2,870 - -
Oakwood Homes Corp. 12,259 - - 62,775
Octel Corp. 13,246 - - 29,900
OEC Medical Systems, Inc. 5,762 - - 28,028
Old American Stores, Inc. - 1,618 - -
Old Dominion Freight Lines, Inc. 1,053 - - 8,207
One Price Clothing Stores, Inc. - 3,168 - -
Orbit F/R - - - -
Orcad, Inc. 402 2,696 - 3,842
Oriole Homes Corp. Class B - - - 1,315
OroAmerica, Inc. 1,064 3,476 - -
Orthofix International 1,296 - - 11,404
Patrick Industries, Inc. 2,229 131 80 8,828
Pe Ben Oilfield Services Ltd. - 51 - 764
Performance Food Group Co. - 215 - 13,735
Petroleum Development Corp. 3,112 - - 7,337
Philadelphia Consolidated
Holding Corp. 5,088 - - 16,610
Piercing Pagoda, Inc. 1,001 - - 21,564
Poncebank 4,619 3,105 188 -
Powell Industries, Inc. 3,993 - - 13,560
Premier Choix Tvec, Inc. Class A - 266 - -
Primesource Corp. 678 - 18 3,467
Primex Technologies, Inc. - 1,949 200 -
Programming & Systems, Inc. - - - -
Pubco Corp. 1,338 - - 3,594
PXRE Corp. - 50 697 19,577
Qualix Group, Inc. - 1,047 - -
Quest Diagnostics, Inc. 1,726 - - 40,180
Quixote Corp. 2,444 339 83 8,755
Rainbow Technologies, Inc. - 7,370 - 10,415
Raster Graphics, Inc. 1,731 1,990 - -
Raytech Corp. 248 - - 1,619
7. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Rehabcare Corp. $ 1,152 $ - $ - $ 11,018
Reliability, Inc. - 917 - -
Remedy Corp. - - - 17,906
Res-Care, Inc. 4,119 1,761 - 22,948
Rex Stores Corp. 844 - - 5,656
Reynolds & Reynolds Co. Class A 3,043 - - 69,352
Richardsons Westgrath PLC Class L 1,893 - 103 2,676
Right Management Consultants, Inc. 60 - - 8,465
Robertson Ceco Corp. 1,845 - - 9,786
RPC Energy Services, Inc. 10,254 954 318 33,104
Ryan Hotels Ltd. - 93 155 5,658
S & K Famous Brands, Inc. 338 412 - 6,650
Saevik Supply AS 419 1,619 - -
Safeguard Health Enterprises, Inc. 1,910 - - 2,125
San Francisco Boutiques, Inc.
Class B (sub-vtg.) 113 - - 1,876
Scan-Optics, Inc. 1,311 94 - 2,469
Schult Homes Corp. - 3,262 66 -
SCPIE Holding, Inc. 3,413 1,677 160 22,136
Seattle FilmWorks, Inc. 8,029 2,027 - 9,004
SED International Holdings, Inc. 7,547 507 - 5,875
Seibels Bruce Group - - - -
Shelby Williams Industries, Inc. 6,152 4,254 158 9,000
Shelter Components Corp. - 1,517 - -
Sonic Corp. - 1,503 - 38,216
Sound Advice, Inc. - 995 - 748
Southern Electronics Corp. 3,576 4,640 - -
Southern Energy Homes, Inc. 1,403 1,151 - 13,547
Southwestern Energy Co. 1,835 2,173 409 15,125
Sparebanken Rana Grunnfondsbevis 24 - 40 644
Special Metals Corp. - - - -
Speizman Industries, Inc. 431 217 - 989
SPSS, Inc. 9,344 - - 19,384
Standard Commercial Corp. 5,757 - - 12,489
Stanley Furniture Co., Inc. 1,087 392 - 13,799
Stanley Technology Group, Inc. 97 - - 2,852
Steel of West Virginia, Inc. - - - 5,636
Stephan Co. 14 - 33 5,268
Stewart Information Services Corp. 1,775 3,574 172 24,314
Strattec Security Corp 2,132 - - 10,189
Summit Holdings Southeast, Inc. 8,928 - - 18,456
Superior Energy Services, Inc. - 1,195 - -
Supreme International Corp. 1,503 - - 7,623
Swift Energy Co. 14,572 1,104 - 18,503
Sybron Chemical Industry Corp. 684 2,099 - -
Sylvan Foods Holdings, Inc. 338 36 - 8,895
T B Wood's Corp. 24 141 142 7,307
Taitron Components, Inc. Class A 668 - - 1,155
7. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Talentum OY Class B $ 828 $ - $ 152 $ 10,288
Tandy Brands Accessories, Inc. 4,368 - - 10,220
Tay Homes PLC 2,066 - 303 5,398
TBC Corp. - 1,468 - 11,436
Tech-Sym Corp. 1,409 960 - 9,911
Terra Nova (Bermuda) Holdings Ltd. 3,698 - 157 49,669
Thomas Group - 1,356 - -
Todhunter International, Inc. 140 188 - -
Torch Energy Royalty Trust unit - 2,310 - -
Trans Lux Corp. 53 109 4 -
Transpro, Inc. - - 132 4,585
Transtechnology Corp. 38 1,936 48 -
Twin Disc, Inc. 4,053 - 170 7,683
UICI 18,791 - - 68,150
Uni Select, Inc. 606 - 116 12,253
Unigraphics Solutions, Inc. Class A 662 - - 5,950
Unico America Corporation 289 30 24 5,024
United Dental Care, Inc. 7,981 - - 17,155
USEC, Inc 12,870 - - 119,700
Unionamerica Holdings PLC
sponsored ADR - 7,917 22 -
URS Corp. 7,175 - - 21,329
U.S. Home Corp. - - - 22,487
USX-Delhi Group - 4,265 41 -
Utah Medical Products, Inc. 1,346 - - 6,023
Valley Forge Corp. 148 - 73 5,967
Vertex Communications Corp. 2,133 - - 11,220
Vestcom International - - - -
Video Display Corp. 1,380 1,150 - 2,765
Virginia First Financial Corp. 103 232 16 -
Warren Bancorp., Inc. - 1,830 32 -
Washington Homes, Inc. - 651 - -
Western Beef, Inc. 362 - - 3,969
Weston (Roy F.), Inc. Class A - 184 - -
Winsloew Furniture, Inc. 3,519 920 - 15,901
Winston Resources, Inc. 710 - - 1,639
Wireless Telecom Group, Inc. 7,244 - 216 3,913
Woodhead Industries, Inc. - 234 - -
World Fuel Services Corp. 162 - 242 20,676
Worldtex Corp. - 777 - 6,584
WSOY (Werner Soderstrom
Osakeyhtio) Class B - 491 607 57,062
Wynn's International, Inc. 2,598 - 392 32,265
Zilog, Inc. 312 23,634 - -
TOTALS $ 746,905 $ 415,466 $ 18,691 $ 3,809,725
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Low-Priced Stock Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Low-Priced Stock Fund (a fund of Fidelity Puritan Trust) at
July 31, 1998, and the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fidelity
Low-Priced Stock Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation
of securities at July 31, 1998 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 11, 1998
DISTRIBUTIONS
The Board of Trustees of Low-Priced Stock Fund voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
PAY DATE 9/08/97 12/15/97 9/08/98
RECORD DATE 9/05/97 12/12/97 9/04/98
DIVIDENDS $.16 $.12 $.17
SHORT-TERM
CAPITAL GAINS $.41 $ .22 $.56
LONG-TERM
CAPITAL GAINS $.69 $ .26 $1.18
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 50.62% 34.13%
20% rate 49.38% 65.87%
A total of 2.36% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 11.89% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides 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.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1
For mutual fund and brokerage trading.
2
For quotes.*
3
For account balances and holdings.
4
To review orders and mutual
fund activity.
5
To change your PIN.
*0
To speak to a Fidelity representative.
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.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 and we'll send you an America Online CD or disk with up
to 50 free hours of Web access.
(COMPUTER_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
8880 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
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
Fidelity Brokerage Services, Inc.
100 Summer St., Boston, MA 02110
Member NYSE/SIPC
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-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
LPS-ANN-0998 60527
1.536378.101
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Contrafund II
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export and Multinational Fund
Fidelity Fifty SM
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
Small Cap Stock Fund
Stock Selector
TechnoQuant SM Growth Fund
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
CORPORATE HEADQUARTERS
82 Devonshire St., Boston, MA 02109
WWW.FIDELITY.COM
FIDELITY
PURITAN(registered trademark)
FUND
ANNUAL REPORT
JULY 31, 1998
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
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 48 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 52 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 57 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 58
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:
So far, 1998 has been a year of considerable volatility in the U.S.
stock and bond markets. In the first quarter, the U.S. stock market
soared as inflation and interest rates remained stable, while the
economy maintained strong growth. By summer, however, investors began
to exercise caution relative to the troublesome Asian economic climate
and reports of concerns about corporate earnings domestically. Market
volatility and low interest rates were also the main stories in the
bond market, with many investors moving assets to highly rated U.S.
