FIDELITY(REGISTERED TRADEMARK)
BALANCED
FUND
ANNUAL REPORT
JULY 31, 1999
(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 30 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 34 Notes to the financial
statements.
REPORT OF INDEPENDENT 39 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 40
PROXY VOTING RESULTS 41
OF SPECIAL NOTE 43
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo) This report is printed on recycled paper using
soy-based inks.
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:
In July, the steadily growing U.S. economy again sparked fears of
inflation and posed the threat of another Federal Reserve Board
interest-rate hike at its August policy meeting. Despite rising
profits and continued productivity gains at many U.S. corporations,
stock and bond markets sold off sharply toward the month's end.
Renewed jitters about inflation were sparked by a government report
that showed a larger-than-expected increase in the employment-cost
index.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY BALANCED 17.48% 97.35% 221.84%
Fidelity Balanced Composite 13.48% 134.48% 260.95%
S&P 500 (registered trademark) 20.20% 220.67% 396.75%
LB Aggregate Bond 2.49% 42.30% 113.47%
Balanced Funds Average 9.57% 103.64% 201.30%
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
Fidelity Balanced Composite Index - a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. 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 Inc. The past one year average represents a peer
group of 426 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY BALANCED 17.48% 14.56% 12.40%
Fidelity Balanced Composite 13.48% 18.58% 13.70%
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$10,000 OVER 10 YEARS
Balanced S&P 500 LB Aggregate Bond 60 S&P/40 LB Agg
00304 SP001 LB001 F0021
1989/07/31 10000.00 10000.00 10000.00 10000.00
1989/08/31 10058.97 10196.00 9852.00 10058.40
1989/09/30 10066.86 10154.20 9902.25 10054.18
1989/10/31 10100.99 9918.62 10145.84 10013.15
1989/11/30 10254.55 10120.96 10242.23 10173.77
1989/12/31 10357.50 10363.86 10269.88 10331.26
1990/01/31 9974.90 9668.45 10147.67 9866.14
1990/02/28 10047.78 9793.17 10180.14 9955.13
1990/03/31 10129.77 10052.69 10187.27 10116.21
1990/04/30 9991.26 9801.37 10093.54 9927.24
1990/05/31 10323.68 10757.01 10392.31 10625.52
1990/06/30 10369.60 10683.86 10559.63 10650.60
1990/07/31 10397.68 10649.67 10705.35 10688.94
1990/08/31 9957.81 9686.94 10561.90 10051.88
1990/09/30 9795.13 9215.19 10649.56 9791.53
1990/10/31 9747.68 9175.56 10784.81 9816.01
1990/11/30 10089.37 9768.30 11016.69 10280.90
1990/12/31 10309.33 10040.84 11188.55 10517.15
1991/01/31 10736.05 10478.62 11327.29 10844.45
1991/02/28 11220.97 11227.84 11423.57 11346.55
1991/03/31 11435.59 11499.55 11502.39 11542.61
1991/04/30 11622.26 11527.15 11626.62 11609.10
1991/05/31 11995.58 12025.12 11694.05 11936.94
1991/06/30 11777.48 11474.37 11688.20 11606.53
1991/07/31 12085.84 12009.08 11850.67 11995.58
1991/08/31 12364.37 12293.69 12106.64 12269.80
1991/09/30 12469.60 12088.39 12352.41 12246.48
1991/10/31 12748.53 12250.37 12489.52 12399.32
1991/11/30 12521.25 11756.68 12604.42 12145.13
1991/12/31 13070.32 13101.65 12978.78 13123.06
1992/01/31 13070.32 12857.96 12802.26 12905.22
1992/02/29 13260.82 13025.11 12885.48 13039.43
1992/03/31 13176.28 12771.12 12813.32 12857.66
1992/04/30 13336.97 13146.59 12905.58 13121.50
1992/05/31 13583.35 13211.01 13149.49 13259.28
1992/06/30 13540.76 13014.17 13330.95 13213.93
1992/07/31 13866.00 13546.45 13602.91 13646.03
1992/08/31 13941.89 13268.74 13740.30 13533.31
1992/09/30 14038.35 13425.32 13903.80 13693.54
1992/10/31 13971.07 13472.30 13718.88 13649.45
1992/11/30 14004.71 13931.71 13721.63 13929.81
1992/12/31 14108.83 14103.07 13939.80 14121.21
1993/01/31 14418.79 14221.54 14207.45 14300.83
1993/02/28 14809.10 14414.95 14456.08 14517.63
1993/03/31 15281.37 14719.10 14516.79 14725.81
1993/04/30 15769.07 14362.90 14618.41 14553.22
1993/05/31 16024.53 14747.83 14637.41 14794.81
1993/06/30 16037.17 14790.60 14902.35 14927.66
1993/07/31 16248.49 14731.43 14987.29 14925.87
1993/08/31 16776.81 15289.75 15249.57 15369.77
1993/09/30 16615.25 15172.02 15290.75 15315.36
1993/10/31 16750.53 15486.08 15347.32 15528.24
1993/11/30 16455.37 15338.97 15216.87 15386.94
1993/12/31 16828.64 15524.57 15299.04 15531.88
1994/01/31 17281.09 16052.40 15505.58 15932.60
1994/02/28 16979.45 15617.38 15235.78 15562.65
1994/03/31 16282.56 14936.47 14859.46 15001.77
1994/04/30 16142.95 15127.65 14740.58 15068.98
1994/05/31 16168.34 15375.75 14739.11 15216.66
1994/06/30 16001.56 14999.04 14706.68 14979.58
1994/07/31 16308.30 15491.01 14999.34 15393.62
1994/08/31 16461.67 16126.14 15017.34 15779.69
1994/09/30 16345.92 15731.05 14796.59 15454.94
1994/10/31 16152.86 16085.00 14783.27 15658.02
1994/11/30 15921.18 15499.18 14750.75 15302.08
1994/12/31 15934.34 15729.04 14852.53 15480.47
1995/01/31 15934.34 16136.89 15146.61 15843.92
1995/02/28 16284.40 16765.74 15507.10 16365.22
1995/03/31 16558.29 17260.50 15601.69 16694.91
1995/04/30 16728.45 17768.82 15820.11 17083.40
1995/05/31 17042.60 18479.04 16432.35 17757.55
1995/06/30 17228.61 18908.31 16552.31 18056.91
1995/07/31 17480.22 19535.31 16515.89 18400.28
1995/08/31 17519.95 19584.34 16715.74 18517.04
1995/09/30 17678.11 20410.80 16877.88 19057.74
1995/10/31 17517.40 20337.94 17097.29 19116.02
1995/11/30 18012.92 21230.77 17353.75 19734.23
1995/12/31 18309.05 21639.68 17596.70 20072.79
1996/01/31 18471.56 22376.29 17712.84 20535.75
1996/02/29 18133.00 22583.72 17404.64 20507.04
1996/03/31 17986.86 22801.20 17282.80 20568.11
1996/04/30 18041.66 23137.29 17186.02 20703.95
1996/05/31 18164.95 23734.00 17151.65 21007.75
1996/06/30 18302.88 23824.43 17381.48 21168.38
1996/07/31 17873.36 22771.86 17428.41 20630.11
1996/08/31 18081.19 23252.12 17398.78 20877.14
1996/09/30 18669.05 24560.75 17701.52 21727.42
1996/10/31 19271.73 25238.14 18094.50 22279.90
1996/11/30 20210.79 27145.89 18403.91 23442.78
1996/12/31 20018.82 26608.13 18232.75 23076.93
1997/01/31 20587.53 28270.60 18289.28 23970.66
1997/02/28 20800.80 28492.25 18335.00 24107.39
1997/03/31 20265.90 27321.50 18131.48 23406.01
1997/04/30 20768.60 28952.59 18403.45 24384.84
1997/05/31 21802.72 30715.23 18578.29 25368.24
1997/06/30 22554.26 32091.27 18799.37 26170.89
1997/07/31 23917.66 34644.77 19306.95 27702.98
1997/08/31 23206.95 32703.97 19142.84 26677.64
1997/09/30 24317.13 34495.17 19426.16 27712.25
1997/10/31 23825.56 33343.03 19707.83 27317.63
1997/11/30 24255.68 34886.48 19798.49 28126.61
1997/12/31 24712.68 35485.48 19998.46 28530.01
1998/01/31 24987.80 35877.95 20254.44 28865.41
1998/02/28 25991.20 38465.47 20238.23 30105.23
1998/03/31 26936.50 40435.28 20307.04 31071.19
1998/04/30 27116.08 40842.06 20412.64 31323.36
1998/05/31 27050.78 40139.99 20606.56 31119.32
1998/06/30 27558.98 41770.47 20781.37 31983.36
1998/07/31 27394.55 41325.62 20825.47 31806.13
1998/08/31 24928.05 35350.76 21164.44 29254.09
1998/09/30 26354.29 37615.33 21659.93 30652.46
1998/10/31 27522.00 40674.96 21545.65 32083.73
1998/11/30 28563.96 43140.27 21667.68 33323.17
1998/12/31 29708.98 45626.01 21732.84 34515.30
1999/01/31 30635.12 47534.09 21888.07 35479.98
1999/02/28 30181.13 46056.73 21505.90 34570.55
1999/03/31 31270.49 47899.46 21625.23 35477.18
1999/04/30 32823.05 49754.61 21693.78 36346.58
1999/05/31 32293.35 48579.90 21502.87 35703.76
1999/06/30 32790.19 51276.09 21434.20 36847.08
1999/07/30 32183.65 49675.25 21344.18 36094.96
IMATRL PRASUN SHR__CHT 19990731 19990824 100733 R00000000000123
</TABLE>
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Balanced Fund on July 31, 1989. As the chart
shows, by July 31, 1999, the value of the investment would have grown
to $32,184 - a 221.84% increase on the initial investment. For
comparison, look at how both the Standard & Poor's 500 Index, a market
capitalization-weighted index of common stocks, and the Lehman
Brothers Aggregate Bond Index, a market value-weighted index of
investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of one year or more, did over the same period. With
dividends and capital gains, if any, reinvested, the Standard & Poor's
500 Index would have grown to $49,675 - a 396.75% increase. If $10,000
was invested in the Lehman Brothers Aggregate Bond Index, it would
have grown to $21,347 - a 113.47% increase. You can also look at how
the Fidelity Balanced Composite Index did over the same period. The
composite index combines the total returns of the Standard & Poor's
500 Index (60%) and the Lehman Brothers Aggregate Bond Index (40%).
With dividends and interest, if any, reinvested, the same $10,000
would have grown to $36,095 - a 260.95% increase.
(checkmark)
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.
FUND TALK: THE MANAGERS' OVERVIEW
MARKET RECAP
One big question on investors' minds
throughout the 12-month period was,
"What will the Federal Reserve Board
do next?" After a series of
interest-rate cuts by the Fed in the
fall of 1998, a buoyant domestic
economy, combined with signs of
improvement overseas, caused
nervousness about inflationary
pressures and resulted in a shift in
Fed policy to a tightening bias in May.
While the equity markets churned in
response to prospects of higher
interest rates, the bond market sold
off. For the 12-month period that
ended July 31, 1999, the Standard &
Poor's 500 Index posted a total return
of 20.20%. In comparison, the
Lehman Brothers Aggregate Bond
Index - a broad measure of the
U.S. taxable investment-grade bond
market - returned 2.49% during
the same period. On June 30, 1999, in
a surprising change of events
following the Fed's decision to
increase the federal-funds rate from
4.75% to 5.00%, they caught the
markets off-guard with another shift
in monetary policy, switching from a
tightening bias to neutral. While the
bond market showed some signs of
strength in mid-July, a
larger-than-expected increase in the
employment-cost index caused
further volatility. As stock and bond
prices faltered in response, many
market watchers felt there was a
strong possibility that the Fed would
raise interest rates at its August
meeting.
(photographs of Stephen DuFour and Kevin Grant)
An interview with Stephen DuFour (right), Lead Portfolio Manager of
Fidelity Balanced Fund, and Kevin Grant, Co-Manager for fixed-income
investments
Q. HOW DID THE FUND PERFORM, STEVE?
S.D. Since the fund is made up of stocks and bonds, its performance
typically falls between that of its two benchmarks, the Standard &
Poor's 500 Index and the Lehman Brothers Aggregate Bond Index. For the
12 months that ended July 31, 1999, the fund returned 17.48%, while
the S&P 500 returned 20.20% and the Lehman Brothers index returned
2.49%. During the same period, the fund outperformed the 9.57% return
of the balanced funds average - as measured by Lipper Inc. - as well
as the 13.48% return of the Fidelity Balanced Composite Index.
Q. THE FUND PERFORMED VERY WELL VERSUS ITS PEERS. TO WHAT DO YOU
ATTRIBUTE THIS SUCCESS?
S.D. Solid stock picks among the fund's top holdings, along with
favorable sector weightings, fueled performance of the equity
subportfolio during the 12-month period. I increased the fund's stake
in some of the larger-cap integrated oil companies such as Exxon and
Mobil, which were in merger talks during the period, as well as in
energy services and equipment stocks such as Weatherford
International. This strategy was rewarded handsomely as supply/demand
imbalances began to correct themselves in the spring, boosting the
price of oil, just as OPEC announced its supply cuts.
Q. WHAT WERE YOUR PRINCIPAL INVESTMENT STRATEGIES DURING THE 12-MONTH
PERIOD?
S.D. I always try to buy securities that are significantly undervalued
by the market. My feeling is that there aren't that many of these
stocks out there to choose from. So, when I do find names in which I
have great conviction, I buy them in large positions to get the full
payoff. Depending on where those names are, it can look like I'm
taking a sector bet, but it's more of a function of making a big bet
on specific stocks. This concentrated investment style paid off for
the fund over the past 12 months.
Q. WHICH OTHER STOCKS PERFORMED WELL?
S.D. Unisys, the fund's largest position at the end of the period,
benefited from strong demand for the company's high-end computer
hardware and computer services, as well as the company's restructured
operations and improved financial condition. Shares of MediaOne
provided strong gains, rallying around increased demand for digital
services over enhanced cable systems, most notably high-speed Internet
access. The stock rose further in response to the bidding war for it
between AT&T and Comcast in April, from which AT&T emerged the victor.
The fund no longer owned MediaOne at the end of the period.
Q. WHICH STOCKS DISAPPOINTED?
S.D. Banc One, a casualty of last year's global meltdown, suffered
from disappointing second-quarter earnings and worries surrounding its
merger with First Chicago. Citigroup also fell sharply during last
summer's correction due in large part to its heavy exposure to
emerging markets. Shares of Waste Management, a consolidator of trash
haulers, plunged in July after the company pre-announced
weaker-than-expected earnings for the upcoming quarter due to revenue
shortfalls. The fund no longer owns Banc One and Waste Management.
Q. TURNING TO YOU, KEVIN, HOW DID THE BOND SUBPORTFOLIO FARE?
K.G. We've completed a round trip from last fall's massive
flight-to-safety in the Treasury market, as interest rates rose
steadily during the second half of the period. The story in the first
quarter of 1999 was one of recovery in the spread sectors - mortgages,
corporates and the like - from the depressed levels of last fall.
These bonds outperformed Treasuries by wide margins, supported by
strengthening global economies. The fund's bond subportfolio was
well-positioned to take advantage of these favorable conditions, with
its significant overweighting in corporates and mortgages, and
underweighting in Treasuries relative to the Lehman index. Although
investors' concerns about the possibility of an interest-rate hike, as
well as a high level of debt issuance, halted the rally in spread
sectors in the second quarter, our overweighting in this area was
critical to the positive performance of the subportfolio over the
12-month period.
Q. STEVE, WHAT'S YOUR OUTLOOK?
S.D. My outlook remains positive. With economies recovering around the
world, the value part of the stock market is looking better today than
it did 12 months ago. These recoveries could lead to some of the
cyclical names doing better than their growth counterparts have done
over the last three years. Since this is a value-oriented fund, this
development could bode well for investors.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: 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, 1999,
more than $5.9 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
STEVE DUFOUR ON THE VALUE
SIDE OF THE MARKET:
"Over the past three years, as
economies around the world slowed
and even collapsed, the market
turned toward the stable growth
names and afforded them very high
price-to-earnings ratios given their
consistency for reporting earnings.
Conversely, the companies in the
cyclical part of the market - those
more sensitive to the strength of the
economy - traded down to very low
multiples due to the weakness in
their earnings. As Asia recovers and
Latin America begins to stabilize,
some of these value names in the
cyclical market should start to see
recoveries in their orders, which
should turn into revenues in the
next six to 12 months.
"These companies could thus
enjoy a rate of earnings growth,
on a year-over-year basis, that is
considerably higher than that of
growth companies, which have
performed exceedingly well in
recent years. This turn of events
has begun to, and may continue to,
result in the flow of cash out of these
consistent growth stocks and into
more of the cyclical recovery names.
I have woven this trend into the
fabric of the Balanced Fund, and I
intend to monitor the situation very
closely in considering future
potential investments for the fund."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STOCKS AS OF JULY
31, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCKS 6 MONTHS AGO
Unisys Corp. 4.0 3.1
Exxon Corp. 3.3 1.6
Chase Manhattan Corp. 2.9 3.6
Navistar International Corp. 2.2 1.8
Weatherford International, Inc. 2.0 0.5
TOP FIVE BOND ISSUERS AS OF
JULY 31, 1999
(WITH MATURITIES MORE THAN % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
ONE YEAR) THESE ISSUERS 6 MONTHS AGO
Fannie Mae 10.3 10.4
U.S. Treasury Obligations 5.3 4.0
Government National Mortgage 3.0 2.3
Association
MCI WorldCom, Inc. 0.6 0.6
TCI Communications, Inc. 0.5 0.6
TOP FIVE MARKET SECTORS AS OF
JULY 31, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO
FINANCE 17.7 20.9
ENERGY 9.4 5.0
UTILITIES 9.2 10.1
TECHNOLOGY 8.1 9.0
MEDIA & LEISURE 6.4 9.7
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JULY 31, 1999 *
Stocks 59.4%
Bonds 34.3%
Convertible Securities 0.0%
Short-term Investments 6.3%
* FOREIGN INVESTMENTS 3.0%
AS OF JANUARY 31, 1999 **
Stocks 64.2%
Bonds 33.5%
Convertible Securities 0.3%
Short-term Investments 2.0%
** FOREIGN INVESTMENTS 3.8%
</TABLE>
Row: 1, Col: 1, Value: 59.4
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 34.3
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 6.3
Row: 1, Col: 1, Value: 64.2
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 33.5
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.3
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 2.0
INVESTMENTS JULY 31, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 59.4%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 1.0%
AEROSPACE & DEFENSE - 0.9%
Boeing Co. 399,700 $ 18,136
Harsco Corp. 232,600 6,687
Textron, Inc. 364,700 29,997
54,820
DEFENSE ELECTRONICS - 0.1%
Raytheon Co. Class B 107,600 7,566
TOTAL AEROSPACE & DEFENSE 62,386
BASIC INDUSTRIES - 3.6%
CHEMICALS & PLASTICS - 2.9%
Crompton & Knowles Corp. 948,000 18,605
Dexter Corp. 120,200 4,718
E.I. du Pont de Nemours and 373,900 26,944
Co.
Engelhard Corp. 539,200 12,031
Georgia Gulf Corp. 372,800 5,126
Great Lakes Chemical Corp. 174,500 7,722
Lyondell Chemical Co. 953,500 17,401
Millennium Chemicals, Inc. 322,600 7,581
PPG Industries, Inc. 194,900 11,621
Rogers Corp. (a) 105,100 3,481
Rohm & Haas Co. 607,100 25,878
Schulman (A.), Inc. 182,700 3,528
Union Carbide Corp. 191,700 9,202
W.R. Grace & Co. (a) 498,200 9,372
Witco Corp. 514,000 9,413
172,623
IRON & STEEL - 0.1%
Ispat International NV 69,000 802
Quanex Corp. 104,900 2,767
3,569
METALS & MINING - 0.4%
Alcoa, Inc. 261,700 15,669
Olin Corp. 861,300 11,358
27,027
PACKAGING & CONTAINERS - 0.1%
Bemis Co., Inc. 133,500 4,940
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - 0.1%
Fort James Corp. 169,500 $ 6,187
TOTAL BASIC INDUSTRIES 214,346
CONSTRUCTION & REAL ESTATE -
0.8%
BUILDING MATERIALS - 0.1%
Robbins & Myers, Inc. 54,600 1,246
York International Corp. 52,600 2,351
3,597
ENGINEERING - 0.1%
Fluor Corp. 188,700 7,560
REAL ESTATE INVESTMENT TRUSTS
- - 0.6%
Apartment Investment & 228,300 9,317
Management Co. Class A
Equity Office Properties Trust 446,800 11,226
Equity Residential Properties 353,700 14,612
Trust (SBI)
35,155
TOTAL CONSTRUCTION & REAL 46,312
ESTATE
DURABLES - 4.2%
AUTOS, TIRES, & ACCESSORIES -
3.1%
Delphi Automotive Systems 427,277 7,691
Corp.
Eaton Corp. 190,900 18,887
Ford Motor Co. 406,100 19,747
Modine Manufacturing Co. 256,700 8,222
Navistar International Corp. 2,980,000 132,424
(a)
186,971
CONSUMER DURABLES - 0.9%
Minnesota Mining & 583,200 51,285
Manufacturing Co.
TEXTILES & APPAREL - 0.2%
NIKE, Inc. Class B 191,000 9,932
TOTAL DURABLES 248,188
ENERGY - 8.9%
ENERGY SERVICES - 1.6%
BJ Services Co. (a) 567,100 17,332
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Nabors Industries, Inc. (a) 547,600 $ 12,766
Noble Drilling Corp. (a) 1,377,600 31,254
Schlumberger Ltd. 497,600 30,136
Tidewater, Inc. 178,400 5,898
97,386
OIL & GAS - 7.3%
Exxon Corp. 2,510,400 199,263
Kerr-McGee Corp. 204,700 10,542
Mobil Corp. 1,022,200 104,520
Norsk Hydro AS ADR 64,900 2,555
Weatherford International, 2,965,900 116,226
Inc. (a)
433,106
TOTAL ENERGY 530,492
FINANCE - 13.0%
BANKS - 4.6%
AmSouth Bancorp. 336,400 7,695
Bank of America Corp. 1,003,800 66,627
Chase Manhattan Corp. 2,239,100 172,131
Mellon Bank Corp. 533,700 18,012
Union Planters Corp. 114,200 5,060
UnionBanCal Corp. 110,100 3,964
273,489
CREDIT & OTHER FINANCE - 1.8%
Associates First Capital 255,600 9,793
Corp. Class A
Citigroup, Inc. 2,074,350 92,438
Concord EFS, Inc. (a) 162,100 5,522
107,753
FEDERAL SPONSORED CREDIT - 2.6%
Fannie Mae 1,584,400 109,324
Freddie Mac 606,500 34,798
SLM Holding Corp. 155,800 7,089
151,211
INSURANCE - 3.1%
Allmerica Financial Corp. 543,000 32,139
Ambac Financial Group, Inc. 568,800 31,640
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
American International Group, 580,550 $ 67,416
Inc.
CIGNA Corp. 214,000 18,872
Hartford Financial Services 457,400 24,700
Group, Inc.
MBIA, Inc. 143,900 8,238
UICI (a) 105,900 2,985
185,990
SECURITIES INDUSTRY - 0.9%
Lehman Brothers Holdings, 365,100 19,624
Inc.
Morgan Stanley, Dean Witter & 199,900 18,016
Co.
Schwab (Charles) Corp. 379,000 16,700
54,340
TOTAL FINANCE 772,783
HEALTH - 2.8%
DRUGS & PHARMACEUTICALS - 2.1%
Lilly (Eli) & Co. 804,900 52,822
Merck & Co., Inc. 315,800 21,376
Pharmacia & Upjohn, Inc. 337,600 18,167
Schering-Plough Corp. 555,700 27,229
Sigma-Aldrich Corp. 80,800 2,717
122,311
MEDICAL EQUIPMENT & SUPPLIES
- - 0.7%
Abbott Laboratories 591,600 25,402
Johnson & Johnson 189,800 17,485
42,887
TOTAL HEALTH 165,198
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.5%
ELECTRICAL EQUIPMENT - 0.1%
Harris Corp. 45,200 1,370
Roper Industries, Inc. 227,500 7,963
9,333
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.4%
Caterpillar, Inc. 167,100 9,796
Deere & Co. 247,100 9,452
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
Donaldson Co., Inc. 196,200 $ 4,868
IDEX Corp. 131,200 3,698
Ingersoll-Rand Co. 427,800 27,513
Kaydon Corp. 185,000 5,770
Kennametal, Inc. 204,100 4,924
New Holland NV 447,500 6,713
Parker-Hannifin Corp. 210,400 9,928
82,662
TOTAL INDUSTRIAL MACHINERY & 91,995
EQUIPMENT
MEDIA & LEISURE - 4.8%
BROADCASTING - 2.1%
AT&T Corp. (Liberty Media 485,400 17,960
Group) Class A (a)
CBS Corp. (a) 358,800 15,765
Time Warner, Inc. 1,252,471 90,178
123,903
ENTERTAINMENT - 0.7%
Disney (Walt) Co. 932,700 25,766
News Corp. Ltd. sponsored ADR 542,100 18,906
44,672
LODGING & GAMING - 0.2%
Promus Hotel Corp. (a) 345,300 9,302
PUBLISHING - 1.8%
Belo (A.H.) Corp. Class A 964,900 19,479
Gannet, Inc. 164,200 11,863
Knight-Ridder, Inc. 428,900 23,000
Meredith Corp. 1,132,000 40,681
Washington Post Co. Class B 17,700 10,001
105,024
TOTAL MEDIA & LEISURE 282,901
NONDURABLES - 0.7%
FOODS - 0.4%
Earthgrains Co. 19,800 517
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONDURABLES - CONTINUED
FOODS - CONTINUED
Nabisco Holdings Corp. Class A 206,600 $ 8,600
Quaker Oats Co. 191,600 13,041
22,158
HOUSEHOLD PRODUCTS - 0.3%
Gillette Co. 480,900 21,069
TOTAL NONDURABLES 43,227
PRECIOUS METALS - 0.3%
Franco Nevada Mining Corp. 142,300 1,998
Ltd.
Newmont Mining Corp. 913,800 16,905
18,903
RETAIL & WHOLESALE - 1.1%
GENERAL MERCHANDISE STORES -
0.5%
Consolidated Stores Corp. (a) 871,600 13,619
Dollar General Corp. 613,050 16,208
29,827
GROCERY STORES - 0.4%
Albertson's, Inc. 196,400 9,759
Fleming Companies, Inc. 831,500 10,030
SUPERVALU, Inc. 127,800 2,907
22,696
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.2%
CDnow, Inc. (a) 345,700 6,828
Newpark Resources, Inc. (a) 611,100 5,805
12,633
TOTAL RETAIL & WHOLESALE 65,156
SERVICES - 0.5%
LEASING & RENTAL - 0.1%
Hanover Compressor Co. (a) 186,700 6,838
PRINTING - 0.2%
Deluxe Corp. 298,700 11,201
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - CONTINUED
SERVICES - 0.2%
Block (H&R), Inc. 112,700 $ 6,156
CheckFree Holdings Corp. (a) 32,700 967
Gartner Group, Inc. Class B 83,380 1,803
(a)
8,926
TOTAL SERVICES 26,965
TECHNOLOGY - 7.6%
COMMUNICATIONS EQUIPMENT - 0.7%
ADC Telecommunications, Inc. 782,500 34,821
(a)
Andrew Corp. (a) 274,800 5,496
40,317
COMPUTER SERVICES & SOFTWARE
- - 5.0%
At Home Corp. Series A (a) 313,600 14,328
Electronic Data Systems Corp. 224,300 13,528
IMS Health, Inc. 640,400 17,851
National Instrument Corp. (a) 222,300 9,948
NCR Corp. (a) 136,700 6,408
Unisys Corp. (a) 5,854,300 238,929
300,992
COMPUTERS & OFFICE EQUIPMENT
- - 1.9%
Compaq Computer Corp. 614,800 14,755
Gadzoox Networks, Inc. 2,200 166
Hewlett-Packard Co. 869,600 91,036
Nihon Unisys Ltd. 256,000 6,995
112,952
TOTAL TECHNOLOGY 454,261
TRANSPORTATION - 1.8%
RAILROADS - 1.8%
Burlington Northern Santa Fe 1,751,400 56,045
Corp.
Union Pacific Corp. 943,200 51,228
107,273
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - 6.8%
ELECTRIC UTILITY - 1.0%
Dominion Resources, Inc. 151,900 $ 6,693
Entergy Corp. 577,400 17,502
Florida Progress Corp. 88,500 3,623
Illinova Corp. 63,200 2,078
IPALCO Enterprises, Inc. 1,064,900 22,829
PG&E Corp. 280,968 8,886
61,611
GAS - 0.4%
Dynegy, Inc. 601,300 14,431
K N Energy, Inc. 406,200 7,921
22,352
TELEPHONE SERVICES - 5.4%
AT&T Corp. 1,751,950 90,992
BellSouth Corp. 869,100 41,717
MCI WorldCom, Inc. (a) 880,747 72,662
SBC Communications, Inc. 1,614,300 92,318
Sprint Corp. (FON Group) 386,600 19,982
317,671
TOTAL UTILITIES 401,634
TOTAL COMMON STOCKS 3,532,020
(Cost $2,844,711)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NONCONVERTIBLE BONDS - 12.8%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S)
AEROSPACE & DEFENSE - 0.1%
DEFENSE ELECTRONICS - 0.1%
Raytheon Co. 6.45% 8/15/02 Baa1 $ 4,450 4,431
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.3%
Equistar Chemicals Baa3 5,000 4,934
LP/Equistar Funding Corp.
8.75% 2/15/09
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS -
CONTINUED
Praxair, Inc. 6.15% 4/15/03 A3 $ 10,925 $ 10,682
Rohm & Haas Co. 7.85% 7/15/29 A3 3,600 3,617
(d)
19,233
PAPER & FOREST PRODUCTS - 0.0%
Fort James Corp. 6.625% Baa2 910 896
9/15/04
TOTAL BASIC INDUSTRIES 20,129
CONSTRUCTION & REAL ESTATE -
0.7%
REAL ESTATE - 0.1%
Duke Realty LP 7.3% 6/30/03 Baa1 5,000 5,013
REAL ESTATE INVESTMENT TRUSTS
- - 0.6%
CenterPoint Properties Trust Baa2 2,600 2,435
6.75% 4/1/05
Equity Office Properties Trust:
6.5% 1/15/04 Baa1 6,000 5,777
6.625% 2/15/05 Baa1 2,500 2,382
6.75% 2/15/08 Baa1 4,590 4,280
7.25% 2/15/18 Baa1 15,000 13,428
ProLogis Trust 6.7% 4/15/04 Baa1 1,550 1,486
Spieker Properties, Inc. Baa2 9,700 9,167
7.125% 7/1/09
38,955
TOTAL CONSTRUCTION & REAL 43,968
ESTATE
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES -
0.1%
Ford Motor Co. 7.45% 7/16/31 A1 4,000 3,930
ENERGY - 0.5%
ENERGY SERVICES - 0.0%
Baker Hughes, Inc. 6.875% A2 1,395 1,292
1/15/29 (d)
OIL & GAS - 0.5%
Anadarko Petroleum Corp. 7.2% Baa1 6,970 6,392
3/15/29
Apache Corp.:
7.625% 7/1/19 Baa1 5,000 4,844
7.7% 3/15/26 Baa1 1,500 1,473
Apache Finance Property Ltd. Baa1 2,600 2,444
6.5% 12/15/07
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Conoco, Inc.:
5.9% 4/15/04 A3 $ 2,300 $ 2,219
6.95% 4/15/29 A3 3,790 3,501
Petro-Canada 7% 11/15/28 A3 9,030 8,126
28,999
TOTAL ENERGY 30,291
FINANCE - 4.7%
BANKS - 1.9%
ABN-Amro Bank NV, Chicago A1 6,750 6,739
6.625% 10/31/01
Banco Latinoamericano Baa2 2,300 2,282
Exportaciones SA euro 6.9%
12/4/99 (d)
Bank of New York A1 2,000 1,929
Institutional Capital Trust
A 7.78% 12/1/26 (d)
BankAmerica Corp.:
6.625% 6/15/04 Aa2 4,365 4,315
10% 2/1/03 Aa3 850 926
BankBoston NA 6.375% 3/25/08 A2 5,000 4,674
BanPonce Financial Corp.:
6.69% 9/21/00 A3 500 502
6.75% 8/9/01 A3 770 766
6.88% 6/16/00 A3 2,500 2,513
Barclays Bank PLC yankee:
5.875% 7/15/00 A1 11,000 10,964
5.95% 7/15/01 A1 12,450 12,326
Capital One Bank 6.375% Baa2 5,300 5,149
2/15/03
Chase Manhattan Corp. 5.5% Aa3 2,400 2,375
2/15/01
Korea Development Bank:
6.625% 11/21/03 Baa3 4,045 3,804
7.125% 9/17/01 Baa3 1,195 1,172
MBNA Corp.:
6.34% 6/2/03 Baa2 1,800 1,746
6.875% 11/15/02 Baa2 8,350 8,315
NationsBank NA 5.92% 6/8/01 Aa2 6,500 6,404
NB Capital Trust IV 8.25% Aa2 6,630 6,557
4/15/27
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Providian National Bank:
6.25% 5/7/01 Baa3 $ 2,345 $ 2,314
6.75% 3/15/02 Baa3 905 899
Sanwa Finance Aruba A E C A3 14,100 13,937
8.35% 7/15/09
Union Planters National Bank A3 4,000 4,028
6.81% 8/20/01
Zions Bancorp 8.625% 10/15/02 Baa1 6,000 6,298
110,934
CREDIT & OTHER FINANCE - 2.5%
Associates Corp. of North
America:
6% 4/15/03 Aa3 5,550 5,448
6% 7/15/05 Aa3 20,000 18,923
AT&T Capital Corp. 7.5% Baa3 15,850 15,912
11/15/00
BankBoston Capital Trust II A2 2,250 2,105
7.75% 12/15/26
BanPonce Trust I 8.327% 2/1/27 A3 4,350 4,138
Chase Capital I 7.67% 12/1/26 Aa3 4,500 4,242
Citigroup, Inc. 5.8% 3/15/04 Aa2 7,635 7,284
ERP Operating LP:
6.55% 11/15/01 A3 2,000 1,981
7.1% 6/23/04 A3 4,000 3,948
Finova Capital Corp. 6.12% Baa1 5,000 4,932
5/28/02
First Security Capital I A3 3,490 3,475
8.41% 12/15/26
Fleet Capital Trust II 7.92% A2 1,300 1,260
12/11/26
Ford Motor Credit Co. 6.2% A1 20,000 19,998
3/12/01
Household Finance Corp. 6% A2 15,000 15,007
5/8/00
KeyCorp Institutional Capital A1 2,000 1,929
A 7.826% 12/1/26
Money Store, Inc. 7.3% 12/1/02 A2 3,850 3,906
Spieker Properties LP 6.8% Baa2 2,050 1,998
5/1/04
Sprint Capital Corp.:
5.7% 11/15/03 Baa1 4,070 3,889
5.875% 5/1/04 Baa1 8,670 8,290
6.875% 11/15/28 Baa1 7,790 6,965
6.9% 5/1/19 Baa1 7,225 6,630
Trizec Finance Ltd. yankee Baa3 2,270 2,431
10.875% 10/15/05
U.S. West Capital Funding, Baa1 7,900 7,067
Inc. 6.875% 7/15/28
151,758
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
INSURANCE - 0.2%
Executive Risk Capital Trust Baa3 $ 10,000 $ 9,818
8.675% 2/1/27
SAVINGS & LOANS - 0.1%
Great Western Finance Trust A3 1,500 1,454
II 8.206% 2/1/27
Long Island Savings Bank FSB Baa3 3,750 3,718
6.2% 4/2/01
5,172
SECURITIES INDUSTRY - 0.0%
Amvescap PLC yankee 6.375% A3 3,600 3,513
5/15/03
TOTAL FINANCE 281,195
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.2%
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.2%
Tyco International Group SA Baa1 12,500 12,409
yankee 6.125% 6/15/01
POLLUTION CONTROL - 0.0%
WMX Technologies, Inc. 8.25% Baa2 1,920 1,927
11/15/99
TOTAL INDUSTRIAL MACHINERY & 14,336
EQUIPMENT
MEDIA & LEISURE - 1.6%
BROADCASTING - 1.2%
Clear Channel Communications,
Inc.:
6.875% 6/15/18 Baa3 10,000 8,864
7.25% 10/15/27 Baa3 5,000 4,503
Continental Cablevision, Inc.:
8.3% 5/15/06 Baa3 3,835 4,062
9% 9/1/08 Baa3 4,040 4,484
Nielsen Media Research, Inc. Baa2 3,495 3,492
7.6% 6/15/09
TCI Communications, Inc.:
8.25% 1/15/03 A2 4,120 4,327
8.75% 8/1/15 A2 14,710 16,554
9.8% 2/1/12 A2 6,290 7,591
TCI Communications Financing A3 4,100 4,633
III 9.65% 3/31/27
Time Warner, Inc. 6.85% Baa3 10,000 9,975
1/15/26
68,485
PUBLISHING - 0.4%
News America Holdings, Inc. Baa3 13,000 12,939
8% 10/17/16
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - CONTINUED
News America, Inc. 6.625% Baa3 $ 950 $ 893
1/9/08
Time Warner Entertainment Co.
