(2_FIDELITY_LOGOS)FIDELITY
CONGRESS STREET
FUND
ANNUAL REPORT
DECEMBER 31, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 6 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 9 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 10 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 13 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 17 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 20 THE AUDITORS' OPINION.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Although financial turmoil in Pacific Basin countries was a catalyst
for significant volatility in U.S. markets throughout the fourth
quarter, the Standard & Poor's 500 Index rose more than 33% in 1997,
about three times its historical annual average. Meanwhile, bond
markets - primarily influenced by a relatively steady flow of positive
news on the inflation front - continued to post solid returns as the
year drew to a close.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits the fund earned upon the sale of securities
that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY CONGRESS STREET 22.81% 138.21% 386.47%
S&P 500 (REGISTERED TRADEMARK) 33.36% 151.62% 425.77%
GROWTH & INCOME FUNDS AVERAGE 27.14% 125.21% 335.80%
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
return of 5% over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. To measure how the fund's performance stacked up
against its peers, you can compare it to the growth and income funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past one
year average represents a peer group of 611 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 DECEMBER 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY CONGRESS STREET 22.81% 18.96% 17.14%
S&P 500 33.36% 20.27% 18.05%
GROWTH & INCOME FUNDS AVERAGE 27.14% 17.53% 15.71%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking the
arithmetic average. This may produce a slightly different figure than
that obtained by averaging the cumulative total returns and
annualizing the result.)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19971231 19980109 145803 S00000000000001
Congress Street S&P 500
00024 SP001
1987/12/31 10000.00 10000.00
1988/01/31 10186.30 10421.00
1988/02/29 10644.23 10906.62
1988/03/31 10213.94 10569.60
1988/04/30 10265.84 10686.93
1988/05/31 10390.11 10779.90
1988/06/30 10889.64 11274.70
1988/07/31 10753.18 11231.86
1988/08/31 10547.28 10849.97
1988/09/30 11054.11 11312.18
1988/10/31 11288.04 11626.66
1988/11/30 11126.00 11460.40
1988/12/31 11250.17 11660.96
1989/01/31 11982.87 12514.54
1989/02/28 11694.53 12202.93
1989/03/31 11927.95 12487.26
1989/04/30 12655.66 13135.34
1989/05/31 13153.70 13667.32
1989/06/30 12989.21 13589.42
1989/07/31 14361.81 14816.55
1989/08/31 14369.40 15106.95
1989/09/30 14309.99 15045.01
1989/10/31 14312.52 14695.97
1989/11/30 14689.17 14995.77
1989/12/31 15110.74 15355.66
1990/01/31 13917.24 14325.30
1990/02/28 14113.13 14510.09
1990/03/31 14685.23 14894.61
1990/04/30 14442.64 14522.25
1990/05/31 15903.38 15938.17
1990/06/30 16127.44 15829.79
1990/07/31 16181.29 15779.13
1990/08/31 14865.35 14352.70
1990/09/30 14056.35 13653.72
1990/10/31 14161.42 13595.01
1990/11/30 15005.88 14473.25
1990/12/31 15499.95 14877.05
1991/01/31 15988.48 15525.69
1991/02/28 17155.53 16635.78
1991/03/31 17671.20 17038.36
1991/04/30 17648.13 17079.26
1991/05/31 18290.00 17817.08
1991/06/30 17401.30 17001.06
1991/07/31 18246.93 17793.31
1991/08/31 18905.86 18215.01
1991/09/30 18662.88 17910.82
1991/10/31 19144.72 18150.82
1991/11/30 18607.97 17419.34
1991/12/31 20548.58 19412.12
1992/01/31 20069.50 19051.05
1992/02/29 20024.94 19298.72
1992/03/31 19604.36 18922.39
1992/04/30 19948.34 19478.71
1992/05/31 19938.59 19574.15
1992/06/30 19501.79 19282.50
1992/07/31 20366.29 20071.15
1992/08/31 20041.05 19659.70
1992/09/30 19952.35 19891.68
1992/10/31 19846.75 19961.30
1992/11/30 20362.06 20641.98
1992/12/31 20422.43 20895.88
1993/01/31 20160.95 21071.40
1993/02/28 20419.57 21357.97
1993/03/31 20691.05 21808.63
1993/04/30 20423.86 21280.86
1993/05/31 21056.83 21851.19
1993/06/30 20880.67 21914.55
1993/07/31 20590.09 21826.90
1993/08/31 21353.39 22654.14
1993/09/30 21072.93 22479.70
1993/10/31 21823.22 22945.03
1993/11/30 21789.97 22727.05
1993/12/31 22066.62 23002.05
1994/01/31 22364.32 23784.12
1994/02/28 22150.21 23139.57
1994/03/31 21194.04 22130.68
1994/04/30 21202.84 22413.96
1994/05/31 21683.86 22781.54
1994/06/30 20977.23 22223.40
1994/07/31 21807.11 22952.32
1994/08/31 22880.47 23893.37
1994/09/30 22625.12 23307.98
1994/10/31 23226.38 23832.41
1994/11/30 22844.84 22964.43
1994/12/31 23359.10 23305.00
1995/01/31 24032.58 23909.30
1995/02/28 24858.22 24841.04
1995/03/31 25408.15 25574.10
1995/04/30 26348.30 26327.26
1995/05/31 27291.46 27379.56
1995/06/30 27985.80 28015.58
1995/07/31 28665.89 28944.58
1995/08/31 28583.54 29017.23
1995/09/30 30138.90 30241.76