Treasuries.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY PURITAN 12.56% 103.21% 289.40%
S&P 500 (REGISTERED TRADEMARK) 19.29% 180.53% 445.15%
LB AGGREGATE BOND 7.87% 38.97% 139.96%
BALANCED FUNDS AVERAGE 9.75% 89.19% 232.69%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks - and the performance of the Lehman Brothers Aggregate
Bond Index - a market value weighted performance benchmark for
investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of at least one year. To measure how the fund's performance
stacked up against its peers, you can compare it to the balanced funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past one
year average represents a peer group of 379 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY PURITAN 12.56% 15.24% 14.56%
S&P 500 19.29% 22.91% 18.48%
LB AGGREGATE BOND 7.87% 6.80% 9.15%
BALANCED FUNDS AVERAGE 9.75% 13.54% 12.71%
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
Puritan S&P 500
LB Aggregate Bond
00004 SP001
LB001
1988/07/31 10000.00 10000.00
10000.00
1988/08/31 9898.67 9660.00
10026.00
1988/09/30 10180.37 10071.52
10253.59
1988/10/31 10346.61 10351.50
10446.36
1988/11/30 10275.36 10203.48
10318.91
1988/12/31 10346.99 10382.04
10330.26
1989/01/31 10857.86 11142.00
10479.02
1989/02/28 10760.55 10864.57
10403.57
1989/03/31 10956.02 11117.71
10448.31
1989/04/30 11326.43 11694.72
10666.67
1989/05/31 11705.08 12168.36
10947.21
1989/06/30 11786.93 12099.00
11280.00
1989/07/31 12438.05 13191.54
11520.27
1989/08/31 12521.53 13450.09
11349.77
1989/09/30 12383.48 13394.95
11407.65
1989/10/31 12013.18 13084.18
11688.28
1989/11/30 12237.08 13351.10
11799.32
1989/12/31 12374.86 13671.53
11831.18
1990/01/31 11850.96 12754.17
11690.39
1990/02/28 11977.42 12918.70
11727.79
1990/03/31 11994.66 13261.04
11736.00
1990/04/30 11701.22 12929.52
11628.03
1990/05/31 12352.30 14190.14
11972.22
1990/06/30 12286.19 14093.65
12164.98
1990/07/31 12174.49 14048.55
12332.85
1990/08/31 11439.18 12778.56
12167.59
1990/09/30 10908.02 12156.25
12268.58
1990/10/31 10718.81 12103.97
12424.39
1990/11/30 11324.28 12885.89
12691.52
1990/12/31 11589.02 13245.41
12889.51
1991/01/31 12108.36 13822.91
13049.34
1991/02/28 12810.44 14811.25
13160.26
1991/03/31 12895.55 15169.68
13251.06
1991/04/30 13002.93 15206.08
13394.17
1991/05/31 13637.46 15862.99
13471.86
1991/06/30 13164.29 15136.46
13465.12
1991/07/31 13619.94 15841.82
13652.29
1991/08/31 13857.67 16217.27
13947.18
1991/09/30 13869.31 15946.44
14230.31
1991/10/31 14070.32 16160.13
14388.26
1991/11/30 13587.91 15508.87
14520.63
1991/12/31 14423.29 17283.09
14951.90
1992/01/31 14545.69 16961.62
14748.55
1992/02/29 14953.70 17182.12
14844.42
1992/03/31 14880.61 16847.07
14761.29
1992/04/30 15366.64 17342.38
14867.57
1992/05/31 15542.43 17427.35
15148.57
1992/06/30 15458.70 17167.69
15357.62
1992/07/31 15929.69 17869.85
15670.91
1992/08/31 15772.69 17503.51
15829.19
1992/09/30 15965.01 17710.06
16017.55
1992/10/31 15844.48 17772.04
15804.52
1992/11/30 16271.82 18378.07
15807.68
1992/12/31 16648.42 18604.12
16059.02
1993/01/31 17122.80 18760.39
16367.36
1993/02/28 17472.94 19015.53
16653.79
1993/03/31 18163.85 19416.76
16723.73
1993/04/30 18506.57 18946.88
16840.80
1993/05/31 18757.89 19454.65
16862.69
1993/06/30 18884.82 19511.07
17167.91
1993/07/31 19162.03 19433.03
17265.76
1993/08/31 19716.44 20169.54
17567.91
1993/09/30 19580.73 20014.23
17615.35
1993/10/31 20089.80 20428.53
17680.52
1993/11/30 19766.98 20234.46
17530.24
1993/12/31 20219.02 20479.29
17624.90
1994/01/31 21117.64 21175.59
17862.84
1994/02/28 20886.57 20601.73
17552.03
1994/03/31 20109.15 19703.49
17118.49
1994/04/30 20329.42 19955.70
16981.54
1994/05/31 20458.99 20282.97
16979.84
1994/06/30 20300.63 19786.04
16942.49
1994/07/31 20810.11 20435.02
17279.64
1994/08/31 21424.09 21272.86
17300.38
1994/09/30 20962.15 20751.67
17046.06
1994/10/31 21207.96 21218.59
17030.72
1994/11/30 20538.81 20445.80
16993.26
1994/12/31 20579.78 20749.02
17110.51
1995/01/31 20482.51 21287.04
17449.30
1995/02/28 21107.82 22116.59
17864.59
1995/03/31 21597.71 22769.25
17973.56
1995/04/30 22031.91 23439.81
18225.19
1995/05/31 22508.12 24376.70
18930.51
1995/06/30 22760.93 24942.97
19068.70
1995/07/31 23521.98 25770.08
19026.75
1995/08/31 23634.73 25834.76
19256.97
1995/09/30 23973.36 26924.99
19443.77
1995/10/31 23587.61 26828.87
19696.54
1995/11/30 24430.54 28006.65
19991.98
1995/12/31 24996.30 28546.06
20271.87
1996/01/31 25348.98 29517.77
20405.67
1996/02/29 25672.27 29791.40
20050.61
1996/03/31 26099.63 30078.29
19910.25
1996/04/30 26114.43 30521.64
19798.76
1996/05/31 26277.18 31308.80
19759.16
1996/06/30 26396.35 31428.08
20023.93
1996/07/31 25888.73 30039.59
20078.00
1996/08/31 26127.61 30673.13
20043.86
1996/09/30 27163.89 32399.41
20392.63
1996/10/31 27823.20 33292.98
20845.34
1996/11/30 29224.25 35809.60
21201.80
1996/12/31 28784.33 35100.21
21004.62
1997/01/31 29769.41 37293.27
21069.74
1997/02/28 30220.21 37585.65
21122.41
1997/03/31 29209.21 36041.26
20887.95
1997/04/30 30405.21 38192.92
21201.27
1997/05/31 31634.89 40518.11
21402.68
1997/06/30 32812.52 42333.32
21657.37
1997/07/31 34595.80 45701.78
22242.12
1997/08/31 33067.27 43141.57
22053.07
1997/09/30 34398.59 45504.43
22379.45
1997/10/31 33694.43 43984.58
22703.95
1997/11/30 34504.22 46020.63
22808.39
1997/12/31 35217.47 46810.80
23038.76
1998/01/31 35526.40 47328.53
23333.65
1998/02/28 36907.48 50741.86
23314.99
1998/03/31 38059.19 53340.35
23394.26
1998/04/30 38278.98 53876.96
23515.91
1998/05/31 38224.03 52950.81
23739.31
1998/06/30 39031.98 55101.68
23941.09
1998/07/31 38939.66 54514.84
23996.00
IMATRL PRASUN SHR__CHT 19980731 19980903 160004 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Puritan Fund on July 31, 1988. As the chart
shows, by July 31, 1998, the value of the investment would have grown
to $38,940 - a 289.40% increase on the initial investment. For
comparison, look at how both the Standard & Poor's 500 Index, and the
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 $54,515 - a 445.15%
increase. If $10,000 was invested in the Lehman Brothers Aggregate
Bond Index, it would have grown to $23,996 - a 139.96% 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
While the Standard & Poor's 500
Index - a measure of the U.S.
stock market - returned 19.29%
for the 12-month period that
ended July 31, 1998, the bull
market came to an abrupt halt for
thousands of stocks as the period
drew to a close. The average
stock on the New York Stock
Exchange was down 24% from its
52-week high, and the Russell
2000 Index - a measure of small
company stock performance -
returned just 2.31% during the
past year. At the end of the period,
the Dow Jones Industrial Average
was down over 454 points, or
4.8%, since hitting a record of
9337.97 on July 17, 1998.
Investors worldwide flocked to the
perceived safe haven of U.S.
bonds, amid a sharp sell-off in
Russian bonds, weakness in
Asian markets and concerns
about corporate profits. The
Lehman Brothers Aggregate Bond
Index - a broad gauge of the U.S.
taxable bond market - returned
7.87% during the 12 month period
that ended July 31, 1998. In the
fourth quarter of 1997 and the first
half of 1998, global market
volatility and low interest rates
were the main stories behind bond
performance. As investors moved
assets from stocks and riskier
bonds to highly rated corporate
bonds and U.S. Treasuries, bond
yields - which move in the
opposite direction of bond prices
- - fell to their lowest levels in
decades.
An interview with Bettina Doulton, Portfolio Manager of Fidelity
Puritan Fund
Q. HOW DID THE FUND PERFORM, BETTINA?
A. For the 12 months that ended July 31, 1998, the fund produced a
return of 12.56%. As such, the fund lagged the 19.29% return of the
Standard & Poor's 500 Index, but topped the Lehman Brothers Aggregate
Bond Index, which returned 7.87% during the period. Given the fund's
mix of equities and bonds, performance typically falls between the S&P
500 and Lehman Brothers indexes. The fund also outperformed its peers,
as the balanced funds average returned 9.75% for the period, according
to Lipper Analytical Services.
Q. WHAT FACTORS CONTRIBUTED POSITIVELY TO PERFORMANCE?
A. The fund was well-positioned for the type of investing environment
we witnessed during the period. In general, the stock market was very
narrow - with larger companies accounting for much of the gains - and
very unforgiving. If a company showed even the slightest chink in its
armor, investors shied away. Instead, investors tended to gravitate
toward larger-capitalization companies, many of which have shown the
ability to sustain earnings growth momentum during challenging
periods. Several of the fund's top positions - including General
Electric, American Express and Bristol-Myers Squibb - generated solid
returns. Additionally, as the problems in Southeast Asia continued to
reverberate, companies with more of a domestic orientation performed
fairly well. Retail stocks, in particular, benefited from a lack of
global exposure and a very good U.S. consumer climate. Wal-Mart Stores
- - a top 20 position at the end of the period - enjoyed a nice
performance stretch.
Q. FINANCE STOCKS ACCOUNTED FOR JUST OVER 27% OF THE EQUITY PORTFOLIO
AT THE END OF THE PERIOD. HOW DID THESE STOCKS PERFORM?
A. As they have for several years now, finance stocks continued to
generate impressive returns. A sturdy U.S. economy, low interest rates
and a flurry of merger and acquisition activity no doubt helped. I do,
however, have my concerns about the finance sector. First, with so
many large mergers taking place, the involved companies will need to
successfully integrate their businesses. Second, I'm concerned that
excess capital throughout the sector may dampen overall returns and
profitability. Companies with considerable cash exposure on their
balance sheets typically experience lower returns on equity.
Q. CITICORP - THE FUND'S LARGEST SINGLE INVESTMENT AT THE END OF THE
PERIOD - ANNOUNCED PLANS TO MERGE WITH TRAVELERS EARLIER THIS YEAR.
HOW DID THIS AFFECT CITICORP STOCK?
A. Citicorp's performance throughout the period was influenced by both
positive initial reaction to the pending merger, and uncertainty
pertaining to the company's Asian business exposure. On balance,
Citicorp was a strong contributor to performance. I'm optimistic that
the merger will be a success if Citicorp's strong global franchise can
be integrated with Travelers' approach to expense discipline.
Q. THE FUND ALSO CONTINUED TO HAVE CONSIDERABLE EXPOSURE TO THE
HEALTH-CARE SECTOR, PARTICULARLY PHARMACEUTICAL STOCKS . . .
A. At the close of the period, the fund's health-care weighting stood
at just under 8% of net assets. Pharmaceutical-related investments,
including Bristol-Myers Squibb, American Home Products and Merck,
accounted for over 5% of that total. These companies continued to
generate good financial results, bolstered primarily by successful new
product introductions. The health care industry appears to be one of
the few remaining growth industries. As such, I expect health-care
stocks to remain a significant component of the fund.
Q. WHERE DID YOUR DISAPPOINTMENTS LIE?
A. I'd again go back to the point that if a company's business
prospects failed to meet expectations - regardless of valuations -
investors deserted the stock quickly. Unfortunately, the fund owned a
number of positions that appeared to be cheaply valued and which I
felt offered limited downside risk. What I didn't bargain for was that
the market would be so ruthless on news of disappointments. J.C.
Penney was a good example of this. In an effort to improve the
productivity of its department store base, the company stumbled
somewhat. As a result, the stock price went down sharply, severely
underperforming in an otherwise good retail stock environment. Other
disappointments came in the aerospace and defense sector, with
Lockheed-Martin being a detractor due to lackluster profit and cash
flow growth, as well as its failed merger with Northrop Grumman.
Q. HOW DID THE FUND'S ENERGY-RELATED INVESTMENTS PERFORM DURING THE
PERIOD?
A. Not well. Several of the fund's energy investments were depressed
by supply and demand imbalances for oil. This imbalance was
attributable to a confluence of factors, including weaker global oil
demand, increased overall production and a lack of storage capacity
within the industry. The fund's stake in Royal Dutch Petroleum was the
most notable disappointment within this sector.
Q. DESPITE UNCERTAIN MARKETS OVERSEAS, THE FUND HELD OVER 8% OF ITS
INVESTMENTS IN FOREIGN SECURITIES AT THE END OF THE PERIOD. WHAT ROLE
DO FOREIGN STOCKS PLAY IN THE PORTFOLIO?
A. I make investments in foreign stocks both opportunistically and
cautiously, particularly when the perceived upside more than
compensates for the risks inherent in international investing. Such
risks include share price fluctuation, inferior information flows and
foreign exchange risk. Typically, I make foreign investments in
well-understood global industries, such as energy, nondurables and
pharmaceuticals. British Petroleum and Netherlands-based Unilever were
two of the fund's larger foreign holdings at the end of the period.
Q. WHAT TYPES OF STRATEGIES DID YOU PURSUE WITH RESPECT TO THE BOND
PORTION OF THE PORTFOLIO?
A. The mortgage-backed bond sector was interesting. At the beginning
of 1998, the fund was underweighted in mortgage-backed issues relative
to the Lehman Brothers index because prices appeared high relative to
the level of risk involved. This underweighting proved timely, as
mortgage-backed securities dramatically underperformed both Treasuries
and corporates in early 1998. I then altered my strategy, buying
mortgage-backed bonds opportunistically, and have now overweighted
them relative to the index. The fund was rewarded for this shift in
February and March, when the mortgage-backed sector began to perform
better. In terms of corporate bonds, industries with little or no
business in Asia performed well, particularly cable television
companies and retailers.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I expect the market to remain volatile, particularly as investors
react to developments in Southeast Asia and Japan as those regions try
to stimulate their respective economies. In terms of the fund itself,
I'll look to upgrade the portfolio's investments opportunistically,
taking advantage of unjust price weakness in stocks of what I feel are
good companies.