LP:
8.375% 3/15/23 Baa2 4,770 5,091
8.375% 7/15/33 Baa2 6,500 6,944
25,867
RESTAURANTS - 0.0%
Darden Restaurants, Inc. Baa1 105 96
6.375% 2/1/06
TOTAL MEDIA & LEISURE 94,448
NONDURABLES - 0.6%
BEVERAGES - 0.3%
Seagram Co. Ltd. yankee Baa3 950 830
6.875% 9/1/23
Seagram JE & Sons, Inc.:
6.625% 12/15/05 Baa3 13,805 13,267
7.6% 12/15/28 Baa3 5,000 4,775
18,872
FOODS - 0.1%
ConAgra, Inc. 7.125% 10/1/26 Baa1 5,000 4,882
TOBACCO - 0.2%
Philip Morris Companies, Inc. A2 8,980 9,051
6.95% 6/1/06
RJR Nabisco, Inc. 7.375% Baa2 5,100 5,010
5/15/03 (d)
14,061
TOTAL NONDURABLES 37,815
RETAIL & WHOLESALE - 0.5%
DRUG STORES - 0.1%
Rite Aid Corp. 6% 12/15/05 (d) Baa1 8,000 7,344
GENERAL MERCHANDISE STORES -
0.2%
Dayton Hudson Corp. 6.4% A3 1,000 984
2/15/03
Federated Department Stores,
Inc.:
6.79% 7/15/27 Baa2 6,000 5,894
8.5% 6/15/03 Baa2 4,000 4,183
11,061
GROCERY STORES - 0.1%
Kroger Co. 6% 7/1/00 Baa3 6,070 6,018
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.1%
USA Networks, Inc./USANI LLC Ba1 $ 6,500 $ 6,161
6.75% 11/15/05
TOTAL RETAIL & WHOLESALE 30,584
TECHNOLOGY - 0.5%
COMPUTERS & OFFICE EQUIPMENT
- - 0.5%
Comdisco, Inc.:
5.95% 4/30/02 Baa1 6,000 5,851
6.375% 11/30/01 Baa1 12,000 11,892
9.3% 6/27/00 Baa2 3,750 3,858
9.45% 6/8/00 Baa2 6,000 6,170
27,771
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.2%
Continental Airlines, Inc.
Pass Through Trust
Certificates:
7.434% 3/15/06 Baa1 1,615 1,616
7.73% 9/15/12 Baa1 1,050 1,046
Delta Air Lines, Inc.:
equipment trust certificate Baa1 782 802
8.54% 1/2/07
9.875% 5/15/00 Baa3 2,000 2,051
9.875% 4/30/08 Baa1 4,617 4,951
10,466
RAILROADS - 0.4%
Burlington Northern Santa Fe
Corp.:
6.53% 7/15/37 Baa2 12,000 11,638
6.875% 12/1/27 Baa2 5,000 4,512
Norfolk Southern Corp. 7.05% Baa1 8,820 8,862
5/1/37
25,012
TOTAL TRANSPORTATION 35,478
UTILITIES - 2.4%
CELLULAR - 0.3%
Cable & Wireless Baa1 15,425 15,430
Communications PLC 6.375%
3/6/03
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - 0.9%
Avon Energy Partners Holdings:
6.46% 3/4/08 (d) Baa2 $ 6,800 $ 6,457
7.05% 12/11/07 (d) Baa2 20,000 19,862
DR Investments UK PLC yankee A2 7,500 7,545
7.1% 5/15/02 (d)
Israel Electric Corp. Ltd.:
7.75% 12/15/27 (d) A3 12,795 11,461
yankee 7.25% 12/15/06 (d) A3 3,000 2,857
Texas Utilities Co. 6.375% Baa3 8,055 7,541
1/1/08
55,723
GAS - 0.3%
CMS Panhandle Holding Co.:
6.125% 3/15/04 (d) Baa3 3,500 3,369
7% 7/15/29 (d) Baa3 2,650 2,393
Southwest Gas Corp. 9.75% Baa2 8,700 9,302
6/15/02
15,064
TELEPHONE SERVICES - 0.9%
MCI WorldCom, Inc.:
6.4% 8/15/05 A3 23,490 22,804
8.875% 1/15/06 A3 9,592 10,179
Telecomunicaciones de P R, Baa2 5,020 4,827
Inc. 6.65% 5/15/06 (d)
Teleglobe Canada, Inc.:
7.2% 7/20/09 Baa1 2,375 2,338
7.7% 7/20/29 Baa1 13,255 12,895
53,043
TOTAL UTILITIES 139,260
TOTAL NONCONVERTIBLE BONDS 763,636
(Cost $791,198)
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 5.9%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 0.6%
Fannie Mae 5.25% 1/15/09 Aaa $ 1,850 $ 1,663
Federal Agricultural Mortgage
Corp.:
7.01% 2/10/05 Aaa 1,530 1,559
7.04% 8/10/05 Aaa 2,400 2,452
Federal Home Loan Bank:
7.36% 7/1/04 Aaa 2,990 3,092
7.46% 9/9/04 Aaa 1,540 1,598
7.87% 10/20/04 Aaa 6,400 6,748
Financing Corp. stripped Aaa 4,574 3,417
principal 0% 3/26/04
Freddie Mac 8.115% 1/31/05 Aaa 4,750 5,079
Government Trust Certificates
(assets of Trust guaranteed
by U.S. Government through
Defense Security Assistance
Agency):
Class 1-C, 9.25% 11/15/01 Aaa 4,611 4,791
Class T-3, 9.625% 5/15/02 Aaa 1,201 1,248
Guaranteed Export Trust Aaa 62 62
Certificates (assets of
Trust guaranteed by U.S.
Government through
Export-Import Bank) Series
1994 C, 6.61% 9/15/99
Private Export Funding Corp. Aaa 1,205 1,221
secured 6.86% 4/30/04
32,930
U.S. TREASURY OBLIGATIONS -
5.3%
U.S. Treasury Bonds:
8.75% 5/15/17 Aaa 7,665 9,563
8.875% 8/15/17 Aaa 8,000 10,104
9.875% 11/15/15 Aaa 28,960 39,114
14% 11/15/11 Aaa 13,720 19,862
U.S. Treasury Notes:
6.5% 5/31/02 Aaa 87,150 88,811
6.625% 5/15/07 Aaa 4,500 4,648
7% 7/15/06 Aaa 104,349 109,665
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. TREASURY OBLIGATIONS -
CONTINUED
U.S. Treasury Notes: -
continued
7.5% 11/15/01 Aaa $ 8,510 $ 8,833
U.S. Treasury Notes - coupon Aaa 54,800 25,138
STRIPS 0% 11/15/11
315,738
TOTAL U.S. GOVERNMENT AND 348,668
GOVERNMENT AGENCY OBLIGATIONS
(Cost $358,003)
U.S. GOVERNMENT AGENCY -
MORTGAGE SECURITIES - 13.3%
FANNIE MAE - 10.3%
5.5% 11/1/08 to 3/1/14 Aaa 15,162 14,349
6% 1/1/12 to 1/1/29 Aaa 100,848 94,865
6.5% 7/1/08 to 8/1/29 Aaa 308,849 294,346
7% 12/1/08 to 2/1/29 Aaa 85,074 83,230
7% 8/1/29 (e) Aaa 12,708 12,422
7.5% 6/1/07 to 7/1/29 Aaa 90,598 90,588
7.5% 8/1/29 (e) Aaa 15,000 14,995
8% 9/1/17 to 12/1/27 Aaa 4,650 4,747
609,542
FREDDIE MAC - 0.0%
7% 6/1/01 to 7/1/01 Aaa 904 906
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 3.0%
6.5% 3/15/26 to 5/15/29 Aaa 69,437 65,921
7% 10/15/27 to 12/15/28 Aaa 85,754 83,585
7.5% 1/15/26 to 7/15/29 Aaa 25,978 25,942
8% 1/15/17 to 8/15/25 Aaa 957 977
U.S. GOVERNMENT AGENCY -
MORTGAGE SECURITIES -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - CONTINUED
9% 11/15/14 to 1/15/23 Aaa $ 780 $ 828
9.5% 6/15/09 to 3/15/23 Aaa 1,809 1,937
179,190
TOTAL U.S. GOVERNMENT AGENCY 789,638
- - MORTGAGE SECURITIES
(Cost $815,171)
ASSET-BACKED SECURITIES - 0.9%
American Express Credit A1 4,200 4,101
Account Master Trust 6.1%
12/15/06
Capita Equipment Receivables Baa2 4,680 4,557
Trust 6.48% 10/15/06
Chevy Chase Auto Receivables Aaa 2,339 2,335
Trust 5.91% 12/15/04
Contimortgage Home Equity Aaa 9,583 9,547
Loan Trust 6.26% 7/15/12
Discover Card Master Trust I A2 5,000 4,850
5.85% 11/16/04
Ford Credit Auto Owner Trust:
6.2% 12/15/02 Baa3 3,850 3,795
6.4% 5/15/02 A1 4,250 4,247
6.4% 12/15/02 Baa3 2,360 2,296
Key Auto Finance Trust:
6.3% 10/15/03 A2 3,186 3,173
6.65% 10/15/03 Baa3 935 939
Premier Auto Trust 5.59% Aaa 15,000 14,606
2/9/04
Union Acceptance Corp. 7.075% Baa2 284 284
7/10/02
TOTAL ASSET-BACKED SECURITIES 54,730
(Cost $55,583)
COMMERCIAL MORTGAGE
SECURITIES - 1.2%
CS First Boston Mortgage
Securities Corp.:
Series 1997 C2 Class D, 7.27% Baa2 5,790 5,361
1/17/35
Series 1998 FLI Class E, Baa2 12,180 11,936
6.07% 1/10/13 (d)(f)
5.4013% 12/10/00 (d)(f) A2 6,100 6,037
Equitable Life Assurance
Society of the United States
(The) Series 174:
Class B1, 7.33% 5/15/06 (d) Aa2 4,000 4,027
COMMERCIAL MORTGAGE
SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Equitable Life Assurance
Society of the United States
(The) Series 174: - continued
Class C1, 7.52% 5/15/06 (d) A2 $ 4,000 $ 4,036
GS Mortgage Securities Corp. Baa3 5,000 4,290
II Series 1998-GLII Class E,
7.1905% 4/13/31 (d)(f)
Morgan Stanley Capital I,
Inc. Series 1998 CF1:
Class D, 7.35% 1/15/12 Baa2 5,605 5,067
Class E, 7.35% 12/15/12 Baa3 1,934 1,588
Nomura Asset Securities Corp. Baa2 20,000 17,981
Series 1998-D6 Class A-4,
7.3503% 3/17/28 (f)
Thirteen Affiliates of Aaa 8,000 7,656
General Growth Properties,
Inc. sequential pay Series 1
Class A2, 6.602% 11/15/07 (d)
Wells Fargo Capital Markets Aaa 2,590 2,565
Apartment Financing Trust
Series APT Class 1, 6.56%
12/29/05 (d)
TOTAL COMMERCIAL MORTGAGE 70,544
SECURITIES
(Cost $74,536)
FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (G) - 0.2%
Korean Republic yankee:
8.75% 4/15/03 Baa3 3,600 3,664
8.875% 4/15/08 Baa3 2,946 2,981
Quebec Province yankee:
7.125% 2/9/24 A2 680 648
7.5% 7/15/23 A2 2,880 2,894
TOTAL FOREIGN GOVERNMENT AND 10,187
GOVERNMENT AGENCY OBLIGATIONS
(Cost $10,831)
SUPRANATIONAL OBLIGATIONS -
0.0%
Inter American Development Aaa 3,000 2,956
Bank yankee 6.29% 7/16/27
(Cost $2,981)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 6.3%
SHARES VALUE (NOTE 1) (000S)
Taxable Central Cash Fund (c) 372,510,444 $ 372,510
(Cost $372,510)
TOTAL INVESTMENT IN $ 5,944,889
SECURITIES - 100%
(Cost $5,325,524)
</TABLE>
LEGEND
(a) Non-income producing
(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(c) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.06%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(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 $120,792,000 or 2.0% of net assets.
(e) Security purchased on a delayed delivery or when-issued basis.
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(g) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed have been assigned by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 25.3% AAA, AA, A 25.2%
Baa 8.9% BBB 8.3%
Ba 0.1% 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%
INCOME TAX INFORMATION
At July 31, 1999, the aggregate cost of investment securities for
income tax purposes was $5,333,568,000. Net unrealized appreciation
aggregated $611,321,000, of which $742,781,000 related to appreciated
investment securities and $131,460,000 related to depreciated
investment securities.
The fund hereby designates approximately $354,277,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) JULY 31,
1999
ASSETS
Investment in securities, at $ 5,944,889
value (cost $5,325,524) -
See accompanying schedule
Receivable for investments 78,813
sold
Receivable for fund shares 7,660
sold
Dividends receivable 3,568
Interest receivable 21,879
Other receivables 464
TOTAL ASSETS 6,057,273
LIABILITIES
Payable for investments $ 80,257
purchased Regular delivery
Delayed delivery 27,760
Payable for fund shares 5,026
redeemed
Accrued management fee 2,178
Other payables and accrued 750
expenses
TOTAL LIABILITIES 115,971
NET ASSETS $ 5,941,302
Net Assets consist of:
Paid in capital $ 4,642,932
Undistributed net investment 22,329
income
Accumulated undistributed net 656,671
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 619,370
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 339,377 $ 5,941,302
shares outstanding
NET ASSET VALUE, offering $17.51
price and redemption price
per share ($5,941,302
(divided by) 339,377 shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED JULY 31, 1999
INVESTMENT INCOME $ 38,454
Dividends
Interest (including income on 139,745
securities loaned of $464)
TOTAL INCOME 178,199
EXPENSES
Management fee $ 23,341
Transfer agent fees 11,697
Accounting and security 897
lending fees
Non-interested trustees' 29
compensation
Custodian fees and expenses 157
Registration fees 105
Audit 84
Legal 19
Interest 2
Reports to shareholders 372
Miscellaneous 16
Total expenses before 36,719
reductions
Expense reductions (1,956) 34,763
NET INVESTMENT INCOME 143,436
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 683,296
Foreign currency transactions 91 683,387
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 15,317
Assets and liabilities in 1 15,318
foreign currencies
NET GAIN (LOSS) 698,705
NET INCREASE (DECREASE) IN $ 842,141
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1999 YEAR ENDED JULY 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 143,436 $ 134,510
income
Net realized gain (loss) 683,387 589,388
Change in net unrealized 15,318 (108,105)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 842,141 615,793
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (128,130) (143,536)
From net investment income
From net realized gain (378,957) (378,462)
TOTAL DISTRIBUTIONS (507,087) (521,998)
Share transactions Net 1,527,019 1,387,837
proceeds from sales of shares
Reinvestment of distributions 495,851 512,005
Cost of shares redeemed (1,379,305) (1,204,221)
NET INCREASE (DECREASE) IN 643,565 695,621
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 978,619 789,416
IN NET ASSETS
NET ASSETS
Beginning of period 4,962,683 4,173,267
End of period (including $ 5,941,302 $ 4,962,683
undistributed net investment
income of $22,329 and
$5,932, respectively)
OTHER INFORMATION
Shares
Sold 91,041 86,120
Issued in reinvestment of 33,987 33,230
distributions
Redeemed (83,449) (74,686)
Net increase (decrease) 41,579 44,664
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 16.66 $ 16.49 $ 12.90 $ 13.20 $ 12.76
of period
Income from Investment
Operations
Net investment income .44 B .48 B .51 B .57 .62
Net realized and unrealized 2.09 1.67 3.73 (.27) .27
gain (loss)
Total from investment 2.53 2.15 4.24 .30 .89
operations
Less Distributions
From net investment income (.40) D (.52) (.65) (.60) (.45)
From net realized gain (1.28) D (1.46) - - -
Total distributions (1.68) (1.98) (.65) (.60) (.45)
Net asset value, end of period $ 17.51 $ 16.66 $ 16.49 $ 12.90 $ 13.20
TOTAL RETURN A 17.48% 14.54% 33.82% 2.25% 7.19%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,941 $ 4,963 $ 4,173 $ 4,022 $ 5,070
(in millions)
Ratio of expenses to average .68% .70% .75% .82% .91%
net assets
Ratio of expenses to average .65% C .67% C .74% C .79% C .90% C
net assets after expense
reductions
Ratio of net investment 2.67% 2.97% 3.58% 4.12% 5.33%
income to average net assets
Portfolio turnover rate 157% 135% 70% 247% 269%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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.
D THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1999
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, 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
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
the fund is informed of the ex-dividend date. Non-cash dividends
included in dividend income, if any, are recorded at the fair market
value of the securities received. Interest income, 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. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. 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, option transactions, paydown
gains/losses on certain securities, 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 do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., 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 after the customary settlement period for that security. 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 on a
delayed delivery basis are identified as such in the fund's schedule
of investments. The fund may receive compensation for interest forgone
in the purchase of a delayed delivery security. With respect to
purchase commitments, the fund identifies securities as segregated in
its custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under
the contract.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $8,206,274,000 and $8,078,476,000, respectively, of which
U.S. government and government agency obligations aggregated
$2,035,824,000 and $1,936,901,000, 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 .22% of average net assets.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,172,000 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.
The market value of the loaned securities is determined at the close
of business of the fund and any additional required collateral is
delivered to the fund on the next business day. At period end there
were no loans outstanding.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. The average daily loan balance during the period for which
the loan was outstanding amounted to $14,853,000. The weighted average
interest rate was 5.50%.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $1,521,000 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 $426,000, 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,
1999, 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
Balanced Fund 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,
1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 13, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Balanced Fund voted to pay on
September 7, 1999, to shareholders of record at the opening of
business on September 3, 1999, a distribution of $1.81 per share
derived from capital gains realized from sales of portfolio securities
and a dividend of $.11 per share from net investment income.
A total of 9.76% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 20% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on July 14,
1999, and re-convened on August 6, 1999. The results of votes taken
among shareholders on proposals before them are reported below. Each
vote reported represents one dollar of net asset value held on the
record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.*
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
Affirmative 17,986,401,866.48 90.961
Withheld 1,787,259,914.33 9.039
TOTAL 19,773,661,780.81 100.000
PHYLLIS BURKE DAVIS
Affirmative 17,983,245,089.81 90.945
Withheld 1,790,416,691.00 9.055
TOTAL 19,773,661,780.81 100.000
ROBERT M. GATES
Affirmative 17,981,467,048.37 90.936
Withheld 1,792,194,732.44 9.064
TOTAL 19,773,661,780.81 100.000
EDWARD C. JOHNSON 3D
Affirmative 17,985,106,706.94 90.955
Withheld 1,788,555,073.87 9.045
TOTAL 19,773,661,780.81 100.000
E. BRADLEY JONES
Affirmative 17,965,545,653.74 90.856
Withheld 1,808,116,127.07 9.144
TOTAL 19,773,661,780.81 100.000
DONALD J. KIRK
Affirmative 17,992,374,635.26 90.992
Withheld 1,781,287,145.55 9.008
TOTAL 19,773,661,780.81 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
Affirmative 17,994,511,667.79 91.002
Withheld 1,779,150,113.02 8.998
TOTAL 19,773,661,780.81 100.000
WILLIAM O. MCCOY
Affirmative 17,995,708,043.17 91.008
Withheld 1,777,953,737.64 8.992
TOTAL 19,773,661,780.81 100.000
GERALD C. MCDONOUGH
Affirmative 17,967,133,594.73 90.864
Withheld 1,806,528,186.08 9.136
TOTAL 19,773,661,780.81 100.000
MARVIN L. MANN
Affirmative 17,995,084,785.78 91.005
Withheld 1,778,576,995.03 8.995
TOTAL 19,773,661,780.81 100.000
ROBERT C. POZEN
Affirmative 17,993,340,616.44 90.997
Withheld 1,780,321,164.37 9.003
TOTAL 19,773,661,780.81 100.000
THOMAS R. WILLIAMS
Affirmative 17,973,227,575.79 90.895
Withheld 1,800,434,205.02 9.105
TOTAL 19,773,661,780.81 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,585,920,825.43 87.205
Against 74,448,204.34 2.511
Abstain 304,962,106.76 10.284
TOTAL 2,965,331,136.53 100.000
PROPOSAL 3
To adopt an amended and restated Declaration of Trust.*
# OF % OF
VOTES CAST VOTES CAST
Affirmative 16,134,178,216.02 81.594
Against 999,390,653.54 5.054
Abstain 2,640,092,911.25 13.352
TOTAL 19,773,661,780.81 100.000
PROPOSAL 4
To approve an amended management contract for the fund that would
reduce the management fee payable to FMR by the fund as FMR's assets
under management increase, allow future modifications of the contract
without a shareholder vote if permitted by the 1940 Act, and reduce
the fund's individual fund fee rate.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,340,899,138.81 78.942
Against 87,379,933.64 2.947
Abstain 537,052,064.10 18.111
TOTAL 2,965,331,136.55 100.000
PROPOSAL 5
To amend the fund's fundamental investment objective and eliminate
certain fundamental investment policies.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,240,051,526.32 75.541
Against 136,743,835.96 4.612
Abstain 588,535,774.27 19.847
TOTAL 2,965,331,136.55 100.000
PROPOSAL 6
To amend the fund's fundamental investment limitation concerning
diversification to exclude securities of other investment companies
from the limitation.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,220,537,089.48 74.883
Against 160,011,983.52 5.396
Abstain 584,782,063.55 19.721
TOTAL 2,965,331,136.55 100.000
PROPOSAL 7
To amend the fund's fundamental investment limitation concerning
concentration.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,244,842,399.08 75.703
Against 127,865,964.10 4.312
Abstain 592,622,773.37 19.985
TOTAL 2,965,331,136.55 100.000
*DENOTES TRUST-WIDE PROPOSALS AND VOTING RESULTS.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
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 Automated Service Telephone 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)
FIDELITY AUTOMATED
SERVICE TELEPHONE (FAST SM)
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 EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
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 75039-5587
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 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 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
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
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
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Investments
Money Management, Inc. (FIMM),
Merrimack, NH
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
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity (registered trademark) Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II 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)
Fidelity Automated Service
Telephone (FAST SM)(AUTOMATED GRAPHIC) 1-800-544-5555
(AUTOMATED GRAPHIC) AUTOMATED LINE FOR QUICKEST SERVICE
BAL-ANN-0999 84101
1.536127.102
(FIDELITY LOGO GRAPHIC)(registered trademark)
Corporate Headquarters
www.fidelity.com
FIDELITY(REGISTERED TRADEMARK)
LOW-PRICED STOCK
FUND
ANNUAL REPORT
JULY 31, 1999
(Fidelity logo graphics)(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 42 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 46 Notes to the financial
statements.
REPORT OF INDEPENDENT 59 The auditors' opinion
ACCOUNTANTS
DISTRIBUTIONS 60
PROXY VOTING RESULTS 61
OF SPECIAL NOTE 63
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
In July, the steadily growing U.S. economy again sparked fears of
inflation and posed the threat of another Federal Reserve Board
interest-rate hike at its August policy meeting. Despite rising
profits and continued productivity gains at many U.S. corporations,
stock and bond markets sold off sharply toward the month's end.
Renewed jitters about inflation were sparked by a government report
that showed a larger-than-expected increase in the employment-cost
index.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. 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, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY LOW-PRICED STOCK 3.72% 120.69% 403.61%
FIDELITY LOW-PRICED STOCK 0.61% 114.07% 388.50%
(INCL. 3.00% SALES CHARGE)
Russell 2000 (registered 7.41% 95.86% 212.63%
trademark)
Small Cap Funds Average 9.12% 113.13% 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 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 - a market
capitalization-weighted index of 2,000 small company 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
Inc. The past one year average represents a peer group of 702 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, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY LOW-PRICED STOCK 3.72% 17.15% 18.35%
FIDELITY LOW-PRICED STOCK 0.61% 16.44% 17.97%
(INCL. 3.00% SALES CHARGE)
Russell 2000 7.41% 14.38% 12.61%
Small Cap Funds Average 9.12% 15.97% 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 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
1998/08/31 39686.69 23454.55
1998/09/30 41093.86 25290.05
1998/10/31 42727.25 26321.47
1998/11/30 44480.17 27700.52
1998/12/31 45991.83 29414.67
1999/01/31 45528.89 29805.56
1999/02/28 43455.74 27391.48
1999/03/31 42751.27 27819.10
1999/04/30 45911.32 30311.90
1999/05/31 47159.24 30754.66
1999/06/30 49393.41 32145.38
1999/07/30 48849.96 31263.33
IMATRL PRASUN SHR__CHT 19990731 19990817 170033 R00000000000119
$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, 1999, the value of the investment would have
grown to $48,850 - a 388.50% 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 $31,263 - a 212.63% increase.
(checkmark)
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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Federal Reserve Board monetary
policy, Internet stock mania and
Y2K concerns all played key roles
in the direction of the U.S. equity
market for the 12 months that ended
July 31, 1999. As we entered the
period, investors were still leery of
troubled overseas markets and
overall liquidity. The Fed then made
three successive interest-rate cuts
in the fall and confidence was
restored. The second quarter of 1999
saw more sharing of the market's
gains by smaller stocks, many of
which rely on borrowed money to
fund their growth. The Russell 2000
Index - a measure of small-stock
performance - handily outpaced
the large-cap oriented Standard &
Poor's 500
Index during that time. For the entire
12 months, though, the S&P 500(registered trademark)
returned 20.20%, while the Russell
2000 could only muster 7.41%.
The Dow Jones Industrial Average -
an index of 30 blue-chip stocks -
returned 21.88%. Internet stocks
continued to attract investors, with
many stock valuations peaking
around April, then cooling off some
as the period ended. Technology
stocks prospered - the tech-heavy
NASDAQ index returned a tidy
41.42% during the period - as
did telecommunications stocks with
Internet exposure. Y2K concerns
mounted toward the end of the
period, as many investors
anticipated a spending freeze within
the technology sector.
(photograph of Joel Tillinghast)
An interview with Joel Tillinghast, Portfolio Manager of Fidelity
Low-Priced Stock Fund
Q. HOW DID THE FUND PERFORM, JOEL?
A. For the 12 months that ended July 31, 1999, the fund returned
3.72%. This trailed both the Russell 2000 Index, which returned 7.41%
during that time, and the small cap funds average, which returned
9.12% according to Lipper Inc.
Q. WHAT FACTORS CAUSED THE FUND TO TRAIL THE INDEX AND LIPPER GROUP?
A. In a word, the Internet. The fund had almost no pure Internet
holdings during the period, and the average Internet stock in the
Russell 2000 more than tripled during that time despite some slippage
since April. I've avoided these stocks because it's impossible to
estimate their inherent value. Most have never made a profit, and
rapid changes in their business models indicate that future earnings
prospects are simply a guess. Also, it's extremely difficult to
separate winners and losers in any emerging industry. Consider the
personal computer industry, where early frontrunners included
companies such as Tandy and Commodore. I also mistimed some shifts on
semiconductor stocks. Last fall, the most commodity-like semiconductor
stocks were under severe pricing pressure from distressed Asian
producers. At the time, I cut back on the stocks most exposed to that
pressure and held on to smaller, more niche-oriented producers. As
pricing pressures waned and investors anticipated a boom, stocks of
commodity-like semiconductor producers rallied and the fund didn't
fully participate.
Q. THE FUND STILL HAD JUST UNDER 13% OF ITS TOTAL INVESTMENTS TIED UP
IN TECHNOLOGY STOCKS AT THE END OF THE PERIOD. WHERE DID YOU FIND
OPPORTUNITIES?
A. Technology companies with recurring service-related revenue streams
were appealing. For instance, the fund's stakes in Affiliated Computer
Services - a business solutions outsourcing firm - and Kronos, which
makes electronic timekeeping systems, performed well. Recurring
revenue was important because it increases the predictability of a
stock's performance and reduces its risk of a Y2K sales slowdown.
Q. AT OVER 16% OF TOTAL INVESTMENTS, FINANCE STOCKS CONTINUED TO BE
THE FUND'S LARGEST SECTOR EXPOSURE. HOW DID THESE HOLDINGS PERFORM
DURING THE PERIOD?
A. Finance stocks had a tough period due mostly to rising interest
rates. Catastrophe reinsurance companies did especially poorly due to
an above-average number of weather-related catastrophes during the
period, combined with falling premium rates. The fund's stakes in IPC
Holdings, LaSalle Re Holdings and RenaissanceRe suffered as a result.
Banks and insurance stocks also stumbled due to fewer takeovers and
mergers. This may have been attributable to fears of buying another
company's Y2K problems. If so, takeover activity could reaccelerate in
the new year.
Q. YOU ADDED TO THE FUND'S INVESTMENTS IN SEVERAL AREAS DURING THE
PERIOD, NAMELY THE MEDIA AND LEISURE AND THE RETAIL SECTORS. WHAT DID
YOU LIKE ABOUT THESE GROUPS?
A. Several of the fund's cable TV and media stocks helped performance
significantly. Cable companies have developed into viable portals to
the Internet and many have prospered accordingly. Moffat
Communications, Cogeco Cable and TCA Cable all contributed positively
to the fund's return. King World Productions - the company that
distributes Jeopardy! and the Oprah Winfrey Show - also performed
well, partly due to its acquisition by CBS. Restaurant holdings such
as Sonic, Benihana and Applebee's also contributed positively. Lastly,
strong consumer spending trends helped many of the fund's retail
stocks, including BJ's Wholesale Club, Claire's Stores and Ross
Stores.
Q. YOU ALSO INCREASED THE FUND'S EXPOSURE TO HEALTH CARE STOCKS, JOEL.
WHY?
A. As the population gets older, health care becomes more and more of
a long-term growth industry. Some of the more service-oriented stocks
became attractively valued during the period due to changes in
government reimbursement. While these changes have hurt companies such
as Universal Health and Quorum, they have hurt many non-profit
hospitals even more and a better reimbursement program may result.
Device companies such as Biomet and OEC Medical benefited from new
product introductions.
Q. WHAT'S YOUR OUTLOOK?
A. The buoyant economy produced faster profit growth during the latter
stages of the period, particularly among energy and economically
sensitive stocks. Future profit growth, however, could be constrained
by the tight labor market and recent increases in interest rates. If
profits can continue to improve and relative valuations remain at low
levels, the outlook should be fairly positive.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: capital appreciation 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, 1999,
more than $7.7 billion
MANAGER: Joel Tillinghast,
since 1989; analyst for
natural gas, personal care
products, appliance and
tobacco industries,
1986-1989; joined Fidelity
in 1986
JOEL TILLINGHAST TALKS
ABOUT RELATIVE VALUATIONS
OF SMALL COMPANIES:
"The widening gap between the
valuations of large and small
companies has been a drag on fund
performance, but many now
present an opportunity. Over the
last few years, small-cap stocks
have underperformed larger stocks
to a greater extent than any other
time in market history, including the
1929 crash and the early 1970s.
"The rising price-to-earnings (P/E)
multiples of the large-cap-heavy
S&P 500 has actually contributed
more to its appreciation over the
last four years than earnings
growth. Small-cap stocks, like those
in the Russell 2000, have generally
risen more in line with earnings.
Currently, the price of a dollar of
earnings for S&P 500 companies is
roughly double the price of a
dollar of earnings for companies
in the fund. That is, the P/E ratio
for the fund is about half that of
the S&P 500, despite higher
historical earnings growth.
"The cheap relative valuations of
small stocks present a great
opportunity for investors who can
hang on, or buy more. I'm hoping
that the somewhat better relative
returns we've seen recently signal
a return of small-cap stocks to
favor."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JULY 31,
1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCKS 6 MONTHS AGO
USEC, Inc. 1.4 1.5
Dallas Semiconductor Corp. 1.3 0.9
Gallaher Group PLC sponsored 1.3 1.5
ADR
Reynolds & Reynolds Co. Class A 1.2 1.0
Hyder PLC 1.1 1.2
King World Productions, Inc. 1.1 1.1
UICI 1.1 0.7
Viad Corp. 1.0 0.9
Biomet, Inc. 1.0 1.0
Black Box Corp. 1.0 0.6
TOP FIVE MARKET SECTORS AS OF
JULY 31, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO
FINANCE 16.6 16.3
TECHNOLOGY 12.8 11.9
HEALTH 8.8 8.0
RETAIL & WHOLESALE 8.4 7.9
MEDIA & LEISURE 8.2 7.3
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JULY 31, 1999 *
Stocks 98.5%
Convertible Securities 0.1%
Short-term Investments 1.4%
* FOREIGN INVESTMENTS 22.6%
AS OF JANUARY 31, 1999 **
Stocks 94.2%
Convertible Securities 0.0%
Short-term Investments 5.8%
** FOREIGN INVESTMENTS 22.8%
</TABLE>
Row: 1, Col: 1, Value: 98.5
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.1
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 1.4
Row: 1, Col: 1, Value: 94.2
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 5.8
INVESTMENTS JULY 31, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 98.5%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 0.3%
AEROSPACE & DEFENSE - 0.1%
Allied Research Corp. (a)(d) 473,000 $ 2,572
Howmet International, Inc. (a) 12,900 240
Primex Technologies, Inc. 117,700 2,501
5,313
DEFENSE ELECTRONICS - 0.2%
Ducommun, Inc. (a)(d) 1,095,500 13,146
Flir Systems, Inc. (a) 203,000 3,578
Herley Industries, Inc. 3,000 42
16,766
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, 10,000 322
Inc.
TOTAL AEROSPACE & DEFENSE 22,401
BASIC INDUSTRIES - 4.8%
CHEMICALS & PLASTICS - 3.0%
Aronkasei Co. Ltd. 741,000 2,717
CFC International, Inc. (a) 119,900 1,139
E.I. du Pont de Nemours and 250,000 18,016
Co.
Ellis & Everard PLC 300,000 1,149
European Colour PLC 675,000 745
Georgia Gulf Corp. 420,000 5,775
International Specialty 1,377,200 12,309
Products, Inc. (a)
Low & Bonar PLC 150,000 511
Lydall, Inc. (a) 31,000 364
Nihon Kagaku Sangyo Co. Ltd. 200,000 663
Nippon Chemical Industrial 300,000 843
Co. Ltd.
Octel Corp. (a)(d) 1,472,000 18,124
OM Group, Inc. 50,000 1,872
Park Electrochemical Corp. 5,000 154
Rogers Corp. (a) 9,900 328
Solutia, Inc. 1,300,800 27,805
Spartech Corp. 835,000 24,424
Synthetech, Inc. (a) 323,500 1,779
Tokyo Printing Ink 375,000 1,097
Manufacturing Co. Ltd.
USEC, Inc. (d) 8,600,000 103,705
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS -
CONTINUED
Wardle Storeys PLC 200,000 $ 1,012
Yule Catto & Co. PLC 750,443 4,335
228,866
IRON & STEEL - 0.2%
Beltecno Corp. (a) 125,000 360
Bunka Shutter Co. Ltd. 150,000 458
Chubu Steel Plate Co. Ltd. 1,000,000 1,973
Cold Metal Products, Inc. (a) 310,000 1,279
Harris Steel Group, Inc. 210,700 2,833
Class A
Japan Steel Tower Co. Ltd. 500,000 1,576
Nittetsu Steel Drum Co. Ltd. 100,000 315
Northwest Pipe Co. (a) 109,000 1,948
Richardsons Westgarth PLC (d) 3,632,300 1,945
Roanoke Electric Steel Corp. 281,500 4,680
Takigami Steel Construction 300,000 1,296
Co. Ltd.
18,663
METALS & MINING - 0.6%
Acier Leroux, Inc. Class B (a) 190,000 624
AFC Cable Systems, Inc. (a) 400,100 15,229
Cable Design Technology Corp. 500,000 9,063
(a)
Chase Industries, Inc. (a)(d) 908,200 7,606
Draka Holding NV 60,000 2,215
General Cable Corp. 100,000 1,594
Lindberg Corp. 25,000 328
Major Drilling Group 100,000 329
International, Inc. (a)
Nagahori Corp. 200,000 594
Special Metals Corp. (a) 474,200 2,401
Toami Corp. (d) 350,000 3,086
Zemex Cda Corp. 13,400 97
43,166
PACKAGING & CONTAINERS - 0.4%
Astronics Corp. (a)(d) 379,950 4,132
Boxmore International PLC 300,000 608
Liqui-Box Corp. 29,000 1,573
Owens-Illinois, Inc. (a) 416,000 10,374
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
BASIC INDUSTRIES - CONTINUED
PACKAGING & CONTAINERS -
CONTINUED
Silgan Holdings, Inc. (a) 497,600 $ 10,792
Tupperware Corp. 50,000 1,181
28,660
PAPER & FOREST PRODUCTS - 0.6%
Clondalkin Group Ltd. unit 1,250,000 7,891
CVG (Crown Van Gelder) 300,000 4,461
Mercer International, Inc. 202,200 1,011
(SBI)
Metsa-Serla Oyj Class B Free 3,000,000 27,218
Shares
Noda Corp. 100,000 537
Rolland, Inc. 200,000 790
Uehara Sei Shoji Co. Ltd. 1,050,000 3,850
45,758
TOTAL BASIC INDUSTRIES 365,113
CONSTRUCTION & REAL ESTATE -
6.8%
BUILDING MATERIALS - 1.2%
American Woodmark Corp. 167,300 5,500
Ameron International Corp. 35,200 1,498
Asahi Concrete Works Co. Ltd. 1,150,000 4,718
(d)
Barnett, Inc. (a) 730,000 5,931
Brampton Brick Ltd. Class A 440,000 1,563
(a)(d)
Devcon International Corp. 302,700 832
(a)(d)
Domco, Inc. 550,000 3,469
Drew Industries, Inc. (a)(d) 1,146,000 13,680
Florida Rock Industries, Inc. 38,200 1,471
Giant Cement Holding, Inc. 598,300 13,013
(a)(d)
Heywood Williams Group PLC 350,000 1,635
Hibiya Engineering Ltd. 1,500,000 10,476
Kingspan Group PLC 50,000 126
Komai Tekko, Inc. 100,000 528
Kondotec, Inc. 275,000 1,945
Kyushu Fujisash Co. Ltd. 112,000 345
Matsuo Bridge Co. Ltd. 500,000 1,235
McClain Industries, Inc. (a) 6,000 43
Nichiha Corp. 300,000 3,405
Patrick Industries, Inc. (d) 593,000 8,710
Polynorm NV 19,950 1,385
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONSTRUCTION & REAL ESTATE -
CONTINUED
BUILDING MATERIALS - CONTINUED
Quixote Corp. (d) 720,000 $ 9,360
Richelieu Hardware Ltd. (a) 10,000 64
ROHN Industries, Inc. (a) 250,000 406
Shaw Group (a) 60,400 1,200
Watsco, Inc. Class A 52,900 770
93,308
CONSTRUCTION - 4.2%
American Homestar Corp. (a) 839,200 6,084
Aoki Marine Co. Ltd. 150,000 485
Barratt Developments PLC 500,000 2,839
Beazer Homes USA, Inc. (a)(d) 632,700 16,055
Clayton Homes, Inc. 4,540,000 47,670
Crossman Communities, Inc. 1,147,600 36,149
(a)(d)
D.R. Horton, Inc. 1,056,600 17,170
Dominion Homes, Inc. (a)(d) 578,000 3,685
Engle Homes, Inc. (d) 1,003,500 13,171
Fortress Group, Inc. 69,700 89
Henry Boot & Sons PLC 1,100,000 3,837
Jacobs Engineering Group, 1,100,000 37,813
Inc. (a)
Kaneshita Construction Co. 400,000 2,794
Ltd.