1995/10/31 30517.07 30133.80
1995/11/30 31584.47 31456.67
1995/12/31 32383.62 32062.53
1996/01/31 33726.45 33153.93
1996/02/29 34030.16 33461.27
1996/03/31 34471.09 33783.50
1996/04/30 34873.48 34281.47
1996/05/31 36031.30 35165.59
1996/06/30 36391.49 35299.57
1996/07/31 35001.64 33740.04
1996/08/31 35417.19 34451.61
1996/09/30 37266.18 36390.55
1996/10/31 37532.32 37394.20
1996/11/30 40215.54 40220.83
1996/12/31 39612.65 39424.06
1997/01/31 41741.43 41887.27
1997/02/28 42401.27 42215.67
1997/03/31 41050.17 40481.03
1997/04/30 42754.76 42897.74
1997/05/31 44924.39 45509.36
1997/06/30 46806.68 47548.18
1997/07/31 49318.25 51331.58
1997/08/31 45869.79 48455.99
1997/09/30 48390.85 51109.92
1997/10/31 45425.08 49402.85
1997/11/30 47987.29 51689.71
1997/12/31 48647.33 52577.22
IMATRL PRASUN SHR__CHT 19971231 19980109 145807 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Congress Street Fund on December 31, 1987. As the
chart shows, by December 31, 1997, the value of the investment would
have grown to $48,647 - a 386.47% increase on the initial investment.
For comparison, look at how the S&P 500 did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $52,577 - a 425.77% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks will
vary. That means if you sell
your shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a bout with global volatility
in late October, the U.S. equity
market still managed to register
strong gains for the third
consecutive calendar year. For the
12 months that ended December
31, 1997, the Standard & Poor's
500 Index - a measure of the U.S.
stock market - returned 33.36%.
The strength of the S&P 500
reflected the continued
dominance of large-capitalization
stocks during most of the period.
For most of 1996 and part of 1997,
stocks of the largest companies
performed well as investors
sought reliability and consistent
earnings growth track records.
Stock prices surged, investor
enthusiasm was high and the Dow
Jones Industrial Average reached
the 8,000-point mark in August for
the first time ever. But the adage
"what goes up, must come down"
may have crept into investors'
minds as many felt the market had
risen too rapidly. In mid-August,
several multinational companies
announced earnings shortfalls and
stocks of smaller companies came
into favor. From August through
December, the S&P 500 returned
2.43%, while the S&P MidCap 400
Index - a measure of
medium-sized stocks - returned
6.50%. In October, currency
turmoil in several Asian countries
bubbled over, causing concern in
many world markets. As we
entered 1998, sentiment indicated
that the effects of this crisis could
linger, placing pressure on U.S.
economic growth as well as
corporate profits.
An interview with Timothy Heffernan, Portfolio Manager of Fidelity
Congress Street Fund
Q. HOW DID THE FUND PERFORM, TIM?
A. For the 12 months that ended December 31, 1997, the fund had a
total return of 22.81%, trailing the 33.36% return of the Standard &
Poor's 500 Index. Over the same period, the fund also trailed the
27.14% return recorded by the growth and income funds average tracked
by Lipper Analytical Services.
Q. WHY DID THE FUND UNDERPERFORM THE INDEX AND THE AVERAGE?
A. The fund's performance was hurt by the relatively weak showing of
its technology holdings. In addition, the fund was significantly
underweighted in the finance sector compared to the S&P 500, which
hurt performance when the continuing spree of bank mergers, combined
with stable interest rates, spurred healthy gains in many finance
stocks.
Q. WHAT FACTORS HELPED THE FUND'S PERFORMANCE?
A. One helpful sector was health care, where the fund was
significantly overweighted compared to the S&P 500. The health care
sector benefited from investors' perception that the demand for health
care products and services is relatively steady and not as sensitive
to the ups and downs of the economy as, for example, the demand for
cars and other big-ticket items. In addition, 1997 was another good
year to own stocks, particularly a select group of large-cap stocks
that are heavily weighted in benchmarks like the S&P 500 and the Dow
Jones Industrial Average. Although the equity markets sold off briefly
in March, when the Federal Reserve Board raised the federal funds
target rate by a modest .25%, they rallied strongly from April through
early August, when the Dow Jones Industrial Average flirted with the
8300 threshold. Most U.S. equity indexes stalled for the balance of
August until late October, as small-cap stocks significantly
outperformed their large-cap brethren. Near the end of October,
widespread currency problems in the Pacific Basin created volatile
market conditions that caused investors to once again take refuge in
large-cap stocks, and by year's end the popular averages had recovered
much of the ground they lost in October.