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 OFFERS HER
THOUGHTS ON INDUSTRY
CONSOLIDATION:
"We've seen a record pace of merger
and acquisition activity through the
first seven months of 1998. These
deals have involved companies in
a variety of industries, including
telecommunications, finance,
automotive and pharmaceuticals.
"This consolidation wave has been
fueled by a number of factors. First,
companies are trying to strengthen
their strategic positions by building
their market shares to take
advantage of economies of scale.
Second, many companies have
exhausted all internal options for
improving their business, and
acquisitions can provide a new
opportunity to sustain earnings
momentum.
"Several of the fund's investments
were involved in consolidation
activity during the period, including
Citicorp, pharmaceutical company
American Home Products - which
plans to join forces with Monsanto
- - and BankAmerica, which will
merge with NationsBank. From
this point, it's a wait-and-see game
to see if these significant
integrations can be executed
smoothly."
FUND FACTS
GOAL: high income with
preservation of capital. The
fund also considers the
potential for growth of capital.
FUND NUMBER: 004
TRADING SYMBOL: FPURX
START DATE: April 16, 1947
SIZE: as of July 31, 1998,
more than $24.9 billion
MANAGER: Bettina Doulton,
since 1996; manager, Fidelity
Equity-Income II Fund, since
1996; Fidelity Value Fund,
1995-1996; Fidelity Select
Automotive Portfolio, 1993;
joined Fidelity in 1986
(checkmark)
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF JULY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
CITICORP 3.3 2.5
GENERAL ELECTRIC CO. 3.0 2.6
BRISTOL-MYERS SQUIBB CO. 1.9 1.8
CHASE MANHATTAN CORP. 1.8 1.1
AMERICAN HOME PRODUCTS CORP. 1.8 2.3
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE BOND ISSUERS AS OF JULY 31, 1998
(WITH MATURITIES GREATER THAN ONE YEAR) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE BOND ISSUERS
6 MONTHS AGO
FANNIE MAE 7.3 7.3
U.S. TREASURY 2.8 2.0
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 2.0 2.3
WORLDCOM, INC. (VARIOUS ISSUES) 0.5 0.4
RAYTHEON CO. (VARIOUS ISSUES) 0.4 0.3
</TABLE>
TOP FIVE MARKET SECTORS AS OF JULY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 23.8 21.9
UTILITIES 8.0 6.9
HEALTH 7.8 8.4
INDUSTRIAL MACHINERY & EQUIPMENT 7.0 5.6
NONDURABLES 6.4 7.9
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JULY 31, 1998* AS OF JANUARY 31, 1998 **
ROW: 1, COL: 1, VALUE: 2.9
ROW: 1, COL: 2, VALUE: 1.7
ROW: 1, COL: 3, VALUE: 34.4
ROW: 1, COL: 4, VALUE: 61.0
STOCKS 59.1%
BONDS 31.7%
CONVERTIBLE
SECURITIES 0.7%
SHORT-TERM
INVESTMENTS 8.5%
FOREIGN
INVESTMENTS 9.3%
STOCKS 62.0%
BONDS 34.4%
CONVERTIBLE
SECURITIES 0.7%
SHORT-TERM
INVESTMENTS 2.9%
FOREIGN
INVESTMENTS 8.2%
ROW: 1, COL: 1, VALUE: 8.5
ROW: 1, COL: 2, VALUE: 1.7
ROW: 1, COL: 3, VALUE: 31.7
ROW: 1, COL: 4, VALUE: 58.1
*
**
INVESTMENTS JULY 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 60.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.9%
AEROSPACE & DEFENSE - 2.2%
AlliedSignal, Inc. 4,385,700 $ 190,778
Lockheed Martin Corp. 1,290,400 128,637
Textron, Inc. 2,112,300 156,046
United Technologies Corp. 717,700 68,765
544,226
DEFENSE ELECTRONICS - 0.2%
Raytheon Co. Class B 879,900 48,669
SHIP BUILDING & REPAIR - 0.5%
General Dynamics Corp. 2,452,700 116,657
TOTAL AEROSPACE & DEFENSE 709,552
BASIC INDUSTRIES - 0.7%
CHEMICALS & PLASTICS - 0.4%
du Pont (E.I.) de Nemours & Co. 917,000 56,854
IMC Global, Inc. 308,500 7,886
Monsanto Co. 761,600 43,126
107,866
METALS & MINING - 0.2%
Aluminum Co. of America 791,500 54,861
PAPER & FOREST PRODUCTS - 0.1%
Kimberly-Clark Corp. 299,300 13,450
TOTAL BASIC INDUSTRIES 176,177
CONSTRUCTION & REAL ESTATE - 0.6%
BUILDING MATERIALS - 0.3%
American Standard Companies, Inc. (a) 183,800 8,753
Masco Corp. 2,269,800 64,831
73,584
REAL ESTATE INVESTMENT TRUSTS - 0.3%
Apartment Investment & Management Co. Class A 161,900 6,152
Boston Properties, Inc. 199,900 6,459
Equity Office Properties Trust 389,700 9,694
Equity Residential Properties Trust (SBI) 353,500 14,847
Mack-Cali Realty Corp. 171,400 5,324
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Patriot American Hospitality, Inc. 156,200 $ 2,968
Public Storage, Inc. 238,800 6,328
Simon Debartolo Group, Inc. 256,100 7,971
Starwood Hotels & Resorts Trust 550,000 22,584
82,327
TOTAL CONSTRUCTION & REAL ESTATE 155,911
DURABLES - 1.0%
AUTOS, TIRES, & ACCESSORIES - 0.7%
Ford Motor Co. 3,262,800 185,776
CONSUMER ELECTRONICS - 0.3%
Black & Decker Corp. 1,329,860 75,636
TOTAL DURABLES 261,412
ENERGY - 5.7%
OIL & GAS - 5.7%
Atlantic Richfield Co. 960,800 65,094
British Petroleum PLC:
Ord. 9,530,247 126,503
ADR 2,889,026 231,844
Chevron Corp. 1,355,700 112,015
Exxon Corp. 2,900,700 203,412
Harcor Energy, Inc. warrants 7/24/00 (a) 165,000 -
Mobil Corp. 881,700 61,499
Royal Dutch Petroleum Co. Ord. 592,800 30,300
Royal Dutch Petroleum Co. 2,961,400 151,031
Texaco, Inc. 3,851,900 234,244
Total SA:
Class B 290,700 33,235
sponsored ADR 353,200 20,199
USX-Marathon Group 4,308,500 147,028
1,416,404
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - 16.8%
BANKS - 7.8%
Banc One Corp. 2,622,530 $ 135,552
Bank of New York Co., Inc. 1,068,400 68,377
BankAmerica Corp. 2,209,100 198,267
Chase Manhattan Corp. 5,980,200 452,253
Citicorp 4,779,800 812,550
NationsBank Corp. 980,700 78,211
U.S. Bancorp 4,166,400 191,654
1,936,864
CREDIT & OTHER FINANCE - 3.0%
American Express Co. 4,072,227 449,472
Associates First Capital Corp. Class A 1,797,805 139,667
Household International, Inc. 3,116,501 155,046
Olympic Financial Ltd. warrants 3/15/07 (a) 361 4
744,189
FEDERAL SPONSORED CREDIT - 3.0%
Freddie Mac 8,287,500 391,584
Fannie Mae 5,535,450 343,198
734,782
INSURANCE - 2.2%
American International Group, Inc. 941,400 141,975
Allstate Corp. 2,056,444 87,270
Chubb Corp. (The) 917,400 67,314
Hartford Financial Services Group, Inc. 3,239,800 168,672
MGIC Investment Corp. 553,600 29,687
St. Paul Companies, Inc. (The) 1,149,000 41,579
536,497
SAVINGS & LOANS - 0.3%
Washington Mutual, Inc. 2,036,840 81,346
SECURITIES INDUSTRY - 0.5%
ECM Corp. LP (h) 6,318 556
Morgan Stanley, Dean Witter, Discover and Co. 570,500 49,669
Travelers Group, Inc. (The) 1,301,299 87,187
137,412
TOTAL FINANCE 4,171,090
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - 7.5%
DRUGS & PHARMACEUTICALS - 6.4%
American Home Products Corp. 8,752,300 $ 450,743
Bristol-Myers Squibb Co. 4,084,900 465,423
Lilly (Eli) & Co. 1,708,000 114,863
Merck & Co., Inc. 3,063,100 377,719
Schering-Plough Corp. 1,195,850 115,698
SmithKline Beecham PLC ADR 152,300 8,719
Warner-Lambert Co. 800,000 60,450
1,593,615
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
Baxter International, Inc. 841,700 50,292
Becton, Dickinson & Co. 20,800 1,719
Johnson & Johnson 2,390,200 184,643
236,654
MEDICAL FACILITIES MANAGEMENT - 0.1%
Columbia/HCA Healthcare Corp. 953,700 27,180
TOTAL HEALTH 1,857,449
HOLDING COMPANIES - 0.0%
CINergy Corp. 343,900 10,854
INDUSTRIAL MACHINERY & EQUIPMENT - 6.1%
ELECTRICAL EQUIPMENT - 4.6%
Alcatel Alsthom Compagnie Generale d'Electricite
SA sponsored ADR 1,188,000 46,555
Ampex Corp. Class A (a) 110,662 187
Emerson Electric Co. 1,532,400 91,082
General Electric Co. 8,300,900 741,374
Honeywell, Inc. 1,554,000 130,245
Siemens A.G. 1,645,000 122,205
1,131,648
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Cooper Industries, Inc. 2,253,704 118,179
Tyco International Ltd. 4,101,232 254,020
372,199
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 0.0%
Waste Management, Inc. 103,675 $ 5,715
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,509,562
MEDIA & LEISURE - 1.7%
BROADCASTING - 0.7%
Benedek Communications Corp. warrants 7/1/00 (a) 51,900 156
CS Wireless Systems, Inc. (a)(h) 911 -
Loral Orion Networks Systems, Inc.:
warrants 1/15/07 (a) 8,090 127
warrants 1/15/17 (a) 41,555 519
Orbital Imaging Corp. warrants 3/1/05 (a)(h) 1,120 56
Teletrac Holdings, Inc. warrants 8/1/07 (a) 2,910 29
Time Warner, Inc. 1,808,237 162,854
UIH Australia/Pacific, Inc. warrants 5/15/06 (a) 26,110 131
163,872
ENTERTAINMENT - 0.1%
Cedar Fair LP (depositary unit) 300,000 8,156
Viacom, Inc. Class B (non-vtg.) (a) 333,200 22,824
30,980
LEISURE DURABLES & TOYS - 0.0%
IHF Capital, Inc. (h):
Series H warrants 11/15/04 (a) 10,225 256
Series I warrants 11/14/99 (a) 5,050 126
382
LODGING & GAMING - 0.0%
Motels of America, Inc. (a) 3,000 75
PUBLISHING - 0.2%
McGraw-Hill Companies, Inc. 643,000 52,686
RESTAURANTS - 0.7%
McDonald's Corp. 2,472,800 165,214
TOTAL MEDIA & LEISURE 413,209
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - 5.9%
BEVERAGES - 0.1%
Anheuser-Busch Companies, Inc. 454,300 $ 23,482
Brown-Forman Corp. Class B 88,400 5,359
28,841
FOODS - 1.0%
Dean Foods Co. 573,500 31,435
Flowers Industries, Inc. 2,296,600 42,344
Heinz (H.J.) Co. 1,727,500 95,228
Sara Lee Corp. 1,707,900 85,608
254,615
HOUSEHOLD PRODUCTS - 3.2%
Alliance Gaming Corp. (a) 10,651 37
Avon Products, Inc. 1,366,900 118,237