M/I Schottenstein Homes, Inc. 880,000 16,720
(d)
Matsui Construction Co. Ltd. 400,000 1,372
Meritage Corp. (a) 260,000 3,266
NCI Building Systems, Inc. (a) 619,500 11,848
Oakwood Homes Corp. (d) 3,177,000 33,557
Oriole Homes Corp. Class B 261,800 655
(a)(d)
Palm Harbor Homes, Inc. (a) 45,900 843
Persimmon PLC 100,000 409
Redrow Group PLC Class L 700,000 2,544
Robertson Ceco Corp. (a)(d) 1,017,600 8,904
Southern Energy Homes, Inc. 1,426,000 5,348
(a)(d)
Swan Hill Group PLC 2,000,000 2,304
Takada Kiko Co. Ltd. 700,000 4,094
Tay Homes PLC 1,400,000 2,555
Technip SA (a)(e) 50,000 4,911
U.S. Home Corp. (a) 665,045 22,861
Volker Wessels Stevin NV 10,000 180
Willbros Group, Inc. (a)(d) 690,700 5,094
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONSTRUCTION & REAL ESTATE -
CONTINUED
CONSTRUCTION - CONTINUED
Writer Corp. (a) 82,000 $ 159
Yokogawa Bridge Corp. 1,000,000 3,614
Yokogawa Construction Co. 300,000 1,205
Ltd.
320,284
ENGINEERING - 0.9%
Dai-Dan Co. Ltd. 300,000 2,213
Fugro NV 304,700 8,737
Hoan Kogyo Co. Ltd. 500,000 1,349
Japan Engineering Consultants 300,000 969
Kawasaki Setsubi Kogyo Co. 200,000 856
Ltd.
Metalrax Group PLC Class L 2,100,000 2,811
MYR Group, Inc. (d) 524,300 10,093
Ohba Co. Ltd. 125,000 442
Sanshin Corp. 250,000 709
Sanyo Engineering & 900,000 4,007
Construction, Inc.
Stantec, Inc. (a) 250,000 1,685
Taihei Dengyo Kaisha Ltd. 100,000 354
URS Corp. (a)(d) 1,250,000 32,500
66,725
REAL ESTATE - 0.1%
Chuo Warehouse Co. Ltd. 300,000 1,836
Echelon International Corp. 46,000 998
(a)
FRM Nexus, Inc. (a)(d) 156,649 274
Kennedy-Wilson, Inc. (a) 133,400 1,309
Nagawa Co. Ltd. 825,000 6,266
Wilshire Oil of Texas (a) 391,000 1,955
12,638
REAL ESTATE INVESTMENT TRUSTS
- - 0.4%
AMRESCO Capital Trust, Inc. 486,100 4,952
Banyan Strategic Realty Trust 919,250 5,458
(SBI) (d)
Meditrust Corp. unit 465,000 5,057
Redwood Trust, Inc. (d) 1,020,000 17,021
32,488
TOTAL CONSTRUCTION & REAL 525,443
ESTATE
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
DURABLES - 7.6%
AUTOS, TIRES, & ACCESSORIES -
3.4%
Airboss of America Corp. (a) 12,500 $ 39
Autocam Corp. (d) 430,002 5,913
AutoZone, Inc. (a) 2,275,000 56,164
Cook (D.C.) Holdings PLC (d) 2,300,000 485
Dixon Motors PLC 350,000 704
European Motor Holdings PLC 250,000 251
FCC Co. Ltd. 50,000 856
Federal Screw Works (d) 108,800 5,467
Fuji Oozx, Inc. (a) 200,000 379
Giant Industries, Inc. 20,000 233
Intermet Corp. 100,000 1,138
Keiiyu Co. Ltd. 100,000 1,135
Koito Industries Ltd. 1,000,000 5,247
Lufkin Industries, Inc. 150,000 2,475
Meritor Automotive, Inc. 1,296,700 31,445
Monaco Coach Corp. (a) 700,000 18,506
Monro Muffler Brake, Inc. 600,000 4,538
(a)(d)
Murakami Corp. (d) 790,000 5,069
Nissin Shoji Co. Ltd. 250,000 1,364
Owari Precise Products Co. 300,000 681
Ltd.
Peugeot SA 50,000 8,613
Piolax, Inc. (d) 676,000 6,196
Quicks Group PLC (d) 3,999,999 5,873
Raytech Corp. (a)(d) 328,800 1,603
Rocla OYJ 50,000 360
Sanderson Bramal Motor Group 600,000 2,103
PLC
Strattec Security Corp. (a)(d) 480,500 17,118
Tachi-S Co. Ltd. 850,000 5,639
TBC Corp. (a)(d) 1,837,500 13,666
Tochigi Fuji Industrial Co. 600,000 1,729
Ltd.
Transpro, Inc. (d) 660,925 4,874
Uni-Select, Inc. (d) 1,280,000 13,384
Wynn's International, Inc. (d) 1,774,000 34,371
257,618
CONSUMER DURABLES - 0.4%
Asko OY Class A 800,000 13,010
CompX International, Inc. (a) 218,900 3,598
Mikasa, Inc. 523,700 6,841
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
DURABLES - CONTINUED
CONSUMER DURABLES - CONTINUED
Portmeirion Potteries 125,000 $ 304
Holdings PLC
Sankyo Co. Ltd. (Gunma) 75,000 4,347
28,100
CONSUMER ELECTRONICS - 1.1%
Fantom Technologies, Inc. 407,500 5,573
Fossil, Inc. (a) 1,000,300 52,516
Koss Corp. (a)(d) 210,000 2,599
Movado Group, Inc. (d) 945,000 22,916
Tulikivi OY Series A 35,000 524
84,128
HOME FURNISHINGS - 1.3%
Airsprung Furniture Group PLC 975,000 2,057
Beter Bed Holding NV 131,666 3,768
BMTC Group, Inc. Class A 400,000 5,444
(sub-vtg.) (d)
Bush Industries, Inc. Class 957,500 12,687
A. (d)
Chromcraft Revington, Inc. (a) 534,500 7,249
Dorel Industries, Inc.:
Class A (multi-vtg.) (a)(e) 200,000 4,083
Class B (a) 550,600 10,966
Ladd Furniture, Inc. (a) 369,100 7,613
Miller (Herman), Inc. 60,000 1,575
Nakayamafuku Co. Ltd. 54,800 210
Nippon Filing 100,000 436
Rosebys PLC 500,000 1,979
Samas Groep NV 110,000 1,836
Silentnight Holdings PLC 200,000 811
Stanley Furniture Co., Inc. 694,900 16,721
(a)(d)
Tosco Co. Ltd. 452,000 1,764
Winsloew Furniture, Inc. 574,200 19,307
(a)(d)
98,506
TEXTILES & APPAREL - 1.4%
Berisford (S.W.) PLC 1,500,000 6,334
Concord Fabrics, Inc.:
Class A (a)(d) 169,600 1,304
Class B (a)(d) 122,700 920
Conso International Corp. 748,050 4,208
(a)(d)
Decorator Industries, Inc. (d) 343,415 2,404
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Dewhirst (IJ) Group PLC 5,500,000 $ 7,496
Dyersburg Corp. 610,100 534
Ellis Perry International, 454,400 5,751
Inc. (a)(d)
Galey & Lord, Inc. (a) 100,000 425
Gerber Childrenswear, Inc. (a) 34,300 247
Hampshire Group Ltd. (a)(d) 388,300 4,854
Happy Kids, Inc. (a) 190,000 2,066
JLM Couture, Inc. (a)(d) 181,500 437
Nautica Enterprises, Inc. 3,610,000 61,370
(a)(d)
Novel Denim Holdings Ltd. (a) 235,000 1,792
Polo Ralph Lauren Corp. Class 50,000 975
A (a)
Tandy Brands Accessories, 573,900 8,250
Inc. (a)(d)
Worldtex, Inc. (a) 674,900 1,687
111,054
TOTAL DURABLES 579,406
ENERGY - 2.7%
COAL - 0.0%
RJB Mining PLC 2,450,000 2,186
ENERGY SERVICES - 1.3%
AKITA Drilling Ltd. Class A 863,500 6,449
(non-vtg.)
Alpine Oil Services Corp. 2,000,000 1,593
(a)(d)
Aztec Manufacturing Co. (d) 415,000 4,150
Carbo Ceramics, Inc. 623,500 14,341
Dawson Geophysical Co. (a)(d) 375,900 4,064
Eagle Geophysical, Inc. (a) 203,401 153
IHC Caland NV 40,000 1,819
Input/Output, Inc. (a) 1,125,000 8,367
Kaneb Services, Inc. (a) 167,000 752
Oceaneering International, 15,000 264
Inc. (a)
Offshore Logistics, Inc. (a) 100,000 1,213
Pe Ben Oilfield Services Ltd. 314,500 866
(a)(d)
Petroleum Helicopters, Inc. 211,200 2,904
(d)
Petroleum Helicopters, Inc. 300,000 3,450
(non-vtg.)
Pool Energy Services Co. (a) 200,000 4,163
Powell Industries, Inc. (a)(d) 859,500 7,521
Precision Drilling Corp. 399,000 9,125
Class A (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
RPC Energy Services, Inc. (d) 2,769,600 $ 19,214
Santa Fe International Corp. 250,000 5,219
Seitel, Inc. 246,000 3,229
98,856
OIL & GAS - 1.4%
Adams Resources & Energy, 421,300 3,265
Inc. (d)
British-Borneo Oil & Gas PLC 45,000 166
Castle Energy Corp. (d) 408,750 7,051
Columbus Energy Corp. (a)(d) 307,500 1,768
Crown Central Petroleum Corp. 169,500 1,462
Class A (a)
Elf Gabon 10,000 984
ENEX Resources Corp. (a)(d) 144,300 361
Fletcher Challenge Ltd. 500,000 1,446
(Energy Division)
Foremost Industries, Inc. 517,500 1,117
(a)(d)
Frontier Oil Corp. (a) 100,000 656
Gulf Island Fabrication, Inc. 69,500 834
(a)
Hallwood Energy Corp. 394,527 2,318
Hartland Pipeline Services 185,000 694
Ltd. (a)
Hokuriku Gas Co. 1,432,000 5,000
Holly Corp. (d) 825,000 12,375
Markwest Hydrocarbon, Inc. 529,200 4,366
(a)(d)
Maynard Oil Co. (a)(d) 385,900 3,859
Novus Petroleum Ltd. (a)(d) 6,450,542 7,430
Petroleum Development Corp. 1,573,800 7,279
(a)(d)
Premier Oil PLC (a) 23,250,000 8,016
Renaissance Energy Ltd. (a) 450,000 6,483
Swift Energy Co. (a)(d) 2,018,100 21,064
Torch Energy Royalty Trust 215,400 1,198
Total Fina SA warrants 8/5/03 100,000 2,319
(a)
UNIFAB International, Inc. (a) 192,500 1,636
103,147
TOTAL ENERGY 204,189
FINANCE - 16.6%
BANKS - 4.2%
Banco Santander Puerto Rico 158,400 2,950
Bank of The Ozarks, Inc. 181,800 3,681
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Bergensbanken ASA (d) 1,200,000 $ 18,210
Canadian Western Bank (d) 815,000 10,821
Cathay Bancorp, Inc. 283,800 11,104
Den Norske Bank ASA (e) 900,000 3,125
Den Norske Bank ASA Class A 650,000 2,257
Free shares
Financial Institutions, Inc. 110,000 1,540
Finansbanken ASA (Reg.) (a) 250,000 1,238
First BanCorp P R (d) 2,850,000 64,659
First Financial Corp. Rhode 5,000 72
Island
GBC Bancorp (d) 700,000 14,088
Gronlandsbanken AS 20,000 547
Hamilton Bancorp, Inc. (a) 30,000 810
Hanmi Bank 237,874 3,955
Harleysville National Corp. 7,000 250
Jyske Bank AS (Reg.) 250,000 23,012
Laurentian Bank 888,500 14,186
Midtbank AS 10,050 325
National Bank of Canada 2,500,000 30,787
Nordbanken Holding AB 3,975,000 23,397
Nordlandsbanken AS (d) 330,700 9,144
Nordvestbank (Reg.) 12,000 1,036
Okobank Class A 578,000 5,225
Ringkjoebing Bank (d) 31,730 3,286
Seacoast Financial Services 495,000 5,847
Corp. (a)
SouthTrust Corp. 500,000 18,375
Sparebanken More 39,084 824
Sparebanken NOR primary 1,000,000 19,677
shares certificates
Sparebanken Nord-Norge 100,000 1,993
Sparebanken Rana 37,550 729
Grunnfondsbevis (d)
Sparebanken Rogaland capital 25,000 682
certificates
Sterling Bancorp (d) 518,500 10,564
Sydbank AS 330,000 14,808
Wing Hang Bank Ltd. 200,000 761
323,965
CREDIT & OTHER FINANCE - 1.3%
Aiful Corp. 10,000 1,363
Amagerbanken AS 34,850 1,454
Amtsspar Fyn Holding AS 45,000 2,203
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE -
CONTINUED
Credia Co. Ltd. 410,000 $ 13,816
Doral Financial Corp. 2,000,000 33,000
FIH AS Class B 665,000 14,825
Firstcity Financial Corp. (a) 265,000 1,491
Home Capital Group Class B 255,000 753
(sub-vtg.)
JCG Holdings Ltd. 14,700,000 9,848
Nissin Co. Ltd. 100,000 5,412
Paragon Group of Companies PLC 1,300,625 5,318
Resource Bancshares Mortgage 338,700 2,371
Group, Inc.
Surrey Metro Savings Credit 565,000 4,876
Union (non-vtg.)
Triad Guaranty, Inc. (a) 208,000 3,926
WSFS Financial Corp. 3,100 47
100,703
INSURANCE - 9.8%
Amerus Life Holdings, Inc. 887,200 24,453
Blanch E.W. Holdings, Inc. 450,000 29,475
Brown & Brown, Inc. 92,600 3,334
Capital Re Corp. 1,000,000 13,438
Commerce Group, Inc. 670,000 17,085
Cotton State Life & Health 420,200 4,648
Insurance Co. (d)
Desjardins-Laurentian Finance 482,500 5,125
Corp. Class A (sub-vtg.) (d)
Enhance Financial Services 165,000 3,424
Group, Inc.
Erie Indemnity Co. Class A 275,000 7,502
Fairfax Financial Holdings 1,117,900 105
Ltd. rights 12/31/07 (a)
Farm Family Holdings, Inc. 525,000 20,278
(a)(d)
Fidelity National Financial, 475,000 8,283
Inc.
Financial Industries Corp. (a) 249,700 3,215
First American Financial 75,000 1,247
Corp.
First Health Group Corp. (a) 85,000 2,019
Fremont General Corp. 2,000,000 34,000
HCC Insurance Holdings, Inc. 1,225,000 27,792
Healthcare Recoveries, Inc. 1,000,000 4,625
(a)(d)
Independence Holding Co. 146,000 1,697
Independent Insurance PLC 1,100,000 5,336
Intercontinental Life Corp. 874,100 8,960
(a)(d)
Investors Title Co. 131,500 2,482
IPC Holdings Ltd. (d) 2,503,000 50,060
Lambert Fenchurch Group PLC 1,000,000 1,347
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Lasalle Re Holdings Ltd. (d) 1,502,700 $ 24,513
Life USA Holding, Inc. (d) 1,600,000 32,700
Medical Assurance, Inc. (a) 273,800 8,214
MEEMIC Holdings, Inc. (a) 77,500 1,221
MIIX Group, Inc. 197,500 3,555
Miller Fisher Group PLC 325,000 353
MMI Companies, Inc. (d) 1,276,000 20,815
Mobile America Corp. 142,300 445
National Western Life 170,000 16,490
Insurance Co. Class A (a)(d)
Nymagic, Inc. 203,900 2,906
PAULA Financial (d) 569,300 4,163
Philadelphia Consolidated 987,000 21,221
Holding Corp. (a)(d)
PMI Group, Inc. 400,000 25,575
Professionals Insurance Co. 291,650 8,932
Management Group (a)
Protective Life Corp. 1,700,002 60,669
PXRE Corp. (d) 725,063 11,692
Radian Group, Inc. 360,000 18,562
RenaissanceRe Holdings Ltd. 648,300 24,028
SCPIE Holding, Inc. 380,000 11,828
Stirling Cooke Brown Holdings 793,700 3,869
Ltd. (d)
Symons International Group, 392,500 3,214
Inc. (a)
Terra Nova (Bermuda) Holdings 1,800,000 42,975
Ltd. Class A (d)
UICI (a)(d) 2,850,000 80,334
Unico American Corp. (d) 361,500 3,683
Union Assurances Federales SA 300,088 34,611
(a)
746,498
SAVINGS & LOANS - 0.9%
American Bank of Connecticut 23,900 547
CNY Financial Corp. 100,000 1,375
First Federal Bankshares, 127,000 1,349
Inc.
Home Port Bancorp, Inc. (d) 135,100 3,378
Independence Federal Savings 120,200 1,533
Bank (d)
Iroquois Bancorp, Inc. 106,400 1,968
PBOC Holdings, Inc. (a) 55,000 595
Ringerikes Sparebank 10,000 215
South Jersey Financial Corp., 30,000 416
Inc. (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
SAVINGS & LOANS - CONTINUED
UCBH Holdings, Inc. (a)(d) 589,000 $ 11,559
Washington Federal, Inc. 1,800,000 44,438
67,373
SECURITIES INDUSTRY - 0.4%
Daiko Shoken Business Co. 100,000 572
Globaly Corp. 255,000 3,272
JWGenesis Financial Corp. (a) 150,000 2,475
London Pacific Group Ltd. 3,000,030 17,767
MFC Bancorp Ltd. (a) 594,500 4,645
Nac Co. Ltd. 100,000 829
Norvestia OY AB Class B (a) 240,000 3,387
32,947
TOTAL FINANCE 1,271,486
HEALTH - 8.8%
DRUGS & PHARMACEUTICALS - 1.0%
Embrex, Inc. (a) 325,800 2,922
Fuji Pharmaceutical Co. Ltd. 100,000 558
H. Lundbeck A/S 63,800 1,997
Herbalife International, Inc.:
Class A (d) 1,037,500 11,996
Class B (non-vtg.) 2,010,500 18,911
Medco Research, Inc. (a) 362,500 9,063
Nature's Sunshine Products, 1,127,500 10,570
Inc. (d)
PAREXEL International Corp. 65,000 715
(a)
Riken Vitamin Oil Co. Ltd. 350,000 4,736
Serologicals Corp. (a)(d) 1,412,500 10,682
Theragenics Corp. (a) 340,000 3,655
Twinlab Corp. (a) 10,000 86
USANA, Inc. (a) 118,000 907
76,798
MEDICAL EQUIPMENT & SUPPLIES
- - 4.2%
ADAC Laboratories (a) 239,900 1,694
Ballard Medical Products (d) 2,770,500 67,185
Biomet, Inc. 2,000,000 72,750
Dentsply International, Inc. 700,000 18,944
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES
- - CONTINUED
Dianon Systems, Inc. (a) 44,500 $ 412
Elscint Ltd. (a)(d) 1,465,200 15,293
EMPI, Inc. (a) 92,500 2,353
ESC Medical Systems Ltd. 2,208,300 12,560
(a)(d)
Exactech, Inc. (a) 138,200 2,108
Hokuyaku, Inc. 250,000 1,157
HPSC, Inc. (a) 175,000 1,805
ICU Medical, Inc. (a)(d) 738,000 13,561
Medstone International, Inc. 561,200 3,683
(a)(d)
Moulin International Holding 3,000,000 309
Ltd.
NMT Medical, Inc. (a) 125,100 399
Ocular Sciences, Inc. (a)(d) 1,165,000 22,936
OEC Medical Systems, Inc. (d) 1,220,000 39,955
Orthofix International NV 950,700 14,023
(a)(d)
Protocol Systems, Inc. (a) 10,000 79
Respironics, Inc. (a)(d) 2,130,000 22,898
Utah Medical Products, Inc. 758,800 5,786
(a)(d)
319,890
MEDICAL FACILITIES MANAGEMENT
- - 3.6%
Community Hospitals Group PLC 350,000 2,726
Corvel Corp. (a)(d) 654,500 14,644
Cryolife, Inc. (a)(d) 714,100 8,569
First Commonwealth, Inc. (d) 280,000 6,843
Health Management Associates, 2,125,000 17,531
Inc. Class A (a)
HEALTHSOUTH Corp. (a) 1,500,000 18,375
Horizon Health Corp. (a)(d) 644,400 4,591
Lincare Holdings, Inc. (a) 50,000 1,500
ProVantage Health Services, 48,400 895
Inc. (a)
Quest Diagnostics, Inc. (a)(d) 2,000,000 51,500
Quorum Health Group, Inc. (a) 2,730,000 27,471
Ramsay Health Care Ltd. 1,000,000 664
RehabCare Group, Inc. (a)(d) 652,700 13,666
Res-Care, Inc. (a)(d) 1,365,000 28,665
Safeguard Health Enterprises, 438,000 1,752
Inc. (a)(d)
Syncor International Corp. (a) 158,500 4,696
United Wisconsin Services, 673,500 5,683
Inc.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT
- - CONTINUED
Universal Health Services, 1,500,000 $ 63,844
Inc. Class B (a)(d)
US Oncology, Inc. (a) 500,000 5,938
279,553
TOTAL HEALTH 676,241
HOLDING COMPANIES - 0.5%
DCC PLC:
(Ireland) 700,000 5,055
(United Kingdom) 3,000,000 21,660
Fonciere Financiere et Part SA 25,000 1,650
Hunting Group PLC 2,000,000 5,257
Perry Group (d) 1,900,000 4,747
TOTAL HOLDING COMPANIES 38,369
INDUSTRIAL MACHINERY &
EQUIPMENT - 4.6%
ELECTRICAL EQUIPMENT - 2.0%
Aichi Electric Co. Ltd. 1,000,000 1,938
American Power Conversion 2,000,000 41,500
Corp. (a)
Bairnco Corp. (d) 900,900 7,038
Blick PLC Class L 1,315,000 5,057
BMC Industries, Inc. 1,075,100 12,498
C&D Technologies, Inc. 485,600 14,629
Chase Corp. (d) 318,500 3,902
Cobra Electronics Corp. (a)(d) 500,000 2,000
Denyo Co. Ltd. 261,000 2,153
Emcee Broadcast Products, 122,500 245
Inc. (a)
Genlyte Group, Inc. (a) 568,000 13,206
Hughes Supply, Inc. 756,700 21,566
Inaba Denkisangyo Co. Ltd. 725,000 12,405
NovAtel, Inc. (a) 90,500 136
Sigmatron International, Inc. 35,500 226
(a)
Twentsche Kabel Holding NV 20,004 659
Vertex Communications Corp. 511,000 6,324
(a)(d)
Volex Group PLC 25,000 276
Yurtec Corp. 1,150,000 6,265
152,023
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - 2.6%
AGCO Corp. 1,063,000 $ 9,966
Amadasonoike Co. Ltd. 150,000 458
Baldwin Technology Co., Inc. 265,000 878
Class A (a)
Chart Industries, Inc. 1,090,000 7,153
DT Industries, Inc. 167,100 1,044
Engineered Support Systems, 453,250 6,119
Inc. (d)
Fansteel, Inc. (a)(d) 701,600 4,078
Fukushima Industries Corp. 25,000 196
Gardner Denver Machinery, 1,134,200 20,486
Inc. (a)(d)
Gehl Co. (a)(d) 635,000 13,573
Hardinge, Inc. 300,000 4,950
Hirsch International Corp. 655,000 1,351
Class A (a)(d)
IDEX Corp. (d) 1,500,000 42,281
Kaydon Corp. 835,000 26,042
KCI (Konecranes 75,000 2,387
International) (e)
Linx Printing Technology 380,361 1,148
MTS Systems Corp. 65,000 683
New Holland NV 837,700 12,566
Oilgear Co. (d) 135,300 1,133
P & F Industries, Inc. Class 287,500 2,767
A (a)(d)
Sansei Transport 800,000 4,295
Shin Nippon Machinery Co. 479,000 962
Ltd.
Specialty Equipment 873,700 22,716
Companies, Inc. (a)
Speizman Industries, Inc. 195,000 878
(a)(d)
Strongco, Inc. (a) 110,000 321
TB Wood's Corp. (d) 329,000 3,352
Twin Disc, Inc. (d) 232,400 4,590
Valmet Corp./Rauma Corp. (a) 54,458 728
Wakita & Co. Ltd. (a) 850,000 4,378
201,479
POLLUTION CONTROL - 0.0%
Weston (Roy F.), Inc. Class A 183,800 511
(a)
TOTAL INDUSTRIAL MACHINERY & 354,013
EQUIPMENT
MEDIA & LEISURE - 8.2%
BROADCASTING - 2.4%
CanWest Global Communications 1,300,006 16,743
Corp. (sub-vtg.)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Capital Radio PLC 850,000 $ 12,550
Chubu-Nippon Broadcasting Co. 9,200 84
Ltd.
Cogeco Cable, Inc. (d) 1,000,000 16,597
Cogeco, Inc. (sub. vtg.) (d) 1,391,500 21,247
Hearst-Argyle Television, 130,000 3,218
Inc. (a)
Matav-Cable System Media Ltd. 220,000 9,460
sponsored ADR
Moffat Communications Ltd. (d) 2,380,000 32,865
Nielsen Media Research, Inc. 475,000 15,438
(a)
P4 Radio Hele Norge ASA (a) 650,000 2,633
Prime Television Ltd. 1,546,499 1,650
Radio Pacific Ltd. 300,000 1,154
Regional Cablesystems, Inc. 70,000 674
(a)
Scottish Media Group PLC 500,000 7,439
Scottish Radio Holdings PLC 500,000 8,113
Southern Cross Broadcasting 840,410 4,621
Australia Ltd.
TCA Cable TV, Inc. 300,000 17,588
TVA Group, Inc. Class B (a) 1,075,000 13,774
Ulster Television PLC Ord. 10,000 32
185,880
ENTERTAINMENT - 1.4%
Alliance Atlantis 221,500 2,500
Communications Corp. (a)
Alliance Atlantis 50,000 564
Communications Corp. (a)(e)
European Leisure PLC 547,000 870
King World Productions, Inc. 2,325,000 81,084
(a)
Lady Luck Gaming Corp. (a) 143,500 753
Lakes Gaming, Inc. (d) 853,700 10,778
Scientific Games Holdings 238,400 4,902
Corp. (a)
Shingakukai Co. 175,000 733
Television & Media Services 1,542,944 2,360
Ltd.
104,544
LEISURE DURABLES & TOYS - 0.2%
Hamleys PLC 100,000 255
K2, Inc. 113,400 1,120
National R.V. Holdings, Inc. 304,900 7,603
(a)
PlayCore, Inc. (a) 297,115 2,451
Winnebago Industries, Inc. 67,100 1,644
13,073
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 0.1%
Choice Hotels International, 220,700 $ 3,573
Inc. (a)
Choice Hotels Skandanavia ASA 150,000 386
(a)
Dover Downs Entertainment, 5,000 81
Inc.
Hanover International PLC 450,000 944
Riviera Holdings Corp. rights 90,900 205
12/31/99 (a)
Ryan Hotels PLC 3,500,979 3,408
ShoLodge, Inc. (a) 311,500 1,733
10,330
PUBLISHING - 1.3%
A-pressen ASA Series A (a) 50,000 817
Adscene Group PLC Class L 175,000 733
Bemrose Corp. PLC 100,000 568
Central Newspapers, Inc. 85,000 3,570
Class A
Fine Art Developments PLC 750,000 1,621
Class L
Independent Newspapers PLC:
(Ireland) 50,000 238
(United Kingdom) 375,000 1,795
Johnston Press PLC 1,950,000 9,745
Journal Register Co. (a) 760,000 12,778
Kauppakaari OY (a) 125,000 2,407
Reader's Digest Association, 260,000 9,051
Inc. Class A (non-vtg.)
Roto Smeets de Boer NV 175,000 5,898
Sanoma-WSOY Oyj (a) 475,000 25,410
Schibsted AS Series B 100,000 1,157
Southnews PLC 150,000 1,667
Sterling Publishing Group PLC 400,000 224
Talentum OY Class B (d) 1,000,000 16,797
VLT AB Class B 175,000 1,962
Wegener Arcade NV 50,000 711
97,149
RESTAURANTS - 2.8%
Applebee's International, 2,150,000 67,994
Inc. (d)
ARK Restaurants Corp. (a)(d) 270,000 3,038
Benihana, Inc. (a)(d) 346,400 5,542
Benihana, Inc. Class A (a)(d) 266,800 3,869
Consolidated Products, Inc. 1,250,000 19,922
(a)
Elxsi Corp. (a)(d) 282,500 3,178
Flanigans Enterprises, Inc. 177,700 822
(d)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
IHOP Corp. (a)(d) 1,860,200 $ 43,250
Mikes Restaurants, Inc. (a)(d) 272,500 362
Morton's Restaurant Group, 360,000 6,795
Inc. (a)(d)
Restaurant Brands NZ Ltd. 500,000 379
Sonic Corp. (a)(d) 1,925,000 61,841
Sportscene Restaurants, Inc. 2,800 13
Class A
217,005
TOTAL MEDIA & LEISURE 627,981
NONDURABLES - 3.7%
AGRICULTURE - 0.1%
IAWS Group PLC 1,650,000 6,532
IAWS Group PLC Class A (UK 500,000 1,866
Reg.)
Sylvan, Inc. (a) 235,200 2,617
11,015
BEVERAGES - 0.1%
Golden State Vinters, Inc. 13,000 80
Class B (a)
National Beverage Corp. (a) 292,500 2,669
Shikoku Coca-Cola Bottling 100,000 1,536
Co. Ltd.
Sleeman Breweries Ltd. (a) 150,000 737
Todhunter International, Inc. 256,400 2,564
(a)(d)
7,586
FOODS - 0.8%
Agribrands International, 105,200 4,780
Inc. (a)
Benson's Crisps PLC 1,850,000 1,493
Cagle's, Inc. 209,700 3,879
Corn Products International, 465,000 14,648
Inc.
Greggs PLC 70,000 2,726
Hazlewood Foods PLC 125,000 238
Matthews (Bernard) PLC 600,000 1,156
Monterey Pasta Co. (a) 71,500 203
Perkins Foods PLC 1,900,320 3,176
Raisio Group PLC 250,000 3,009
Riviana Foods, Inc. (d) 839,000 16,256
Robert Wiseman Dairies PLC 400,000 1,246
Shoei Foods Corp. 250,000 1,093
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONDURABLES - CONTINUED
FOODS - CONTINUED
Suprema Specialties, Inc. 447,000 $ 3,548
(a)(d)
Tokatsu Foods Co. 34,000 122
Vlasic Foods International, 50,000 372
Inc. (a)
57,945
HOUSEHOLD PRODUCTS - 1.3%
Alberto-Culver Co. Class A 350,000 7,591
Comany, Inc. 100,000 482
CPAC, Inc. (d) 683,000 5,293
Del Laboratories, Inc. 364,400 5,238
DSG International Ltd. (a)(d) 645,000 4,797
Helen of Troy Corp. (a)(d) 2,750,000 45,891
IWP International PLC:
(Dublin Reg.) 525,000 1,123
(United Kingdom Reg.) 800,000 1,752
Luxottica Group Spa sponsored 50,000 772
ADR
Mayborn Group PLC 75,000 100
Paterson Zochonis PLC Class A 50,000 217
(non-vtg.)
Premark International, Inc. 550,000 20,831
Stephan Co. (d) 329,500 1,318
Swallowfield PLC Class L 100,000 105
95,510
TOBACCO - 1.4%
Gallaher Group PLC sponsored 4,430,000 100,229
ADR
RJ Reynolds Tobacco Holdings, 100,000 2,738
Inc.
Standard Commercial Corp. (d) 1,248,900 6,635
109,602
TOTAL NONDURABLES 281,658
PRECIOUS METALS - 0.7%
De Beers Consolidated Mines 1,125,000 27,844
Ltd. ADR
Industrias Penoles SA 4,700,000 12,487
Normandy Mt. Leyshon Ltd. 1,000,000 1,412
Orogen Minerals Ltd. 1,600,000 2,020
Orogen Minerals Ltd. GDR (e) 265,000 3,313
Richmont Mines, Inc. (a)(d) 800,000 1,434
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
PRECIOUS METALS - CONTINUED
Ross Mining NL 1,022,747 $ 439
Sons of Gwalia NL 1,632,272 4,249
TOTAL PRECIOUS METALS 53,198
RETAIL & WHOLESALE - 8.4%
APPAREL STORES - 3.1%
Braun's Fashions Corp. (a) 57,500 1,013
Buckle, Inc. (The) (a) 140,000 4,235
Catherines Stores Corp. (a) 309,000 4,056
Chateau Stores of Canada Ltd. 192,900 1,024
Class A (d)
Chicos Fas, Inc. (a) 239,600 6,230
Claire's Stores, Inc. 2,360,000 56,050
Footstar, Inc. (a)(d) 1,490,004 53,640
Goldlion Holdings Ltd. 1,000,000 211
Gymboree Corp. (a) 600,000 3,113
Just for Feet, Inc. (a) 200,000 731
Kenneth Cole Productions, 675,000 23,625
Inc. Class A (a)(d)
Men's Wearhouse, Inc. (The) 80,000 1,990
(a)
New Look Group PLC (e) 1,000,000 3,553
One Price Clothing Stores, 655,000 3,275
Inc. (a)(d)
PrimeSource Corp. 47,500 344
Ross Stores, Inc. 1,335,000 64,247
S & K Famous Brands, Inc. 420,000 3,623
(a)(d)
Shirmax Fashions Ltd. (a) 450,000 783
United Retail Group, Inc. (a) 280,000 2,870
234,613
DRUG STORES - 0.5%
Jean Coutu Group, Inc. Class 1,690,000 37,024
A (d)
GENERAL MERCHANDISE STORES -
1.3%
Arnotts PLC 100,387 827
BJ's Wholesale Club, Inc. (a) 2,185,000 66,916
Daiwa Co. Ltd. 300,000 773
Jo-Ann Stores, Inc.:
Class A (a) 374,200 5,262
Class B (non vtg.) (a) 1,090,900 12,682
Shopko Stores, Inc. (a) 200,500 7,682
Stein Mart, Inc. (a) 1,175,000 7,821
101,963
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 1.4%
Food Lion, Inc. Class A 2,600,000 $ 31,038
Iceland Group PLC 4,700,000 20,933
Metro Richelieu, Inc. Class A 3,200,000 44,082
(d)
Schultz Sav-O Stores, Inc. (d) 395,100 6,470
Western Beef, Inc. (a)(d) 423,400 3,480
Whittard of Chelsea PLC 431,950 442
106,445
RETAIL & WHOLESALE,
MISCELLANEOUS - 2.1%
Advanced Marketing Services, 343,300 5,579
Inc.
Amway Asia Pacific Ltd. 100,000 1,369
Amway Japan Ltd. sponsored ADR 10,900 57
Blair Corp. (d) 791,100 15,723
Brookstone, Inc. (a)(d) 744,600 11,634
Cameron Ashley Building 700,000 8,619
Products, Inc. (a)(d)
Cole National Corp. Class A 1,058,900 8,604
(a)(d)
Daisytek International Corp. 832,000 11,960
(a)
Farepak PLC 1,013,000 4,684
Finish Line, Inc. Class A 1,891,700 19,863
(a)(d)
Finlay Enterprises, Inc. 1,000,000 14,375
(a)(d)
Friedmans, Inc. Class A (d) 1,343,700 11,505
Grafton Group PLC unit 125,000 2,595
Guitar Center, Inc. (a) 10,000 121
Heiton Holdings PLC 350,000 1,254
HomeBase, Inc. (a) 1,177,400 6,108
Oasis Stores Ltd. 50,000 195
Partridge Fine Arts PLC 140,000 132
Piercing Pagoda, Inc. (a)(d) 910,000 15,243
Rex Stores Corp. (a)(d) 545,000 20,267
Sound Advice, Inc. (a)(d) 212,500 1,620
Sportsmans Guide, Inc. (a) 235,000 1,322
162,829
TRADING COMPANIES - 0.0%
Mitani Sangyo Co. Ltd. 100,000 516
TOTAL RETAIL & WHOLESALE 643,390
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - 5.9%
ADVERTISING - 0.7%
ADVO, Inc. (a) 81,800 $ 1,564
InfoUSA, Inc.:
Class A (a)(d) 1,772,500 13,405
Class B (a)(d) 1,828,000 14,167
R.H. Donnelley Corp. 1,423,500 25,000
Saatchi & Saatchi PLC 250,000 867
55,003
EDUCATIONAL SERVICES - 0.2%
Concorde Career Colleges, 250,000 141
Inc. (a)
Institution of General 450,000 2,102
Education (d)
Quest Education Corp. (a)(d) 758,800 7,351
Up, Inc. (d) 450,000 2,711
12,305
LEASING & RENTAL - 0.5%
Aaron Rents, Inc. Class B 356,800 7,225
Cort Business Services Corp. 464,200 11,228
(a)
Gowrings PLC 200,000 438
Nishio Rent All Co. Ltd. 500,000 5,500
Rakentajain Konevuokraamo OY 75,000 1,003
Class B
Superior Energy Services, 2,000,000 11,500
Inc. (a)(d)
36,894
PRINTING - 1.4%
Adare Printing Group PLC:
(Ireland)(d) 679,000 4,591
(United Kingdom)(d) 710,004 4,608
Pubco Corp. (a)(d) 319,500 2,636
Reynolds & Reynolds Co. Class 3,900,000 91,650
A (d)
Wyndeham Press Group PLC 575,000 3,137
106,622
SERVICES - 3.1%
Aktiv Kapital ASA 125,000 338
Analytical Surveys, Inc. (a) 35,000 875
Asi Solutions, Inc. (a) 23,000 196
Caldwell Partners 400,000 1,461
International, Inc. Class A
(non-vtg.)
Chodai Co. Ltd. 200,000 1,372
Craig (Jenny), Inc. (a) 936,100 2,691
de la Rue PLC 100,000 625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Diversified Corporate 253,200 $ 1,139
Resources, Inc. (a)(d)
Dun & Bradstreet Corp. 660,000 20,955
Eyeful Home Technology, Inc. 200,000 1,554
Go-Ahead Group (The) PLC 300,000 4,140
Holidaybreak PLC 275,000 1,383
Interim Services, Inc. (a) 50,000 1,056
International Telecom Data 154,500 1,448
Systems, Inc. (a)
Lai Worldwide, Inc. (a)(d) 700,000 4,288
Learning Tree International, 15,000 167
Inc. (a)
NFO Worldwide, Inc. (a) 388,300 5,825
Personnel Group of America, 832,800 7,860
Inc. (a)
Pittston Co. (Brinks Group) 2,310,000 62,803
(d)
Pre-Paid Legal Services, Inc. 25,000 770
(a)
Programming & Systems, Inc. 313,300 0
(a)(d)
Proudfoot Consulting PLC 250,000 95
RCM Technologies, Inc. (a) 272,100 3,792
RemedyTemp, Inc. Class A 517,500 9,250
(a)(d)
Right Management Consultants, 673,000 9,632
Inc. (a)(d)
Seattle FilmWorks, Inc. (a)(d) 1,635,000 4,496
SOS Staffing Services, Inc. 217,000 1,180
(a)
Staffmark, Inc. (a) 822,600 8,946
Sterile Recoveries, Inc. (a) 138,100 1,519
Tanabe Management Consulting 200,000 742
Co.
Telespectrum Worldwide, Inc. 71,500 505
(a)
Thomas Group (a) 170,900 1,538
Unifirst Corp. 156,900 2,618
Viad Corp. 2,225,000 73,564
Wesco, Inc. 200,000 1,030
Westaff, Inc. (a) 56,000 343
Winston Resources, Inc. (a)(d) 322,000 1,449
241,645
TOTAL SERVICES 452,469
TECHNOLOGY - 12.7%
COMMUNICATIONS EQUIPMENT - 0.2%
KTK Telecommunications 100,000 581
Engineering Co. Ltd.
Kyosan Electric Manufacturing 500,000 1,458
Co. Ltd.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT -
CONTINUED
Lo Jack Corp. (a) 110,500 $ 1,105
Tollgrade Communications, 509,000 11,516
Inc. (a)(d)
14,660
COMPUTER SERVICES & SOFTWARE
- - 5.4%
Affiliated Computer Services, 1,000,000 46,500
Inc. Class A (a)
Aladdin Knowledge Systems 490,000 3,828
Ltd. (a)
Analysts International Corp. 210,000 2,966
Avant! Corp. (a) 70,000 1,006
Black Box Corp. (a)(d) 1,425,000 72,319
Computer Learning Centers, 1,693,400 9,314
Inc. (a)(d)
Condor Technology Solutions, 184,000 667
Inc. (a)
Cotelligent, Inc. (a) 460,300 2,704
Daitec Co. Ltd. 411,600 9,199
Directrix, Inc. (a) 90,000 602
ECI Telecom Ltd. 875,000 29,695
Equitrac Corp. (a)(d) 353,000 7,237
Fair, Isaac & Co., Inc. 550,000 18,597
Forsoft Ltd. (a) 10,000 70
GSE Systems, Inc. (a)(d) 330,700 1,654
Industri-Matematik 256,800 538
International Corp. (a)
Infinium Software, Inc. (a) 180,000 911
Informa Group PLC 1,000,000 5,971
JDA Software Group, Inc. 1,325,000 11,925
(a)(d)
Mapics, Inc. (a) 500,000 4,063
Melita International Corp. (a) 700,400 8,055
Meridian Data, Inc. (a) 52,000 462
Meta Group, Inc. (a) 75,000 1,088
Metro Information Services, 42,500 730
Inc. (a)
MMT Computing PLC 50,000 564
Ontrack Data International, 217,000 1,058
Inc. (a)
Orbotech Ltd. 150,000 7,988
Phoenix Technologies Ltd. (a) 1,115,000 13,798
Project Software & 375,000 15,938
Development, Inc. (a)
Rainbow Technologies, Inc. (a) 131,500 1,816
Remedy Corp. (a)(d) 1,500,000 30,938
Sapiens International Corp. 120,000 1,215
NV (a)
SPSS, Inc. (a)(d) 860,000 21,178
Symantec Corp. (a) 1,900,000 57,475
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - CONTINUED
Symix Systems, Inc. (a) 143,500 $ 1,238
Timberline Software Corp. 185,700 3,145
Unigraphics Solutions, Inc. 550,000 14,025
Class A (a)(d)
410,477
COMPUTERS & OFFICE EQUIPMENT
- - 2.8%
Adaptec, Inc. (a) 790,000 30,711
Advanced Digital Information 850,000 36,125
Corp. (a)(d)
Amplicon, Inc. 523,400 6,935
Apex, Inc. (a) 25,000 653
Ciprico, Inc. (a) 50,000 569
Creo Products, Inc. (a) 9,500 194
Cybex Corp. (a)(d) 733,200 19,521
Equinox Systems, Inc. (a)(d) 373,600 4,717
Inacom Corp. (a) 350,000 4,856
Kronos, Inc. (a)(d) 1,000,000 48,375
Maezawa Kasei Industries Co. 200,000 3,021
Ltd.
Nam Tai Electronics, Inc. 389,000 4,814
Nam Tai Electronics, Inc. 140,000 193
warrants 11/24/00 (a)
Pomeroy Computer Resources, 1,162,500 16,784
Inc. (a)(d)
Quantum Corp. (a) 500,000 11,156
Scan-Optics, Inc. (a) 251,000 879
SED International Holdings, 960,000 2,880
Inc. (a)(d)
Zebra Technologies Corp. (a) 550,000 25,816
218,199
ELECTRONIC INSTRUMENTS - 0.6%
BTU International, Inc. (a)(d) 358,800 1,480
Cohu, Inc. 160,000 6,600
Halma PLC 1,150,000 2,183
Hurco Companies, Inc. (a)(d) 379,028 1,611
Intest Corp. (a)(d) 652,500 5,057
Mesa Laboratories, Inc. (a) 135,400 669
MOCON, Inc. 137,600 998
Nanometrics, Inc. (a)(d) 843,500 6,326
Reliability, Inc. (a)(d) 635,000 2,858
Sanderson Electronics PLC 1,250,000 3,458
SBS Technologies, Inc. (a)(d) 496,000 11,966
Toko Seiki Co. Ltd. (a) 300,000 731
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS -
CONTINUED
Wireless Telecom Group, Inc. 1,655,700 $ 3,518
(a)(d)
X-Rite, Inc. 250,000 1,875
49,330
ELECTRONICS - 3.7%
Align-Rite International, 448,000 6,776
Inc. (a)(d)
Apollo Electronics Co. Ltd. 50,000 642
ASM Pacific Technology Ltd. 4,124,000 3,374
Bel Fuse, Inc. Class A (a) 13,000 414
Bergman & Beving AB Class B 487,500 6,892
Daidensha Co. Ltd. 100,000 568
Dallas Semiconductor Corp. (d) 2,000,000 101,875
Del Global Technologies Corp 709,800 5,767
(a)(d)
Diodes, Inc. (a)(d) 490,000 4,134
Elec & Eltek International 2,000,000 358
Holdings Ltd.
Esterline Technologies Corp. 83,300 1,286
(a)
General Semiconductor, Inc. 2,910,600 24,922
(a)(d)
Griffon Corp. (a)(d) 2,690,000 20,175
Kingboard Chemical Holdings 7,000,000 2,458
Ltd.
Merix Corp. (a) 70,000 551
Methode Electronics, Inc. 1,250,000 27,891
Class A
Micro Linear Corp. (a)(d) 1,182,800 4,657
Microsemi Corp. (a)(d) 1,150,000 8,913
NU Horizons Electronics Corp. 440,000 3,506
(a)(d)
Percon Acquisition, Inc. (a) 143,300 1,290
Pericom Semiconductor Corp. 170,000 2,476
(a)
Sedgemoor PLC 1,100,000 892
Siliconix, Inc. (a) 397,300 19,120
Stoneridge, Inc. (a) 484,600 8,056
Taitron Components, Inc. 559,900 1,680
Class A (a)(d)
Tech-Sym Corp. (a)(d) 440,700 10,852
Techtronic Industries Co. 5,000,000 966
TT Group PLC 3,700,000 8,465
Video Display Corp. (a)(d) 217,600 986
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Wong's International Holdings 10,000,000 $ 2,834
Ltd.
Wong's International Holdings 1,000,000 29
Ltd. warrants 5/31/00 (a)
282,805
TOTAL TECHNOLOGY 975,471
TRANSPORTATION - 4.2%
AIR TRANSPORTATION - 1.8%
Alpha Airports Group PLC 700,000 681
America West Holding Corp. 650,000 12,878
Class B (a)
Comair Holdings, Inc. 2,750,000 67,203
Mercury Air Group, Inc. (a)(d) 623,140 4,362
Mesaba Holdings, Inc. (a) 130,000 1,690
Midwest Express Holdings, 1,030,000 34,248
Inc. (a)(d)
Transat AT, Inc. (a) 125,000 589
World Fuel Services Corp. (d) 1,249,906 17,264
138,915
SHIPPING - 0.1%
Farstad Shipping ASA 200,000 602
Isewan Terminal Service Co. 1,000,000 2,750
Ltd.
Meiko Transportation Co. Ltd. 500,000 2,030
Ocean Wilsons Holdings Ltd. 600,000 954
Peninsular & Oriental Steam 10,000 162
Navigation Co.
Tokyo Kisen Co. Ltd. 425,000 1,744
8,242
TRUCKING & FREIGHT - 2.3%
Air Express International 830,000 22,203
Corp.
Arkansas Best Corp. (a) 150,000 1,631
Arnold Industries, Inc. (d) 1,529,200 24,085
Baltrans Holdings Ltd. 4,412,000 489
Boyd Brothers Transportation, 278,100 2,885
Inc. (a)(d)
Cannon Express, Inc. Class A 253,100 728
(a)(d)
Covenant Transport, Inc. 75,000 1,322
Class A (a)
Daiwa Logistics Co. Ltd. 300,000 2,907
Goodfellow, Inc. (d) 379,500 2,532
Hub Group, Inc. Class A (a) 80,300 1,927
Japan Logistic Systems Corp. 134,000 503
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - CONTINUED
Landstar System, Inc. (a) 95,000 $ 3,836
Mark VII, Inc. (a)(d) 656,000 14,924
Marten Transport Ltd. (a)(d) 447,700 5,372
Old Dominion Freight Lines, 831,200 12,468
Inc. (a)(d)
P.A.M. Transportation 221,000 2,500
Services, Inc. (a)
Pittston Co. (BAX Group)(d) 1,600,000 16,000
Trancom Co. Ltd. 236,000 1,669
USFreightways Corp. 1,100,000 54,313
172,294
TOTAL TRANSPORTATION 319,451
UTILITIES - 2.0%
ELECTRIC UTILITY - 0.2%
Avista Corp. 118,000 1,984
Bangor Hydro-Electric Co. 367,400 6,108
Central Vermont Public 184,100 2,554
Service Corp.
CMP Group, Inc. 160,200 4,245
Green Mountain Power Corp. 68,000 922
Maine Public Service Co. 80,600 1,431
17,244
GAS - 0.3%
Midcoast Energy Resources, 522,425 8,881
Inc. (d)
Otaki Gas Co. Ltd. 400,000 1,697
Southwestern Energy Co. (d) 1,740,900 14,471
25,049
TELEPHONE SERVICES - 0.1%
Atlantic Tele-Network, Inc. 490,920 4,786
(d)
WATER - 1.4%
Brockhampton Holdings PLC 4,700,000 6,863
Class A (non-vtg.)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
WATER - CONTINUED
Hyder PLC (d) 8,443,800 $ 87,269
Yorkshire Water PLC 1,525,947 10,844
104,976
TOTAL UTILITIES 152,055
TOTAL COMMON STOCKS 7,542,334
(Cost $6,161,677)
PREFERRED STOCKS - 0.0%
CONVERTIBLE PREFERRED STOCKS
- - 0.0%
ENERGY - 0.0%
OIL & GAS - 0.0%
Goodrich Petrolem Corp. 73,800 240
Series A, $0.80
NONCONVERTIBLE PREFERRED
STOCKS - 0.0%
MEDIA & LEISURE - 0.0%
BROADCASTING - 0.0%
Prosieben Media AG (non-vtg.) 5,000 213
TOTAL PREFERRED STOCKS 453
(Cost $1,033)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CONVERTIBLE BONDS - 0.1%
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S)
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES -
0.0%
Mercury Air Group, Inc. 7.75% B- $ 500 525
2/1/06
TECHNOLOGY - 0.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Aspect Telecommunications
Corp.:
0% 8/10/18 (e) - 20,000 4,500
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT -
CONTINUED
Aspect Telecommunications
Corp.: - continued
0% 8/10/18 - $ 24,500 $ 5,513
Trans Lux Corp. 7.5% 12/1/06 - 535 471
10,484
TOTAL CONVERTIBLE BONDS 11,009
(Cost $10,174)
CASH EQUIVALENTS - 1.4%
SHARES
Taxable Central Cash Fund (c) 107,036,763 107,037
(Cost $107,037)
TOTAL INVESTMENT IN $ 7,660,833
SECURITIES - 100%
(Cost $6,279,921)
</TABLE>
LEGEND
(a) Non-income producing
(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(c) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.06%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(d) Affiliated company
(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 $26,436,000 or 0.3% of net assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 77.4%
United Kingdom 5.4
Canada 4.5
Japan 2.8
Bermuda 2.0
Finland 1.5
Israel 1.1
Others (individually less 5.3
than 1%)
100.0%
INCOME TAX INFORMATION
At July 31, 1999, the aggregate cost of investment securities for
income tax purposes was $6,287,260,000. Net unrealized appreciation
aggregated $1,373,573,000, of which $2,204,683,000 related to
appreciated investment securities and $831,110,000 related to
depreciated investment securities.
The fund hereby designates approximately $609,722,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) JULY 31,
1999
ASSETS
Investment in securities, at $ 7,660,833
value (cost $6,279,921) -
See accompanying schedule
Cash 706
Foreign currency held at 26
value (cost $26)
Receivable for investments 73,869
sold
Receivable for fund shares 6,177
sold
Dividends receivable 8,122
Interest receivable 499
Redemption fees receivable 4
Other receivables 300
TOTAL ASSETS 7,750,536
LIABILITIES
Payable for investments $ 26,831
purchased
Payable for fund shares 14,483
redeemed
Accrued management fee 5,532
Other payables and accrued 1,786
expenses
TOTAL LIABILITIES 48,632
NET ASSETS $ 7,701,904
Net Assets consist of:
Paid in capital $ 5,914,947
Undistributed net investment 28,835
income
Accumulated undistributed net 376,940
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,381,182
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 317,372 $ 7,701,904
shares outstanding
NET ASSET VALUE and $24.27
redemption price per share
($7,701,904 (divided by)
317,372 shares)
Maximum offering price per $25.02
share (100/97.00 of $24.27)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED JULY 31, 1999
INVESTMENT INCOME $ 114,592
Dividends (including $39,424
received from
affiliated issuers)
Interest 24,807
139,399
Less foreign taxes withheld (7,231)
TOTAL INCOME 132,168
EXPENSES
Management fee Basic fee $ 52,665
Performance adjustment 15,550
Transfer agent fees 19,229
Accounting fees and expenses 897
Non-interested trustees' 37
compensation
Custodian fees and expenses 1,212
Audit 73
Legal 30
Interest 94
Reports to shareholders 569
Miscellaneous 27
Total expenses before 90,383
reductions
Expense reductions (910) 89,473
NET INVESTMENT INCOME 42,695
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 464,448
(including realized gain of
$28,923 on sales of
investments in affiliated
issuers)
Foreign currency transactions (331) 464,117
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (459,538)
Assets and liabilities in 404 (459,134)
foreign currencies
NET GAIN (LOSS) 4,983
NET INCREASE (DECREASE) IN $ 47,678
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1999 YEAR ENDED JULY 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 42,695 $ 119,579
income
Net realized gain (loss) 464,117 974,263
Change in net unrealized (459,134) (66,124)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 47,678 1,027,718
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (77,740) (106,826)
From net investment income
From net realized gain (752,214) (591,880)
TOTAL DISTRIBUTIONS (829,954) (698,706)
Share transactions Net 1,590,582 3,991,908
proceeds from sales of shares
Reinvestment of distributions 800,524 685,260
Cost of shares redeemed (4,423,505) (3,166,447)
NET INCREASE (DECREASE) IN (2,032,399) 1,510,721
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,485 2,051
TOTAL INCREASE (DECREASE) (2,813,190) 1,841,784
IN NET ASSETS
NET ASSETS
Beginning of period 10,515,094 8,673,310
End of period (including $ 7,701,904 $ 10,515,094
undistributed net investment
income of $28,835 and
$70,720, respectively)
OTHER INFORMATION
Shares
Sold 70,854 153,618
Issued in reinvestment of 39,125 27,797
distributions
Redeemed (199,036) (119,111)
Net increase (decrease) (89,057) 62,304
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 25.87 $ 25.20 $ 19.87 $ 19.25 $ 17.62
period
Income from Investment
Operations
Net investment income .12 C .29 C .30 C .26 .20
Net realized and unrealized .42 2.24 6.93 1.83 3.57
gain (loss)
Total from investment .54 2.53 7.23 2.09 3.77
operations
Less Distributions
From net investment income (.20) (.28) (.24) (.23) (.09)
From net realized gain (1.94) (1.58) (1.66) (1.24) (2.05)
Total distributions (2.14) (1.86) (1.90) (1.47) (2.14)
Redemption fees added to paid - - - - -
in capital
Net asset value, end of $ 24.27 $ 25.87 $ 25.20 $ 19.87 $ 19.25
period
TOTAL RETURN A, B 3.72% 10.53% 39.45% 11.50% 23.81%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 7,702 $ 10,515 $ 8,673 $ 4,019 $ 2,947
millions)
Ratio of expenses to average 1.09% .97% 1.02% 1.05% 1.12%
net assets
Ratio of expenses to average 1.08% D .95% D 1.01% D 1.04% D 1.11% D
net assets after expense
reductions
Ratio of net investment .52% 1.10% 1.36% 1.46% 1.31%
income to average net assets
Portfolio turnover rate 24% 47% 45% 79% 65%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Low-Priced Stock Fund (the fund) is a fund of Fidelity
Puritan Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended, 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
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
U.S. federal income taxes to the extent that it distributes
substantially all of its taxable income for its fiscal year. The fund
may be subject to foreign taxes on income and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests. Foreign
governments may also impose taxes on other payments or transactions
with respect to foreign securities. The fund accrues such taxes as
applicable. 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,
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. 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,
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 1.50% 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.
2. OPERATING POLICIES -
CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the fund, along with other registered investment companies
having management contracts with FMR, may participate in an interfund
lending program. This program provides an alternative credit facility
allowing the fund to borrow from, or lend money to, other
participating funds.
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 $1,861,622,000 and $3,745,765,000, 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 .82% 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 $1,887,000 on sales of shares of the fund of which
$1,886,000 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 .23% 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 $463,000 for the
period.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower.
The average daily loan balances during the period for which loans were
outstanding amounted to $ 46,804,000. The weighted average interest
rate was 5.02%. Interest expense includes $91,000 paid under the
interfund lending program.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. The average daily loan balances during the period for which
loans were outstanding amounted to $2,542,000. The weighted average
interest rate was 5.18%. Interest expense includes $3,000 paid under
the bank borrowing program.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $654,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's custodian and transfer agent fees were
reduced by $19,000 and $237,000, respectively, under these
arrangements.
8. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
AFC Cable Systems, Inc. $ 1,953 $ 9,013 $ - $ -
ADAC Laboratories 3,565 7,937 - -
Adams Resources & Energy, Inc. 590 - 42 3,265
Adare Printing Group Plc - - - 4,591
(Ireland)
Adare Printing Group Plc - - - 4,608
(United Kingdom)
Advanced Digital Information - 1,884 - 36,125
Corp.
Aladdin Knowledge Systems Ltd. 915 1,294 - -
Alberto-Culver Co. Class A - 2,523 - -
Align-Rite International, 48 - - 6,776
Inc.
Allied Research Corp. 9 - - 2,572
Alpine Oil Services Corp. 620 - - 1,593
American Safety Razor Co. 386 5,870 - -
AMRESCO Capital Trust, Inc. - 413 399 -
Applebee's International, Inc. 7,174 510 182 67,994
ARK Restaurants Corp. - - - 3,038
Arnold Industries, Inc. - 12,220 770 24,085
ASA Holdings, Inc. 2,889 8,155 527 -
Asahi Concrete Works Co. Ltd. 996 - 65 4,718
Astronics Corp. 1,188 - - 4,132
Atlantic Tele-Network, Inc. - - 221 4,786
Australian Oil & Gas Corp, 171 2,250 147 -
Ltd.
Autocam Corp. - 1,937 41 5,913
Award Software International, 756 3,265 - -
Inc.
Aztec Manufacturing Co. - 353 51 4,150
BMTC Group, Inc. Class A - - 44 5,444
(sub-vtg.)
</TABLE>
8. OPERATING POLICIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
BTU International, Inc. $ 8 $ 18 $ - $ 1,480
Bairnco Corp. - - 180 7,038
Ballard Medical Products 2,396 3,126 290 67,185
BancTec, Inc. - 18,278 - -
Banyan Strategic Realty Trust - 309 441 5,458
(SBI)
Beazer Homes USA, Inc. 4,799 - - 16,055
Benchmarq Microelectronics, - 2,671 - -
Inc.
Benihana, Inc. 171 406 - 5,542
Benihana, Inc. Class A 220 - - 3,869
Bergensbanken ASA - - 386 18,210
Black Box Corp. 38 133 - 72,319
Blair Corp. 2,580 3,220 532 15,723
Boole & Babbage, Inc. 302 2,202 - -
Boyd Brothers Transportation, 955 - - 2,885
Inc.
Brampton Brick Ltd. Class A 167 - - 1,563
Brookstone, Inc. - 145 - 11,634
Bush Industries, Inc. Class A - 1,223 200 12,687
CPAC, Inc. - 197 136 5,293
Cameron Ashley Building 2,862 - - 8,619
Products, Inc.
Canadian Western Bank 1,510 1,498 236 10,821
Cannon Express, Inc. Class A - 847 - 728
Castle Energy Corp. - - 246 7,051
Chase Corp. 180 - 87 3,902
Chase Industries, Inc. 970 104 - 7,606
Chateau Stores Of Canada Ltd. - - 43 1,024
Class A
Chicos Fas, Inc. - 848 - -
Chromcraft Revington, Inc. 201 401 - -
Claire's Stores, Inc. 7,896 10,400 222 -
Cobra Electronics Corp. - 209 - 2,000
Cogeco Cable, Inc. - - 135 16,597
Cogeco, Inc. (sub-vtg.) - - 165 21,247
Cold Metal Products, Inc. - 779 - -
Cole National Corp. Class A 78 192 - 8,604
Columbus Energy Corp. - 918 - 1,768
Compdent Corp. 3,331 9,675 - -
Computer Learning Centers, - 886 - 9,314
Inc.
Concord Fabrics, Inc. Class A - - - 1,304
Concord Fabrics, Inc. Class B - 76 - 920
</TABLE>
8. OPERATING POLICIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
Conso International Corp. $ - $ - $ - $ 4,208
Consolidated Products, Inc. - 2,876 - -
Cook (D.C.) Holdings PLC - - 100 485
Corvel Corp. 3,249 - - 14,644
Cotton States Life Health 320 170 67 4,648
Insurance Co.
Crossman Communities, Inc. 604 - - 36,149
Crown Central Petroleum Corp. - 1,240 - -
Class A
Cryolife, Inc. 920 - - 8,569
Cybex Corp. 811 1,611 - 19,521
Dallas Semiconductor Corp. - 11,171 381 101,875
Dawson Geophysical Co. 1,048 - - 4,064
Decorator Industries, Inc. - 181 103 2,404
Del Global Technologies Corp 2,904 - - 5,767
Del Labs, Inc. 20 3,099 50 -
Desjardins-Laurentian Finance - - 28 5,125
Corp. Class A (sub-vtg.)
Devcon International Corp. 77 - - 832
Diodes, Inc. 27 208 - 4,134
Diversified Corporate - 46 - 1,139
Resources, Inc.
Dominion Homes, Inc. 701 - - 3,685
Drew Industries, Inc. 136 - - 13,680
DSG International Ltd. 331 1,259 - 4,797
Dsp Technology, Inc. - 500 - -
Ducommun, Inc. - 547 - 13,146
Durakon Industries, Inc. - 3,047 - -
Dyersburg Corp. - 247 21 -
Edusoft Ltd. - 1,508 - -
Ellis Perry International, 1,741 - - 5,751
Inc.
Elscint Ltd. 7,346 200 - 15,293
Elxsi Corp. - 26 - 3,178
Emerging Communications, Inc. - 5,653 - -
ENEX Resources Corp. - - - 361
Engineered Support Systems, 1,364 - 7 6,119
Inc.
Engle Homes, Inc. 126 - 180 13,171
Equinox Systems, Inc. 1,025 201 - 4,717
Equitrac Corp. 77 - - 7,237
ESC Medical Systems Ltd. 3,485 - - 12,560
</TABLE>
8. OPERATING POLICIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
Fansteel, Inc. $ - $ 1,400 $ - $ 4,078
Farm Family Holdings, Inc. - 7 - 20,278
FDP Corp. - 2,684 22 -
Federal Screw Works - - 239 5,467
Finish Line, Inc. Class A 2,977 - - 19,863
Finlay Enterprises, Inc. 5,932 - - 14,375
First BanCorp P R 8,788 788 854 64,659
First Central Financial Corp. - 2,811 - -
First Commonwealth, Inc. 1,072 - - 6,843
Flanigans Enterprises, Inc. 57 95 18 822
Footstar, Inc. - 1,961 - 53,640
Foremost Industries, Inc. 163 - - 1,117
Fossil, Inc. 245 8,129 - -
Friedmans, Inc. Class A 4,196 - 34 11,505
FRM Nexus, Inc. - - - 274
GBC Bancorp 960 2,789 248 14,088
Gardner Denver Machinery, Inc. 2,268 699 - 20,486
Gehl Co. 402 38 - 13,573
General Semiconductor, Inc. 1,249 1,953 - 24,922
Giant Cement Holding, Inc. 251 - - 13,013
Global Motorsport Group, Inc. - 6,016 - -
Goodfellow, Inc. 339 200 23 2,532
Griffon Corp. 488 273 - 20,175
GSE System 500 - - 1,654
Gymboree Corp. - 1,200 - -
HPSC, Inc. - 413 - -
Hallwood Consolidated 734 1,270 - -
Resources Corp.
Hampshire Group Ltd. 544 - - 4,854
Hardinge, Inc. - 564 - -
Healthcare Recoveries, Inc. 3,554 225 - 4,625
Helen of Troy Corp. 1,213 559 - 45,891
Herbalife International, Inc. - - 156 11,996
Class A
Hirsch International, Corp. 200 - - 1,351
Class A
Holly Corp. 5,621 127 342 12,375
Home Port Bancorp, Inc. 1,004 - 20 3,378
Homebase, Inc. - 1,073 - -
Horizon Health Corp. 2,178 - - 4,591
Hurco Companies, Inc. 89 - - 1,611
Hyder PLC 10,919 400 6,431 87,269
</TABLE>
8. OPERATING POLICIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
ICU Medical, Inc. $ 5,105 $ 98 $ - $ 13,561
IDEX Corp. 20,984 33,716 1,115 42,281
IHOP Corp. 7,691 - - 43,250
Independence Federal Savings 15 - 31 1,533
Bank
InfoUSA, Inc. Class A 975 1,210 - 13,405
InfoUSA, Inc. Class B 1,063 1,270 - 14,167
Institution of General - - - 2,102
Education
Intercontinental Life Corp. 60 - - 8,960
Intest Corp. 1,173 379 - 5,057
IPC Holdings Ltd. 2,216 - 3,170 50,060
JDA Software Group Inc. 5,252 4,087 - 11,925
Jean Coutu Group, Inc. Class A - 1,439 204 37,024
JLM Couture, Inc. - - - 437
Jo-Ann Stores, Inc. Class A 2,146 1,768 - -
Kaynar Technologies, Inc. - 3,727 - -
Kennedy Wilson, Inc. - 224 - -
Kenneth Cole Productions, 1,374 580 - 23,625
Inc. Class A
King World Productions, Inc. 1,556 4,946 - -
Koss Corp. - - - 2,599
Kronos, Inc. 3,656 1,899 - 48,375
Laboratory Specialists - 180 - -
America, Inc.
Lai Worldwide, Inc. 1,685 - - 4,288
Lakes Gaming, Inc. 3,567 - - 10,778
Lasalle Re Holdings Ltd. 1,091 - 2,808 24,513
Life USA Holding, Inc. - 4,958 179 32,700
Logans Roadhouse 474 645 - -
M/I Schottenstein Homes, Inc. - - 176 16,720
Mark VII, Inc. 2,486 - - 14,924
Markwest Hydrocarbon, Inc. 765 - - 4,366
Marten Transport Ltd. 54 - - 5,372
Martin Color-Fi, Inc. - 1,834 - -
Maynard Oil Co. 809 - - 3,859
Medstone International, Inc. - - - 3,683
Melita International Corp. 2,063 2,561 - -
Mercury Air Group, Inc. - 196 - 4,362
Metro Richelieu, Inc. Class A 2,896 406 432 44,082
Micro Linear Corp. 110 - - 4,657
Microsemi Corp. 2,257 163 - 8,913
</TABLE>
8. OPERATING POLICIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
Midcoast Energy Resources, $ - $ - $ - $ 8,881
Inc.
Midwest Express Holdings, Inc. 6,058 644 - 34,248
Mikes Restaurants, Inc. - - - 362
MMI Companies, Inc. - 3,007 461 20,815
Moffat Communications Ltd. 582 245 112 32,865
Monro Muffler Brake, Inc. - 105 - 4,538
Mortons Restaurant Group, Inc. 169 241 - 6,795
Movado Group, Inc. 4,694 - 74 22,916
Murakami Corp. 499 - 37 5,069
MYR Group, Inc. 418 512 73 10,093
Mysoftware Company - 429 - -
Nagawa Co., Ltd. - 99 110 -
Nanometrics, Inc. - 193 - 6,326
National Western Life - - - 16,490
Insurance Co. Class A
Natures Sunshine Products, 1,409 178 138 10,570
Inc.
Nautica Enterprises, Inc.. 18,465 - - 61,370
Nordlandsbanken AS 238 - 281 9,144
Norvestia OY AB Class B - 114 - -
Novus Petroleum Ltd. 937 - - 7,430
NSC Corp. - 375 - -
Nu Horizons Electronics Corp. 123 210 - 3,506
Oakwood Homes Corp. 1,437 - 127 33,557
Octel Corp. - - - 18,124
Ocular Sciences, Inc. 294 - - 22,936
OEC Medical Systems, Inc. - 1,280 - 39,955
Oilgear Co. 32 - 9 1,133
Old Dominion Freight Lines, 3,470 179 - 12,468
Inc.
One Price Clothing Stores, 677 - - 3,275
Inc.
Orcad, Inc. - 850 - -
Oriole Homes Corp. Class B - 200 - 655
Orthofix International NV 973 - - 14,023
P & F Industries, Inc. Class A 977 172 - 2,767
PXRE Corp. - - 747 11,692
Patrick Industries, Inc. 68 - 95 8,710
PAULA Financial 2,269 210 47 4,163
Pe Ben Oilfield Services Ltd. 49 - - 866
Performance Food Group Co. - 529 - -
Perry Group 1,005 - 145 4,747
Petroleum Development Corp. 213 - - 7,279
Petroleum Helicopters, Inc. - - - 2,904
</TABLE>
8. OPERATING POLICIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
Philadelphia Consolidated 2,136 - - 21,221
Holding Corp.
Phoenix Technology Ltd. 267 421 - -
Piercing Pagoda, Inc. 89 - - 15,243
Piolax, Inc. 439 - - 6,196
Pittston Co. (BAX Group) 697 - 186 16,000
Pittston Co. (Brink's Group) 7,463 - 53 62,803
Pomeroy Computer Resources, 8,099 - - 16,784
Inc.
Powell Industries, Inc. - 3,300 - 7,521
Primesource Corp. - 785 17 -
Programming & Systems, Inc. - - - -
Pubco Corp. - - - 2,636
Quest Diagnostics, Inc. 1,353 716 - 51,500
Quest Education Corp. 2,268 - - 7,351
Quicks Group PLC 258 - 284 5,873
Quixote Corp. 1,880 754 166 9,360
Rainbow Technologies, Inc. - 1,524 - -
Raytech Corp. 4 - - 1,603
Reliability, Inc. 1,241 - - 2,858
Redwood Trust, Inc. - 43 - 17,021
RehabCare Group, Inc. 1,570 - - 13,666
Remedy Corp. 2,197 4,736 - 30,938
Remedytemp, Inc. Class A 2,255 - - 9,250
Res-Care, Inc. 1,354 1,098 - 28,665
Respironics, Inc. 9,042 200 - 22,898
Rex Stores Corp. 1,316 794 - 20,267
Reynolds & Reynolds Co. Class 3,948 11,118 1,635 91,650
A
Richardsons Westgarth PLC 140 - 98 1,945
Richmont Mines, Ltd. 58 - - 1,434
Right Management Consultants, 118 - - 9,632
Inc.
Ringkjoebing Bank - - 63 3,286
Riviana Foods, Inc. 1,244 - 392 16,256
Robertson Ceco Corp. 299 - - 8,904
RPC Energy Services, Inc. - 1,762 403 19,214
Ryan Hotels PLC - 1,149 48 -
S&K Famous Brands, Inc. - 562 - 3,623
SCPIE Holding, Inc. 86 3,393 83 -
SPSS, Inc. 54 120 - 21,178
Safeguard Health Enterprises, 371 360 - 1,752
Inc.
</TABLE>
8. OPERATING POLICIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
San Francisco Boutiques, Inc. $ - $ 196 $ - $ -
Class B (sub vtg.)
Sanoma-WSOY Oyj - 2,556 - -
SBS Technologies Inc. 3,755 - - 11,966
Scan-Optics, Inc. - 1,574 - -
Schultz Sav-O Stores, Inc.. 457 - 60 6,470
Seattle FilmWorks, Inc. 590 - - 4,496
SED International Holdings, - 780 - 2,880
Inc.
Serological Corp. 2,017 500 - 10,682
Shelby Williams Industries, - 2,748 53 -
Inc.
Sonic Corp. - 149 - 61,841
Sound Advice, Inc. 184 377 - 1,620
Southern Energy Homes, Inc. - - - 5,348
Southwestern Energy Co. 1,955 2,827 378 14,471
Sparebanken Rana 133 - 49 729
Grunnfondsbevis
Speizman Industries, Inc. - 249 - 878
Standard Commercial Corp. - - 250 6,635
Stanley Furniture Co., Inc. 1,576 - - 16,721
Stanley Technology Group, Inc. - 163 - -
Steel of West Virginia, Inc.. - 3,551 - -
Stephan Co. - 1,435 30 1,318
Sterling Bancorp 2,138 - - 10,564
Stewart Information Services - 3,082 - -
Stirling Cooke Brown Holdings 1,168 - 22 3,869
Ltd.
Strattec Security Corp. 3,258 - - 17,118
Summit Holdings Southeast, - 3,262 - -
Inc.
Superior Energy Services, Inc. 1,711 205 - 11,500
Suprema Specialties, Inc. 1,421 - - 3,548
Supreme International Corp. 218 1,599 - -
Swift Energy Co. 3,641 - - 21,064
Sylvan, Inc. - 4,545 - -
TBC Corp. 415 456 - 13,666
TB Wood's Corp. - 1,031 130 3,352
Taitron Components, Inc. - 70 - 1,680
Class A
Talentum Oy Class B - 432 230 16,797
Tandy Brands Accessories, Inc. 364 97 - 8,250
Tay Homes PLC - 3,722 315 -
Tech-Sym Corp. 2,229 149 - 10,852
Terra Nova (Bermuda) Holdings 6,426 310 408 42,975
Ltd.
Class A
Toami Corp. - - 43 3,086
</TABLE>
8. OPERATING POLICIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
Todhunter International, Inc. $ - $ - $ - $ 2,564
Tollgrade Communications, Inc. 2,439 - - 11,516
Transpro, Inc. - - 132 4,874
Twin Disc, Inc. - 1,667 211 4,590
UCBH Holdings, Inc. 1,961 - - 11,559
UICI - 1,553 - 80,334
Unico American Corp. 187 - 90 3,683
Unigraphics Solutions, Inc. - 341 - 14,025
Class A
Uni-Select, Inc.. - 215 73 13,384
United Dental Care, Inc. - 8,494 - -
Universal Health Services, - - - 63,844
Inc. Class B
Up, Inc. 141 - - 2,711
URS Corp. 102 107 - 32,500
USEC, Inc. 4,518 1,931 7,087 103,705
Utah Medical Products, Inc. - 768 - 5,786
Valley Forge Corp. 20 1,461 41 -
Vertex Communications Corp. 18 - - 6,324
Video Display Corp. - 637 - 986
Western Beef, Inc. - - - 3,480
Willbros Group, Inc. 54 877 - 5,094
Winsloew Furniture, Inc. - 1,349 - 19,307
Winston Resources, Inc. 165 - - 1,449
Wireless Telecom Group, Inc. 387 1,224 - 3,518
World Fuel Services Corp. 366 - 250 17,264
Worldtex Corp. - 3,490 - -
Wynns International, Inc. - - 461 34,371
TOTALS $ 343,018 $ 354,921 $ 39,424 $ 3,602,822
</TABLE>
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, 1999, 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,
1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 13, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Low-Priced Stock Fund voted to pay
on September 7, 1999, to shareholders of record at the opening of
business on September 3, 1999, a distribution of $.99 per share
derived from capital gains realized from sales of portfolio securities
and a dividend of $.10 per share from net investment income.