Gillette Co. 149,700 7,841
Procter & Gamble Co. 1,184,700 94,036
Renaissance Cosmetics, Inc. warrants 8/31/06 (a)(h) 10,000 -
Unilever:
PLC Ord. 10,615,600 104,339
NV Ord. 600,000 42,977
NV ADR 6,120,600 425,382
792,849
TOBACCO - 1.6%
Philip Morris Companies, Inc. 8,877,040 388,925
TOTAL NONDURABLES 1,465,230
RETAIL & WHOLESALE - 1.8%
APPAREL STORES - 0.0%
Lamonts Apparel, Inc.:
Class A (a) 152,242 86
Class A warrants 1/31/08 (a) 94,251 24
Class B warrants 1/31/08 (a) 30,235 8
Mothers Work, Inc. (a)(d) 2,416 17
135
DRUG STORES - 0.2%
Rite Aid Corp. 1,325,900 52,373
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - 1.6%
Dayton Hudson Corp. 300,000 $ 14,344
Nordstrom, Inc. 1,542,900 48,167
Penney (J.C.) Co., Inc. 1,813,600 106,436
Wal-Mart Stores, Inc. 3,725,700 235,185
404,132
TOTAL RETAIL & WHOLESALE 456,640
SERVICES - 0.7%
LEASING & RENTAL - 0.0%
Ryder Systems, Inc. 131,200 3,805
PRINTING - 0.5%
Donnelley (R.R.) & Sons Co. 3,130,900 133,063
SERVICES - 0.2%
Service Corp. International 495,100 18,752
ServiceMaster Co. 930,500 31,637
50,389
TOTAL SERVICES 187,257
TECHNOLOGY - 4.6%
COMPUTER SERVICES & SOFTWARE - 0.0%
Concentric Network Corp. warrants 12/15/07 (a)(h) 3,530 459
COMPUTERS & OFFICE EQUIPMENT - 3.5%
International Business Machines Corp. 2,515,700 333,330
Pitney Bowes, Inc. 6,730,180 339,874
Xerox Corp. 1,963,500 207,272
880,476
ELECTRONICS - 0.8%
Motorola, Inc. 2,262,600 118,221
Texas Instruments, Inc. 1,421,300 84,301
202,522
PHOTOGRAPHIC EQUIPMENT - 0.3%
Eastman Kodak Co. 835,800 70,312
TOTAL TECHNOLOGY 1,153,769
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - 0.3%
RAILROADS - 0.3%
Burlington Northern Santa Fe Corp. 628,000 $ 64,645
UTILITIES - 4.4%
CELLULAR - 0.0%
McCaw International Ltd. warrants 4/15/07 (a)(h) 40,960 205
Microcell Telecommunications, Inc. warrants 6/1/06 (a)(h) 110,880
1,964
Powertel, Inc. warrants 2/1/06 (a) 25,856 236
2,405
ELECTRIC UTILITY - 0.8%
CMS Energy Corp. 1,616,800 68,209
Duke Energy Corp. 1,451,096 82,894
Entergy Corp. 200,000 5,475
PG&E Corp. 988,100 30,075
186,653
GAS - 0.1%
Enron Corp. 614,700 32,541
TELEPHONE SERVICES - 3.5%
AT&T Corp. 5,886,900 356,893
ALLTEL Corp. 914,000 38,331
Ameritech Corp. 1,772,800 87,200
BellSouth Corp. 904,200 61,768
GTE Corp. 2,727,800 148,324
Hyperion Telecommunications, Inc. Class A (a) 44,990 607
KMC Telecom Holdings, Inc. warrants 2/15/08 (a)(h) 5,620 28
Optel Communications warrants 12/29/04 (a)(d) 1,706,343 506
SBC Communications, Inc. 2,389,500 97,671
Sprint Corp. 371,600 26,012
Tele Danmark AS Class B 413,000 42,367
WorldCom, Inc. (a) 350,000 18,506
878,213
TOTAL UTILITIES 1,099,812
TOTAL COMMON STOCKS
(Cost $10,638,705) 15,108,973
PREFERRED STOCKS - 1.6%
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - 0.3%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Ampex Corp. 8% (a) 369 $ 576
Loral Space & Communications Ltd., Series C, $3.00 (h) 300,000
22,275
22,851
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Host Marriott Financial Trust $3.375 QUIPS (h) 534,900 26,879
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 63,000 31,973
TOTAL CONVERTIBLE PREFERRED STOCKS 81,703
NONCONVERTIBLE PREFERRED STOCKS - 1.3%
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.1%
Fresenius Medical Care Capital Trust II 7 7/8% 12,047 12,046
INSURANCE - 0.0%
American Annuity Group Capital Trust II 8 3/4% 6,030 6,157
TOTAL FINANCE 18,203
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Ampex Corp. 8% (a) 807 1,259
Echostar Communications Corp. 12 1/8%, pay-in-kind 10,470 11,831
13,090
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.3%
Adelphia Communications Corp. $13 38,030 $ 4,411
CSC Holdings, Inc.:
11 1/8% pay-in-kind 261,880 30,607
Series H, 11 3/4% pay-in-kind 135,635 16,140
Citadel Broadcasting Co., Series B, 13 1/4% pay-in-kind 53,166 6,380
Granite Broadcasting Corp. 12 3/4%, pay-in-kind (a) 6,203 7,258
64,796
PUBLISHING - 0.1%
PRIMEDIA, Inc.:
Series D, $10 161,300 16,493
8 5/8% (a) 74,220 7,274
23,767
TOTAL MEDIA & LEISURE 88,563
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Renaissance Cosmetics, Inc. pay-in-kind 14% (a) 12,774 19
TECHNOLOGY - 0.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc. 13 1/2%, pay-in-kind (a) 26,898
31,740
COMPUTER SERVICES & SOFTWARE - 0.0%
Concentric Network Corp. 13 1/2% (h) 4,044 4,196
TOTAL TECHNOLOGY 35,936
UTILITIES - 0.6%
CELLULAR - 0.2%
Nextel Communications, Inc.:
Series D 13% pay-in-kind 22,935 25,573
11 1/8%, 2/15/10 pay-in-kind (a) 29,002 30,887
56,460
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - 0.0%
Entergy Gulf States, Inc., Series A adj. rate 34,800 $ 3,489
TELEPHONE SERVICES - 0.4%
e.spire Communications, Inc.:
14 3/4% pay-in-kind 2,332 2,822
$127.50 pay-in-kind 8,034 8,857
Hyperion Telecommunications, Inc. 12 7/8%,
pay-in-kind (Reg.) 11,427 12,227
ICG Holdings, Inc.:
14 1/4%, pay-in-kind (a) 18,419 21,458
14%, pay-in-kind 4,019 4,722
IXC Communications, Inc. 12 1/2% pay-in-kind 5,083 5,769
NEXTLINK Communications, Inc. 14%, pay-in-kind 541,743 31,692
WinStar Communications, Inc. 14 1/4% 5,509 6,390
93,937
TOTAL UTILITIES 153,886
TOTAL NONCONVERTIBLE PREFERRED STOCKS 309,697
TOTAL PREFERRED STOCKS
(Cost $353,019) 391,400
CORPORATE BONDS - 20.5%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) (E) AMOUNT (000S)
CONVERTIBLE BONDS - 0.4%
MEDIA & LEISURE - 0.2%
PUBLISHING - 0.2%
News America Holdings, Inc. liquid yield
option notes 0%, 3/11/13 Baa $ 64 38,393
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.2%
DRUG STORES - 0.1%
Rite Aid Corp. 5 1/4%, 9/15/02 - $ 21 $ 26,419
GENERAL MERCHANDISE STORES - 0.1%
Federated Department Stores, Inc. 5%, 10/1/03 Baa 17 25,969
TOTAL RETAIL & WHOLESALE 52,388
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
GST Telecommunications, Inc.
0%, 12/15/05 (f)(h) - 40 43
TOTAL CONVERTIBLE BONDS 90,824
NONCONVERTIBLE BONDS - 20.1%
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.3%
Lockheed Martin Corp. 7.20%, 5/1/36 A3 74,700 81,226
DEFENSE ELECTRONICS - 0.5%
Raytheon Co.:
6.30%, 8/15/00 Baa 49,000 49,264
5.95%, 3/15/01 Baa 24,250 24,149
6.45%, 8/15/04 Baa 33,950 34,220
107,633
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, Inc.
9 1/4%, 12/1/06 B1 2,430 2,594
TOTAL AEROSPACE & DEFENSE 191,453
BASIC INDUSTRIES - 0.9%
CHEMICALS & PLASTICS - 0.2%
Atlantis Group, Inc. 11%, 2/15/03 B2 5,260 5,405
Geo Specialty Chemicals 10 1/8%, 8/1/08 (h) B3 2,070 2,111
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Huntsman Corp. 9 1/2%, 7/1/07 (h) B2 $ 19,360 $ 20,038
Koppers Industry, Inc. 9 7/8%, 12/1/07 B2 4,345 4,475
Methanex Corp. yankee 8 7/8%, 11/15/01 A2 25,455 26,429
58,458
IRON & STEEL - 0.1%
GS Technologies Operating, Inc.
12 1/4%, 10/1/05 B2 3,620 3,846
Republic Engineered Steels, Inc.
9 7/8%, 12/15/01 Caa 11,630 11,804
WHX Corp. 10 1/2%, 4/15/05 B3 8,510 8,553
24,203
METALS & MINING - 0.0%
Doe Run Resources Corp. (h):
12.0088%, 3/15/03 (j) B2 2,800 2,786
11 1/4%, 3/15/05 B2 2,210 2,232
5,018
PACKAGING & CONTAINERS - 0.4%
Norampac, Inc. 9.5% 2/01/08 B2 8,160 8,446
Owens Illinois, Inc.:
7.15%, 5/15/05 Ba1 28,200 28,196
7.35%, 5/15/08 Ba1 26,500 26,496
7.80%, 5/15/18 Ba1 32,500 32,988
96,126
PAPER & FOREST PRODUCTS - 0.2%
APP Finance II Mauritius Ltd. 12%, 3/15/04 Caa 13,365 9,222
Doman Industries Ltd. yankee 8 3/4%, 3/15/04 B1 3,680 3,395
Indah Kiat Finance Mauritius Ltd. 10%, 7/1/07 Caa 1,670 1,127
Mail-Well Corp. 10 1/2%, 2/15/04 B+ 1,160 1,241
Millar Western Forest 9 7/8%, 5/15/08 (h) B3 5,850 5,704
Omega Cabinets Ltd. 10 1/2%, 6/15/07 B3 2,140 2,175
Pindo Deli Finance Mauritius Ltd.
10 1/4%, 10/1/02 Caa 2,740 1,836
Stone Container Corp.:
11 7/8%, 12/1/98 B2 4,340 4,438
11 7/8%, 8/1/16 B2 810 915
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Tembec Finance Corp. yankee 9 7/8%, 9/30/05 Ba3 $ 3,545 $ 3,753
Tjiwi Kimia Mauritius Ltd. 10%, 8/1/04 Ba3 4,570 3,108
36,914
TOTAL BASIC INDUSTRIES 220,719
CONSTRUCTION & REAL ESTATE - 0.2%
BUILDING MATERIALS - 0.1%
American Standard, Inc. 7 3/8%, 2/1/08 Ba3 11,885 11,811
Insiloc Corp. 10 1/4%, 8/15/07 B3 2,990 3,050
Schuff Steel Co. 10 1/2%, 6/1/08 (h) B3 2,040 2,020
16,881
REAL ESTATE - 0.0%
LNR Property Corp. 9 3/8%, 3/15/08 (h) B1 8,665 8,665
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Centerpoint Properties Trust 6 3/4%, 4/1/05 Baa 8,720 8,718
Equity Office Properties Trust:
6 5/8%, 2/15/05 Baa 10,300 10,223
6 3/4%, 2/15/08 Baa 15,970 15,747
34,688
TOTAL CONSTRUCTION & REAL ESTATE 60,234
DURABLES - 0.6%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Advance Holding Corp. 0%, 4/15/09 (f)(h) Caa 1,940 1,174
Advance Stores Co., Inc.
10 1/4%, 4/15/08 (h) Caa 5,640 5,837
Blue Bird Body Co. 10 3/4%, 11/15/06 B2 1,550 1,686
Breed Technologies, Inc.
9 1/4%, 4/15/08 (h) B3 15,100 14,987
Morris Material Handling, Inc.
9 1/2%, 4/1/08 (h) B2 8,560 7,790
31,474
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
CONSUMER DURABLES - 0.1%
Corning Consumer Products Co.
9 5/8%, 5/1/08 (h) B3 $ 8,820 $ 8,511
HOME FURNISHINGS - 0.1%
Guitar Center Management Co., Inc.