A total of 14% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on July 14,
1999, and re-convened on August 6, 1999. The results of votes taken
among shareholders on proposals before them are reported below. Each
vote reported represents one dollar of net asset value held on the
record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.*
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
Affirmative 17,986,401,866.48 90.961
Withheld 1,787,259,914.33 9.039
TOTAL 19,773,661,780.81 100.000
PHYLLIS BURKE DAVIS
Affirmative 17,983,245,089.81 90.945
Withheld 1,790,416,691.00 9.055
TOTAL 19,773,661,780.81 100.000
ROBERT M. GATES
Affirmative 17,981,467,048.37 90.936
Withheld 1,792,194,732.44 9.064
TOTAL 19,773,661,780.81 100.000
EDWARD C. JOHNSON 3D
Affirmative 17,985,106,706.94 90.955
Withheld 1,788,555,073.87 9.045
TOTAL 19,773,661,780.81 100.000
E. BRADLEY JONES
Affirmative 17,965,545,653.74 90.856
Withheld 1,808,116,127.07 9.144
TOTAL 19,773,661,780.81 100.000
DONALD J. KIRK
Affirmative 17,992,374,635.26 90.992
Withheld 1,781,287,145.55 9.008
TOTAL 19,773,661,780.81 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
Affirmative 17,994,511,667.79 91.002
Withheld 1,779,150,113.02 8.998
TOTAL 19,773,661,780.81 100.000
WILLIAM O. MCCOY
Affirmative 17,995,708,043.17 91.008
Withheld 1,777,953,737.64 8.992
TOTAL 19,773,661,780.81 100.000
GERALD C. MCDONOUGH
Affirmative 17,967,133,594.73 90.864
Withheld 1,806,528,186.08 9.136
TOTAL 19,773,661,780.81 100.000
MARVIN L. MANN
Affirmative 17,995,084,785.78 91.005
Withheld 1,778,576,995.03 8.995
TOTAL 19,773,661,780.81 100.000
ROBERT C. POZEN
Affirmative 17,993,340,616.44 90.997
Withheld 1,780,321,164.37 9.003
TOTAL 19,773,661,780.81 100.000
THOMAS R. WILLIAMS
Affirmative 17,973,227,575.79 90.895
Withheld 1,800,434,205.02 9.105
TOTAL 19,773,661,780.81 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 3,475,730,842.31 94.497
Against 89,195,074.47 2.425
Abstain 113,231,845.53 3.078
TOTAL 3,678,157,762.31 100.000
PROPOSAL 3
To adopt an amended and restated Declaration of Trust.*
# OF % OF
VOTES CAST VOTES CAST
Affirmative 16,134,178,216.02 81.594
Against 999,390,653.54 5.054
Abstain 2,640,092,911.25 13.352
TOTAL 19,773,661,780.81 100.000
PROPOSAL 4
To approve an amended management contract for the fund that would
reduce the management fee payable to FMR by the fund as FMR's assets
under management increase, allow future modifications of the contract
without a shareholder vote if permitted by the 1940 Act, and modify
the performance adjustment calculations.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 3,136,479,638.43 85.273
Against 135,551,052.42 3.685
Abstain 406,123,571.91 11.042
TOTAL 3,678,154,262.76 100.000
PROPOSAL 5
To approve a Distribution and Service Plan pursuant to Rule 12b-1 for
the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,990,973,783.91 81.317
Against 266,691,770.38 7.251
Abstain 420,488,708.47 11.432
TOTAL 3,678,154,262.76 100.000
PROPOSAL 6
To eliminate a fundamental investment policy of the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,877,105,591.60 78.221
Against 276,540,165.18 7.519
Abstain 524,508,505.98 14.260
TOTAL 3,678,154,262.76 100.000
PROPOSAL 7
To amend the fund's fundamental investment limitation concerning
diversification to exclude securities of other investment companies
from the limitation.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,924,158,658.63 79.501
Against 244,604,426.45 6.650
Abstain 509,391,177.68 13.849
TOTAL 3,678,154,262.76 100.000
*DENOTES TRUST-WIDE PROPOSALS AND VOTING RESULTS.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
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
Bart A. Grenier, Vice President
Joel C. Tillinghast, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Aggressive Growth Fund
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund (registered trademark)
Contrafund(registered trademark) II
Disciplined Equity Fund
Dividend 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 Fund(registered trademark)
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Small Cap Stock Fund
Stock Selector
Tax Managed Stock Fund
TechnoQuant (registered trademark) Growth Fund
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST SM) (Automated graphic) 1-800-544-5555
(automated graphic) AUTOMATED LINE FOR QUICKEST SERVICE
LPS-ANN-0999 84107
1.536378.102
(Fidelity Logo Graphic)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
FIDELITY(REGISTERED TRADEMARK)
GLOBAL BALANCED
FUND
ANNUAL REPORT
JULY 31, 1999
(Fidelity logo graphics)(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 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
PROXY VOTING RESULTS 40
OF SPECIAL NOTE 42
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
In July, the steadily growing U.S. economy again sparked fears of
inflation and posed the threat of another Federal Reserve Board
interest-rate hike at its August policy meeting. Despite rising
profits and continued productivity gains at many U.S. corporations,
stock and bond markets sold off sharply toward the month's end.
Renewed jitters about inflation were sparked by a government report
that showed a larger-than-expected increase in the employment-cost
index.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. 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, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY GLOBAL BALANCED 10.39% 63.45% 106.22%
MSCI World 15.51% 112.28% 173.13%
SB World Govt Bond 6.54% 36.74% n/a
Global Flexible Portfolio 8.08% 78.49% n/a
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on 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 index that is designed to
represent the performance of developed stock markets throughout the
world. As of July 31, 1999, the index included over 1500 equity
securities of companies domiciled in 22 countries. You can also
compare the fund's returns to the performance of the Salomon Brothers
World Government Bond Index - a market value-weighted index of debt
issues traded in 14 world government bond markets. 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
Inc. The past one year average represents a peer group of 90 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY GLOBAL BALANCED 10.39% 10.33% 11.79%
MSCI World 15.51% 16.25% 16.73%
SB World Govt Bond 6.54% 6.46% n/a
Global Flexible Portfolio 8.08% 12.08% n/a
Funds Average
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 different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$10,000 OVER LIFE OF FUND
Fidelity Global Balanced MSCI World SB World Govt Bond
00334 MS004 SB006
1993/02/26 10000.00 10000.00 10000.00
1993/03/31 10639.77 10576.83 10153.51
1993/04/30 11203.78 11064.11 10368.08
1993/05/28 11423.65 11316.16 10472.05
1993/06/30 11299.46 11218.32 10449.72
1993/07/30 11501.06 11446.52 10479.38
1993/08/31 12163.48 11968.39 10794.43
1993/09/30 12102.98 11744.40 10922.48
1993/10/29 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
1994/04/29 12198.22 12375.31 10930.85
1994/05/31 12398.03 12404.35 10834.90
1994/06/30 11806.56 12367.06 10991.21
1994/07/29 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
1994/12/30 11595.91 12539.70 11174.03
1995/01/31 11284.95 12348.47 11408.49
1995/02/28 11405.32 12525.49 11700.51
1995/03/31 11726.32 13126.17 12395.51
1995/04/28 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
1995/09/29 12538.83 14450.95 12919.89
1995/10/31 12418.46 14220.32 13016.19
1995/11/30 12649.17 14710.97 13163.42
1995/12/29 12930.36 15137.97 13301.24
1996/01/31 12940.43 15408.69 13136.91
1996/02/29 12728.95 15499.36 13069.92
1996/03/29 12799.44 15754.07 13051.78
1996/04/30 13161.98 16121.28 12999.79
1996/05/31 13182.12 16131.99 13002.58
1996/06/28 13282.82 16210.32 13104.81
1996/07/31 13000.85 15634.18 13356.01
1996/08/30 13031.06 15810.64 13408.00
1996/09/30 13330.51 16426.40 13462.42
1996/10/31 13392.46 16537.82 13714.33
1996/11/29 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
1997/05/30 14901.89 18882.39 13452.66
1997/06/30 155 38.01 19820.92 13613.15
1997/07/31 16111.56 20730.57 13507.08
1997/08/29 15298.16 19340.53 13499.06
1997/09/30 16099.75 20387.98 13786.55
1997/10/31 15482.98 19311.64 14072.64
1997/11/28 15525.52 19650.09 13856.67
1997/12/31 15675.93 19886.29 13814.81
1998/01/30 16008.10 20437.18 13949.13
1998/02/27 16715.28 21816.33 14062.52
1998/03/31 17176.02 22734.20 13923.31
1998/04/30 17497.47 22952.95 14145.91
1998/05/29 17390.32 22661.87 14179.05
1998/06/30 17604.62 23196.25 14199.99
1998/07/31 17808.20 23155.59 14218.83
1998/08/31 15879.52 20064.26 14606.10
1998/09/30 16298.56 20415.67 15382.74
1998/10/30 17111.86 22257.74 15838.39
1998/11/30 17773.35 23577.90 15614.75
1998/12/31 18458.88 24726.22 15929.10
1999/01/29 18818.89 25264.05 15782.92
1999/02/26 18273.42 24588.40 15275.63
1999/03/31 18906.17 25608.58 15314.35
1999/04/30 19309.82 26614.51 15308.07
1999/05/28 18764.34 25638.40 15080.94
1999/06/30 19495.28 26830.62 14786.48
1999/07/30 19658.92 26746.51 15148.98
</TABLE>
$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, 1999,
the value of the investment would have grown to $19,659 - a 96.59%
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 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 $26,747 - a 167.47% increase and the Salomon
Brothers World Government Bond Index would have grown to $15,149 - a
51.49% increase.
(checkmark)
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating
value of its currency create
these risks. For these reasons
an international fund's
performance may be more
volatile than a fund that invests
exclusively in the United States.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
A year ago, many of the world's
markets plunged following Russia's
unexpected debt defaults and
currency devaluation. Meanwhile,
economic upheavals in Asia were
also causing repercussions on an
international scale. But by the end
of the 12-month period ending
July 31, 1999, many global stock
and bond markets experienced a
dramatic reversal of fortunes. For
the period, the Morgan Stanley
Capital International EAFE Index -
a measure of over 1,000 securities
listed on the stock exchanges of
Europe, Australasia and the Far
East - returned 9.95%. The U.S.
stock market, as measured by the
Standard & Poor's 500 Index,
returned 20.20%. Japan was one of
the biggest turnaround stories, as
the Tokyo Stock Exchange Index
(TOPIX) returned 48.91%.
Emerging markets also rebounded.
Despite Brazil's currency
devaluation in January, and fears of
a similar move by Argentina and
Colombia late in the period, the
Morgan Stanley Capital International
Emerging Markets Free Index
returned 21.36%. During the
turbulent late summer and early fall
of 1998, investors moved assets
from stocks and riskier bond markets
into safer havens, helping the
performance of U.S. and
developed nations' bond markets.
Since then, however, returns have
been more modest. For the 12-month
period, the Lehman Brothers
Aggregate Bond Index - a
measure of the overall U.S.
taxable-bond market - returned
2.49%, and the Salomon Brothers
World Government Bond Index
returned 6.54%.
(photograph of Richard Mace)
An interview with Richard Mace, Portfolio Manager of Fidelity
Global Balanced Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. For the 12 months that ended July 31, 1999, the fund returned
10.39%. The fund compares its performance to three measures: a bond
index, an equity index and a peer group of competitor funds. The
fund's overall return topped that of its bond-oriented benchmark - the
Salomon Brothers World Government Bond Index - which returned 6.54%
during the period. On the equity side, the fund's return lagged the
Morgan Stanley Capital International (MSCI) World Index, which
returned 15.51% during the period. The fund also outperformed its
peers, as the global flexible portfolio funds average - maintained by
Lipper Inc. - returned 8.08% during the period.
Q. BY ITSELF, THE FUND'S EQUITY PORTFOLIO BEAT THE MSCI WORLD INDEX
DURING THE PERIOD. WHAT FACTORS HELPED?
A. The fund's relative overweighting in Japanese stocks helped
immensely, as that market continued to rise. Specifically, the fund
benefited from above-average returns from its investments in Japanese
technology and financial stocks. As in the U.S., Japanese companies
with Internet exposure experienced strong results. Fujitsu Support &
Service - an online information supplier - and Softbank Corp., Japan's
leading software distributor, contributed positively to performance.
Several of the fund's positions in Japanese non-bank lending
institutions, such as Takefuji Corp. and Shohkoh Fund, also helped.
Q. ON THE FLIP SIDE, THE FUND'S BOND INVESTMENTS TRAILED THE SALOMON
BROTHERS INDEX. WHY?
A. Currency swings hurt the most, both in Japan and Europe. I've
avoided Japanese bonds for some time, mainly because I felt they were
unattractive on a yield basis. Along the same lines, I also
overweighted the fund's exposure to U.S. bonds to try to insulate the
portfolio from the impact of a strengthening dollar, and to take
advantage of their relatively high yields. This strategy served the
fund well until early this year, when Japanese bonds rallied on the
heels of a stronger yen. Because the Salomon Brothers index is heavily
weighted in Japanese bonds, this turnaround detracted from the fund's
relative returns. In addition, the fund's European-based bond
investments were hurt from the weak performance of the new euro, which
had declined by more than 9% versus the dollar at the end of the
period.
Q. SWITCHING GEARS BACK TO STOCKS, JUST OVER 42% OF THE FUND'S EQUITY
POSITIONS AT THE END OF THE PERIOD WERE U.S.-BASED. DID THIS EXPOSURE
HELP PERFORMANCE?
A. After Japan, the fund's U.S. investments were the best contributors
to overall performance. This emphasis also may have been a prime
reason why the fund topped its Lipper peers. As in Japan, technology
stocks were outstanding performers. Computer-related holdings were
particularly strong, as sales of new units were spurred on by lower
prices and increased Internet usage. The fund's investments in U.S.
market leaders such as Microsoft, IBM, Dell Computer and Intel each
benefited as a result. Telecommunications stocks such as MCI WorldCom,
AT&T and Qwest Communications also contributed positively. The fund no
longer held Qwest at the end of the period.
Q. WHICH HOLDINGS PROVED DISAPPOINTING?
A. U.S. and European financial investments were a letdown. U.S.
investments such as Citicorp (now Citigroup) and Bank of America
declined due to investors' concerns over emerging-market volatility
and rising interest rates. European names such as Switzerland's UBS,
France's Societe Generale and Italy's Banca di Roma slid for the same
reasons.
Q. WHAT'S YOUR OUTLOOK?
A. Merger and acquisition activity has been rampant in the finance,
pharmaceutical and energy areas, to name a few. Continued
consolidation activity should drive share prices for some time.
Overall economic improvement in Europe and Japan could be slow, and
proposed bank mergers in Japan may be a plus.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: seeks income and capital
growth with reasonable risk by
investing in a broadly diversified
portfolio of high-yielding
equity and debt securities
issued anywhere in the world
FUND NUMBER: 334
TRADING SYMBOL: FGBLX
START DATE: February 1, 1993
SIZE: as of July 31, 1999,
more than $101 million
MANAGER: Richard Mace, since
1996; manager, Fidelity
International Value Fund, since
1994; Fidelity Overseas Fund,
since 1996; Group Leader,
Fidelity International funds;
joined Fidelity in 1987
RICK MACE ON THE CHALLENGES
OF MONITORING 500-PLUS
POSITIONS:
"At the close of the period, the
fund had approximately 550
names in its portfolio. People
sometimes ask how we manage to
monitor that many positions. The
answer lies in our research team.
"Fidelity has roughly 200 analysts
and associates in Boston, London,
Hong Kong and Tokyo. Each analyst
recommends potential holdings. If
I pick the top 10% of each analyst's
recommendations, the fund would
own nearly 1,000 names. Or, stated
differently, the 550 positions are less
than three recommendations per
analyst and would often represent
the best 5% of our analysts' ideas.
"In monitoring these positions, we
rely heavily on global
communication. I attend weekly
European sector reviews, for
example, via video conference. I
also attend U.S. industry and
sector reviews. I like to get a
hands-on view of a potential
investment and I'll travel as much
as possible to do that. Mainly, I
leverage the knowledge and
expertise of the many analysts we
have worldwide.
"Keeping track of so many
investments is indeed
challenging, but if you have an
excellent team in place - which
Fidelity no doubt does - it makes
the challenge somewhat less
daunting."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STOCKS AS OF JULY
31, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCKS 6 MONTHS AGO
MCI WorldCom, Inc. (United 1.2 1.8
States of America)
AT&T Corp. (United States of 1.1 1.0
America)
Microsoft Corp. (United 1.0 1.4
States of America)
General Electric Co. (United 1.0 1.2
States of America)
Wal-Mart Stores, Inc. (United 0.7 1.2
States of America)
TOP FIVE BOND ISSUERS AS OF
JULY 31, 1999
(WITH MATURITIES MORE THAN % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
ONE YEAR) THESE ISSUERS 6 MONTHS AGO
U.S. Treasury Obligations 8.2 11.4
Federal Home Loan Bank 4.8 4.8
United Kingdom, Great Britain 4.0 2.0
& Northern Ireland
French Government 3.4 2.3
German Federal Republic 2.7 0.9
TOP FIVE COUNTRIES AS OF JULY
31, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE COUNTRIES 6 MONTHS AGO
United States of America 41.0 46.1
Japan 12.9 8.3
United Kingdom 9.8 8.1
France 6.5 6.4
Germany 6.4 8.0
</TABLE>
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JULY 31, 1999 *
Stocks 62.8%
Bonds 28.6%
Convertible Securities 0.4%
Short-term Investments 8.2%
* FOREIGN INVESTMENTS 50.8%
AS OF JANUARY 31, 1999 **
Stocks and equity futures
62.1%
Bonds 30.3%
Convertible Securities 0.4%
Short-term Investments 7.2%
** FOREIGN INVESTMENTS 45.1%
Row: 1, Col: 1, Value: 62.8
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 28.6
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.4
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 8.199999999999999
Row: 1, Col: 1, Value: 62.1
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 30.3
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.4
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 7.2
INVESTMENTS JULY 31, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 62.7%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.0%
Bansud SA Class B (a) 2,500 $ 5,152
Importadora y Exportadorade 800 5,602
de la Patagonia SA
Inversiones y Representacions 200 5,650
SA sponsored GDR
Nortel Inversora SA ADR 200 2,988
Perez Companc SA Class B 4,340 24,531
Telefonica de Argentina SA 300 8,681
sponsored ADR
52,604
AUSTRALIA - 1.1%
Amcor Ltd. 4,000 21,522
AMP Ltd. 6,000 67,899
Australia & New Zealand 4,838 33,939
Banking Group Ltd.
Brambles Industries Ltd. 1,300 34,358
Broken Hill Proprietary Co. 9,012 99,404
Ltd. (The)
Cable & Wireless Optus Ltd. 15,100 34,883
(a)
Coles Myer Ltd. 5,800 33,705
Commonwealth Bank of Australia 1,200 18,835
CSR Ltd. 5,400 14,864
Fosters Brewing Group Ltd. 8,600 25,128
Goodman Fielder Ltd. 24,000 23,427
Harvey Norman Holdings Ltd. 2,800 26,610
Lend Lease Corp. Ltd. 2,900 36,122
Macquarie Bank Ltd. 1,300 17,174
National Australia Bank Ltd. 7,800 118,775
News Corp. Ltd. 19,777 175,030
Rio Tinto Ltd. 1,500 26,758
Smith (Howard) Ltd. 2,200 16,965
Smorgon Steel Group Ltd. (a) 10,000 15,943
Telstra Corp. Ltd. 29,400 160,518
Westfield Holdings Ltd. 4,200 25,828
Westpac Banking Corp. 5,000 32,329
WMC Ltd. 5,500 23,944
Woodside Petroleum Ltd. 3,300 23,717
Woolworths Ltd. 5,800 20,940
1,128,617
BELGIUM - 0.1%
Electrabel SA 220 70,472
BRAZIL - 0.2%
Centrais Electricas 1,194,000 20,198
Brasileiras SA
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BRAZIL - CONTINUED
Companhia Cervejaria Brahma:
(PN Reg.) 26,000 $ 15,069
sponsored ADR 700 8,138
Companhia de Electricidade do 27,000,000 5,691
Estado do Rio de Janeiro
(CERJ)
Companhia de Tecidos Norte de 46,000 3,572
Minas
Companhia Vale do Rio Doce: 1,100 16,601
(ON)
(PN-A) 1,500 29,451
Compania Energertica Minas 564,478 9,768
Gerais
Embratel Participacoes SA 1,010,000 11,148
Perdigao SA 6,897,000 8,798
Petrobras Distribuidora SA 967,000 7,428
Souza Cruz Industria Comerico 3,400 21,498
Tele Centro Sul Participacoes 1,657,000 17,737
SA
Tele Norte Leste 2,000 32,750
Participacoes SA ADR (a)
Telesp Participacoes SA (a) 570,500 10,252
Telesp Participacoes SA ADR 600 10,650
(a)
Votorantim Celulose e Papel 591,000 16,550
SA (PN Reg.)
245,299
CANADA - 1.4%
Alberta Energy Co. Ltd. 1,260 38,688
Alcan Aluminium Ltd. 1,550 46,717
ATI Technologies, Inc. (a) 1,000 13,809
Bank of Montreal 780 28,429
Bank of Nova Scotia 3,120 64,832
BCE, Inc. 3,450 171,893
Bombardier, Inc. Class B 1,990 28,866
Bro-X Minerals Ltd. (a) 600 0
Canadian Imperial Bank of 1,780 42,128
Commerce
Canadian National Railway Co. 490 32,937
Canadian Natural Resources 1,060 22,413
Ltd. (a)
Canadian Tire Corp. Ltd. 500 13,012
Series A
Celestica, Inc. (sub-vtg.) 730 33,197
Cinar Films, Inc. Class B 710 20,146
(sub-vtg.) (a)
Dofasco, Inc. 770 12,831
Domtar, Inc. 1,500 15,286
Enbridge, Inc. 1,970 43,159
Euro-Nevada Mining Corp. Ltd. 470 5,164
Falconbridge Ltd. 460 6,780
Imasco Ltd. 1,840 49,839
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CANADA - CONTINUED
Imperial Oil Ltd. 1,040 $ 20,782
Inco Ltd. 1,620 28,554
JDS Uniphase Canada Ltd. (a) 378 34,041
Loblaw Companies Ltd. 480 11,775
Newbridge Networks Corp. (a) 210 5,577
Northern Telecom Ltd. 2,290 203,566
NOVA Chemicals Corp. 1,200 23,541
Petro-Canada 2,180 32,129
Placer Dome, Inc. 560 5,744
Poco Petroleums Ltd. (a) 2,790 24,542
Rogers Communications, Inc. 1,390 26,300
Class B (non-vtg.) (a)
Royal Bank of Canada 630 27,290
Seagram Co. Ltd. 1,600 82,586
Shaw Communications, Inc. 780 30,034
Class B
Slocan Forest Products Ltd. 1,320 10,209
(a)
St. Laurent Paperboard, Inc. 750 9,834
(a)
Suncor Energy, Inc. 600 24,457
Talisman Energy, Inc. (a) 500 14,788
Thomson Corp. 1,020 31,048
Toronto Dominion Bank 3,740 73,991
United Dominion Industries 400 9,865
Ltd.
Westcoast Energy, Inc. 1,100 20,886
1,441,665
CHILE - 0.1%
Banco de A. Edwards sponsored 400 6,150
ADR
Compania Cervecerias Unidas 200 5,238
SA sponsored ADR
Compania de 800 20,400
Telecomunicaciones de Chile
SA sponsored ADR
Distribucion Y Servicio D&S 900 15,075
SA ADR
Embotelladora Andina 1,100 20,213
sponsored ADR Class A
Enersis SA sponsored ADR 26 606
Laboratorio Chile SA ADR 200 3,725
Madeco SA ADR 500 5,250
Santa Isabel SA sponsored ADR 1,300 10,725
(a)
Supermercados Unimarc SA 1,400 5,075
sponsored ADR
92,457
FINLAND - 0.6%
KCI (Konecranes International) 2,300 73,208
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINLAND - CONTINUED
Nokia AB 5,500 $ 468,238
Sampo Insurance Co. Ltd. 1,500 43,572
585,018
FRANCE - 3.1%
Alcatel Alsthom Compagnie 4,200 129,675
Generale d'Electricite SA
sponsored ADR
AXA SA de CV (a) 2,000 234,308
Banque Nationale de Paris 1,000 82,382
Cap Gemini SA 600 102,068
Castorama Dubois 480 122,225
Investissements SA
Clarins SA 1,600 152,525
Compagnie Financiere de 900 102,068
Paribas Class A (Reg.)
Elf Aquitaine 1,900 325,411
France Telecom SA 3,472 249,999
L'Oreal SA 74 48,058
LVMH (Louis Vuitton Moet 300 8,519
Hennessy) rights 9/21/99 (a)
Rhone-Poulenc SA Class A 2,400 116,198
Sanofi-Synthelabo SA (a) 4,360 181,226
Societe Generale, France 200 37,575
Class A (a)
Suez Lyonnaise des Eaux 1,950 344,240
Television Francaise 1 SA 850 204,618
Total Fina SA Class B (a) 1,382 176,008
Usinor Sacilor 5,300 79,387
Vivendi SA (a) 5,250 412,567
3,109,057
GERMANY - 2.6%
Allianz AG (Reg.) 975 260,058
BASF AG 3,600 164,465
Bayer AG 4,100 175,902
Bayerische Hypo-und 3,100 174,458
Vereinsbank AG
Beiersdorf AG 1,200 80,743
Boss (Hugo) AG 1,006 111,883
DaimlerChrysler AG (Reg.) 3,263 235,950
Deutsche Bank AG 1,800 113,912
Deutsche Telekom AG 9,100 371,237
Dresdner Bank AG 1,700 73,117
FAG Kugelfischer Georg 5,000 50,285
Schaefer AG
Kali Und Salz Beteiligungs AG 300 44,454
Mannesmann AG 2,300 346,969
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GERMANY - CONTINUED
Munich Reinsurance AG (Reg.) 300 $ 57,759
Primacom AG (a) 1,500 73,823
Siemens AG 3,100 254,224
2,589,239
HONG KONG - 1.0%
Cable & Wireless HKT Ltd. 31,447 73,941
Cheung Kong Holdings Ltd. 14,000 122,653
China Telecom Ltd. (a) 4,000 11,850
CLP Holdings Ltd. 10,500 47,618
Dairy Farm International 15,000 15,900
Holdings Ltd.
Dao Heng Bank Group Ltd. 5,000 25,445
Giordano International Ltd. 32,000 27,417
Great Eagle Holdings Ltd. 12,000 18,243
Hang Seng Bank Ltd. 4,500 49,280
Hong Kong & China Gas Co. 29,216 39,899
Ltd.
Hutchison Whampoa Ltd. 21,000 199,536
JCG Holdings Ltd. 44,000 29,478
Johnson Electric Holdings 9,000 37,337
Ltd.
Li & Fung Ltd. 12,000 33,549
New World Development Co. 12,000 31,694
Ltd.
Sun Hung Kai Properties Ltd. 14,000 120,849
Swire Pacific Ltd. Class A 4,500 20,988
Wharf Holdings Ltd. 10,000 29,761
Wheelock & Co. Ltd. 10,000 13,592
Wing Hang Bank Ltd. 8,000 30,457
979,487
IRELAND - 0.2%
Bank of Ireland, Inc. 11,400 107,332
CRH PLC 3,707 74,960
182,292
ITALY - 0.7%
Assicurazioni Generali Spa 1,700 54,601
Banca di Roma 45,700 59,505
Eni Spa sponsored ADR 32,500 198,060
Olivetti & Co. Spa 27,100 61,526
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - CONTINUED
San Paolo-IMI Spa 11,700 $ 147,823
Telecom Italia Spa 15,800 157,244
678,759
JAPAN - 12.6%
Acom Co. Ltd. 2,300 216,849
Aiful Corp. 1,600 218,036
Alps Electric Co. Ltd. 5,000 135,749
Anritsu Corp. 4,000 38,132
Asahi Chemical Industry Co. 11,000 55,216
Ltd.
Bank of Tokyo-Mitsubishi Ltd. 24,000 366,652
Banyu Pharmaceutical Co. Ltd. 12,000 235,705
Benesse Corp. 800 100,498
Bridgestone Corp. 1,000 30,816
Canon, Inc. 2,000 63,750
Citizen Watch Co. Ltd. 6,000 48,608
Coca Cola West Japan Co. Ltd. 1,632 73,372
Dai Nippon Printing Co. Ltd. 4,000 68,267
Dai-Ichi Kangyo Bank Ltd. 17,000 127,778
Dainippon Screen 10,000 68,966
Manufacturing Co. Ltd.
Daiwa Securities Co. Ltd. 18,000 156,351
DDI Corp. 25 171,759
Don Quijote Co. Ltd. 400 82,828
Enix Corp. 1,000 68,529
Fuji Bank Ltd. 16,000 122,916
Fuji Coca-Cola Bottling Co. 4,000 72,632
Ltd.
Fuji Heavy Industries Ltd. 7,000 61,414
Fujitsu Ltd. 7,000 210,214
Fujitsu Support & Service, 1,000 221,388
Inc.
Furukawa Electric Co. Ltd. 27,000 139,066
Hikari Tsushin, Inc. 500 209,515
Hino Motors Ltd. (a) 12,000 53,845
Hirose Electric Co. Ltd. 1,000 112,615
Hitachi Information Systems 7,000 182,104
Hitachi Ltd. 16,000 160,200
Honda Motor Co. Ltd. 3,000 130,162
Hosiden Corp. 2,000 45,046
Hoya Corp. 2,000 121,519
Ito En Ltd. 1,000 71,497
Ito-Yokado Co. Ltd. 1,000 68,093
Japan Medical Dynamic 1,000 37,887
Marketing, Inc. (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Japan Tobacco, Inc. 10 $ 120,471
JSR Corp. 7,000 54,998
Kadokawa Shoten Publish Co. 300 68,616
Ltd.
Kaneka Corp. 5,000 52,161
Kao Corp. 5,000 139,241
Kawasumi Laboratories, Inc. 8,000 119,564
Kinki Coca-Cola Bottling Co. 1,000 16,176
Ltd.
Kirin Beverage Corp. 3,000 53,557
Kirin Brewery Co. Ltd. 8,000 99,031
Koa Denko Co. Ltd. 3,000 35,775
Kokusai Denshin Denwa 1,500 95,722
Kokusai Securities Co. Ltd. 5,000 72,632
Konami Co. Ltd. 3,000 186,207
Koyo Seiko Co. Ltd. 5,000 41,859
Kyocera Corp. 2,500 174,160
Matsushita Communication 1,000 72,021
Industrial Co. Ltd.
Matsushita Electric 12,000 279,600
Industrial Co. Ltd.
Matsushita-Kotobuk 2,000 56,395
Electronics Industries Ltd.
Max Co. Ltd. 2,000 20,707
Mazda Motor Corp. 12,000 67,464
Meiwa Estate Co. Ltd. 2,000 87,298
Mikasa Coca Cola Bottling Co. 5,000 60,236
Mitsubishi Electric Corp. 22,000 117,154
Mitsumi Electric Co. Ltd. 3,000 92,449
Mori Seiki Co. Ltd. 3,000 45,308
NEC Corp. 8,000 125,709
New Japan Securities Co. Ltd. 17,000 52,091
(a)
Nichicon Corp. 8,000 160,629
Nidec Corp. 700 110,607
Nihon Unisys Ltd. 2,000 54,649
Nintendo Co. Ltd. 900 131,995
Nippon Computer Systems Corp. 3,000 50,808
Nippon Steel Corp. 16,000 40,925
Nippon System Development Co. 2,200 124,836
Ltd.
Nippon Telegraph & Telephone 14 178,437
Corp.
Nippon Zeon Co. Ltd. 9,000 73,854
Nissin Co. Ltd. 2,900 156,962
Nitto Denko Corp. 4,000 104,758
NTT Mobile Communication 5 77,259
Network, Inc.
NTT Mobile Communication 20 309,035
Network, Inc. (d)
Oji Paper Co. Ltd. 8,000 48,049
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Olympus Optical Co. Ltd. 4,000 $ 60,934
Omron Corp. 11,000 183,413
Oracle Corp. Japan 500 54,561
Otsuka Kagu Ltd. 300 52,379
Paris Miki, Inc. 2,200 130,982
Ricoh Co. Ltd. 10,000 167,787
Riso Kagaku Corp. 1,200 67,569
Rohm Co. Ltd. 2,000 374,858
Ryohin Keikaku Co. Ltd. 200 61,458
Sankyo Co. Ltd. (Gunma) 3,600 208,677
Sanwa Bank Ltd. 10,000 109,646
Senshukai Co. Ltd. 6,000 69,664
Seven Eleven Japan Co. Ltd. 1,000 115,408
Shikoku Coca-Cola Bottling 3,000 46,067
Co. Ltd.
Shin-Etsu Chemical Co. Ltd. 3,000 108,948
Shohkoh Fund & Co. Ltd. 180 133,566
SMC Corp. 400 49,236
Softbank Corp. 800 216,499
Sony Corp. 2,400 300,450
Square Co. Ltd. 1,500 56,307
Takeda Chemical Industries 5,000 271,497
Ltd.
Takefuji Corp. 1,700 204,356
TDK Corp. 1,000 100,218
Terumo Corp. 6,000 150,065
THK Co. Ltd. 10,000 286,338
Tokyo Seimitsu Co. Ltd. 2,000 167,438
Toyoda Gosei Co. Ltd. 7,000 173,549
Toyota Motor Corp. 7,000 246,879
Trend Micro, Inc. 500 79,441
World Co. Ltd. 600 45,989
Yakult Honsha Co. Ltd. 5,000 52,248
Yamaha Motor Co. Ltd. 5,000 52,815
12,776,621
LUXEMBOURG - 0.0%
Quilmes Industrial SA 600 6,263
sponsored ADR
MEXICO - 0.4%
Apasco SA de CV 2,000 11,158
Banacci SA de CV Class O (a) 13,000 28,045
Cemex SA Series B 7,000 30,202
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
Cifra SA de CV Series C (a) 28,000 $ 46,181
Coca Cola Femsa SA de CV ADR 700 11,463
El Puerto de Liverpool SA 6,000 10,074
Class C
Empresas ICA Sociedad 1,600 5,900
Controladora SA de CV
sponsored ADR
Gruma SA de CV Class B 600 3,975
sponsored ADR (a)
Grupo Carso SA de CV Class 3,000 11,876
A-1 (a)
Grupo Elektra SA de CV Unit 11,000 4,992
Grupo Financiero Bancomer SA 108,000 27,889
de CV Series A
Grupo Indus Bimbo SA de CV 2,000 4,474
Series A
Grupo Mexico SA Series B 4,000 16,111
Grupo Modelo SA de CV Class C 13,600 37,649
Grupo Televisa SA de CV 1,500 57,375
sponsored ADR (a)
Telefonos de Mexico SA 1,470 110,985
sponsored ADR representing
Class L shares
Tubos de Acero de Mexico SA 950 9,441
sponsored ADR
427,790
NETHERLANDS - 1.9%
Aegon NV 1,700 131,047
Akzo Nobel NV 3,500 149,599
Equant NV (a) 700 61,412
Fortis Amev NV 4,800 151,755
ING Groep NV 4,258 217,759
Koninklijke (Royal) Philips 920 93,952
Electronics NV
Koninklijke Ahold NV 5,663 197,518
Koninklijke KPN NV 3,800 173,602
Numico NV 4,000 163,695
Unilever NV 4,917 348,258
Vendex KBB NV 8,900 231,387
Vnu NV 1,500 54,886
1,974,870
NETHERLANDS ANTILLES - 0.0%
Schlumberger Ltd. 800 48,450
NEW ZEALAND - 0.1%
Lion Nathan Ltd. 6,000 14,896
Telecom Corp. of New Zealand 11,000 49,777
Ltd.
64,673
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PANAMA - 0.0%
Panamerican Beverages, Inc. 400 $ 7,825
Class A
PERU - 0.0%
Cementos Lima SA 319 5,181
Compania de Minas 1,700 26,775
Buenaventura SA sponsored
ADR Class B
Telefonica del Peru SA ADR 900 13,219
45,175
PORTUGAL - 0.1%
Electricidade de Portugal SA 5,600 99,698
SINGAPORE - 0.4%
City Developments Ltd. 7,000 48,678
Datacraft Asia Ltd. 6,000 28,560
Development Bank of Singapore 2,000 26,033
Ltd. (For. Reg.)
Natsteel Electronics Ltd. 5,000 24,369
Oversea-Chinese Banking Corp. 6,000 50,282
Ltd. (For. Reg.)
Overseas Union Bank Ltd. 5,500 26,478
Singapore Airlines Ltd. (For. 4,000 37,563
Reg.)
Singapore Press Holdings Ltd. 3,000 53,135
Singapore Telecommunications 25,000 42,645
Ltd.
United Overseas Bank Ltd. 7,000 51,174
(For. Reg.)
Venture Manufacturing 4,000 33,284
Singapore Ltd.
422,201
SPAIN - 1.2%
Banco Santander Central 33,488 332,133
Hispano SA
Cortefiel SA 6,400 173,923
Tabacalera SA Series A 14,900 289,020
Telefonica SA (a) 24,000 384,650
1,179,726
SWEDEN - 0.4%
Ericsson (L.M.) Telefon AB:
ADR Class B 1,800 57,713
Class B 5,800 185,963
Skandinaviska Enskilda Banken 10,700 123,225
Class A
366,901
SWITZERLAND - 2.1%
Credit Suisse Group (Reg.) 1,000 189,186
Julius Baer Holding AG 51 164,229
Kuoni Reisen Holding AG Class 26 102,912
B (Reg.)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Nestle SA (Reg.) 168 $ 330,455
Novartis AG (Reg.) 206 297,681
PubliGroupe SA 196 137,671
Richemont Compagnie Financier 66 127,962
Class A Unit
Roche Holding AG 35 387,193
participation certificates
UBS AG 746 227,463
Zurich Allied AG (Reg.) 355 206,008
2,170,760
UNITED KINGDOM - 5.8%
Abbey National PLC 10,400 180,046
Allied Zurich PLC 3,900 47,616
Arcadia Group PLC 27,000 105,795
AstraZeneca Group PLC:
(Reg.) 3,800 139,650
(Sweden) 633 23,104
Autonomy Corp. PLC (a) 6,600 48,510
Barclays PLC 3,000 88,735
BP Amoco PLC 34,415 664,640
BPB Industries PLC 15,000 97,958
British Aerospace PLC 9,561 63,137
British Energy PLC 14,000 118,799
British Telecommunications PLC 18,500 325,600
BTP PLC 10,500 80,496
Caradon PLC 35,200 97,090
Carillion PLC (a) 568 1,005
Diageo PLC 16,000 162,899
General Electric Co. PLC 11,000 110,476
GKN PLC Class L 6,500 112,318
Glaxo Wellcome PLC 11,000 287,031
Hays PLC 5,800 62,015
HSBC Holdings PLC:
(Reg.) 19,992 240,904
(Hong Kong) (Reg.) 4,950 59,648
Kingfisher PLC 10,916 122,473
Lloyds TSB Group PLC 17,929 233,300
MFI Furniture Group PLC 81,700 41,756
Next PLC 7,300 80,541
Orange PLC (a) 6,900 109,769
Rentokil Initial PLC 18,100 70,481
Royal & Sun Alliance 11,363 93,473
Insurance Group PLC
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Royal Bank of Scotland Group 11,000 $ 228,805
PLC
Shell Transport & Trading Co. 70,800 570,087
PLC (Reg.)