11%, 7/1/06 B1 4,367 4,804
Interlake Corp. 12 1/8%, 3/1/02 B3 10,815 11,112
Sealy Mattress Co.:
0% 12/15/07 (f) B3 2,730 1,802
9 7/8%, 12/15/07 B3 1,920 1,975
19,693
TEXTILES & APPAREL - 0.3%
Cluett American Corp. 10 1/8%, 5/15/08 (h) B3 4,450 4,495
Levi Strauss & Co. (h):
6.80%, 11/1/03 Baa 30,210 30,785
7%, 11/1/06 Baa 12,100 12,130
Polymer Group, Inc. 9%, 7/1/07 B2 12,000 12,300
Synthetic Industries, Inc. 9 1/4%, 2/15/07 B2 5,820 5,980
WestPoint Stevens, Inc. 7 7/8%, 6/15/08 (h) Ba3 11,350 11,620
Worldtex, Inc. 9 5/8%, 12/15/07 B1 6,900 6,693
84,003
TOTAL DURABLES 143,681
ENERGY - 0.6%
COAL - 0.1%
Level 3 Communications, Inc. 9 1/8%, 5/01/08 B3 29,910 29,536
P&L Coal Holdings Corp.
9 5/8%, 5/15/08 (h) B2 9,800 10,180
39,716
ENERGY SERVICES - 0.1%
Bayard Drilling Technologies, Inc.
11%, 6/30/05 (h) B2 1,820 1,820
DI Industries, Inc. 8 7/8%, 7/1/07 B1 1,905 1,791
Grey Wolf, Inc. 8 7/8%, 7/1/07 (h) B1 7,680 7,219
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Ocean Rig Norway AS 10 1/4%, 6/1/08 (h) B3 $ 5,920 $ 5,550
Pool Energy Services Co. 8 5/8%, 4/01/08 B2 8,130 7,784
24,164
OIL & GAS - 0.4%
Canadian Forest Oil Ltd. 8 3/4%, 9/15/07 B2 5,000 4,838
Chesapeake Energy Corp. 9 5/8%, 5/1/05 (h) B1 6,485 6,258
Gothic Production Corp. 11 1/8%, 5/01/05 B3 5,570 5,403
Great Lakes Carbon Corp.
10 1/4%, 5/15/08 (h) B3 6,725 6,792
Hurricane Hydrocarbons Ltd.
11 3/4%, 11/1/04 (h) B3 3,365 3,029
Occidental Petroleum Corp. 8 1/2%, 11/9/01 Baa 5,900 6,326
Ocean Energy, Inc. 8 3/8%, 7/1/08 (h) B1 6,720 6,686
Petroleum Geo-Services yankee
7 1/8%, 3/30/28 Baa 27,850 27,870
Plains Resources, Inc.:
Series B, 10 1/4%, 3/15/06 B2 5,530 5,779
Series D, 10 1/4%, 3/15/06 B2 1,905 1,991
Seven Seas Petroleum, Inc.
12 1/2%, 5/15/05 (h) Caa 2,970 2,992
Southwest Royalties, Inc. 10 1/2%, 10/15/04 Caa 640 522
USX-Marathon Group 6.85%, 3/1/08 Baa 15,200 15,146
93,632
TOTAL ENERGY 157,512
FINANCE - 6.9%
ASSET BACKED SECURITIES - 1.3%
Airplanes Pass Through Trust Class D
10 7/8%, 3/15/19 Ba2 11,560 12,629
Arcadia Automobile Receivables Trust
6 1/2%, 6/17/02 Aaa 15,835 15,949
Chase Manhattan Grantor Trust:
6.61%, 9/15/02 Aaa 18,480 18,661
6.76%, 9/15/02 A3 4,840 4,847
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
ASSET BACKED SECURITIES - CONTINUED
Chevy Chase Auto Receivables Trust:
5.90%, 7/15/03 Aaa $ 19,648 $ 19,648
5.91%, 12/15/04 Aaa 12,656 12,639
6.60%, 12/15/02 Aaa 7,665 7,720
Contimortgage Home Equity Loan Trust
6.26%, 7/15/12 Aaa 34,000 34,011
Capital Equipment Receivables Trust
6.11%, 7/15/99 Aaa 56,328 56,440
Ford Credit Grantor Trust 5.90%, 10/15/00 Aaa 4,466 4,471
Ford Credit Auto Owner Trust:
6.40%, 5/15/02 A1 19,240 19,397
6.20%, 12/15/02 Baa 14,100 14,078
6.40%, 12/15/02 Baa 8,660 8,587
General Motors Acceptance Corp. Grantor Trust
1995-A, 7.15%, 3/15/00 Aaa 1,678 1,678
Key Plastics, Inc. 10 1/4%, 3/15/07 A2 23,032 23,105
Key Auto Finance Trust Class C
6.65%, 10/15/03 Baa 6,754 6,773
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 A3 359 358
MBNA Master Credit Card Trust II Class A
6.55%, 1/15/07 Aaa 34,000 34,924
Premier Auto Trust 4.95%, 2/2/99 A2 242 242
Union Federal Savings Bank Grantor Trust
8.20%, 1/10/01 Baa 385 386
Sears Credit Account Master Trust II
6 1/2%, 10/15/03 Aaa 34,060 34,262
330,805
BANKS - 2.5%
ABN Amro Bank NV 6 5/8%, 10/31/01 Aa3 28,500 28,965
Bank of New York Institutional Capital Trust A
7.78%, 10/1/26 (h) A1 50,000 52,222
Banc One Corp. 6.70%, 3/24/00 Aa3 23,130 23,384
Banco Latinoamericano Exportaciones SA euro
6.90%, 12/4/99 (h) Baa 10,550 10,679
Banponce Financial Corp.:
6.66%, 3/26/01 A3 10,000 10,124
6 3/4%, 8/9/01 A3 18,240 18,527
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Barclays Bank PLC yankee:
5 7/8%, 7/15/00 A1 $ 37,000 $ 36,942
5.95%, 7/15/01 A1 43,800 43,739
Chase Manhattan Corp. 5 1/2%, 2/15/01 Aa3 8,700 8,594
Capital One Bank:
6.74%, 5/31/99 Baa 14,195 14,286
7.20%, 7/19/99 Baa 22,000 22,194
6.42%, 11/12/99 Baa 25,000 25,051
6 3/8%, 2/15/03 Baa 20,000 19,869
Capital One Financial Corp. 7 1/8%, 8/01/08 Ba1 19,050 18,916
First Chicago Institutional Capital B
7 3/4%, 12/1/26 (h) A1 35,000 37,438
First Maryland Bancorp 10 3/8%, 8/1/99 A3 8,345 8,696
First USA Bank:
6 1/2%, 12/23/99 Aa2 17,000 17,137
7.65%, 8/1/03 Aa3 12,500 13,269
Firstar Corp. 7.15%, 9/1/00 A3 11,970 11,980
Kansallis-Osake-Pankki 10%, 5/1/02 A3 5,285 5,943
MBNA Corp.:
6 7/8%, 11/15/02 Baa 29,550 30,056
6.34%, 6/2/03 Baa 6,475 6,469
Merchants National Corp. 9 7/8%, 10/1/99 A2 6,850 7,144
Midlantic Corp.:
9 7/8%, 12/1/99 A3 18,227 19,087
9.2%, 8/1/01 A3 11,550 12,485
NB Capital Trust IV 8 1/4%, 4/15/27 Aa3 11,600 12,734
NationsBank NA 5.92%, 6/8/01 Aa2 23,500 23,497
Provident Bank 6 1/8%, 12/15/00 A3 27,500 27,509
Providian National Bank 6 1/4%, 5/7/01 Baa 28,000 27,998
Shawmut National Corp. 8 5/8%, 12/15/99 A3 7,440 7,690
Signet Banking Corp. 9 5/8%, 6/1/99 A2 7,500 7,711
Summit Bancorp. 8 5/8%, 12/10/02 BBB 6,750 7,346
Union Planters National Bank 6.81%, 8/20/01 A3 13,000 13,256
630,937
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 2.7%
AT&T Capital Corp.:
6.41%, 8/13/99 Baa $ 6,500 $ 6,520
6 1/4%, 5/15/01 Baa 40,260 40,329
Ahmanson Capital Trust I 8.36%, 12/1/26 (h) Baa 15,500 16,742
Anthony Crane Rentals L.P.
10 3/8%, 8/01/08 (h) B3 4,020 4,000
Arcadia Financial Ltd. 11 1/2%, 3/15/07 B2 2,735 2,557
Associates Corp. of North America:
6 1/2%, 9/9/98 Aa3 50,000 50,034
6%, 4/15/03 Aa3 19,550 19,441
6% 7/15/05 Aa3 45,500 45,050
BankBoston Capital Trust II 7 3/4%, 12/15/26 A2 37,000 38,201
CEX Holdings, Inc. 9 5/8%, 6/1/08 (h) B2 6,740 6,909
Chase Capital I 7.67%, 12/1/26 Aa3 45,040 46,902
Chrysler Financial Corp. 6 3/8%, 1/28/00 A2 29,710 29,898
Delta Financial Corp. 9 1/2%, 8/1/04 B1 3,200 3,008
ERP Operating LP 6.55%, 11/15/01 A3 7,000 7,041
Finova Capital Corp. 6.27%, 9/29/00 Baa 2,080 2,085
First Security Capital I 8.41%, 12/15/26 A3 22,920 25,435
First Union Institutional Capital I 8.04%, 12/1/26 BBB 15,000
16,089
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 3,520 3,595
Fleet Mortgage Group, Inc. 6 1/2%, 6/15/00 A2 3,900 3,941
Ford Motor Credit Co. euro 8 5/8%, 1/24/00 A1 7,250 7,508
GST Network Funding, Inc. 0%, 5/1/08 (f)(h) - 17,380 10,776
Gs Escrow Corp. 7.125% 8/01/05 (h) Ba1 23,300 23,207
General Electric Capital Corp.
6.94%, 4/13/09 (g) Aaa 25,630 25,806
General Motors Acceptance Corp.
6.65%, 5/24/00 A2 5,950 6,021
Household Finance Corp. 6%, 5/8/00 A2 25,000 25,082
Imperial Credit Capital Trust I 10 1/4%, 6/14/02 B2 3,600 3,672
Imperial Credit Industries, Inc. 9 7/8%, 1/15/07 B2 9,577 9,673
JPM Capital Trust II 7.95%, 2/1/27 Aa3 24,420 26,156
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
KeyCorp Institutional Capital Series A
7.826%, 12/1/26 A1 $ 19,000 $ 19,901
La Petite Academy, Inc. 10%, 5/15/08 (h) B3 590 603
MCN Investment Corp. 5.84%, 2/1/99 Baa 11,820 11,806
Money Store, Inc. 7.30%, 12/1/02 A2 13,900 14,472
Nordstrom Credit, Inc. 7 1/4%, 4/30/02 A2 21,150 22,086
Ocwen Capital Trust 10 7/8%, 8/1/27 B2 3,780 4,092
Olympic Financial Ltd. 11 1/2%, 3/15/07 B2 4,420 4,089
PNC Institutional Capital Trust
8.315%, 5/15/27 (h) A2 19,000 20,930
Time Warner Telecommunications LLC
9 3/4%, 7/15/08 B2 3,920 4,013
Wells Fargo Capital C Capital Securities
7.73%, 12/1/26 (h) A1 50,000 53,231
660,901
INSURANCE - 0.2%
SunAmerica, Inc.:
6.20%, 10/31/99 Baa 21,500 21,541
6.20%, 10/31/99 Baa 27,000 27,058
48,599
SAVINGS & LOANS - 0.2%
Great Western Financial Corp. 6 3/8%, 7/1/00 A3 1,330 1,338
Home Savings of America 6%, 11/1/00 A3 10,500 10,464
Long Island Savings Bank FSB:
6.20%, 4/2/01 Baa 14,750 14,778
7%, 6/13/02 Baa 14,850 15,270
41,850
SECURITIES INDUSTRY - 0.0%
Amvescap PLC 6 3/8%, 5/15/03 (h) A3 13,050 13,066
ECM Corp. extendible 14%, 6/1/02 (h) - 334 334
13,400
TOTAL FINANCE 1,726,492
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 0.3%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
CONMED Corp. 9%, 3/15/08 B3 $ 640 $ 641
Graham-Field Health Products, Inc.
9 3/4%, 8/15/07 B3 2,030 1,827
Wright Medical Technology, Inc.