Smith & Nephew Associates Co. 36,400 106,897
Smith (David S.) Holdings PLC 30,500 92,044
SmithKline Beecham PLC 20,034 240,658
Tarmac PLC 568 5,111
Vodafone AirTouch PLC 22,400 471,520
Wickes PLC 9,800 64,477
WPP Group PLC 23,800 213,544
5,862,408
UNITED STATES OF AMERICA -
26.6%
Abbott Laboratories 5,500 236,156
Abercrombie & Fitch Co. Class 2,300 95,450
A (a)
ADC Telecommunications, Inc. 1,000 44,500
(a)
AES Corp. (a) 1,000 60,000
AFLAC, Inc. 5,000 231,875
Alcoa, Inc. 2,214 132,563
Amerada Hess Corp. 1,000 59,188
America Online, Inc. (a) 1,200 114,150
American Express Co. 2,000 263,500
American International Group, 3,700 429,663
Inc.
Ameritech Corp. 5,000 366,250
AMFM, Inc. (a) 1,000 52,500
Amgen, Inc. (a) 4,000 307,500
Associates First Capital 6,048 231,714
Corp. Class A
At Home Corp. Series A (a) 1,000 45,688
AT&T Corp. 21,663 1,125,096
AT&T Corp. (Liberty Media 2,000 74,000
Group) Class A (a)
Automatic Data Processing, 2,000 80,125
Inc.
AutoZone, Inc. (a) 1,000 24,688
Avon Products, Inc. 3,000 136,500
Baker Hughes, Inc. 8,400 292,425
Bank of America Corp. 3,000 199,125
Bank of New York Co., Inc. 13,200 487,575
Baxter International, Inc. 2,000 137,375
Becton, Dickinson & Co. 2,000 54,875
Bed Bath & Beyond, Inc. (a) 3,000 101,813
Bemis Co., Inc. 1,500 55,500
Biomet, Inc. 1,500 54,563
Boeing Co. 600 27,225
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Boston Scientific Corp. (a) 2,000 $ 81,125
Bristol-Myers Squibb Co. 1,500 99,750
Burlington Northern Santa Fe 2,000 64,000
Corp.
Burlington Resources, Inc. 500 22,094
Calpine Corp. (a) 3,000 225,563
Cardinal Health, Inc. 1,500 102,375
Case Corp. 2,500 119,063
CBS Corp. (a) 5,000 219,688
Cendant Corp. (a) 3,000 60,375
Ceridian Corp. (a) 3,000 84,000
Chase Manhattan Corp. 4,000 307,500
Chevron Corp. 1,500 136,875
Cincinnati Bell, Inc. 2,000 42,500
Cisco Systems, Inc. (a) 8,500 528,063
Citigroup, Inc. 12,375 551,461
Clear Channel Communications, 2,000 139,125
Inc. (a)
Clorox Co. 700 78,400
Comcast Corp. Class A 6,000 231,000
(special)
Cooper Cameron Corp. (a) 3,500 126,875
Cox Communications, Inc. 2,000 74,875
Class A (a)
Crescent Real Estate Equities 1,000 22,000
Co.
CVS Corp. 2,700 134,325
Dayton Hudson Corp. 3,000 194,063
Dell Computer Corp. (a) 2,500 102,188
DST Systems, Inc. (a) 1,000 66,375
Dynegy, Inc. 2,000 48,000
E.I. du Pont de Nemours and 1,100 79,269
Co.
Electronic Data Systems Corp. 2,000 120,625
EMC Corp. (a) 4,900 296,756
Exxon Corp. 5,000 396,875
Fannie Mae 4,000 276,000
Fleet Financial Group, Inc. 3,000 121,500
Ford Motor Co. 3,000 145,875
Forest Laboratories, Inc. (a) 500 25,625
Freddie Mac 5,000 286,875
Gartner Group, Inc. Class B 260 5,623
(a)
General Dynamics Corp. 1,000 67,313
General Electric Co. 9,000 981,000
General Motors Corp. Class H 2,000 111,125
(a)
Gillette Co. 2,900 127,056
Guidant Corp. 2,500 146,406
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Halliburton Co. 5,400 $ 249,075
Hartford Financial Services 1,000 54,000
Group, Inc.
Hewlett-Packard Co. 1,500 157,031
Home Depot, Inc. 7,500 478,594
Household International, Inc. 3,293 141,393
Howmet International, Inc. (a) 1,500 27,938
Illinova Corp. 2,000 65,750
IMS Health, Inc. 2,000 55,750
Ingersoll-Rand Co. 3,000 192,938
Ingram Micro, Inc. Class A (a) 4,000 113,750
Intel Corp. 6,000 414,000
International Business 4,900 615,869
Machines Corp.
Interpublic Group of 4,000 168,000
Companies, Inc.
Johnson & Johnson 4,500 414,563
Kroger Co. (a) 6,000 157,875
Leggett & Platt, Inc. 6,200 158,875
Lilly (Eli) & Co. 6,500 426,563
Limited, Inc. (The) 1,000 45,688
Liz Claiborne, Inc. 1,500 58,219
Lowe's Companies, Inc. 2,000 105,500
Lucent Technologies, Inc. 8,500 553,031
M&T Bank Corp. 200 107,900
Masco Corp. 4,000 119,000
MBIA, Inc. 2,000 114,500
McDermott International, Inc. 2,000 56,375
McDonald's Corp. 1,000 41,688
MCI WorldCom, Inc. (a) 15,304 1,262,580
MediaOne Group, Inc. 2,000 144,750
Medimmune, Inc. (a) 1,500 119,813
Merck & Co., Inc. 7,000 473,813
Meredith Corp. 2,000 71,875
Merrill Lynch & Co., Inc. 800 54,450
Micron Technology, Inc. (a) 1,000 62,125
Microsoft Corp. (a) 12,000 1,029,750
Morgan Stanley, Dean Witter & 1,000 90,125
Co.
Motorola, Inc. 2,500 228,125
Nabisco Holdings Corp. Class A 2,000 83,250
Newell Rubbermaid, Inc. 2,500 108,125
Nielsen Media Research, Inc. 3,000 97,500
(a)
Noble Affiliates, Inc. 1,500 43,875
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Noble Drilling Corp. (a) 3,000 $ 68,063
Ocean Energy, Inc. (a) 1,000 11,063
Omnicom Group, Inc. 4,000 283,500
Oracle Corp. (a) 4,500 171,281
Owens-Illinois, Inc. (a) 3,000 74,813
Parker-Hannifin Corp. 2,000 94,375
PepsiCo, Inc. 4,000 156,500
Perot Systems Corp. 100 2,488
PG&E Corp. 2,000 63,250
Phelps Dodge Corp. 1,000 59,313
Philip Morris Companies, Inc. 7,000 260,750
Procter & Gamble Co. 5,000 452,500
Providian Financial Corp. 1,000 91,000
Raytheon Co. Class B 1,500 105,469
Rowan Companies, Inc. (a) 3,000 56,438
Safeway, Inc. 4,000 215,500
Schering-Plough Corp. 7,300 357,700
Sealed Air Corp. (a) 3,000 192,750
Sonic Automotive, Inc. (a) 4,000 52,500
Sun Microsystems, Inc. (a) 1,000 67,875
TALK.com, Inc. (a) 5,000 53,125
TALK.com, Inc. rights 2/28/00 250 0
(a)
Texas Instruments, Inc. 500 72,000
Textron, Inc. 2,500 205,625
Time Warner, Inc. 1,300 93,600
TJX Companies, Inc. 1,500 49,594
Tosco Corp. 1,200 31,650
Tricon Global Restaurants, 1,000 40,688
Inc. (a)
Tyco International Ltd. 500 48,844
U.S. Bancorp 6,000 186,750
Union Pacific Corp. 2,000 108,625
Union Pacific Resources 1,000 17,813
Group, Inc.
Unisys Corp. (a) 6,300 257,119
United Technologies Corp. 1,000 66,688
USX-Marathon Group 6,500 197,438
Viacom, Inc. Class B 2,000 83,875
(non-vtg.) (a)
Wal-Mart Stores, Inc. 16,000 676,000
Walgreen Co. 3,000 84,938
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Warner-Lambert Co. 2,500 $ 165,000
Waters Corp. (a) 2,000 119,500
26,931,184
TOTAL COMMON STOCKS 63,539,511
(Cost $49,634,579)
PREFERRED STOCKS - 0.2%
CONVERTIBLE PREFERRED STOCKS
- - 0.1%
AUSTRALIA - 0.1%
WBK STRYPES Trust (Westpac 1,700 52,594
Banking Corp.) $3.135
NONCONVERTIBLE PREFERRED
STOCKS - 0.1%
GERMANY - 0.1%
Dyckerhoff AG 190 60,781
SAP AG (Systeme Anwendungen 100 37,770
Produkte)
Wella AG 1,664 48,068
146,619
TOTAL PREFERRED STOCKS 199,213
(Cost $198,773)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CONVERTIBLE BONDS - 0.3%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (C)
JAPAN - 0.3%
MBL International Finance of A2 $ 240,000 278,400
Bermuda Trust 3% 11/30/02
(Cost $277,225)
GOVERNMENT OBLIGATIONS (E) -
28.6%
FRANCE - 3.4%
French Government:
OAT 5.5% 4/25/04 Aaa EUR 1,300,000 1,467,229
4% 4/25/09 Aaa EUR 2,000,000 1,978,245
3,445,474
GOVERNMENT OBLIGATIONS (E) -
CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (C) VALUE (NOTE 1)
GERMANY - 3.7%
German Federal Republic:
3.75% 1/4/09 Aaa EUR 2,000,000 $ 1,969,258
7.375% 1/3/05 Aaa EUR 625,000 761,702
Treuhandanstalt 6.625% 7/9/03 Aaa EUR 877,507 1,019,398
3,750,358
ITALY - 1.3%
Italian Republic:
6.75% 2/1/07 Aa3 EUR 700,000 836,555
10.5% 9/1/05 Aa3 EUR 361,519 504,567
1,341,122
SPAIN - 1.1%
Spanish Kingdom 4.5% 7/30/04 Aa2 EUR 1,000,000 1,094,187
SWEDEN - 0.7%
Swedish Kingdom 10.25% 5/5/03 Aa1 SEK 5,000,000 721,250
UNITED KINGDOM - 4.0%
United Kingdom, Great Britain Aaa GBP 2,000,000 4,030,915
& Northern Ireland 9%
10/13/08
UNITED STATES OF AMERICA -
14.4%
Federal Home Loan Bank:
4.875% 1/22/02 Aaa 1,500,000 1,457,340
5.125% 9/15/03 Aaa 1,495,000 1,427,262
5.19% 10/20/03 Aaa 650,000 620,341
5.28% 1/6/04 Aaa 1,515,000 1,448,476
Freddie Mac 5.75% 7/15/03 Aaa 1,480,000 1,453,804
U.S. Treasury Bond stripped Aaa 5,750,000 1,025,225
principal 0% 11/15/27
U.S. Treasury Bonds:
7.125% 2/15/23 Aaa 1,350,000 1,476,981
8.125% 8/15/19 Aaa 1,300,000 1,552,681
12.75% 11/15/10 (callable) Aaa 880,000 1,175,627
13.875% 5/15/11 (callable) Aaa 980,000 1,389,454
U.S. Treasury Notes:
6.5% 10/15/06 Aaa 400,000 409,376
GOVERNMENT OBLIGATIONS (E) -
CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (C) VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
U.S. Treasury Notes: -
continued
7% 7/15/06 Aaa $ 425,000 $ 446,650
7.875% 8/15/01 Aaa 640,000 666,598
14,549,815
TOTAL GOVERNMENT OBLIGATIONS 28,933,121
(Cost $30,596,149)
CASH EQUIVALENTS - 8.2%
SHARES
Taxable Central Cash Fund (b) 8,293,726 8,293,726
(Cost $8,293,726)
TOTAL INVESTMENT IN $ 101,243,971
SECURITIES - 100%
(Cost $89,000,452)
</TABLE>
SECURITY TYPE ABBREVIATIONS
STRYPES - Structured Yield Product
Exchangeable for Common Stock
CURRENCY ABBREVIATIONS
EUR - European Monetary Unit
GBP - British pound
SEK - Swedish krona
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.06%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Principal amount is stated in United States dollars unless
otherwise noted.
(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 $309,035 or 0.3% of net assets.
(e) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed have been assigned by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 28.9% AAA, AA, A 24.6%
Baa 0.0% BBB 0.0%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.6%
BASIC INDUSTRIES 2.3
CASH EQUIVALENTS 8.2
CONSTRUCTION & REAL ESTATE 1.1
DURABLES 2.8
ENERGY 3.9
FINANCE 11.7
GOVERNMENT OBLIGATIONS 28.6
HEALTH 5.7
HOLDING COMPANIES 0.1
INDUSTRIAL MACHINERY & 3.2
EQUIPMENT
MEDIA & LEISURE 2.3
NONDURABLES 3.9
PRECIOUS METALS 0.0
RETAIL & WHOLESALE 4.2
SERVICES 1.7
TECHNOLOGY 10.5
TRANSPORTATION 0.3
UTILITIES 8.9
100.0%
INCOME TAX INFORMATION
At July 31, 1999, the aggregate cost of investment securities for
income tax purposes was $89,160,679. Net unrealized appreciation
aggregated $12,083,292 of which $15,371,955 related to appreciated
investment securities and $3,288,663 related to depreciated investment
securities.
At July 31, 1999, the fund had a capital loss carryforward of
approximately $1,974,000 which will expire on July 31, 2003.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1999
ASSETS
Investment in securities, at $ 101,243,971
value (cost $89,000,452) -
See accompanying schedule
Foreign currency held at 26,489
value (cost $26,162)
Receivable for investments 1,759,416
sold
Receivable for fund shares 76,010
sold
Dividends receivable 72,348
Interest receivable 557,188
TOTAL ASSETS 103,735,422
LIABILITIES
Payable for investments $ 1,789,829
purchased
Payable for fund shares 28,114
redeemed
Accrued management fee 62,607
Other payables and accrued 98,935
expenses
TOTAL LIABILITIES 1,979,485
NET ASSETS $ 101,755,937
Net Assets consist of:
Paid in capital $ 90,635,470
Undistributed net investment 989,733
income
Accumulated undistributed net (2,117,293)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 12,248,027
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 5,647,676 $ 101,755,937
shares outstanding
NET ASSET VALUE, offering $18.02
price and redemption price
per share ($101,755,937
(divided by) 5,647,676
shares)
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1999
INVESTMENT INCOME $ 850,739
Dividends
Interest 2,177,247
3,027,986
Less foreign taxes withheld (67,250)
TOTAL INCOME 2,960,736
EXPENSES
Management fee $ 695,700
Transfer agent fees 244,826
Accounting fees and expenses 63,887
Non-interested trustees' 1,235
compensation
Custodian fees and expenses 141,456
Registration fees 30,040
Audit 56,948
Legal 238
Reports to shareholders 8,397
Miscellaneous 1,838
Total expenses before 1,244,565
reductions
Expense reductions (11,605) 1,232,960
NET INVESTMENT INCOME 1,727,776
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 4,224,401
Foreign currency transactions (81,933)
Futures contracts 517,574 4,660,042
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 3,024,866
Assets and liabilities in 11,584
foreign currencies
Futures contracts (56,767) 2,979,683
NET GAIN (LOSS) 7,639,725
NET INCREASE (DECREASE) IN $ 9,367,501
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1999 YEAR ENDED JULY 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 1,727,776 $ 1,467,414
income
Net realized gain (loss) 4,660,042 6,633,711
Change in net unrealized 2,979,683 (725,159)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 9,367,501 7,375,966
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,574,612) (1,895,825)
from net investment income
Share transactions Net 45,697,691 66,298,210
proceeds from sales of shares
Reinvestment of distributions 1,484,276 1,827,302
Cost of shares redeemed (48,179,432) (53,263,687)
NET INCREASE (DECREASE) IN (997,465) 14,861,825
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 6,795,424 20,341,966
IN NET ASSETS
NET ASSETS
Beginning of period 94,960,513 74,618,547
End of period (including $ 101,755,937 $ 94,960,513
undistributed net investment
income of $989,733 and
$742,283, respectively)
OTHER INFORMATION
Shares
Sold 2,735,365 4,236,702
Issued in reinvestment of 95,920 124,912
distributions
Redeemed (2,898,880) (3,475,772)
Net increase (decrease) (67,595) 885,842
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 16.62 $ 15.45 $ 12.91 $ 12.40 $ 11.99
of period
Income from Investment
Operations
Net investment income .31 B .30 B .31 B .31 .28
Net realized and unrealized 1.37 1.27 2.68 .25 .13
gain (loss)
Total from investment 1.68 1.57 2.99 .56 .41
operations
Less Distributions from net (.28) (.40) (.45) (.05) -
investment income
Net asset value, end of period $ 18.02 $ 16.62 $ 15.45 $ 12.91 $ 12.40
TOTAL RETURN A 10.39% 10.53% 23.93% 4.52% 3.42%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 101,756 $ 94,961 $ 74,619 $ 87,785 $ 148,831
(000 omitted)
Ratio of expenses to average 1.32% 1.39% 1.51% 1.39% 1.34%
net assets
Ratio of expenses to average 1.30% C 1.37% C 1.49% C 1.36% C 1.33% C
net assets after expense
reductions
Ratio of net investment 1.83% 1.95% 2.28% 2.94% 4.68%
income to average net assets
Portfolio turnover rate 100% 81% 57% 189% 242%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1999
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
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
U.S. federal income taxes to the extent that it distributes
substantially all of its taxable income for its fiscal year. The fund
may be subject to foreign taxes on income and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INCOME TAXES - CONTINUED
Foreign governments may also impose taxes on other payments or
transactions with respect to foreign securities. The fund accrues such
taxes as applicable. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, foreign currency transactions,
passive foreign investment companies (PFIC), capital loss
carryforwards 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 contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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.
(FIMM), 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. 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
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 $87,164,201 and $83,818,743, respectively, of which U.S.
government and government agency obligations aggregated $10,666,824
and $11,254,833, respectively.
The market value of futures contracts opened and closed during the
period amounted to $15,002,699 and $17,709,506, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .45%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annual rate of .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
(FIJ). 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 .26% 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 $2,893 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 $10,520 under this arrangement.
In addition, the fund has entered into an arrangement with its
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 transfer agent fees were reduced by $1,085
under this arrangement.
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, 1999, 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,
1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 13, 1999
DISTRIBUTIONS
A total of 30.45% 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 13% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on July 14,
1999, and re-convened on August 6, 1999. The results of votes taken
among shareholders on proposals before them are reported below. Each
vote reported represents one dollar of net asset value held on the
record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.*
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
Affirmative 17,986,401,866.48 90.961
Withheld 1,787,259,914.33 9.039
TOTAL 19,773,661,780.81 100.000
PHYLLIS BURKE DAVIS
Affirmative 17,983,245,089.81 90.945
Withheld 1,790,416,691.00 9.055
TOTAL 19,773,661,780.81 100.000
ROBERT M. GATES
Affirmative 17,981,467,048.37 90.936
Withheld 1,792,194,732.44 9.064
TOTAL 19,773,661,780.81 100.000
EDWARD C. JOHNSON 3D
Affirmative 17,985,106,706.94 90.955
Withheld 1,788,555,073.87 9.045
TOTAL 19,773,661,780.81 100.000
E. BRADLEY JONES
Affirmative 17,965,545,653.74 90.856
Withheld 1,808,116,127.07 9.144
TOTAL 19,773,661,780.81 100.000
DONALD J. KIRK
Affirmative 17,992,374,635.26 90.992
Withheld 1,781,287,145.55 9.008
TOTAL 19,773,661,780.81 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
Affirmative 17,994,511,667.79 91.002
Withheld 1,779,150,113.02 8.998
TOTAL 19,773,661,780.81 100.000
WILLIAM O. MCCOY
Affirmative 17,995,708,043.17 91.008
Withheld 1,777,953,737.64 8.992
TOTAL 19,773,661,780.81 100.000
GERALD C. MCDONOUGH
Affirmative 17,967,133,594.73 90.864
Withheld 1,806,528,186.08 9.136
TOTAL 19,773,661,780.81 100.000
MARVIN L. MANN
Affirmative 17,995,084,785.78 91.005
Withheld 1,778,576,995.03 8.995
TOTAL 19,773,661,780.81 100.000
ROBERT C. POZEN
Affirmative 17,993,340,616.44 90.997
Withheld 1,780,321,164.37 9.003
TOTAL 19,773,661,780.81 100.000
THOMAS R. WILLIAMS
Affirmative 17,973,227,575.79 90.895
Withheld 1,800,434,205.02 9.105
TOTAL 19,773,661,780.81 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 47,997,915.62 94.133
Against 1,199,031.92 2.351
Abstain 1,792,655.03 3.516
TOTAL 50,989,602.57 100.000
PROPOSAL 3
To adopt an Amended and Restated Declaration of Trust.*
# OF % OF
VOTES CAST VOTES CAST
Affirmative 16,134,178,216.02 81.594
Against 999,390,653.54 5.054
Abstain 2,640,092,911.25 13.352
TOTAL 19,773,661,780.81 100.000
PROPOSAL 4
To approve an amended management contract for the fund that would
reduce the management fee payable to FMR by the fund as FMR's assets
under management increase, and allow future modifications of the
contract without a shareholder vote if permitted by the 1940 Act.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 44,121,548.15 90.069
Against 1,717,148.84 3.506
Abstain 3,147,440.60 6.425
TOTAL 48,986,137.59 100.000
PROPOSAL 5
To approve an Agreement and Plan providing for the reorganization of
the fund from a separate series of one Massachusetts business trust to
another.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 43,650,764.47 89.108
Against 1,412,793.71 2.884
Abstain 3,922,579.41 8.008
TOTAL 48,986,137.59 100.000
PROPOSAL 6
To amend the fund's fundamental investment objective and eliminate
certain fundamental investment policies.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 41,829,817.17 85.391
Against 2,909,163.44 5.939
Abstain 4,247,156.98 8.670
TOTAL 48,986,137.59 100.000
PROPOSAL 7
To amend the fund's fundamental investment limitation concerning
diversification to exclude securities of other investment companies
from the limitation.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 42,638,291.81 87.042
Against 2,460,040.76 5.021
Abstain 3,887,805.02 7.937
TOTAL 48,986,137.59 100.000
*DENOTES TRUST-WIDE PROPOSALS AND VOTING RESULTS.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
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 Automated Service Telephone 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)
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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
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
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FIDELITY(REGISTERED TRADEMARK)
PURITAN(REGISTERED TRADEMARK)
FUND
ANNUAL REPORT
JULY 31, 1999
(Fidelity logo graphics)(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 45 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 49 Notes to the financial
statements.
REPORT OF INDEPENDENT 54 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 55
PROXY VOTING RESULTS 56
OF SPECIAL NOTE 58
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo) This report is printed on recycled paper using
soy-based inks.
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:
In July, the steadily growing U.S. economy again sparked fears of
inflation and posed the threat of another Federal Reserve Board
interest-rate hike at its August policy meeting. Despite rising
profits and continued productivity gains at many U.S. corporations,
stock and bond markets sold off sharply toward the month's end.
Renewed jitters about inflation were sparked by a government report
that showed a larger-than-expected increase in the employment-cost
index.
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.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY PURITAN 8.03% 102.14% 238.21%
Fidelity Balanced Composite 13.48% 134.48% 260.95%
S&P 500 (registered trademark) 20.20% 220.67% 396.75%
LB Aggregate Bond 2.49% 42.30% 113.47%
Balanced Funds Average 9.57% 103.64% 201.30%
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
Fidelity Balanced Composite Index - a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. 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 Inc. The past one year average represents a peer
group of 426 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY PURITAN 8.03% 15.12% 12.96%
Fidelity Balanced Composite 13.48% 18.58% 13.70%
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$10,000 OVER 10 YEARS
Puritan 60 S&P/40 LB Agg S&P 500 LB Aggregate Bond
00004 F0021 SP001 LB001
1989/07/31 10000.00 10000.00 10000.00 10000.00
1989/08/31 10067.11 10058.40 10196.00 9852.00
1989/09/30 9956.12 10054.18 10154.20 9902.25
1989/10/31 9658.41 10013.15 9918.62 10145.84
1989/11/30 9838.42 10173.77 10120.96 10242.23
1989/12/31 9949.20 10331.26 10363.86 10269.88
1990/01/31 9527.99 9866.14 9668.45 10147.67
1990/02/28 9629.66 9955.13 9793.17 10180.14
1990/03/31 9643.53 10116.21 10052.69 10187.27
1990/04/30 9407.60 9927.24 9801.37 10093.54
1990/05/31 9931.06 10625.52 10757.01 10392.31
1990/06/30 9877.91 10650.60 10683.86 10559.63
1990/07/31 9788.11 10688.94 10649.67 10705.35
1990/08/31 9196.93 10051.88 9686.94 10561.90
1990/09/30 8769.88 9791.53 9215.19 10649.56
1990/10/31 8617.76 9816.01 9175.56 10784.81
1990/11/30 9104.55 10280.90 9768.30 11016.69
1990/12/31 9317.39 10517.15 10040.84 11188.55
1991/01/31 9734.94 10844.45 10478.62 11327.29
1991/02/28 10299.39 11346.55 11227.84 11423.57
1991/03/31 10367.82 11542.61 11499.55 11502.39
1991/04/30 10454.16 11609.10 11527.15 11626.62
1991/05/31 10964.31 11936.94 12025.12 11694.05
1991/06/30 10583.89 11606.53 11474.37 11688.20
1991/07/31 10950.22 11995.58 12009.08 11850.67
1991/08/31 11141.35 12269.80 12293.69 12106.64
1991/09/30 11150.72 12246.48 12088.39 12352.41
1991/10/31 11312.32 12399.32 12250.37 12489.52
1991/11/30 10924.47 12145.13 11756.68 12604.42
1991/12/31 11596.10 13123.06 13101.65 12978.78
1992/01/31 11694.51 12905.22 12857.96 12802.26
1992/02/29 12022.55 13039.43 13025.11 12885.48
1992/03/31 11963.78 12857.66 12771.12 12813.32
1992/04/30 12354.54 13121.50 13146.59 12905.58
1992/05/31 12495.88 13259.28 13211.01 13149.49
1992/06/30 12428.56 13213.93 13014.17 13330.95
1992/07/31 12807.22 13646.03 13546.45 13602.91
1992/08/31 12681.00 13533.31 13268.74 13740.30
1992/09/30 12835.63 13693.54 13425.32 13903.80
1992/10/31 12738.72 13649.45 13472.30 13718.88
1992/11/30 13082.30 13929.81 13931.71 13721.63
1992/12/31 13385.08 14121.21 14103.07 13939.80
1993/01/31 13766.47 14300.83 14221.54 14207.45
1993/02/28 14047.97 14517.63 14414.95 14456.08
1993/03/31 14603.46 14725.81 14719.10 14516.79
1993/04/30 14879.00 14553.22 14362.90 14618.41
1993/05/31 15081.06 14794.81 14747.83 14637.41
1993/06/30 15183.10 14927.66 14790.60 14902.35
1993/07/31 15405.98 14925.87 14731.43 14987.29
1993/08/31 15851.72 15369.77 15289.75 15249.57
1993/09/30 15742.61 15315.36 15172.02 15290.75
1993/10/31 16151.89 15528.24 15486.08 15347.32
1993/11/30 15892.35 15386.94 15338.97 15216.87
1993/12/31 16255.78 15531.88 15524.57 15299.04
1994/01/31 16978.26 15932.60 16052.40 15505.58
1994/02/28 16792.48 15562.65 15617.38 15235.78
1994/03/31 16167.45 15001.77 14936.47 14859.46
1994/04/30 16344.54 15068.98 15127.65 14740.58
1994/05/31 16448.71 15216.66 15375.75 14739.11
1994/06/30 16321.40 14979.58 14999.04 14706.68
1994/07/31 16731.01 15393.62 15491.01 14999.34
1994/08/31 17224.64 15779.69 16126.14 15017.34
1994/09/30 16853.25 15454.94 15731.05 14796.59
1994/10/31 17050.88 15658.02 16085.00 14783.27
1994/11/30 16512.89 15302.08 15499.18 14750.75
1994/12/31 16545.83 15480.47 15729.04 14852.53
1995/01/31 16467.62 15843.92 16136.89 15146.61
1995/02/28 16970.37 16365.22 16765.74 15507.10
1995/03/31 17364.23 16694.91 17260.50 15601.69
1995/04/30 17713.31 17083.40 17768.82 15820.11
1995/05/31 18096.18 17757.55 18479.04 16432.35
1995/06/30 18299.44 18056.91 18908.31 16552.31
1995/07/31 18911.31 18400.28 19535.31 16515.89
1995/08/31 19001.96 18517.04 19584.34 16715.74
1995/09/30 19274.21 19057.74 20410.80 16877.88
1995/10/31 18964.08 19116.02 20337.94 17097.29
1995/11/30 19641.78 19734.23 21230.77 17353.75
1995/12/31 20096.64 20072.79 21639.68 17596.70
1996/01/31 20380.19 20535.75 22376.29 17712.84
1996/02/29 20640.11 20507.04 22583.72 17404.64
1996/03/31 20983.70 20568.11 22801.20 17282.80
1996/04/30 20995.60 20703.95 23137.29 17186.02
1996/05/31 21126.45 21007.75 23734.00 17151.65
1996/06/30 21222.26 21168.38 23824.43 17381.48
1996/07/31 20814.14 20630.11 22771.86 17428.41
1996/08/31 21006.20 20877.14 23252.12 17398.78
1996/09/30 21839.35 21727.42 24560.75 17701.52
1996/10/31 22369.43 22279.90 25238.14 18094.50
1996/11/30 23495.85 23442.78 27145.89 18403.91
1996/12/31 23142.16 23076.93 26608.13 18232.75
1997/01/31 23934.15 23970.66 28270.60 18289.28
1997/02/28 24296.58 24107.39 28492.25 18335.00
1997/03/31 23483.76 23406.01 27321.50 18131.48
1997/04/30 24445.32 24384.84 28952.59 18403.45
1997/05/31 25433.97 25368.24 30715.23 18578.29
1997/06/30 26380.76 26170.89 32091.27 18799.37
1997/07/31 27814.50 27702.98 34644.77 19306.95
1997/08/31 26585.58 26677.64 32703.97 19142.84
1997/09/30 27655.94 27712.25 34495.17 19426.16
1997/10/31 27089.80 27317.63 33343.03 19707.83
1997/11/30 27740.86 28126.61 34886.48 19798.49
1997/12/31 28314.31 28530.01 35485.48 19998.46
1998/01/31 28562.68 28865.41 35877.95 20254.44
1998/02/28 29673.04 30105.23 38465.47 20238.23
1998/03/31 30599.01 31071.19 40435.28 20307.04
1998/04/30 30775.71 31323.36 40842.06 20412.64
1998/05/31 30731.53 31119.32 40139.99 20606.56
1998/06/30 31381.11 31983.36 41770.47 20781.37
1998/07/31 31306.89 31806.13 41325.62 20825.47
1998/08/31 28234.09 29254.09 35350.76 21164.44
1998/09/30 29289.87 30652.46 37615.33 21659.93
1998/10/31 30727.70 32083.73 40674.96 21545.65
1998/11/30 31923.21 33323.17 43140.27 21667.68
1998/12/31 33012.94 34515.30 45626.01 21732.84
1999/01/31 33292.57 35479.98 47534.09 21888.07
1999/02/28 32799.11 34570.55 46056.73 21505.90
1999/03/31 33470.09 35477.18 47899.46 21625.23
1999/04/30 34664.27 36346.58 49754.61 21693.78
1999/05/31 33619.36 35703.76 48579.90 21502.87
1999/06/30 34573.47 36847.08 51276.09 21434.20
1999/07/30 33820.78 36094.96 49675.25 21347.00
IMATRL PRASUN SHR__CHT 19990731 19990817 150125 R00000000000123
</TABLE>
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Puritan Fund on July 31, 1989. As the chart
shows, by July 31, 1999, the value of the investment would have grown
to $33,821 - a 238.21% increase on the initial investment. For
comparison, look at how the Standard & Poor's 500 Index, a market
capitalization-weighted index of common stocks, and the Lehman
Brothers Aggregate Bond Index, a market value-weighted index of
investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of one year or more, did over the same period. With
dividends and capital gains, if any, reinvested, the Standard &
Poor's 500 Index would have grown to $49,675 - a 396.75% increase. If
$10,000 was invested in the Lehman Brothers Aggregate Bond Index, it
would have grown to $21,347 - a 113.47% increase. You can also look at
how the Fidelity Balanced Composite Index did over the same period.
The composite index combines the total returns of the Standard &
Poor's 500 Index (60%) and the Lehman Brothers Aggregate Bond Index
(40%). With dividends and interest, if any, reinvested, the same
$10,000 would have grown to $36,095 - a 260.95% increase.
(checkmark)
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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
One big question on investors' minds
throughout the 12-month period was,
"What will the Federal Reserve Board
do next?" After a series of
interest-rate cuts by the Fed in the
fall of 1998, a buoyant domestic
economy, combined with signs of
improvement overseas, caused
nervousness about inflationary
pressures and resulted in a shift in
Fed policy to a tightening bias in May.
While the equity markets churned in
response to prospects of higher
interest rates, the bond market sold
off. For the 12-month period that
ended July 31, 1999, the Standard &
Poor's 500 Index posted a total return
of 20.20%. In comparison, the
Lehman Brothers Aggregate Bond
Index - a broad measure of the
U.S. taxable investment-grade bond
market - returned 2.49% during
the same period. On June 30, 1999, in
a surprising change of events
following the Fed's decision to
increase the federal-funds rate from
4.75% to 5.00%, they caught the
markets off-guard with another shift
in monetary policy, switching from a
tightening bias to neutral. While the
bond market showed some signs of
strength in mid-July, a
larger-than-expected increase in the
employment-cost index caused
further volatility. As stock and bond
prices faltered in response, many
market watchers felt there was a
strong possibility that the Fed would
raise interest rates at its August
meeting.
(photograph of Bettina Doulton)
An interview with Bettina Doulton, Portfolio Manager of Fidelity
Puritan Fund
Q. HOW DID THE FUND PERFORM, BETTINA?
A. Given the fund's mix of equities and bonds, its performance
typically falls between the returns of the Standard & Poor's 500 Index
and the Lehman Brothers Aggregate Bond Index. For the 12-month period
ending July 31, 1999, the fund returned 8.03%. Meanwhile, the S&P 500
and the Lehman Brothers Aggregate Bond Index returned 20.20% and
2.49%, respectively. The fund underperformed the 9.57% one-year return
of the balanced funds average, as tracked by Lipper Inc.
Q. WHY DID THE FUND TRAIL THE BALANCED FUNDS AVERAGE OVER THE PAST
YEAR?
A. It really came down to portfolio construction. The fund's equity
subportfolio is managed in a more conservative, equity-income style
compared to its more growth-oriented peers. That means the fund
focuses on investments with higher dividend yields, bypassing
low-yielding, high price-to-earnings growth stocks such as Microsoft.
This led to an underweighting in technology, a sector that has driven
the majority of the market's double-digit gains for the past several
years.
Q. WHERE DID YOU FIND OPPORTUNITIES TO BOOST PERFORMANCE?
A. Overweighting the energy sector relative to my peers proved
beneficial. From March through the period's close, we saw a rapid
shift from larger, more predictable earners to smaller value and
cyclical stocks. Against this backdrop, compounded by OPEC's
production cuts which pushed oil prices higher, energy stocks
rebounded. In response, I selectively added to the fund's exposure in
integrated oil and energy services stocks, including Exxon and
Halliburton. BP Amoco and Halliburton were two of the strongest
contributors to performance. Overweighting the media and leisure
sector also helped. Its strong performance was led by Time Warner,
whose returns rose from a combination of underlying profit growth and
capital discipline.
Q. HOW DID THE FINANCE SECTOR - THE FUND'S LARGEST SECTOR WEIGHTING -
PERFORM?
A. It's performance was exceptionally volatile during the past 12
months and was somewhat of a drag on total return. Early in the
period, liquidity - or lack thereof - was a huge concern. The Russian
debt default, which triggered a crisis in the fixed-income markets,
left finance stocks battered. But when the Federal Reserve Board
stepped in with three interest-rate cuts, finance stocks enjoyed a
terrific October-through-May run. Unfortunately, they gave some of
that performance back late in the period as concerns grew about
inflation and rising interest rates. Within the finance sector, my
focus was on names with strong, revenue-driven earnings growth and
reasonable valuations. American Express is one example. It has a
terrific brand franchise with a global credit card base that's doing
extremely well both internationally and domestically. American Express
and Citigroup were top contributors to fund performance over the past
year.
Q. WHICH STOCKS HAVEN'T LIVED UP TO YOUR EXPECTATIONS?
A. Fannie Mae and Freddie Mac, which provide housing-related financial
services, were disappointments. Concerns about growth rates, pricing
wars and rising mortgage rates drove their stock prices down. I remain
optimistic that the relative performance of these stocks will recover,
driven by continued strong fundamentals. Philip Morris also performed
poorly, as ongoing litigation liabilities continued to batter the
stock.
Q. HOW DID THE FUND'S BOND SUBPORTFOLIO FARE?
A. Portfolio construction was again an issue here. Relative to its
peers and the Lehman Brothers Aggregate Bond Index, the fund was
overweighted in corporates and mortgages and underweighted in
government securities. This was a significant detractor in the early
months of the period as investors fled to Treasuries during the
emerging markets crisis in the third quarter of 1998. While that
underperformance was mostly recovered during the last nine months of
the period, the fund's high-grade, fixed-income component was somewhat
lackluster overall.