11 3/4%, 7/1/00 (j) Caa 6,440 6,247
8,715
MEDICAL FACILITIES MANAGEMENT - 0.3%
Fountain View, Inc. 11 1/4%, 4/15/08 (h) Caa 3,040 3,063
Harborside Healthcare Corp. 0%, 8/1/08 (f)(h) B3 6,200 3,658
Integrated Health Services, Inc.:
9 1/2%, 9/15/07 B2 1,320 1,353
Series A, 9 1/4%, 1/15/08 B2 6,330 6,425
Oxford Health Plans, Inc. 11%, 5/15/05 (h) Caa 10,040 9,438
Tenet Healthcare Corp.:
8%, 1/15/05 Ba1 3,490 3,582
8 1/8%, 12/1/08 (h) Ba3 33,280 33,613
61,132
TOTAL HEALTH 69,847
INDUSTRIAL MACHINERY & EQUIPMENT - 0.7%
ELECTRICAL EQUIPMENT - 0.1%
Amphenol Corp. 9 7/8%, 5/15/07 B2 770 805
Echostar Communications Corp. secured discount
0%, 6/1/04 (f) B2 11,860 11,652
Motors & Gears, Inc., Series D,
10 3/4%, 11/15/06 B3 12,660 13,483
Telex Communications, Inc. 10 1/2%, 5/1/07 B2 5,330 4,584
30,524
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
Continental Global Group, Inc. 11%, 4/1/07 B2 3,380 3,515
Thermadyne Holdings Corp. 0%, 6/1/08 (f)(h) Caa 11,150 6,300
Thermadyne Manufacturing LLC
9 7/8%, 6/1/08 (h) B3 7,320 7,466
Tyco International Group SA yankee
6 1/8%, 6/15/01 Baa 63,500 63,576
80,857
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 0.2%
Envirosource, Inc. 9 3/4%, 6/15/03 B3 $ 4,970 $ 4,933
WMX Technologies, Inc.:
6 1/4%, 4/1/99 Baa 10,000 10,015
8 1/4%, 11/15/99 Baa 7,050 7,222
6 1/4%, 10/15/00 Baa 11,150 11,164
7.10%, 8/1/26 Baa 10,860 11,340
7.70%, 10/1/02 (g) Baa 10,000 10,441
55,115
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 166,496
MEDIA & LEISURE - 3.0%
BROADCASTING - 2.1%
ACME Television LLC/ ACME Financial Corp.
10 7/8%, 9/30/04 (g) B3 7,590 6,395
Ascent Entertainment Group, Inc.
0%, 12/15/04 (f) B3 18,370 11,803
Adelphia Communications Corp.:
9 1/2%, 2/15/04 B2 8,380 8,560
9 7/8%, 3/1/07 B2 4,460 4,906
Classic Communications, Inc. Unit
0%, 8/01/08 (f)(h) Caa 1,450 834
CBS Radio, Inc. Series B, 11 3/8%, pay-in-kind - 14,533 16,786
Chancellor Media Corp. 12 1/4%, pay-in-kind - 7,680 9,101
Clear Channel Communications, Inc.
7 1/4%, 10/15/27 Baa 15,420 15,606
Continental Cablevision, Inc.:
8.30%, 5/15/06 Baa 2,325 2,569
9%, 9/1/08 Baa 18,140 21,242
Cox Communications, Inc. 6.4%, 8/01/08 Baa 17,400 17,267
Diamond Cable Communications PLC yankee (f):
0%, 12/15/05 Caa 2,440 2,062
0%, 2/15/07 Caa 3,070 2,364
Falcon Holding Group LP/Falcon Funding
0%, 4/15/10 (f)(h) B2 250 171
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Golden Sky Systems, Inc.
12 3/8%, 8/01/06 (h) B3 $ 1,500 $ 1,538
Granite Broadcasting Corp.:
10 3/8%, 5/15/05 B3 1,780 1,887
9 3/8%, 12/1/05 B3 3,565 3,672
International Cabletel, Inc. 0%, 2/1/06 (f) B3 16,350 13,611
Iridium Operating LLC/ Iridium Capital Corp.:
10 7/8%, 7/15/05 B3 28,080 26,536
11 1/4%, 7/15/05 B3 7,960 7,662
NTL, Inc. 0%, 4/1/08 (f)(h) B3 44,160 29,698
Orion Network Systems, Inc.:
0%, 1/15/07 (f) B2 36,325 27,335
11 1/4%, 1/15/07 B2 7,830 8,642
Olympus Communications LP/Olympus Capital Corp
10 5/8%, 11/15/06 B1 10,275 11,380
Orbital Imaging Corp. 11 5/8%, 3/1/05 (h) - 1,120 1,134
Renaissance Media Group
0%, 4/15/08 (f)(h) B3 4,290 2,853
Rogers Cablesystems Ltd. yankee
10 1/8%, 9/1/12 Ba3 1,360 1,489
Satelites Mexicanos SA de CV (h):
9.44%, 6/30/04 (g) - 11,721 11,633
10 1/8%, 11/1/04 B3 11,450 10,992
TCI Communications, Inc.:
6 3/8%, 5/1/03 Baa 25,000 25,118
6.82%, 9/15/10 (j) Baa 26,000 26,020
8 3/4%, 8/1/15 Baa 44,243 52,603
8 1/4%, 1/15/03 Baa 23,130 24,885
Telewest PLC 0%, 10/1/07 (f) B1 6,950 5,847
Time Warner, Inc.:
7 3/4%, 6/15/05 Baa 22,000 23,575
8.18%, 8/15/07 Baa 12,000 13,316
6 7/8%, 6/15/18 Baa 19,230 19,099
6.85%, 1/15/26 Baa 19,000 19,454
UIH Australia/Pacific, Inc. (f):
Series B, 0%, 5/15/06 B2 30,870 19,602
0%, 5/15/06 B2 4,020 2,553
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
United International Holdings, Inc.
0%, 2/15/08 (f) B3 $ 16,550 $ 10,344
522,144
ENTERTAINMENT - 0.3%
AMC Entertainment, Inc. 9 1/2%, 3/15/09 B2 6,690 6,757
Cinemark USA, Inc.:
9 5/8%, 8/1/08 B2 4,860 5,054
8 1/2%, 8/1/08 B2 4,670 4,612
Loews Cineplex Entertainment Corp.
8 7/8%, 8/01/08 (h) B3 3,460 3,432
Premier Parks, Inc.:
0%, 4/1/08 B3 6,870 4,715
9 1/4%, 4/1/06 B3 560 585
Paramount Communications, Inc.
7 1/2%, 1/15/02 Ba2 3,325 3,413
Viacom, Inc.:
6 3/4%, 1/15/03 ba2 28,130 28,407
8%, 7/7/06 B1 20,750 21,476
78,451
LODGING & GAMING - 0.1%
Aladdin Gaming Holdings/Aladdin Capital
Corp. Unit 0%, 3/1/10 (f)(h) Caa 8,480 3,901
HMH Properties, Inc. 7 7/8%, 8/1/05 ba2 9,900 9,912
KSL Recreation Group, Inc. 10 1/4%, 5/1/07 B3 2,040 2,193
Sun International Hotels Ltd. /Sun International
North America, Inc. yankee 9%, 3/15/07 Ba3 3,390 3,576
19,582
PUBLISHING - 0.4%
Advanstar Communications, Inc.
9 1/4%, 5/1/08 (h) B2 1,930 1,978
Big Flower Press Holdings, Inc. 8 7/8%, 7/1/07 B2 14,440 14,837
News America, Inc.:
6 5/8%, 1/9/08 Baa 4,425 4,399
7 1/4%, 5/18/18 (h) Baa 66,400 67,091
88,305
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.1%
AFC Enterprises, Inc. 10 1/4%, 5/15/07 B3 $ 6,735 $ 7,181
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa 2,820 2,695
Foodmaker, Inc. 8 3/8%, 4/15/08 (h) B1 2,985 2,992
Host Marriott Travel Plazas, Inc.
9 1/2%, 5/15/05 Ba3 9,720 10,255
Nebraska Restaurant Co., Inc.
10 3/4%, 7/15/08 (h) B3 3,910 3,998
SC International Services, Inc., Series B,
9 1/4%, 9/1/07 B2 7,150 7,347
34,468
TOTAL MEDIA & LEISURE 742,950
NONDURABLES - 0.5%
FOODS - 0.1%
Aurora Foods, Inc. 8 3/4%, 7/1/08 (h) B1 910 937
ConAgra, Inc. 7 1/8%, 10/1/26 Baa 22,725 24,126
Dart and Kraft Finance NV 7 3/4%, 11/30/98 A2 7,239 7,270
Delaware Monte Corp. 12 1/4%, 4/15/07 Caa 540 605
32,938
HOUSEHOLD PRODUCTS - 0.1%
AKI Holding, Inc. 0%, 7/1/09 (f)(h) Caa 1,930 994
AKI, Inc. 10 1/2%, 7/1/08 (h) B2 1,110 1,121
Revlon Consumer Products Corp.
8 5/8%, 2/1/08 B3 16,800 17,178
19,293
TOBACCO - 0.3%
North Atlantic Trading, Inc. 11%, 6/15/04 B3 4,220 4,262
Philip Morris Companies, Inc.:
7%, 7/15/05 A2 50,500 51,776
6.95%, 6/1/06 A2 20,550 20,981
77,019
TOTAL NONDURABLES 129,250
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
PRECIOUS METALS - 0.1%
Centaur Mining & Exploration Ltd.
11%, 12/01/07 B1 $ 7,060 $ 7,095
Great Central Mines Ltd. 8 7/8%, 4/1/08 (h) Ba2 14,710 14,489
21,584
RETAIL & WHOLESALE - 1.0%
APPAREL STORES - 0.1%
Mothers Work, Inc. 12 5/8%, 8/1/05 B3 8,300 8,923
Specialty Retailers, Inc. 9%, 7/15/07 B2 13,480 14,019
22,942
GENERAL MERCHANDISE STORES - 0.3%
Dayton Hudson Corp. 6.80%, 10/1/01 A3 2,850 2,910
Federated Department Stores, Inc.:
8 1/2%, 6/15/03 Baa 60,285 65,470
6.79%, 7/15/27 Baa 11,500 11,824
80,204
GROCERY STORES - 0.3%
American Stores Co. 7 1/2%, 5/1/37 Baa 32,000 34,958
Kroger Co. 6%, 7/1/00 Baa 28,300 28,265
Pathmark Stores, Inc. 9 5/8%, 5/1/03 Caa 16,730 17,023
80,246
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
Amazon.com, Inc. 0%, 5/1/08 (f)(h) Caa 31,100 19,515
Big 5 Corp. 10 7/8%, 11/15/07 B2 5,055 5,257
HMV Media Group PLC
10 1/4%, 5/15/08 (h) B3 6,140 6,247
Home Interiors & Gifts, Inc.
10 1/8%, 6/1/08 (h) B2 9,390 9,766
J Crew Group, Inc. 0%, 10/15/08 (f) Caa 19,670 11,015
J Crew Operating Corp. 10 3/8%, 10/15/07 Caa 10,570 10,306
Metals USA, Inc. 8 5/8%, 2/15/08 (h) B2 4,980 4,831
U.S. Office Products Co.
9 3/4%, 6/15/08 (h) B3 3,540 3,575
70,512
TOTAL RETAIL & WHOLESALE 253,904
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
SERVICES - 0.3%
LEASING & RENTAL - 0.1%
AP Holdings, Inc. 0%, 3/15/08 (f)(h) Caa $ 3,800 $ 2,223
Apcoa, Inc. 9 1/4%, 3/15/08 (h) Caa 10,055 9,954
Hollywood Entertainment Corp.
10 5/8%, 8/15/04 B3 13,890 14,168
26,345
PRINTING - 0.0%
Sullivan Graphics, Inc. 12 3/4%, 8/1/05 Caa 10,940 11,542
SERVICES - 0.2%
Iron Mountain, Inc. 8 3/4%, 9/30/09 B3 3,660 3,770
Medaphis Corp. 9 1/2%, 2/15/05 B2 13,750 13,475
Signature Resorts, Inc.:
9 1/4%, 5/15/06 B2 7,430 7,319
9 3/4%, 10/1/07 B3 13,770 13,288
Sitel Corp. 9 1/4%, 3/15/06 (h) B2 1,010 992
Teligent, Inc. 0%, 3/1/08 (f)(h) Caa 13,980 7,934
46,778
TOTAL SERVICES 84,665
TECHNOLOGY - 0.7%
COMMUNICATIONS EQUIPMENT - 0.0%
Jordan Telecommunication Products, Inc.:
0%, 8/1/07 (f) B3 7,800 6,396
9 7/8%, 8/1/07 B3 2,170 2,224
8,620
COMPUTER SERVICES & SOFTWARE - 0.1%
Concentric Network Corp.