Q. WHAT'S YOUR OUTLOOK, BETTINA?
A. The huge valuation gaps that existed for nearly two years have
closed. The question now is what will do well going forward. For the
first time in many years, no industry group appears compelling enough
based on fundamentals and valuations to warrant a significant
overweighting. As such, I believe individual stock selection -
including avoiding disappointments - will be critical for fund
performance differentiation. Currently, I'm considering opportunities
in Europe, a market that appears poised to perform well, where there
exists some potentially interesting restructuring stories and value
stocks.
(checkmark)
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, 1999,
more than $25.7 billion
MANAGER: Bettina Doulton,
since 1996; manager, Fidelity
Equity Income II Fund, since
1996; Fidelity Value Fund,
1995-1996; joined
Fidelity in 1986
BETTINA DOULTON ON THE
NEAR-TERM PROSPECTS FOR
INFLATION:
"The prospects of accelerating
domestic and global economies, as
well as wage pressures and tight labor
markets in the U.S., are driving the
market's and the Federal Reserve
Board's concerns about inflation.
However, after recent visits to
Southeast Asia and the U.K., and
continuous discussions with
corporate America, I'm not overly
worried about inflation. Corporations
continue to believe that there's no
flexibility to dramatically increase
prices, and recognize the need to
offset any cost pressures with
productivity improvements.
"Secondarily, there's a lot of
industrial capacity out there.
Typically, if the vast majority of
capacity is in use, economists worry
that bottlenecks may form and
create inflationary pressure. And
while, yes, operating rates are
improving, I still see excess capacity
in most basic industries, especially
internationally. Additionally, there
are other deflationary pressures,
including improved technology and
manufacturing techniques, and
industry consolidation, all of which
reduce unit costs. The same is true
of the Internet, which I believe will
dramatically increase
corporate productivity, and thus is
also deflationary. It improves
employee productivity,
streamlines order processing and
inventory management. When I add
all of these factors up, I'm not overly
concerned about the near-term
prospects for increased inflation."
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STOCKS AS OF JULY
31, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCKS 6 MONTHS AGO
Citigroup, Inc. 2.7 2.1
Chase Manhattan Corp. 2.6 2.5
Exxon Corp. 2.5 1.0
Fannie Mae 2.4 1.7
American Express Co. 2.3 2.1
TOP FIVE BOND ISSUERS AS OF
JULY 31, 1999
(WITH MATURITIES MORE THAN % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
ONE YEAR) THESE ISSUERS 6 MONTHS AGO
Fannie Mae 7.9 7.7
U.S. Treasury Obligations 3.4 2.8
Government National Mortgage 2.1 1.6
Association
CS First Boston Mortgage 0.5 0.4
Securities Corp.
TCI Communications Inc. 0.4 0.4
TOP FIVE MARKET SECTORS AS OF
JULY 31, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO
FINANCE 19.4 19.4
UTILITIES 9.4 10.8
ENERGY 8.7 4.7
MEDIA & LEISURE 7.8 7.9
TECHNOLOGY 6.9 5.8
</TABLE>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JULY 31, 1999 *
Stocks 63.7%
Bonds 31.4%
Convertible Securities 0.8%
Short-term Investments 4.1%
* FOREIGN INVESTMENTS 7.7%
AS OF JANUARY 31, 1999 **
Stocks 64.4%
Bonds 31.9%
Convertible Securities 0.8%
Short-term Investments 2.9%
* FOREIGN INVESTMENTS 7.7%
Row: 1, Col: 1, Value: 63.7
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 31.4
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.8
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 4.1
Row: 1, Col: 1, Value: 64.40000000000001
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 31.9
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.8
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 2.9
INVESTMENTS JULY 31, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 62.7%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 2.4%
AEROSPACE & DEFENSE - 1.7%
AlliedSignal, Inc. 796,800 $ 51,543
Boeing Co. 1,331,600 60,421
Textron, Inc. 2,814,500 231,493
United Technologies Corp. 1,235,400 82,386
425,843
SHIP BUILDING & REPAIR - 0.7%
General Dynamics Corp. 2,652,700 178,560
TOTAL AEROSPACE & DEFENSE 604,403
BASIC INDUSTRIES - 2.7%
CHEMICALS & PLASTICS - 1.7%
Dow Chemical Co. 402,600 49,922
E.I. du Pont de Nemours and 2,038,200 146,878
Co.
Engelhard Corp. 1,280,300 28,567
Lyondell Chemical Co. 1,000,000 18,250
PPG Industries, Inc. 200,000 11,925
Praxair, Inc. 2,371,100 109,367
Rohm & Haas Co. 1,707,600 72,786
437,695
IRON & STEEL - 0.0%
Allegheny Teledyne, Inc. 263,100 5,640
METALS & MINING - 1.0%
Alcoa, Inc. 4,180,000 250,278
TOTAL BASIC INDUSTRIES 693,613
CONSTRUCTION & REAL ESTATE -
0.3%
BUILDING MATERIALS - 0.3%
Masco Corp. 2,201,200 65,486
ENGINEERING - 0.0%
Fluor Corp. 317,700 12,728
REAL ESTATE INVESTMENT TRUSTS
- - 0.0%
Equity Residential Properties 5,600 231
Trust (SBI)
TOTAL CONSTRUCTION & REAL 78,445
ESTATE
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
DURABLES - 0.8%
CONSUMER DURABLES - 0.7%
Minnesota Mining & 2,097,500 $ 184,449
Manufacturing Co.
TEXTILES & APPAREL - 0.1%
NIKE, Inc. Class B 480,100 24,965
TOTAL DURABLES 209,414
ENERGY - 8.1%
ENERGY SERVICES - 1.4%
Baker Hughes, Inc. 433,600 15,095
Halliburton Co. 5,224,200 240,966
R&B Falcon Corp. warrants 9,992 1,199
5/1/09 (a)(g)
Schlumberger Ltd. 1,853,700 112,265
369,525
OIL & GAS - 6.7%
Atlantic Richfield Co. 1,550,400 139,633
BP Amoco PLC 9,463,512 182,764
BP Amoco PLC sponsored ADR 3,509,019 406,608
Burlington Resources, Inc. 1,181,300 52,199
Exxon Corp. 8,221,000 652,542
Mobil Corp. 300,000 30,675
Royal Dutch Petroleum Co. (NY 550,500 33,581
Registry Gilder 1.25)
Total Fina SA:
Class B (a) 655,800 83,521
sponsored ADR (a) 978,800 62,276
USX-Marathon Group 2,532,800 76,934
1,720,733
TOTAL ENERGY 2,090,258
FINANCE - 15.0%
BANKS - 3.0%
Bank of America Corp. 966,000 64,118
Bank of New York Co., Inc. 1,123,900 41,514
Chase Manhattan Corp. 8,701,800 668,951
774,583
CREDIT & OTHER FINANCE - 6.2%
American Express Co. 4,546,427 598,992
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE -
CONTINUED
Associates First Capital 6,381,110 $ 244,476
Corp. Class A
Citigroup, Inc. 15,451,329 688,550
Household International, Inc. 1,626,701 69,846
Olympic Financial Ltd. 361 0
warrants 3/15/07 (a)
1,601,864
FEDERAL SPONSORED CREDIT - 4.4%
Fannie Mae 8,977,050 619,416
Freddie Mac 8,645,100 496,013
1,115,429
INSURANCE - 1.4%
American International Group, 763,700 88,685
Inc.
Hartford Financial Services 3,465,300 187,126
Group, Inc.
MBIA, Inc. 1,310,770 75,042
350,853
SECURITIES INDUSTRY - 0.0%
ECM Corp. LP (g) 6,318 556
TOTAL FINANCE 3,843,285
HEALTH - 5.2%
DRUGS & PHARMACEUTICALS - 4.0%
Bristol-Myers Squibb Co. 5,640,500 375,093
Lilly (Eli) & Co. 3,116,500 204,520
Merck & Co., Inc. 3,839,700 259,900
Schering-Plough Corp. 4,163,600 204,016
1,043,529
MEDICAL EQUIPMENT & SUPPLIES
- - 1.2%
Abbott Laboratories 3,171,100 136,159
Baxter International, Inc. 271,400 18,642
Johnson & Johnson 1,614,100 148,699
303,500
TOTAL HEALTH 1,347,029
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY &
EQUIPMENT - 5.2%
ELECTRICAL EQUIPMENT - 2.5%
ABB Ltd. (Sweden) (a) 572,552 $ 55,052
General Electric Co. 5,250,900 572,348
Honeywell, Inc. 184,000 22,046
649,446
INDUSTRIAL MACHINERY &
EQUIPMENT - 2.5%
Caterpillar, Inc. 500,000 29,313
Cooper Industries, Inc. 151,600 8,319
Deere & Co. 2,528,500 96,715
Illinois Tool Works, Inc. 535,800 39,817
Ingersoll-Rand Co. 1,385,100 89,079
Parker-Hannifin Corp. 662,700 31,271
Tyco International Ltd. 3,682,012 359,687
654,201
POLLUTION CONTROL - 0.2%
Browning-Ferris Industries, 970,400 43,547
Inc.
TOTAL INDUSTRIAL MACHINERY & 1,347,194
EQUIPMENT
MEDIA & LEISURE - 4.4%
BROADCASTING - 1.8%
Benedek Communications Corp. 51,900 104
warrants 7/1/07 (a)
CBS Corp. (a) 3,210,200 141,048
Comcast Corp. Class A 400,000 15,400
(special)
CS Wireless Systems, Inc. 911 0
(a)(g)
MediaOne Group, Inc. 845,500 61,193
NTL, Inc. warrants 12/31/08 16,463 823
(a)
Teletrac Holdings, Inc. 2,910 1
warrants 8/1/07 (a)
Time Warner, Inc. 3,390,201 244,094
UIH Australia/Pacific, Inc. 26,110 783
warrants 5/15/06 (a)
463,446
ENTERTAINMENT - 1.2%
Alliance Gaming Corp. (a)(j) 3,043 12
Cedar Fair LP (depository 196,500 4,409
unit)
Disney (Walt) Co. 2,341,700 64,689
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - CONTINUED
News Corp. Ltd. sponsored:
ADR 1,256,000 $ 43,803
ADR (ltd. vtg.) 831,200 26,287
Viacom, Inc. Class B 3,891,100 163,183
(non-vtg.) (a)
302,383
LODGING & GAMING - 0.0%
Motels of America, Inc. (a) 3,000 56
PUBLISHING - 0.7%
McGraw-Hill Companies, Inc. 3,588,000 182,540
RESTAURANTS - 0.7%
McDonald's Corp. 4,639,900 193,426
TOTAL MEDIA & LEISURE 1,141,851
NONDURABLES - 3.3%
BEVERAGES - 0.1%
Brown-Forman Corp. Class B 399,600 24,775
FOODS - 0.5%
Dean Foods Co. 1,175,800 51,000
Flowers Industries, Inc. 3,200,200 53,403
Nabisco Group Holdings Corp. 1,221,100 22,896
Nabisco Holdings Corp. Class A 278,800 11,605
138,904
HOUSEHOLD PRODUCTS - 1.9%
Avon Products, Inc. 2,950,500 134,248
Clorox Co. 80,200 8,982
Colgate-Palmolive Co. 428,000 21,133
Unilever NV NY Shares 3,535,196 247,022
Unilever PLC 7,045,982 67,818
479,203
TOBACCO - 0.8%
British American Tobacco PLC 2,189,600 18,474
Philip Morris Companies, Inc. 4,622,440 172,186
190,660
TOTAL NONDURABLES 833,542
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
RETAIL & WHOLESALE - 2.4%
APPAREL STORES - 0.0%
Mothers Work, Inc. (a)(j) 2,416 $ 36
GENERAL MERCHANDISE STORES -
1.1%
Dayton Hudson Corp. 793,600 51,336
Federated Department Stores, 554,000 28,427
Inc. (a)
Nordstrom, Inc. 1,867,700 58,716
Saks, Inc. (a) 1,766,360 40,626
Wal-Mart Stores, Inc. 2,247,800 94,970
274,075
GROCERY STORES - 1.2%
Albertson's, Inc. 2,913,639 144,771
Kroger Co. (a) 6,154,200 161,932
306,703
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.1%
Home Depot, Inc. 352,900 22,519
TOTAL RETAIL & WHOLESALE 603,333
SERVICES - 0.0%
Block (H&R), Inc. 180,000 9,833
TECHNOLOGY - 6.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Tellabs, Inc. (a) 452,000 27,826
COMPUTER SERVICES & SOFTWARE
- - 2.0%
Electronic Data Systems Corp. 870,500 52,502
International Business 3,752,600 471,655
Machines Corp.
524,157
COMPUTERS & OFFICE EQUIPMENT
- - 3.7%
Compaq Computer Corp. 992,000 23,808
EMC Corp. (a) 630,000 38,154
Hewlett-Packard Co. 2,439,300 255,364
Pitney Bowes, Inc. 6,105,480 388,461
Xerox Corp. 4,931,700 240,420
946,207
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - 0.3%
Insilco Corp. warrants 5,660 $ 0
8/15/07 (a)
Texas Instruments, Inc. 547,700 78,869
78,869
TOTAL TECHNOLOGY 1,577,059
TRANSPORTATION - 1.2%
RAILROADS - 1.2%
Burlington Northern Santa Fe 5,905,700 188,982
Corp.
CSX Corp. 1,555,700 75,354
Union Pacific Corp. 888,500 48,257
312,593
UTILITIES - 5.6%
CELLULAR - 0.5%
ALLTEL Corp. 1,658,300 119,087
Loral Orion Network Systems,
Inc.:
warrants 1/15/07 (CV ratio 41,555 249
.47) (a)
warrants 1/15/07 (CV ratio 8,090 65
.6) (a)
McCaw International Ltd. 40,960 102
warrants 4/15/07 (a)(g)
Orbital Imaging Corp. 1,120 28
warrants 3/1/05 (a)(g)
119,531
ELECTRIC UTILITY - 0.6%
CMS Energy Corp. 1,701,500 63,594
Entergy Corp. 1,292,000 39,164
PG&E Corp. 1,967,000 62,206
164,964
GAS - 0.1%
Enron Corp. 389,500 33,181
TELEPHONE SERVICES - 4.4%
Ameritech Corp. 1,941,100 142,186
AT&T Corp. 7,710,150 400,446
KMC Telecom Holdings, Inc. 5,620 14
warrants 4/15/08 (a)(g)
MCI WorldCom, Inc. (a) 2,657,100 219,211
Optel Communications Corp. 1,706,343 17
warrants 12/29/04 (a)(j)
Pathnet, Inc. warrants 12,390 124
4/15/08 (a)(g)
Rhythms NetConnections, Inc. 56,650 6,795
warrants 5/15/08 (a)(g)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
SBC Communications, Inc. 5,144,600 $ 294,207
Sprint Corp. (FON Group) 1,080,600 55,854
1,118,854
TOTAL UTILITIES 1,436,530
TOTAL COMMON STOCKS 16,128,382
(Cost $11,415,733)
PREFERRED STOCKS - 1.6%
CONVERTIBLE PREFERRED STOCKS
- - 0.6%
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Loral Space & Communications 275,000 14,438
Ltd. Series C, $3.00 (g)
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.0%
Ingersoll Rand Co./Ingersoll 30,800 924
Rand Finance $1.68 Income
PRIDES
TOTAL INDUSTRIAL MACHINERY & 15,362
EQUIPMENT
MEDIA & LEISURE - 0.5%
BROADCASTING - 0.4%
MediaOne Group, Inc. 1,194,600 112,292
(Vodafone AirTouch PLC)
$3.63 PIES
LODGING & GAMING - 0.1%
Host Marriott Financial Trust 534,900 19,825
$3.375 QUIPS (g)
TOTAL MEDIA & LEISURE 132,117
TOTAL CONVERTIBLE PREFERRED 147,479
STOCKS
NONCONVERTIBLE PREFERRED
STOCKS - 1.0%
ENERGY - 0.0%
ENERGY SERVICES - 0.0%
R&B Falcon Corp. $0.00 (a)(g) 10,373 9,336
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONCONVERTIBLE PREFERRED
STOCKS - CONTINUED
FINANCE - 0.0%
INSURANCE - 0.0%
American Annuity Group 6,030 $ 6,165
Capital Trust II 8.875%
HEALTH - 0.1%
MEDICAL FACILITIES MANAGEMENT
- - 0.1%
Fresenius Medical Care 14,190 13,314
Capital Trust II 7.875%
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.3%
Adelphia Communications Corp. 38,030 4,164
$13.00
Citadel Broadcasting Co. 60,442 7,011
Series B, 13.25% pay-in-kind
CSC Holdings, Inc.:
11.125% pay-in-kind 292,250 31,709
Series H, 11.75% pay-in-kind 152,285 16,675
Granite Broadcasting Corp. 6,805 6,669
12.75% pay-in-kind
66,228
PUBLISHING - 0.0%
PRIMEDIA, Inc. 8.625% 74,220 6,680
TOTAL MEDIA & LEISURE 72,908
TECHNOLOGY - 0.0%
COMPUTER SERVICES & SOFTWARE
- - 0.0%
Concentric Network Corp. 5,168 4,806
13.5% pay-in-kind
COMPUTERS & OFFICE EQUIPMENT
- - 0.0%
Ampex Corp. 8% non-cumulative 779 1,215
(a)
TOTAL TECHNOLOGY 6,021
UTILITIES - 0.6%
CELLULAR - 0.3%
Nextel Communications, Inc.:
11.125% pay-in-kind 36,498 37,228
Series D, 13% pay-in-kind 26,792 28,132
65,360
ELECTRIC UTILITY - 0.0%
Entergy Gulf States, Inc. 32,305 3,231
Series A, adj. rate
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONCONVERTIBLE PREFERRED
STOCKS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - 0.3%
e.spire Communications, Inc.:
$127.50 pay-in-kind 8,828 $ 3,708
14.75% pay-in-kind 2,693 1,239
ICG Holdings, Inc.:
14% pay-in-kind 2 2
14.25% pay-in-kind 17,007 16,837
Intermedia Communications, 19,031 18,175
Inc. 13.5% pay-in-kind
IXC Communications, Inc. 10,728 11,479
12.5% pay-in-kind
NEXTLINK Communications, Inc. 609,043 30,452
14% pay-in-kind
WinStar Communications, Inc. 5,509 4,572
14.25% (a)
86,464
TOTAL UTILITIES 155,055
TOTAL NONCONVERTIBLE 262,799
PREFERRED STOCKS
TOTAL PREFERRED STOCKS 410,278
(Cost $396,106)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 15.5%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S)
CONVERTIBLE BONDS - 0.2%
MEDIA & LEISURE - 0.2%
PUBLISHING - 0.2%
News America Holdings, Inc. Baa3 $ 78,390 56,637
liquid yield option notes
0% 3/11/13
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
GST Telecommunications, Inc. - 40 40
0% 12/15/05 (e)(g)
TOTAL CONVERTIBLE BONDS 56,677
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - 15.3%
AEROSPACE & DEFENSE - 0.2%
DEFENSE ELECTRONICS - 0.2%
Raytheon Co.:
5.95% 3/15/01 Baa1 $ 24,250 $ 24,114
6.3% 8/15/00 Baa1 5,000 5,007
6.45% 8/15/02 Baa1 11,360 11,313
40,434
BASIC INDUSTRIES - 0.6%
CHEMICALS & PLASTICS - 0.4%
Huntsman Corp.:
9.5% 7/1/07 (g) B2 22,170 21,062
9.5% 7/1/07 (g) B2 5,960 5,662
Huntsman ICI Chemicals LLC B2 6,970 6,935
10.125% 7/1/09 (g)
Koppers Industries, Inc. B2 6,365 6,174
9.875% 12/1/07
Lyondell Chemical Co.:
9.625% 5/1/07 (g) Ba3 10,390 10,546
9.875% 5/1/07 (g) Ba3 10,540 10,645
10.875% 5/1/09 (g) B2 7,120 7,262
Monsanto Co. 5.75% 12/1/05 (g) A2 3,000 2,858
Rohm & Haas Co. 7.85% 7/15/29 A3 12,700 12,759
(g)
Zeneca Specialty Chemicals B2 6,700 6,734
PLC 11% 7/1/09 (g)
90,637
METALS & MINING - 0.0%
Kaiser Aluminum & Chemical
Corp.:
9.875% 2/15/02 B1 1,430 1,426
12.75% 2/1/03 B3 2,540 2,553
Metals USA, Inc. 8.625% B2 7,030 6,643
2/15/08
10,622
PACKAGING & CONTAINERS - 0.1%
Gaylord Container Corp. Caa1 10,200 9,435
9.375% 6/15/07
Packaging Corp. of America B3 10,230 10,383
9.625% 4/1/09 (g)
19,818
PAPER & FOREST PRODUCTS - 0.1%
APP Finance II Mauritius Ltd. B3 11,905 7,143
12% 3/15/04
Container Corp. of America B2 1,020 1,044
gtd. 9.75% 4/1/03
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS -
CONTINUED
Doman Industries Ltd. 12% B3 $ 950 $ 941
7/1/04 (g)
Fort James Corp. 6.625% Baa2 3,010 2,965
9/15/04
Indah Kiat Finance Mauritius Caa1 3,470 2,186
Ltd. 10% 7/1/07
Millar Western Forest B3 10,880 10,608
Products Ltd. 9.875% 5/15/08
Pindo Deli Finance Mauritius Caa1 2,740 1,781
Ltd. 10.25% 10/1/02
Stone Container Corp.:
10.75% 10/1/02 B1 5,340 5,527
12.58% 8/1/16 (i) B2 810 883
Tjiwi Kimia Finance Mauritius Caa1 3,160 1,991
Ltd. 10% 8/1/04
35,069
TOTAL BASIC INDUSTRIES 156,146
CONSTRUCTION & REAL ESTATE -
0.3%
CONSTRUCTION - 0.0%
Del Webb Corp. 10.25% 2/15/10 B2 5,450 5,396
Great Lakes Dredge & Dock B3 7,800 8,112
Corp. 11.25% 8/15/08
13,508
REAL ESTATE - 0.1%
Duke Realty LP 7.3% 6/30/03 Baa1 10,000 10,025
LNR Property Corp. 9.375% B1 13,585 12,634
3/15/08
22,659
REAL ESTATE INVESTMENT TRUSTS
- - 0.2%
CenterPoint Properties Trust Baa2 8,720 8,166
6.75% 4/1/05
Equity Office Properties Trust:
6.625% 2/15/05 Baa1 10,300 9,812
6.75% 2/15/08 Baa1 17,690 16,497
7.25% 2/15/18 Baa1 6,005 5,376
ProLogis Trust 6.7% 4/15/04 Baa1 4,865 4,666
44,517
TOTAL CONSTRUCTION & REAL 80,684
ESTATE
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES -
0.1%
Blue Bird Body Co. 10.75% B2 $ 4,340 $ 4,600
11/15/06
Ford Motor Co. 7.45% 7/16/31 A1 10,250 10,071
14,671
CONSUMER DURABLES - 0.0%
Corning Consumer Products Co. B3 6,420 5,329
9.625% 5/1/08
HOME FURNISHINGS - 0.0%
Omega Cabinets Ltd. 10.5% B3 2,440 2,379
6/15/07
TEXTILES & APPAREL - 0.0%
Synthetic Industries, Inc. B2 5,820 5,835
9.25% 2/15/07
Worldtex, Inc. 9.625% 12/15/07 B1 4,840 4,308
10,143
TOTAL DURABLES 32,522
ENERGY - 0.6%
COAL - 0.1%
P&L Coal Holdings Corp.:
8.875% 5/15/08 Ba3 1,920 1,891
9.625% 5/15/08 B2 16,580 16,166
18,057
ENERGY SERVICES - 0.1%
Baker Hughes, Inc. 6.875% A2 4,690 4,343
1/15/29 (g)
R&B Falcon Corp. 12.25% Ba3 3,950 4,098
3/15/06
RBF Finance Co.:
11% 3/15/06 Ba3 5,130 5,284
11.375% 3/15/09 Ba3 2,460 2,546
16,271
OIL & GAS - 0.4%
Anadarko Petroleum Corp. 7.2% Baa1 23,125 21,207
3/15/29
Apache Corp.:
7.625% 7/1/19 Baa1 23,000 22,281
7.7% 3/15/26 Baa1 4,785 4,700
Apache Finance Property Ltd. Baa1 5,010 4,709
6.5% 12/15/07
Belden & Blake Corp. 9.875% Caa1 2,530 1,898
6/15/07
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Chesapeake Energy Corp.:
7.875% 3/15/04 B3 $ 1,160 $ 1,015
8.5% 3/15/12 B3 1,120 896
9.625% 5/1/05 B3 7,886 7,275
Conoco, Inc.:
5.9% 4/15/04 A3 7,300 7,042
6.95% 4/15/29 A3 12,215 11,285
Flores & Rucks, Inc. 9.75% B1 8,080 8,322
10/1/06
Great Lakes Carbon Corp. B3 11,015 10,795
10.25% 5/15/08 pay-in-kind
Ocean Energy, Inc.:
8.375% 7/1/08 B1 4,950 4,764
8.875% 7/15/07 B1 1,080 1,072
Plains Resources, Inc.:
Series B 10.25% 3/15/06 B2 5,530 5,613
Series D, 10.25% 3/15/06 B2 1,905 1,934
Seven Seas Petroleum, Inc. Caa1 1,670 668
12.5% 5/15/05
115,476
TOTAL ENERGY 149,804
FINANCE - 4.4%
BANKS - 2.1%
ABN-Amro Bank NV, Chicago A1 28,500 28,454
6.625% 10/31/01
Banco Latinoamericano Baa2 10,550 10,468
Exportaciones SA euro 6.9%
12/4/99 (g)
Bank of New York A1 20,000 19,295
Institutional Capital Trust
A 7.78% 12/1/26 (g)
BankAmerica Corp.:
6.625% 6/15/04 Aa2 14,905 14,735
10% 2/1/03 Aa3 2,990 3,256
BankBoston Corp. 6.625% 2/1/04 A3 9,640 9,494
BankBoston NA 6.375% 3/25/08 A2 2,650 2,477
BanPonce Financial Corp.:
6.66% 3/26/01 A3 10,000 9,994
6.75% 8/9/01 A3 18,240 18,154
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Barclays Bank PLC yankee:
5.875% 7/15/00 A1 $ 37,000 $ 36,878
5.95% 7/15/01 A1 43,800 43,362
Capital One Bank:
6.375% 2/15/03 Baa2 20,000 19,431
6.42% 11/12/99 Baa3 25,000 25,043
Capital One Financial Corp. Baa3 20,300 19,292
7.125% 8/1/08
Chase Manhattan Corp. 5.5% Aa3 8,700 8,609
2/15/01
First Chicago NBD A1 18,500 17,686
Institutional Capital B
7.75% 12/1/26 (g)
First USA Bank 7.65% 8/1/03 Aa3 12,500 12,813
Kansallis-Osake-Pankki (NY A2 5,285 5,687
Branch) yankee 10% 5/1/02
Korea Development Bank:
6.625% 11/21/03 Baa3 14,825 13,943
7.125% 9/17/01 Baa3 4,385 4,301
MBNA Corp.:
6.34% 6/2/03 Baa2 6,475 6,281
6.875% 11/15/02 Baa2 29,550 29,425
Merchants National Corp. A2 6,850 6,896
9.875% 10/1/99
Midlantic Corp. 9.2% 8/1/01 A3 11,550 12,058
NationsBank NA 5.92% 6/8/01 Aa2 18,500 18,226
NB Capital Trust IV 8.25% Aa2 11,600 11,472
4/15/27
Provident Bank 6.125% 12/15/00 A3 27,500 27,291
Providian National Bank:
6.25% 5/7/01 Baa3 20,195 19,929
6.75% 3/15/02 Baa3 7,805 7,750
Sanwa Finance Aruba A E C A3 45,800 45,270
8.35% 7/15/09
Summit Bancorp 8.625% 12/10/02 BBB+ 6,750 7,086
Union Planters National Bank A3 13,000 13,091
6.81% 8/20/01
528,147
CREDIT & OTHER FINANCE - 2.2%
Ahmanson Capital Trust I A3 6,500 6,543
8.36% 12/1/26 (g)
AMRESCO, Inc.:
9.875% 3/15/05 Caa3 8,620 6,508
10% 3/15/04 Caa3 1,600 1,240
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE -
CONTINUED
Associates Corp. of North
America:
6% 4/15/03 Aa3 $ 9,550 $ 9,375
6% 7/15/05 Aa3 45,500 43,050
AT&T Capital Corp.:
6.25% 5/15/01 Baa3 40,260 39,542
7.5% 11/15/00 Baa3 38,460 38,610
BankBoston Capital Trust II A2 20,500 19,179
7.75% 12/15/26
Chase Capital I 7.67% 12/1/26 Aa3 30,385 28,643
Citigroup, Inc. 5.8% 3/15/04 Aa2 26,095 24,897
ContiFinancial Corp. 8.125% Caa2 1,790 609
4/1/08
Delta Financial Corp. 9.5% B3 182 158
8/1/04
ERP Operating LP:
6.55% 11/15/01 A3 7,000 6,934
7.1% 6/23/04 A3 10,300 10,167
Finova Capital Corp. 6.27% Baa1 2,080 2,075
9/29/00
First Security Capital I A3 16,730 16,657
8.41% 12/15/26
Fleet Capital Trust II 7.92% A2 5,200 5,042
12/11/26
Ford Motor Credit Co. 6.5% A1 24,230 24,133
2/28/02
GS Escrow Corp. 7.125% 8/1/05 Ba1 36,000 33,970
Household Finance Corp. 6% A2 25,000 25,011
5/8/00
Imperial Credit Capital Trust B2 3,600 2,844
I 10.25% 6/14/02
Imperial Credit Industries B3 9,577 7,470
9.875% 1/15/07
KeyCorp Institutional Capital A1 6,000 5,787
A 7.826% 12/1/26
Lodgian Financing Corp. B3 4,920 4,920
12.25% 7/15/09 (g)
Macsaver Financial Services,
Inc.:
7.4% 2/15/02 Ba2 2,110 1,772
7.6% 8/1/07 Ba2 4,270 3,395
7.875% 8/1/03 Ba2 5,170 4,110
Money Store, Inc. 7.3% 12/1/02 A2 13,900 14,102
Olympic Financial Ltd. 11.5% B2 1,480 1,302
3/15/07
PNC Institutional Capital A2 19,000 19,133
Trust 8.315% 5/15/27 (g)
PX Escrow Corp. 0% 2/1/06 (e) B3 2,550 1,479
Spieker Properties LP 6.8% Baa2 22,460 21,888
5/1/04
Sprint Capital Corp.:
5.7% 11/15/03 Baa1 7,290 6,966
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE -
CONTINUED
Sprint Capital Corp.: -
continued
5.875% 5/1/04 Baa1 $ 27,585 $ 26,376
6.875% 11/15/28 Baa1 17,180 15,360
6.9% 5/1/19 Baa1 22,995 21,100
Trizec Finance Ltd. yankee Baa3 8,968 9,605
10.875% 10/15/05
U.S. West Capital Funding, Baa1 17,675 15,812
Inc. 6.875% 7/15/28
Wells Fargo Capital C Capital Aa3 50,000 46,916
Securities 7.73% 12/1/26 (g)
WinStar Equipment II Corp. CCC+ 2,350 2,444
12.5% 3/15/04
575,124
SAVINGS & LOANS - 0.1%
Long Island Savings Bank FSB:
6.2% 4/2/01 Baa3 14,750 14,623
7% 6/13/02 Baa3 14,850 14,817
29,440
SECURITIES INDUSTRY - 0.0%
Amvescap PLC yankee 6.375% A3 13,050 12,735
5/15/03
ECM Corp. LP 14% 6/10/02 (g) - 155 154
12,889
TOTAL FINANCE 1,145,600
HEALTH - 0.2%
DRUGS & PHARMACEUTICALS - 0.0%
Global Health Sciences, Inc. Caa1 5,760 4,320
11% 5/1/08
MEDICAL EQUIPMENT & SUPPLIES
- - 0.0%
Wright Medical Technology, Caa3 6,440 3,606
Inc. 11.75% 7/1/00 (i)
MEDICAL FACILITIES MANAGEMENT
- - 0.2%
Express Scripts, Inc. 9.625% Ba2 3,450 3,502
6/15/09 (g)
Fountain View, Inc. 11.25% Caa1 6,190 5,076
4/15/08
Harborside Healthcare Corp. B3 6,200 2,294
0% 8/1/08 (e)
Integrated Health Services,
Inc.:
9.25% 1/15/08 B2 5,283 3,434
9.5% 9/15/07 B2 1,715 1,098
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT
- - CONTINUED
Mariner Post-Acute Network, B3 $ 9,440 $ 1,510
Inc. 9.5% 11/1/07
Oxford Health Plans, Inc. 11% Caa1 9,850 9,899
5/15/05 (g)
Tenet Healthcare Corp.:
7.875% 1/15/03 Ba1 8,070 7,919
8.125% 12/1/08 Ba3 3,980 3,701
38,433
TOTAL HEALTH 46,359
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.6%
ELECTRICAL EQUIPMENT - 0.0%
Motors & Gears, Inc. 10.75% B3 9,890 9,865
11/15/06
Telex Communications, Inc. B2 5,330 3,971
10.5% 5/1/07
13,836
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.3%
Applied Power, Inc. 8.75% B1 3,960 3,841
4/1/09
Thermadyne Holdings Corp. 0% Caa1 11,150 5,241
6/1/08 (e)
Thermadyne Manufacturing LLC B3 9,540 8,109
9.875% 6/1/08
Tokheim Corp. 11.375% 8/1/08 B3 1,760 1,694
(g)
Tyco International Group SA Baa1 49,000 48,642
yankee 6.125% 6/15/01
67,527
POLLUTION CONTROL - 0.3%
Allied Waste North America, B2 28,820 28,460
Inc. 10% 8/1/09 (g)
Envirosource, Inc. 9.75% Caa3 5,930 3,855
6/15/03
IT Group, Inc. (The) 11.25% B3 3,280 3,149
4/1/09 (g)
WMX Technologies, Inc.:
6.25% 10/15/00 Baa2 11,150 10,994
7.1% 8/1/26 Baa2 10,860 10,531
8.25% 11/15/99 Baa2 7,050 7,077
WMX Technologies, Inc. 7.7% Baa2 10,000 10,254
10/1/02
74,320
TOTAL INDUSTRIAL MACHINERY & 155,683
EQUIPMENT
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
MEDIA & LEISURE - 2.4%
BROADCASTING - 1.7%
Adelphia Communications Corp.:
7.75% 1/15/09 B1 $ 12,490 $ 11,366
9.875% 3/1/07 B1 4,460 4,594
Ascent Entertainment Group, B3 13,310 9,517
Inc. 0% 12/15/04 (e)
Central European Media Caa1 1,250 1,050
Enterprises Ltd. 9.375%
8/15/04
Century Communications Corp., Ba3 9,800 4,214
Series B, 0% 1/15/08
Charter Communications
Holdings LLC/Charter
Communications Holdings
Capital Corp.:
0% 4/1/11 (e)(g) B2 6,980 4,223
8.625% 4/1/09 (g) B2 14,820 14,079
Clear Channel Communications, Baa3 15,420 13,886
Inc. 7.25% 10/15/27
Continental Cablevision, Inc.:
8.3% 5/15/06 Baa3 13,230 14,015
9% 9/1/08 Baa3 18,140 20,134
Diamond Cable Communications B3 6,360 5,024
PLC 0% 2/15/07 (e)
Earthwatch, Inc. 0% 7/15/07 - 11,190 7,749
unit (e)(g)
EchoStar DBS Corp. 9.375% B2 16,980 17,022
2/1/09 (g)
Golden Sky DBS, Inc. 0% Caa1 4,710 2,732
3/1/07 (e)(g)
International Cabletel, Inc. B3 20,440 17,732
0% 2/1/06 (e)
Iridium Operating LLC/Iridium
Capital Corp.:
10.875% 7/15/05 (d) Caa3 7,710 1,388
11.25% 7/15/05 (d) Caa3 7,040 1,267
LIN Holdings Corp. 0% 3/1/08 B3 6,991 4,736
(e)
Nielsen Media Research, Inc. Baa2 11,355 11,346
7.6% 6/15/09
NTL Communications Corp. B3 8,890 9,557
11.5% 10/1/08
NTL, Inc. 0% 4/1/08 (e) B3 26,005 17,683
Olympus Communications B1 10,275 11,097
LP/Olympus Capital Corp.
10.625% 11/15/06
Satelites Mexicanos SA de CV:
8.75% 6/30/04 (g)(i) B1 15,084 14,330
10.125% 11/1/04 B3 15,780 12,387
Sinclair Broadcast Group, B2 3,855 3,778
Inc. 9% 7/15/07
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
TCI Communications, Inc.:
8.25% 1/15/03 A2 $ 23,130 $ 24,295
8.75% 8/1/15 A2 38,398 43,212
9.8% 2/1/12 A2 20,180 24,353
TCI Communications Financing A3 13,120 14,826
III 9.65% 3/31/27
Telewest PLC 0% 10/1/07 (e) B1 20,720 18,441
Time Warner, Inc.:
6.85% 1/15/26 Baa3 19,000 18,952
7.75% 6/15/05 Baa3 10,000 10,218
8.18% 8/15/07 Baa3 5,425 5,693
UIH Australia/Pacific, Inc.:
Series B 0% 5/15/06 (e) B2 20,450 15,747
Series D 0% 5/15/06 (e) B2 4,020 3,095
United International B3 15,980 9,508
Holdings, Inc. 0% 2/15/08
(e)
United Pan-Europe B2 17,900 17,811
Communications NV 10.875%
8/1/09 (g)
441,057
ENTERTAINMENT - 0.3%
AMC Entertainment, Inc.:
9.5% 3/15/09 B3 6,530 6,057
9.5% 2/1/11 B3 5,370 5,021
Harrahs Operating Co., Inc. Ba2 6,810 6,487
7.875% 12/15/05
Hollywood Entertainment Corp. B3 6,510 6,315
10.625% 8/15/04
Paramount Communications, Baa3 3,325 3,374
Inc. 7.5% 1/15/02
Premier Parks, Inc. 0% 4/1/08 B3 8,330 5,498
(e)
Regal Cinemas, Inc. 9.5% B3 4,500 4,050
6/1/08
Town Sports International, B2 3,920 3,763
Inc. 9.75% 10/15/04 (g)
Viacom, Inc. 6.75% 1/15/03 Baa3 21,600 21,206
61,771
LEISURE DURABLES & TOYS - 0.0%
Marvel Enterprises, Inc. 12% - 8,410 8,284
6/15/09 (g)
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 0.2%
Circus Circus Enterprises, Ba2 $ 5,380 $ 4,654
Inc. 7.625% 7/15/13
Horseshoe Gaming LLC:
8.625% 5/15/09 (g) B2 9,650 9,264
9.375% 6/15/07 B2 2,100 2,121
KSL Recreation Group, Inc. B3 9,390 9,484
10.25% 5/1/07
Prime Hospitality Corp.:
9.25% 1/15/06 Ba2 1,270 1,273
9.75% 4/1/07 B1 2,290 2,238
Signature Resorts, Inc.:
9.25% 5/15/06 B2 8,500 8,203
9.75% 10/1/07 B3 13,770 12,393
Sun International Hotels Ba3 4,040 3,979
Ltd./Sun International North
America, Inc. yankee 9%
3/15/07
53,609
PUBLISHING - 0.1%
News America, Inc. 6.625% Baa3 4,425 4,157
1/9/08
Time Warner Entertainment Co.
LP:
7.25% 9/1/08 Baa2 6,575 6,552
8.375% 3/15/23 Baa2 19,301 20,600
31,309
RESTAURANTS - 0.1%
AFC Enterprises, Inc. 10.25% B3 5,275 5,407
5/15/07
CKE Restaurants, Inc. 9.125% B1 7,730 7,266
5/1/09
Darden Restaurants, Inc. Baa1 220 202
6.375% 2/1/06
NE Restaurant, Inc. 10.75% B3 3,720 3,395
7/15/08
16,270
TOTAL MEDIA & LEISURE 612,300
NONDURABLES - 0.6%
BEVERAGES - 0.2%
Seagram Co. Ltd. yankee Baa3 4,275 3,734
6.875% 9/1/23
Seagram JE & Sons, Inc.:
6.625% 12/15/05 Baa3 40,625 39,041
7.6% 12/15/28 Baa3 20,700 19,769
62,544
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
NONDURABLES - CONTINUED
FOODS - 0.1%
Aurora Foods, Inc. 8.75% B1 $ 1,810 $ 1,774
7/1/08
ConAgra, Inc. 7.125% 10/1/26 Baa1 22,725 22,189
International Home Foods, B2 1,670 1,745
Inc. 10.375% 11/1/06
25,708
HOUSEHOLD PRODUCTS - 0.0%
AKI Holding Corp. 0% 7/1/09 Caa1 1,930 695
(e)
AKI, Inc. 10.5% 7/1/08 B2 4,720 4,484
5,179
TOBACCO - 0.3%
Philip Morris Companies, Inc.:
6.95% 6/1/06 A2 20,550 20,712
7% 7/15/05 A2 27,190 26,917
RJR Nabisco, Inc. 7.375% Baa2 16,800 16,503
5/15/03 (g)
64,132
TOTAL NONDURABLES 157,563
RETAIL & WHOLESALE - 0.6%
APPAREL STORES - 0.1%
Mothers Work, Inc. 12.625% B3 6,090 6,303
8/1/05
Specialty Retailers, Inc.:
8.5% 7/15/05 B1 12,790 9,209
9% 7/15/07 B3 6,720 4,166
19,678
DRUG STORES - 0.1%
Rite Aid Corp. 6% 12/15/05 (g) Baa1 23,500 21,573
GENERAL MERCHANDISE STORES -
0.3%
Federated Department Stores,
Inc.:
6.79% 7/15/27 Baa2 11,500 11,297
8.5% 6/15/03 Baa2 60,285 63,043
74,340
GROCERY STORES - 0.1%
Ameriserve Food Distribution,
Inc.:
8.875% 10/15/06 B2 3,620 3,131
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - CONTINUED
Ameriserve Food Distribution,
Inc.: - continued
10.125% 7/15/07 Caa1 $ 1,430 $ 1,115
Fleming Companies, Inc.:
Series B, 10.625% 7/31/07 B3 610 561
10.5% 12/1/04 B3 4,320 4,018
Jitney-Jungle Stores of
America, Inc.:
10.375% 9/15/07 Caa1 1,820 728
12% 3/1/06 B3 1,780 1,460
Kroger Co. 6% 7/1/00 Baa3 21,310 21,127
32,140
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.0%
Guitar Center, Inc. 11% 7/1/06 B1 3,427 3,478
TM Group Holdings PLC 11% B3 4,530 4,530
5/15/08
8,008
TOTAL RETAIL & WHOLESALE 155,739
SERVICES - 0.2%
LEASING & RENTAL - 0.0%
Anthony Crane Rentals B3 4,080 3,856
LP/Anthony Credit Capital
Corp. 10.375% 8/1/08
Rent-A-Center, Inc. 11% B2 6,520 6,536
8/15/08
10,392
PRINTING - 0.1%
Big Flower Press Holdings, B2 14,570 14,133
Inc. 8.875% 7/1/07
Sullivan Graphics, Inc. Caa1 10,940 11,487
12.75% 8/1/05
World Color Press, Inc. 7.75% B1 6,310 6,247
2/15/09
31,867
SERVICES - 0.1%
AP Holdings, Inc. 0% 3/15/08 Caa2 1,380 725
(e)
Apcoa, Inc. 9.25% 3/15/08 Caa1 9,285 8,264
Medaphis Corp. 9.5% 2/15/05 Caa1 10,385 7,685
SITEL Corp. 9.25% 3/15/06 B3 1,830 1,464
18,138
TOTAL SERVICES 60,397
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
TECHNOLOGY - 0.8%
COMMUNICATIONS EQUIPMENT - 0.0%
Jordan Telecommunication B3 $ 2,170 $ 2,094
Products, Inc. 9.875% 8/1/07
COMPUTER SERVICES & SOFTWARE
- - 0.1%
Concentric Network Corp. B- 4,690 4,807
12.75% 12/15/07
DecisionOne Corp. 9.75% B3 4,920 197
8/1/07 (d)
PSINet, Inc. 11% 8/1/09 (g) B3 11,200 11,200
16,204
COMPUTERS & OFFICE EQUIPMENT
- - 0.4%
Comdisco, Inc.:
5.95% 4/30/02 Baa1 19,000 18,529
6.1% 6/5/01 Baa1 38,250 38,004
6.375% 11/30/01 Baa1 24,500 24,279
9.25% 7/6/00 Baa2 7,625 7,846
9.28% 6/5/00 Baa1 2,000 2,053
9.3% 6/27/00 Baa2 2,000 2,057
9.5% 1/28/02 Baa2 2,580 2,743
95,511
ELECTRONIC INSTRUMENTS - 0.1%
Telecommunications Techniques B3 15,780 15,188
Co. LLC 9.75% 5/15/08
ELECTRONICS - 0.2%
ChipPAC International Ltd. B3 3,800 3,762
12.75% 8/1/09 (g)
Communications Instruments, B3 3,190 2,839
Inc. 10% 9/15/04
Fairchild Semiconductor Corp.:
10.125% 3/15/07 B3 1,260 1,203
10.375% 10/1/07 (g) B3 6,640 6,408
Hadco Corp. 9.5% 6/15/08 B2 8,760 8,453
Insilco Corp. 12% 8/15/07 B3 5,660 5,717
Micron Technology, Inc. 6.5% B3 9,000 7,155
9/30/05 (j)
SCG Holding B2 6,780 6,831
Corp./Semiconductor
Components Industries LLC
12% 8/1/09 (g)
42,368
TOTAL TECHNOLOGY 171,365
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
TRANSPORTATION - 0.5%
AIR TRANSPORTATION - 0.1%
Atlas Air, Inc. 8.77% 1/2/11 Ba3 $ 9,120 $ 8,869
Continental Airlines, Inc.
Pass Through Trust
Certificates:
7.434% 3/15/06 Baa1 5,265 5,268
7.73% 9/15/12 Baa1 3,425 3,412
Kitty Hawk, Inc. 9.95% B1 9,170 8,941
11/15/04
26,490
RAILROADS - 0.4%
Burlington Northern Santa Fe
Corp.:
6.53% 7/15/37 Baa2 20,000 19,396
6.875% 12/1/27 Baa2 12,000 10,828
7.29% 6/1/36 Baa2 22,430 22,259
Norfolk Southern Corp. 7.05% Baa1 39,550 39,736
5/1/37
92,219
SHIPPING - 0.0%
Holt Group, Inc. 9.75% Caa1 3,175 2,159
1/15/06 (g)
TOTAL TRANSPORTATION 120,868
UTILITIES - 3.2%
CELLULAR - 1.0%
Cable & Wireless Baa1 54,965 54,983
Communications PLC 6.375%
3/6/03
Cellnet Data Systems, Inc. 0% - 25,140 10,559
10/1/07 (e)
Dial Call Communications, B2 3,290 3,372
Inc. 10.25% 12/15/05
McCaw International Ltd. 0% Caa1 40,870 24,522
4/15/07 (e)
Metrocall, Inc.:
10.375% 10/1/07 B3 4,640 3,666
11% 9/15/08 (g) B3 2,360 1,888
Millicom International Caa1 59,340 42,131
Cellular SA 0% 6/1/06 (e)
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
UTILITIES - CONTINUED
CELLULAR - CONTINUED
Nextel Communications, Inc.:
0% 2/15/08 (e) B2 $ 22,950 $ 15,836
9.75% 8/15/04 B2 4,840 4,888
Nextel International, Inc. 0% Caa1 22,310 11,155
4/15/08 (e)
Orange PLC 9% 6/1/09 (g) Ba3 8,950 8,928
Orbital Imaging Corp.:
11.625% 3/1/05 - 1,990 1,572
11.625% 3/1/05 - 2,570 2,030
Orion Network Systems, Inc. B2 8,385 4,528
0% 1/15/07 (e)
PageMart Nationwide, Inc. 0% B3 12,395 11,775
2/1/05 (e)
PageMart Wireless, Inc. 0% Caa2 23,350 10,157
2/1/08 (e)
Rogers Communications, Inc. B2 20,060 20,210
8.875% 7/15/07
Spectrasite Holdings, Inc. 0% - 1,930 1,004
4/15/09 (e)(g)
Telesystem International
Wireless, Inc.:
0% 6/30/07 (e) Caa1 11,050 5,415
0% 11/1/07 (e) Caa1 12,540 5,267
243,886
ELECTRIC UTILITY - 0.6%
Avon Energy Partners Holdings:
6.46% 3/4/08 (g) Baa2 25,500 24,213
6.73% 12/11/02 (g) Baa2 17,000 16,883
7.05% 12/11/07 (g) Baa2 18,000 17,876
DR Investments UK PLC yankee A2 32,000 32,190
7.1% 5/15/02 (g)
Israel Electric Corp. Ltd.:
7.75% 12/15/27 (g) A3 50,905 45,598
yankee 7.25% 12/15/06 (g) A3 9,250 8,809
Texas Utilities Co. 6.375% Baa3 19,610 18,359
1/1/08
163,928
GAS - 0.2%
CMS Panhandle Holding Co.:
6.125% 3/15/04 (g) Baa3 11,950 11,502
7% 7/15/29 (g) Baa3 9,050 8,172
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
UTILITIES - CONTINUED
GAS - CONTINUED
Kern River Funding Corp. A3 $ 20,000 $ 20,104
6.72% 9/30/01 (g)
Southwest Gas Corp. 9.75% Baa2 20,650 22,080
6/15/02
61,858
TELEPHONE SERVICES - 1.4%
Alestra S. de R.L. de CV B2 3,890 3,579
12.625% 5/15/09 (g)
Allegiance Telecom, Inc. 0% - 3,305 2,049
2/15/08 (e)
Call-Net Enterprises, Inc. B2 9,880 8,694
9.375% 5/15/09
Covad Communications Group,
Inc.:
0% 3/15/08 (e) B3 9,120 4,742
12.5% 2/15/09 B3 6,280 5,903
e.spire Communications, Inc.:
0% 11/1/05 (e) - 2,670 1,722
0% 4/1/06 (e) - 3,240 1,814
0% 7/1/08 (e) - 3,250 1,333
GCI, Inc. 9.75% 8/1/07 B2 3,410 3,325
GST Network Funding, Inc. 0% - 10,650 6,390
5/1/08 (e)(g)
GST Equipment Funding, Inc. - 3,200 3,456
13.25% 5/1/07
GST Telecommunications, Inc. - 9,605 10,902
12.75% 11/15/07
GST USA, Inc. 0% 12/15/05 (e) - 1,685 1,407
Hermes Europe Railtel BV B3 5,770 5,789
10.375% 1/15/09
ICG Holdings, Inc. 0% 9/15/05 B3 8,550 7,524
(e)
ICG Services, Inc.:
0% 2/15/08 (e) B3 27,960 15,797
0% 5/1/08 (e) B3 2,060 1,133
Intermedia Communications, B3 13,400 7,571
Inc. 0% 3/1/09 (e)
IXC Communications, Inc. 9% B3 8,690 8,733
4/15/08
KMC Telecom Holdings, Inc.:
0% 2/15/08 (e) Caa2 11,340 5,897
13.5% 5/15/09 (g) Caa2 4,930 4,942
Logix Communications - 9,910 8,275
Enterprises, Inc. 12.25%
6/15/08
MCI WorldCom, Inc.:
6.4% 8/15/05 A3 30,620 29,726
8.875% 1/15/06 A3 28,746 30,504
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Metromedia Fiber Network, B2 $ 6,230 $ 6,292
Inc. 10% 11/15/08
NEXTLINK Communications, Inc.:
0% 6/1/09 (e) B3 10,050 5,754
10.75% 6/1/09 B3 5,390 5,417
Ono Finance PLC 13% 5/1/09 - 2,300 2,404
unit (g)
Optel Communications Corp. - 9,245 8,660
15% 12/29/04 (j)
Pathnet, Inc. 12.25% 4/15/08 - 12,390 6,567
Rhythms NetConnections, Inc.:
0% 5/15/08 (e) B3 15,160 7,921
12.75% 4/15/09 (g) B3 5,270 4,875
Telecomunicaciones de P R, Baa2 16,450 15,817
Inc. 6.65% 5/15/06 (g)
Teleglobe Canada, Inc.:
7.2% 7/20/09 Baa1 7,745 7,624
7.7% 7/20/29 Baa1 37,820 36,792
Teligent, Inc.:
0% 3/1/08 (e) Caa1 7,990 4,534
11.5% 12/1/07 Caa1 5,210 5,015
WinStar Communications, Inc.:
0% 10/15/05 (e) Caa1 8,990 7,686
0% 10/15/05 (e) Caa1 19,150 27,002
0% 3/15/08 (e) CCC 11,940 10,865
10% 3/15/08 CCC 11,235 10,224
15% 3/1/07 CCC 1,500 1,843
WinStar Equipment Corp. 12.5% B3 4,950 5,148
3/15/04
361,647
TOTAL UTILITIES 831,319
TOTAL NONCONVERTIBLE BONDS 3,916,783
TOTAL CORPORATE BONDS 3,973,460
(Cost $4,129,373)
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 4.1%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 0.7%
Fannie Mae 5.125% 2/13/04 Aaa $ 54,890 $ 52,137
Federal Agricultural Mortgage
Corp.:
7.01% 8/10/03 Aaa 1,040 1,061
7.01% 8/10/04 Aaa 1,340 1,374
7.04% 8/10/05 Aaa 5,100 5,210
Federal Home Loan Bank:
7.56% 9/1/04 Aaa 1,340 1,396
8.09% 12/28/04 Aaa 3,500 3,773
8.195% 12/22/04 Aaa 10,000 10,706
Government Loan Trusts Aaa 8,886 9,478
(assets of Trust guaranteed
by U.S. Government through
Agency for International
Development) 8.5% 4/1/06
Government Trust Certificates
(assets of Trust guaranteed
by U.S. Government through
Defense Security Assistance
Agency):
Class 1-C, 9.25% 11/15/01 Aaa 14,997 15,580
Class 2-E 9.4% 5/15/02 Aaa 9,462 9,826
Class T-3, 9.625% 5/15/02 Aaa 9,900 10,289
Guaranteed Export Trust Aaa 117 117
Certificates (assets of
Trust guaranteed by U.S.
Government through
Export-Import Bank) Series
1994 C, 6.61% 9/15/99
Israel Export Trust Aaa 3,434 3,478
Certificates (assets of
Trust guaranteed by U.S.
Government through
Export-Import Bank) Series
1994 1, 6.88% 1/26/03
Overseas Private Investment - 30,000 30,055
Corp. U.S. Government
guaranteed participation
certificate Series 1996-A1,
6.726% 9/15/10 (callable)
Private Export Funding Corp.:
secured 6.86% 4/30/04 Aaa 2,345 2,376
secured 7.9% 3/31/00 Aaa 12,750 12,927
169,783
U.S. TREASURY OBLIGATIONS -
3.4%
U.S. Treasury Bonds:
6.875% 8/15/25 Aaa 118,260 126,502
8.75% 5/15/17 Aaa 750 936
8.875% 8/15/17 Aaa 27,565 34,814
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. TREASURY OBLIGATIONS -
CONTINUED
U.S. Treasury Bonds: -
continued
9.875% 11/15/15 Aaa $ 123,550 $ 166,869
11.625% 11/15/04 Aaa 48,000 60,008
12% 5/15/05 Aaa 63,000 81,102
12.375% 5/15/04 Aaa 15,756 19,862
14% 11/15/11 Aaa 18,400 26,637
U.S. Treasury Notes:
6.5% 5/31/02 Aaa 96,700 98,543
6.625% 5/15/07 Aaa 14,500 14,978
7% 7/15/06 Aaa 139,215 146,307
U.S. Treasury Notes - STRIPS Aaa 221,100 101,425
0% 11/15/11
877,983
TOTAL U.S. GOVERNMENT AND 1,047,766
GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,090,793)
U.S. GOVERNMENT AGENCY -
MORTGAGE SECURITIES - 9.8%
FANNIE MAE - 7.7%
5.5% 10/1/08 to 5/1/14 Aaa 199,565 187,646
6% 10/1/08 to 1/1/29 Aaa 509,022 480,149
6.5% 12/1/06 to 7/1/29 Aaa 975,769 930,048
6.5% 8/1/29 Aaa 75,000 71,461
7% 5/1/23 to 2/1/29 Aaa 122,774 120,059
7% 8/1/29 (h) Aaa 19,163 18,731
7.5% 8/1/07 to 7/1/29 Aaa 137,529 137,526
7.5% 8/1/29 (h) Aaa 34,000 33,989
8.5% 1/1/09 to 7/1/21 Aaa 50 52
10% 8/1/17 Aaa 50 54
1,979,715
U.S. GOVERNMENT AGENCY -
MORTGAGE SECURITIES -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
FREDDIE MAC - 0.0%
7% 4/1/01 to 8/1/01 Aaa $ 9,116 $ 9,154
8% 10/1/16 to 4/1/20 Aaa 2,134 2,202
8.5% 9/1/19 Aaa 0 0
11,356
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 2.1%
6% 9/15/08 to 12/15/10 Aaa 21,594 20,849
6.5% 6/15/02 to 5/15/29 Aaa 202,850 192,759
7% 10/15/17 to 12/15/28 Aaa 82,750 80,678
7.5% 8/15/21 to 7/15/29 Aaa 153,021 153,050
8% 4/15/00 to 10/15/25 Aaa 56,078 57,368
8.5% 11/15/05 to 11/15/22 Aaa 3,852 4,017
9% 3/15/10 to 5/15/22 Aaa 723 768
9.5% 7/15/09 to 3/15/23 Aaa 6,377 6,827
10% 11/15/09 to 1/15/26 Aaa 8,080 8,815
11% 3/15/10 to 7/20/20 Aaa 2,457 2,701
527,832
TOTAL U.S. GOVERNMENT AGENCY 2,518,903
- - MORTGAGE SECURITIES
(Cost $2,594,255)
ASSET-BACKED SECURITIES - 0.8%
Airplanes Pass Through Trust Ba2 7,950 7,473
10.875% 3/15/19
American Express Credit A1 14,200 13,864
Account Master Trust 6.1%
12/15/06
Arcadia Automobile Aaa 15,835 15,855
Receivables Trust 6.5%
6/17/02
Chase Manhattan Grantor Trust:
6.61% 9/15/02 Aaa 8,927 8,947
6.76% 9/15/02 A3 2,338 2,342
Chevy Chase Auto Receivables
Trust:
5.9% 7/15/03 Aaa 10,212 10,180
5.91% 12/15/04 Aaa 8,235 8,219
6.6% 12/15/02 Aaa 3,600 3,611
Contimortgage Home Equity Aaa 21,722 21,641
Loan Trust 6.26% 7/15/12
Discover Card Master Trust I A2 12,421 12,048
5.85% 11/16/04
ASSET-BACKED SECURITIES -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Ford Credit Auto Owner Trust:
6.2% 12/15/02 Baa3 $ 14,100 $ 13,897
6.4% 5/15/02 A1 19,240 19,227
6.4% 12/15/02 Baa3 8,660 8,426
Key Auto Finance Trust:
6.3% 10/15/03 A2 12,459 12,408
6.65% 10/15/03 Baa3 3,653 3,671
Premier Auto Trust 5.59% Aaa 42,000 40,898
2/9/04
Sears Credit Account Master Aaa 11,353 11,364
Trust II 6.5% 10/15/03
TOTAL ASSET-BACKED SECURITIES 214,071
(Cost $216,857)
COMMERCIAL MORTGAGE
SECURITIES - 1.2%
ACP Mortgage LP Series 1, BB 1,999 1,789
Class E 6.8608% 2/28/28
(g)(i)
Berkeley Federal Bank & Trust - 6,080 4,256
FSB Series 1994 Class 1-B
7.5993% 8/1/24 (g)(i)
CBM Funding Corp. Series BBB 12,500 12,361
1996-1B Class C, 7.86% 2/1/08
Commercial Mortgage BB+ 4,500 2,760
Acceptance Corp. pass
through certificates Series
1998-C2 Class F, 5.44%
5/15/13 (g)(i)
CS First Boston Mortgage
Securities Corp.:
Series 1995-WF1 Class A-2, AAA 21,816 21,721
6.648% 12/21/27
Series 1997 C2 Class D, 7.27% Baa2 22,200 20,556
1/17/35
Series 1998 FLI Class E, Baa2 42,880 42,022
6.07% 1/10/13 (g)(i)
5.4013% 12/10/00 (g)(i) A2 20,100 19,893
DLJ Mortgage Acceptance Corp. - 2,800 2,704
Series 1993-MF12 Class B-2,
10.1% 9/18/03 (g)
Equitable Life Assurance A2 6,000 6,054
Society of the United States
(The) Series 174 Class C1,
7.52% 5/15/06 (g)
First Chicago/Lennar Trust I
Series 1997-CHL1:
Class D, 8.0915% 4/13/39 (i) - 3,500 2,833
Class E, 8.0915% 4/1/39 (i) - 2,900 2,057
General Motors Acceptance Ba3 3,500 2,821
Corp. Commercial Mortgage
Securities, Inc. Series
1996-C1 Class F, 7.86%
10/15/28 (g)
COMMERCIAL MORTGAGE
SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
GS Mortgage Securities Corp. Baa3 $ 20,000 $ 17,161
II Series 1998-GLII Class E,
7.1905% 4/13/31 (g)(i)
LB Multifamily Mortgage Trust Caa1 2,654 1,964
Series 1991 4 Class A1,
6.9721% 4/25/21 (i)
Morgan Stanley Capital I, Inc.:
Series 1996-MBL1 Class E, - 3,612 3,566
8.2719% 5/25/21 (g)(i)
Series 1998 CF1:
Class D, 7.35% 1/15/12 Baa2 19,733 17,840
Class E, 7.35% 12/15/12 Baa3 6,848 5,624
Mortgage Capital Funding, Ba1 4,500 3,645
Inc. Series 1998-MC3 Class
F, 0% 11/18/31 (g)(i)
Nationslink Funding Corp. BB 4,500 3,353
Commercial Mortgage pass
through certificates Series
1998-2 Class F, 7.105%
8/20/30
Nomura Asset Securities Corp. Baa2 55,000 49,448
Series 1998-D6 Class A-4,
7.3503% 3/17/28 (i)
Nomura Depositor Trust Series - 3,500 3,118
1998-ST1A Class B1A, 7.93%
1/15/03 (g)(i)
Penn Mutual Life Insurance - 6,500 4,333
Co. (The)/Penn Insurance &
Annuity Co. Series 1996-PML
Class K, 7.9% 11/15/26 (g)
Resolution Trust Corp.:
Series 1991 M2 Class A3, Ba3 1,118 905
7.2498% 9/25/20 (i)
Series 1995-C2 Class D, 7% Baa2 3,503 3,462
5/25/27
Structured Asset Securities
Corp.:
Series 1992-M1 Class C, 7.05% B2 2,200 1,974
11/25/02
Series 1995-C1:
Class E, 7.375% 9/25/24 (g) BB 7,896 7,320
Class F, 7.375% 9/25/24 (g) - 3,000 2,348
Series 1996 CFL Class E, BB+ 11,188 10,753
7.75% 2/25/28
Series 1996-CFL Class G, B 3,500 3,035
7.75% 2/25/28 (g)
Thirteen Affiliates of Aaa 32,000 30,625
General Growth Properties,
Inc. sequential pay Series 1
Class A2, 6.602% 11/15/07
(g)
TOTAL COMMERCIAL MORTGAGE 312,301
SECURITIES
(Cost $323,785)
FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (K) - 0.2%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Korean Republic yankee:
8.75% 4/15/03 Baa3 $ 13,350 $ 13,589
8.875% 4/15/08 Baa3 10,630 10,758
Manitoba Province yankee Aa3 5,000 5,031
6.75% 3/1/03
Quebec Province:
yankee 6.86% 4/15/26 (f) A2 16,750 16,681
yankee:
7.125% 2/9/24 A2 2,560 2,440
7.5% 7/15/23 A2 10,060 10,107
TOTAL FOREIGN GOVERNMENT AND 58,606
GOVERNMENT AGENCY OBLIGATIONS
(Cost $60,631)
SUPRANATIONAL OBLIGATIONS -
0.0%
Inter American Development Aaa 10,850 10,692
Bank yankee 6.29% 7/16/27
(Cost $10,782)
CASH EQUIVALENTS - 4.1%
SHARES
Taxable Central Cash Fund (c) 1,041,706,082 1,041,706
(Cost $1,041,706)
TOTAL INVESTMENT IN $ 25,716,165
SECURITIES - 100%
(Cost $21,280,021)
</TABLE>
SECURITY TYPE ABBREVIATIONS
PIES - Premium Income Equity
Securities
PRIDES - Preferred Redeemable
Increased Dividend Equity
Securities
QUIPS - Quarterly Income Preferred
Securities
LEGEND
(a) Non-income producing
(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(c) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.06%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(d) Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.
(e) 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.
(f) 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.
(g) 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 $884,723,000 or 3.4% of net assets.
(h) Security purchased on a delayed delivery or when-issued basis.
(i) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(j) Restricted securities - Investment in securities not registered
under the Securities Act of 1933.
Additional information on each holding is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST (000S)
Alliance Gaming Corp. 7/28/98 $ 0
Micron Technology, Inc. 3/3/99 $ 6,965
6.5% 9/30/05
Mothers Work, Inc. 6/18/98 $ 21
Optel Communications 12/31/97 $ 506
Corp. warrants 12/29/04
Optel Communications Corp. 12/31/97 - 6/30/99 $ 8,739
15% 12/29/04
(k) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed have been assigned by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 18.8% AAA, AA, A 18.4%
Baa 6.7% BBB 6.4%
Ba 0.6% BB 0.9%
B 3.7% B 3.5%
Caa 1.0% CCC 0.7%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 0.5%. FMR has
determined that unrated debt securities that are lower quality account
for 0.4% of the total value of investment in securities.
INCOME TAX INFORMATION
At July 31, 1999, the aggregate cost of investment securities for
income tax purposes was $21,317,824,000. Net unrealized appreciation
aggregated $4,398,341,000, of which $4,988,892,000 related to
appreciated investment securities and $590,551,000 related to
depreciated investment securities.
The fund hereby designates approximately $1,723,781,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) JULY 31,
1999
ASSETS
Investment in securities, at $ 25,716,165
value (cost $21,280,021) -
See accompanying schedule
Cash 936
Receivable for investments 197,728
sold
Receivable for fund shares 16,110
sold
Dividends receivable 25,827
Interest receivable 102,053
Other receivables 684
TOTAL ASSETS 26,059,503
LIABILITIES
Payable for investments $ 213,904
purchased Regular delivery
Delayed delivery 53,392
Payable for fund shares 39,022
redeemed
Accrued management fee 9,551
Other payables and accrued 4,108
expenses
TOTAL LIABILITIES 319,977
NET ASSETS $ 25,739,526
Net Assets consist of:
Paid in capital $ 20,185,979
Undistributed net investment 67,403
income
Accumulated undistributed net 1,049,950
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 4,436,194
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 1,273,165 $ 25,739,526
shares outstanding
NET ASSET VALUE, offering $20.22
price and redemption price
per share ($25,739,526
(divided by) 1,273,165
shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED JULY 31, 1999
INVESTMENT INCOME $ 326,749
Dividends
Interest (including interest 655,904
income on securities
loaned of $1,320)
982,653
Less foreign taxes withheld (8,574)
TOTAL INCOME 974,079
EXPENSES
Management fee $ 109,881
Transfer agent fees 48,577
Accounting and security 1,103
lending fees
Non-interested trustees' 120
compensation
Custodian fees and expenses 615
Registration fees 675
Audit 197
Legal 80
Interest 5
Reports to shareholders 1,206
Miscellaneous 77
Total expenses before 162,536
reductions
Expense reductions (4,628) 157,908
NET INVESTMENT INCOME 816,171
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,292,144
Foreign currency transactions (415) 1,291,729
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (189,300)
Assets and liabilities in 28 (189,272)
foreign currencies
NET GAIN (LOSS) 1,102,457
NET INCREASE (DECREASE) IN $ 1,918,628
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JULY 31, 1999 YEAR ENDED JULY 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 816,171 $ 798,617
income
Net realized gain (loss) 1,291,729 2,253,079
Change in net unrealized (189,272) (223,880)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,918,628 2,827,816
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (848,159) (794,054)
From net investment income
From net realized gain (1,843,513) (1,073,230)
TOTAL DISTRIBUTIONS (2,691,672) (1,867,284)
Share transactions Net 4,290,936 4,338,239
proceeds from sales of shares
Reinvestment of distributions 2,565,257 1,786,916
Cost of shares redeemed (5,283,873) (4,472,056)
NET INCREASE (DECREASE) IN 1,572,320 1,653,099
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 799,276 2,613,631
IN NET ASSETS
NET ASSETS
Beginning of period 24,940,250 22,326,619
End of period (including $ 25,739,526 $ 24,940,250
undistributed net investment
income of $67,403 and
$89,226, respectively)
OTHER INFORMATION
Shares
Sold 215,648 215,522
Issued in reinvestment of 140,924 91,754
distributions
Redeemed (265,773) (221,223)
Net increase (decrease) 90,799 86,053
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JULY 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 21.09 $ 20.37 $ 17.34 $ 16.69 $ 15.93
period
Income from Investment
Operations
Net investment income .64 B .69 B .66 B .64 .42
Net realized and unrealized .73 1.68 4.57 1.00 1.53
gain (loss)
Total from investment 1.37 2.37 5.23 1.64 1.95
operations
Less Distributions
From net investment income (.68) (.69) (.66) (.55) (.44)
From net realized gain (1.56) (.96) (1.54) (.44) (.75)
Total distributions (2.24) (1.65) (2.20) (.99) (1.19)
Net asset value, end of $ 20.22 $ 21.09 $ 20.37 $ 17.34 $ 16.69
period
TOTAL RETURN A 8.03% 12.56% 33.63% 10.06% 13.03%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 25,740 $ 24,940 $ 22,327 $ 16,699 $ 14,387
millions)
Ratio of expenses to average .64% .64% .67% .74% .77%
net assets
Ratio of expenses to average .63% C .63% C .66% C .72% C .77%
net assets after expense
reductions
Ratio of net investment 3.23% 3.40% 3.69% 3.44% 3.50%
income to average net assets
Portfolio turnover rate 80% 84% 80% 139% 76%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1999
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, 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
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
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
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. 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, foreign currency transactions, defaulted bonds, market
discount, partnerships, non-taxable dividends, and losses deferred due
to wash sales. The fund also utilized earnings and profits distributed
to shareholders on redemption of shares as a part of the dividends
paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
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.
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., 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 after the customary settlement period for that security. 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 on a
delayed delivery basis are identified as such in the fund's schedule
of investments. The fund may receive compensation for interest forgone
in the purchase of a delayed delivery security. With respect to
purchase commitments, the fund identifies securities as segregated in
its custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under
the contract.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $15,880,000 or 0.1% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $19,606,094,000 and $20,271,598,000, respectively, of which
U.S. government and government agency obligations aggregated
$5,405,863,000 and $4,859,232,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. 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 AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,728,000 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.
The market value of the loaned securities is determined at the close
of business of the fund and any additional required collateral is
delivered to the fund on the next business day. At period end there
were no loans outstanding.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. The average daily loan balance during the period for which
the loan was outstanding amounted to $33,666,000. The weighted average
interest rate was 5.5%.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $3,419,000 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 $42,000 and $1,167,000, 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 statements 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,
1999, 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,
1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 13, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Puritan Fund voted to pay on
September 7, 1999, to shareholders of record at the opening of
business on September 3, 1999, a distribution of $.81 per share
derived from capital gains realized from sales of portfolio securities
and a dividend of $.16 per share from net investment income.
A total of 5.02% 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 26% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on July 14,
1999, and re-convened on August 6, 1999. The results of votes taken
among shareholders on proposals before them are reported below. Each
vote reported represents one dollar of net asset value held on the
record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.*
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
Affirmative 17,986,401,866.48 90.961
Withheld 1,787,259,914.33 9.039
TOTAL 19,773,661,780.81 100.000
PHYLLIS BURKE DAVIS
Affirmative 17,983,245,089.81 90.945
Withheld 1,790,416,691.00 9.055
TOTAL 19,773,661,780.81 100.000
ROBERT M. GATES
Affirmative 17,981,467,048.37 90.936
Withheld 1,792,194,732.44 9.064
TOTAL 19,773,661,780.81 100.000
EDWARD C. JOHNSON 3D
Affirmative 17,985,106,706.94 90.955
Withheld 1,788,555,073.87 9.045
TOTAL 19,773,661,780.81 100.000
E. BRADLEY JONES
Affirmative 17,965,545,653.74 90.856
Withheld 1,808,116,127.07 9.144
TOTAL 19,773,661,780.81 100.000
DONALD J. KIRK
Affirmative 17,992,374,635.26 90.992
Withheld 1,781,287,145.55 9.008
TOTAL 19,773,661,780.81 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
Affirmative 17,994,511,667.79 91.002
Withheld 1,779,150,113.02 8.998
TOTAL 19,773,661,780.81 100.000
WILLIAM O. MCCOY
Affirmative 17,995,708,043.17 91.008
Withheld 1,777,953,737.64 8.992
TOTAL 19,773,661,780.81 100.000
GERALD C. MCDONOUGH
Affirmative 17,967,133,594.73 90.864
Withheld 1,806,528,186.08 9.136
TOTAL 19,773,661,780.81 100.000
MARVIN L. MANN
Affirmative 17,995,084,785.78 91.005
Withheld 1,778,576,995.03 8.995
TOTAL 19,773,661,780.81 100.000
ROBERT C. POZEN
Affirmative 17,993,340,616.44 90.997
Withheld 1,780,321,164.37 9.003
TOTAL 19,773,661,780.81 100.000
THOMAS R. WILLIAMS
Affirmative 17,973,227,575.79 90.895
Withheld 1,800,434,205.02 9.105
TOTAL 19,773,661,780.81 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 12,475,303,146.14 95.019
Against 296,340,783.09 2.257
Abstain 357,637,647.57 2.724
TOTAL 13,129,281,576.80 100.00
PROPOSAL 3
To adopt an Amended and Restated Declaration of Trust.*
# OF % OF
VOTES CAST VOTES CAST
Affirmative 16,134,178,216.02 81.594
Against 999,390,653.54 5.054
Abstain 2,640,092,911.25 13.352
TOTAL 19,773,661,780.81 100.000
PROPOSAL 4
To approve an amended management contract for the fund that would
reduce the management fee payable to FMR by the fund as FMR's assets
under management increase, allow future modifications of the contract
without a shareholder vote if permitted by the 1940 Act, and reduce
the fund's individual fund fee rate.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 11,353,687,607.84 86.794
Against 341,634,281.45 2.612
Abstain 1,385,868,354.62 10.594
TOTAL 13,081,190,243.91 100.000
PROPOSAL 5
To approve a Distribution and Service Plan for the fund which
describes all material aspects of the proposed financing for the
distribution of fund shares.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 10,891,733,190.56 83.263
Against 713,130,540.89 5.451
Abstain 1,476,326,512.46 11.286
TOTAL 13,081,190,243.91 100.000
PROPOSAL 6
To amend the fund's fundamental investment objective and eliminate
certain fundamental investment policies.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 10,781,192,108.78 82.418
Against 594,357,527.47 4.543
Abstain 1,705,640,607.66 13.039
TOTAL 13,081,190,243.91 100.000
PROPOSAL 7
To amend the fund's fundamental investment limitation concerning
diversification to exclude securities of other investment companies
from the limitation.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 10,588,078,010.64 80.941
Against 789,123,096.66 6.033
Abstain 1,703,989,136.61 13.026
TOTAL 13,081,190,243.91 100.000
*DENOTES TRUST-WIDE PROPOSALS AND VOTING RESULTS.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
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 Automated Service Telephone 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)
FIDELITY AUTOMATED
SERVICE TELEPHONE (FAST SM)
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 EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
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
19200 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
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
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
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 75039-5517
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 75039-5517
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 Investments Money Management, Inc. (FIMM), Merrimack, NH
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
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity (registered trademark) Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II 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)
Fidelity Automated Service
Telephone (FAST SM) (AUTOMATED GRAPHIC) 1-800-544-5555
(AUTOMATED GRAPHIC) AUTOMATED LINE FOR QUICKEST SERVICE
PUR-ANN-0999 83745
1.536193.102
(FIDELITY LOGO GRAPHIC)(REGISTERED TRADEMARK)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