12 3/4%, 12/15/07 - 5,150 5,665
DecisionOne Holdings Corp.
0%, 8/1/8 unit (f) Caa 7,835 4,544
DecisionOne Corp. 9 3/4%, 8/1/07 B3 2,830 2,604
ICG Services, Inc. (f)(h):
0%, 2/15/08 - 33,120 19,955
0%, 5/1/08 - 3,990 2,334
35,102
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 0.4%
CHS Electronics, Inc. 9 7/8%, 4/15/05 B2 $ 2,780 $ 2,766
Comdisco, Inc.:
9.3%, 6/27/00 Baa 2,000 2,117
9 1/4%, 7/6/00 Baa 7,625 8,083
6.10%, 6/5/01 Baa 38,250 38,374
9 1/2%, 1/28/02 Baa 2,580 2,859
9.28%, 6/5/00 Baa 2,000 2,116
6 3/8%, 11/30/01 Baa 24,500 24,580
General Binding Corp. 9 3/8%, 6/1/08 (h) B2 10,190 10,445
91,340
ELECTRONIC INSTRUMENTS - 0.1%
Fisher Scientific International, Inc. 9%, 2/1/08 B3 4,030 4,060
Telecommunications Techniques Co.
9 3/4%, 5/15/08 (h) B3 10,450 10,711
14,771
ELECTRONICS - 0.1%
American Mobile Satellite Corp. Unit
12 1/4%, 4/1/08 (h) - 2,990 2,512
Communications Instruments, Inc. 10%, 9/15/04 B3 3,800 3,914
Hadco Corp. 9 1/2%, 6/15/08 (h) B2 8,740 8,565
14,991
TOTAL TECHNOLOGY 164,824
TRANSPORTATION - 0.5%
AIR TRANSPORTATION - 0.1%
Atlas Air, Inc.:
9 1/4%, 4/15/08 (h) B3 5,170 5,196
pass through trust 12 1/4%, 12/1/02 Ba3 4,810 5,339
Kitty Hawk, Inc. 9.95%, 11/15/04 B1 9,230 9,645
US Air, Inc. euro pass through trust
8 5/8%, 9/1/98 Ba2 3,000 3,008
23,188
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - CONTINUED
RAILROADS - 0.4%
Burlington Northern Santa Fe Corp.:
6.53%, 7/15/37 Baa $ 20,000 $ 20,409
6 7/8%, 12/1/27 Baa 12,000 12,120
7.29%, 6/1/36 Baa 22,430 24,673
Norfolk Southern Corp. 7.05%, 5/1/37 Baa 39,550 41,892
99,094
SHIPPING - 0.0%
Amer Reefer Co. Ltd. 10 1/4%, 3/1/08 (h) B1 1,470 1,459
Holt Group, Inc. 9 3/4%, 1/15/06 (h) Caa 7,245 7,100
8,559
TOTAL TRANSPORTATION 130,841
UTILITIES - 3.0%
CELLULAR - 0.9%
360 Degrees Communications Co.:
7 1/8%, 3/1/03 Baa 9,590 9,934
7 1/2%, 3/1/06 Baa 15,000 15,793
CellNet Data Systems, Inc. 0%, 10/1/07 (f) - 10,120 5,364
Iridium LLC/ Iridium Capital Corp. 13%, 7/15/05 B3 1,600 1,640
Millicom International Cellular SA
0%, 6/1/06 (f) B3 65,820 51,998
McCaw International Ltd. 0%, 4/15/07 (f) Caa 40,680 26,849
Nextel Communications, Inc. (f):
0%, 8/15/04 B2 16,220 16,220
0%, 10/31/07 B2 5,880 3,969
0%, 2/15/08 B2 35,070 23,234
Nextel International, Inc.
12 1/8%, 4/15/08 (h) Caa 26,960 15,839
PageMart Wireless, Inc. 0%, 2/1/08 (f) Caa 17,250 10,824
Pagemart Nationwide, Inc. 0%, 2/1/05 (f) B3 4,925 4,383
Rogers Communications, Inc. 8 7/8%, 7/15/07 B2 10,240 10,368
Telesystem International Wireless, Inc. (f):
0%, 6/30/07 Caa 7,960 5,254
0%, 11/1/07 Caa 21,260 12,756
214,425
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - 0.7%
Avon Energy Partners Holdings (h):
6.73%, 12/11/02 Baa $ 17,000 $ 17,253
7.05%, 12/11/07 Baa 18,000 18,364
6.46%, 3/4/08 Baa 25,500 25,511
British Columbia Hydro & Power Authority
yankee 12 1/2%, 1/15/14 Aa2 8,660 9,257
DR Investment yankee 7.10%, 5/15/02 (h) Baa 32,000 32,316
Israel Electric Corp. Ltd. (h):
7 3/4%, 12/15/27 A3 50,905 50,204
7 1/4%, 12/15/06 A3 9,250 9,248
Niagara Mohawk Power Corp.:
0%, 7/1/10 (f) Ba3 1,990 1,403
7 3/4%, 10/1/08 Ba3 4,265 4,393
Texas Utilities Co.:
6 3/8%, 1/1/08 Baa 19,610 19,315
9 1/2%, 8/1/99 Baa 2,000 2,066
189,330
GAS - 0.2%
Kern River Funding Corp.
6.72%, 9/30/01 (h) A3 20,000 20,400
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa 20,650 23,083
43,483
TELEPHONE SERVICES - 1.2%
Covad Communications Group Unit
0%, 3/15/08 (f)(h) - 12,430 6,868
Cable & Wireless Communications PLC
6 3/8%, 3/6/03 Baa 35,340 35,419
DTI Holdings, Inc. Unit 0%, 3/1/08 (f)(h) - 6,390 3,355
Dobson Wireline Co. 12 1/4%, 6/15/08 (h) - 9,910 9,761
e.spire Communications, Inc. 0%, 7/01/08 (f)(h) - 3,170 1,942
GCI, Inc. 9 3/4%, 8/1/07 B2 1,760 1,848
GST Telecommunications, Inc.
12 3/4%, 11/15/07 - 9,605 11,262
Hyperion Telecommunications, Inc., Series B,
0%, 4/15/03 (f) B3 29,530 22,738
IXC Communications, Inc. 9%, 4/15/08 (h) B3 13,770 14,183
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
KMC Telecom Holdings, Inc. 0%, 2/15/08 (f)(h) - $ 5,620 $ 3,274
McLeodUSA, Inc. 0%, 3/1/07 (f) B2 13,580 10,457
Netia Holdings B.V.:
0%, 11/1/07 (f) B3 4,060 2,619
10 1/4%, 11/1/07 B3 2,350 2,209
NEXTLINK Communications, Inc.
9 5/8%, 10/1/07 B3 1,830 1,889
Optel Communications Corp.
15%, 12/29/04 (d) - 8,000 7,494
Pathnet, Inc. Unit 12 1/2%, 4/15/08 (h) - 5,480 5,781
Rhythms NetConnections, Inc. Unit
0%, 5/15/08 (f)(h) - 10,450 4,494
Viatel, Inc. Unit:
11 1/4%, 4/15/08 (h) Caa 5,390 5,916
0%, 4/15/08 (f)(h) Caa 2,010 1,317
Winstar Communications, Inc.:
0%, 10/15/05 (f) Caa 5,230 4,367
14 1/2%, 10/15/05 Caa 9,570 13,159
11%, 3/15/08 (h) - 9,030 8,737
WorldCom, Inc.:
9 3/8%, 1/15/04 Baa 6,127 6,423
8 7/8%, 1/15/06 Baa 28,746 31,100
7 3/4%, 4/1/07 Baa 71,200 76,521
293,133
TOTAL UTILITIES 740,371
TOTAL NONCONVERTIBLE BONDS 5,004,823
TOTAL CORPORATE BONDS
(Cost $5,027,662) 5,095,647
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 3.9%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
U.S. TREASURY OBLIGATIONS - 2.8%
U.S. Treasury Bonds:
6 7/8%, 8/15/25 Aaa $ 61,500 $ 70,408
7 5/8%, 2/15/25 Aaa 53,535 66,626
11 5/8%, 11/15/04 Aaa 48,000 63,150
12%, 5/15/05 Aaa 63,000 85,444
12 3/8%, 5/15/04 Aaa 15,756 20,970
U.S. Treasury Notes:
5 7/8%, 11/30/01 Aaa 303,993 306,890
7%, 7/15/06 Aaa 70,500 76,768
7 1/4%, 8/15/04 Aaa 15,995 17,362
707,618
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.1%
Fannie Mae:
6.72%, 8/1/05 Aaa 27,260 28,657
6.74% 5/13/04 Aaa 8,500 8,874
6.79%, 6/2/04 Aaa 43,335 45,427
Federal Agricultural Mortgage Corporation:
7.01%, 8/10/03 Aaa 1,040 1,097
7.01%, 8/10/04 Aaa 1,340 1,421
7.04%, 8/10/05 Aaa 5,100 5,454
Federal Home Loan Bank:
7.56% 9/01/04 Aaa 1,340 1,460
8.09%, 12/28/04 Aaa 3,500 3,922
8.195%, 12/22/04 Aaa 10,000 11,258
Freddie Mac 5.035%, 4/28/03 Aaa 35,000 34,875
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 10,543
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 743 746
Government Trust Certificates (assets of Trust
guaranteed by U.S. Government through
Defense Security Assistance Agency):
Class T-3, 9 5/8%, 5/15/02 Aaa 15,225 16,045
Class 1-C, 9 1/4%, 11/15/01 Aaa 20,873 22,090
Class 2-E, 9.40%, 5/15/02 Aaa 13,601 14,334
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
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 $ 4,415 $ 4,522
Overseas Private Investment Corp. U.S. Government
guaranteed participation Series 1996-A1,
6.726%, 9/15/10 - 30,000 31,337
Private Export Funding Corp. secured notes:
7.90%,3/31/00 Aaa 12,750 13,196
6.86%, 4/30/04 Aaa 2,814 2,888
U.S. Department of Housing and Urban Development
Government guaranteed participation certificates
Series 1995-A, 8.27%, 8/1/03 Aaa 11,375 12,578
270,724
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $969,002) 978,342
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 9.1%
FANNIE MAE - 6.9%
5.5% 6/17/03 to 8/1/12 Aaa 289,673 282,802
6% 4/5/03 to 5/1/28 Aaa 565,377 557,058
6.5% 12/1/23 to 7/1/28 Aaa 798,760 794,904
7% 8/1/28 (c) Aaa 73,802 74,437
7% 1/1/26 to 12/1/26 Aaa 10,478 10,628
7.5% 8/1/07 to 5/1/08 Aaa 3,336 3,423
8.5% 1/1/09 to 7/1/21 Aaa 62 65
10% 8/1/17 Aaa 86 95
1,723,412
FREDDIE MAC - 0.2%
5.5% 8/29/01 to 7/1/03 Aaa 17,967 17,643
7% 1/22/01 to 8/1/01 Aaa 19,249 19,419
8% 10/1/16 to 4/1/20 Aaa 2,900 3,042
40,104
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.0%
6% 9/15/08 to 12/15/10 Aaa 26,974 26,931
6.5% 6/15/02 to 8/15/25 Aaa 24,060 24,086
7% 10/15/17 to 7/15/28 Aaa 98,687 100,239
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - CONTINUED
7.5% 8/15/21 to 3/15/28 Aaa $ 214,175 $ 220,496
8% 6/16/04 to 10/15/25 Aaa 84,476 87,601
8.5% 5/11/06 to 11/15/22 Aaa 5,947 6,300
9% 3/15/10 to 5/15/22 Aaa 1,090 1,172
9.5% 7/15/09 to 3/15/23 Aaa 9,001 9,700
10% 11/15/09 to 1/15/26 Aaa 12,535 13,738
11% 3/15/10 to 5/15/19 Aaa 3,167 3,537
11% 10/20/13 to 7/20/20 Aaa 1,099 1,214
495,014
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $2,232,121) 2,258,530
COMMERCIAL MORTGAGE SECURITIES - 1.2%
ACP Mortgage LP floater Series E,
7.152%, 2/28/28 (h)(j) B 2,008 1,912
Berkeley Federal Bank & Trust FSB Series 1994
Class 1-B, 7.6981%, 8/1/24 (h)(j) - 6,080 4,700
CBM Funding Corp. sequential pay Series 1996:
1 Class A-1, 7.55%, 7/1/99 AA 632 636
1B Class C, 7.86%, 2/1/08 BBB 12,500 13,160
CS First Boston Mortgage Securities Corp.:
Series 1995-WF1 Class A-2,
6.648%, 12/21/27 Aaa 31,981 32,041
floater Series 1998-FL1 Class E,
6.5180%, 1/10/13 (h)(j) Baa 42,880 42,880
Series 1997-C2 Class D, 7.27%, 4/17/11 Baa 22,200 22,609
DLJ Mortgage Acceptance Corp.
Series 1993-MF12 Class B-2,
10.10%, 9/18/03 (h) - 2,800 2,874
Equitable Life Assurance Society of the United States
(The) Series 1996-1 Class C1,
7.52%, 5/15/06 (h) A2 6,000 6,348
First Chicago /Lennar Trust I Series 1997-CHL1 (j):
Class E, 8.1272%, 2/28/11 - 2,900 2,583
Class D, 8.1272%, 5/29/08 - 3,500 3,507
General Motors Acceptance Corp. Commercial
Mortgage Securities, Inc. Series 1996-C1
Class F, 7.86%, 11/15/06 (h) Ba3 2,500 2,426
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (E) AMOUNT (000S) (000S)
GS Mortgage Securities Corp. II Series 1998-GLII
Class E, 7.1905%, 4/13/31 (h)(j) Baa $ 20,000 $ 19,578
Morgan Stanley Capital One, Inc. Series 1996-MBL1
Class E, 8.661%, 5/25/21 (h) - 3,681 3,629
Nomura Asset Securities Corp. Series 1998 - D6
Class A-4, 7.3499%, 3/15/30 (j) Baa 55,000 56,341
Penn Mutual Life Insurance Co.
(The) Series 1996-PML Class K,
7.90%, 11/15/26 (h) - 6,500 4,860
Resolution Trust Corp. Series:
1991-M2 Class A-3, 7.2498%, 9/25/20 (j) Ba3 1,441 1,239
1995-C2 Class D, 7%, 5/25/27 Baa 3,640 3,643
Structured Asset Securities Corp.:
commercial Series 1992-M1
Class C, 7.05% 11/25/02 B2 2,200 2,116
Series 1995-C1 Class E,
7 3/8%, 9/25/24 (h) BB 7,896 7,634
Series 1993-C1 Class E,
6.60%, 10/25/24 (h) B 3,250 1,625
commercial Series 1996-CFL
Class E, 7 3/4%, 2/25/28 BB+ 11,188 11,328
Series 1996-CFL Class G,
7 3/4%, 2/25/28 (h) - 3,500 3,330
Thirteen Affiliates of General Growth Properties, Inc.
sequential pay Series A-2,
6.602%, 11/15/12 (h) Aaa 32,000 32,597
Whitehall Partners commercial Series 1995-C1
Class E, 8.01%, 7/20/25 (h) - 8,892 8,915
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $281,364) 292,511
FOREIGN GOVERNMENT OBLIGATIONS - 0.1% (I)
Manitoba Province yankee 6 3/4%, 3/1/03 A1 5,000 5,144
Quebec Province yankee 6.86%, 4/15/26 (g) A2 16,750 17,520
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $21,417) 22,664
SUPRANATIONAL OBLIGATIONS - 0.0%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (C) AMOUNT (000S) (000S)
Inter American Development Bank
yankee 6.29%, 7/16/27
(Cost $10,782) Aaa $ 10,850 $ 11,370
CERTIFICATES OF DEPOSIT - 0.1%
Canadian Imperial Bank of Commerce NY Branch
yankee 6.20%, 8/1/00
(Cost $21,032) - 21,000 21,124
CASH EQUIVALENTS - 2.8%
MATURITY
AMOUNT (000)
Investment in repurchase agreements
(U.S. Treasury Obligations), in a joint
trading account at 5.63% dated
7/31/98 due 8/03/98 $ 7,984 7,980
SHARES
Taxable Central Cash Fund (b) 685,063,693 685,064
TOTAL CASH EQUIVALENTS
(Cost $693,044) 693,044
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $20,248,148) $ 24,873,605
SECURITY TYPE ABBREVIATIONS
QUIPS - Quarterly Income Preferred
Securities
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.62%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
(d) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Mothers Work, Inc 6/18/98 $ 21
Optel Communication Corp.
15%, 12/29/04 12/31/97 $ 7,494
Optel Communication Corp.
warrants 12/29/04 12/31/97 $ 506
(e) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(f) 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.
(g) 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.
(h) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$1,253,300,000 or 5.0% of net assets.
(i) 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.
(j) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
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 19.3% AAA, AA, A 18.4%
Baa 7.6% BBB 7.8%
Ba 1.2% BB 1.5%
B 4.3% B 4.2%
Caa 1.1% CCC 0.8%
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 1.0%. FMR has determined that
unrated debt securities that are lower quality account for 0.7% of the
total value of investment in securities.
INCOME TAX INFORMATION
At July 31, 1998, the aggregate cost of investment securities for
income tax purposes was $20,259,868,000. Net unrealized appreciation
aggregated $4,613,737,000, of which $4,842,485,000 related to
appreciated investment securities and $228,748,000 related to
depreciated investment securities.
The fund hereby designates approximately $950,111,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JULY 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 24,873,605
AGREEMENTS OF $7,980) (COST $20,248,148) -
SEE ACCOMPANYING SCHEDULE
CASH 44
RECEIVABLE FOR INVESTMENTS SOLD 210,940
RECEIVABLE FOR FUND SHARES SOLD 19,394
DIVIDENDS RECEIVABLE 20,860
INTEREST RECEIVABLE 108,086
OTHER RECEIVABLES 1,125
TOTAL ASSETS 25,234,054
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 176,026
REGULAR DELIVERY
DELAYED DELIVERY 74,592
PAYABLE FOR FUND SHARES REDEEMED 29,106
ACCRUED MANAGEMENT FEE 9,266
OTHER PAYABLES AND ACCRUED EXPENSES 4,814
TOTAL LIABILITIES 293,804
NET ASSETS $ 24,940,250
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 18,473,135
UNDISTRIBUTED NET INVESTMENT INCOME 89,226
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 1,752,423
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 4,625,466
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 1,182,366 SHARES OUTSTANDING $ 24,940,250
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $21.09
SHARE ($24,940,250 (DIVIDED BY) 1,182,366 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1998
INVESTMENT INCOME $ 316,391
DIVIDENDS
INTEREST 629,271
TOTAL INCOME 945,662
EXPENSES
MANAGEMENT FEE $ 103,702
TRANSFER AGENT FEES 44,058
ACCOUNTING FEES AND EXPENSES 988
NON-INTERESTED TRUSTEES' COMPENSATION 128
CUSTODIAN FEES AND EXPENSES 525
REGISTRATION FEES 708
AUDIT 231
LEGAL 105
INTEREST 3
MISCELLANEOUS 110
TOTAL EXPENSES BEFORE REDUCTIONS 150,558
EXPENSE REDUCTIONS (3,513) 147,045
NET INVESTMENT INCOME 798,617
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 2,253,249
FOREIGN CURRENCY TRANSACTIONS (170) 2,253,079
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (223,943)
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 63 (223,880)
NET GAIN (LOSS) 2,029,199
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 2,827,816
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 798,617 $ 702,583
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 2,253,079 721,599
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (223,880) 4,188,442
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,827,816 5,612,624
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (794,054) (692,744)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (1,073,230) (1,497,701)
TOTAL DISTRIBUTIONS (1,867,284) (2,190,445)
SHARE TRANSACTIONS 4,338,239 4,085,647
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 1,786,916 2,090,783
COST OF SHARES REDEEMED (4,472,056) (3,970,707)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,653,099 2,205,723
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,613,631 5,627,902
NET ASSETS
BEGINNING OF PERIOD 22,326,619 16,698,717
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 24,940,250 $ 22,326,619
INCOME OF $89,226 AND $79,303, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 215,522 228,546
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 91,754 127,174
REDEEMED (221,223) (222,372)
NET INCREASE (DECREASE) 86,053 133,348
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 20.37 $ 17.34 $ 16.69 $ 15.93 $ 16.59
OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .69 B .66 B .64 .42 .46
NET REALIZED AND UNREALIZED 1.68 4.57 1.00 1.53 .88
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS 2.37 5.23 1.64 1.95 1.34
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.69) (.66) (.55) (.44) (.51)
FROM NET REALIZED GAIN (.96) (1.54) (.44) (.75) (1.49)
TOTAL DISTRIBUTIONS (1.65) (2.20) (.99) (1.19) (2.00)
NET ASSET VALUE, END OF PERIOD $ 21.09 $ 20.37 $ 17.34 $ 16.69 $ 15.93
TOTAL RETURN A 12.56% 33.63% 10.06% 13.03% 8.60%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 24,940 $ 22,327 $ 16,699 $ 14,387 $ 10,899
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE .64% .67% .74% .77% .80%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE NET .63% C .66% C .72% C .77% .79% C
ASSETS AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO 3.40% 3.69% 3.44% 3.50% 4.00%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 84% 80% 139% 76% 74%
AVERAGE COMMISSION RATE D $ .0459 $ .0441
</TABLE>
N 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).
O NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
P 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).
Q FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Puritan Fund (the fund) is a fund of Fidelity Puritan Trust
(the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The financial statements
have been prepared in conformity with generally accepted accounting
principles which require 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 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.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Under the Plan, deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds, including shares of the fund.
Deferred amounts remain in the fund until distributed in accordance
with the Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, paydown gains/losses on certain
securities, futures transactions, foreign currency transactions,
market discount, partnerships 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.
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
2. OPERATING POLICIES -
CONTINUED
FOREIGN CURRENCY CONTRACTS -
CONTINUED
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.
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., 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
2. OPERATING POLICIES -
CONTINUED
RESTRICTED SECURITIES - CONTINUED
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
$8,017,000 or 0.0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $19,086,839,000 and $18,809,373,000, respectively, of which
U.S. government and government agency obligations aggregated
$6,544,436,000 and $7,012,077,000, 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 annual 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 annual 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 $1,721,000 for the
period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to
5. BANK BORROWINGS -
CONTINUED
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 5.88%.
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 $2,345,000 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 $25,000 and $1,143,000, respectively, under these
arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Puritan Trust and the Shareholders of
Fidelity Puritan Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statement of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Puritan Fund (a fund of Fidelity Puritan Trust) at July 31,
1998, and the results of its operations, the changes in its net assets
and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fidelity Puritan
Fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at
July 31, 1998 by correspondence with the custodian and brokers,
provide a reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 11, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Puritan Fund voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
PAY DATE 9/8/97 12/15/97 9/8/98
RECORD DATE 9/5/97 12/12/97 9/4/98
DIVIDENDS $ .16 $ .20 $ .17
SHORT-TERM
CAPITAL GAINS $ .13 $ .09 $ .17
LONG-TERM
CAPITAL GAINS $ .41 $ .33 $ 1.21
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 55.50% 45.53%
20% rate 44.50% 54.47%
A total of 11.20% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 25.27% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides 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.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1
For mutual fund and brokerage trading.
2
For quotes.*
3
For account balances and holdings.
4
To review orders and mutual
fund activity.
5
To change your PIN.
*0
To speak to a Fidelity representative.
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.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 and we'll send you an America Online CD or disk with up
to 50 free hours of Web access.
(COMPUTER_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
8880 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
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
Fidelity Brokerage Services, Inc.,
100 Summer St., Boston, MA 02110 Member NYSE/SIPC
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
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard A. Spillane, Jr., 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
PUR-ANN-0998 60533
1.536193.101
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 (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
CORPORATE HEADQUARTERS
82 Devonshire St., Boston, MA 02109
WWW.FIDELITY.COM