Q. WHAT STOCKS STOOD OUT AS STRONG PERFORMERS?
A. Among the 10 stocks that contributed most to the fund's
performance, four were health care stocks. Guidant Corp., a leading
manufacturer of medical devices, did well on the strength of sharply
higher sales of its Cardiac Rhythm Management Group, as well as
investors' favorable reception to the company's acquisitions of
Neocardia, LLC, and EndoVascular Technologies. Merck & Co. benefited
from increased sales of established products, product introductions
and growth in its Merck-Medco Managed Care business. Johnson & Johnson
had strong sales in its domestic pharmaceutical business from such
products as Procrit, a treatment for anemia, and Levaquin, for
upper-respiratory infections. The company also reported healthy sales
in its Asia-Pacific operations. Finally, American Home Products saw
its earnings rise as a result of the reduced costs associated with a
more favorable sales mix of pharmaceutical and agricultural products.
Q. WHAT STOCKS WERE DISAPPOINTING OVER THE PERIOD?
A. Motorola had disappointing earnings, in part because of the costs
associated with its decision to exit the DRAM (Dynamic Random Access
Memory) computer chip market. Eastman Kodak's stock struggled as the
company continued to lose market share in its core film business due
to aggressive pricing by key competitor Fuji Photo Film. Kodak also
was burdened by high labor costs, and late in the year the company
responded by announcing layoffs that will result in the elimination of
almost 20,000 positions worldwide by the end of 1999. Another stock
that hurt the fund's performance was Boeing, which was adversely
affected by the company's lower earnings due to production problems
and late delivery costs.
Q. WHAT'S YOUR OUTLOOK, TIM?
A. Turmoil in Asia and a stronger dollar may slow demand in some
industries. This could have a significant impact on the growth rates
and profit margins of many U.S. multinational companies whose growth
strategies hinge, in part, on Asian demand. However, the overall U.S.
economy tends to be less dependent on the demand for exports than most
other nations. Less than 15% of gross domestic product (GDP) results
from foreign trade. Further, exports to Southeast Asia and Korea
represent less than 1% of U.S. GDP.
Questions remain regarding the inflationary outlook for 1998. While we
currently enjoy what appears to be a durable and well-balanced
economy, with inflation in check and interest rates at their lowest
level in years, the economy has reached high operating levels. With
unemployment at a 24-year low, wage pressures could drive prices
higher. If this is the case, the Fed may choose to restrain inflation
by increasing interest rates.
Investors have built their growth expectations into the market's
valuations, leading to record-setting price-to-earnings multiples over
the past year. Heightened uncertainty regarding the stability and
sustainability of earnings growth has led investors to favor a narrow
group of liquid - easily tradable - large-capitalization stocks with
stable earnings growth as they did in 1996 and early 1997. This group
of companies, given their high valuations on many measures, may prove
vulnerable to the effects of reduced overseas demand or an upturn in
interest rates.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF DECEMBER 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
GENERAL ELECTRIC CO. 6.6 5.7
MERCK & CO., INC. 5.5 5.2
COCA-COLA CO. (THE) 5.1 5.0
AMERICAN HOME PRODUCTS CORP. 4.8 4.6
HEWLETT-PACKARD CO. 4.8 4.2
JOHNSON & JOHNSON 4.7 4.5
UNITED TECHNOLOGIES CORP. 4.6 5.1
EXXON CORP. 4.6 4.5
GUIDANT CORP. 4.3 3.2
GTE CORP. 4.3 3.5
TOP FIVE MARKET SECTORS AS OF DECEMBER 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
HEALTH 22.2 20.6
NONDURABLES 18.4 20.1
TECHNOLOGY 12.6 13.5
ENERGY 10.5 10.1
INDUSTRIAL MACHINERY & EQUIPMENT 7.2 6.4
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF DECEMBER 31, 1997 AS OF JUNE 30, 1997
ROW: 1, COL: 1, VALUE: 4.5
ROW: 1, COL: 2, VALUE: 50.0
ROW: 1, COL: 3, VALUE: 40.5
STOCKS 96.2%
SHORT-TERM
INVESTMENTS 3.8%
STOCKS 95.5%
SHORT-TERM
INVESTMENTS 4.5%
ROW: 1, COL: 1, VALUE: 3.8
ROW: 1, COL: 2, VALUE: 50.0
ROW: 1, COL: 3, VALUE: 46.2
INVESTMENTS DECEMBER 31, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 95.5%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 7.1%
Boeing Co. 44,308 $ 2,168,322
United Technologies Corp. 56,100 4,084,781
6,253,103
BASIC INDUSTRIES - 6.2%
CHEMICALS & PLASTICS - 0.6%
Eastman Chemical Co. 8,793 523,733
PAPER & FOREST PRODUCTS - 5.6%
International Paper Co. 65,798 2,837,539
Union Camp Corp. 39,900 2,142,131
4,979,670
TOTAL BASIC INDUSTRIES 5,503,403
ENERGY - 10.5%
OIL & GAS - 10.5%
Chevron Corp. 24,800 1,909,600
Exxon Corp. 66,000 4,038,375
Mobil Corp. 43,625 3,149,180
Union Pacific Resources Group, Inc. 8,181 198,389
9,295,544
FINANCE - 0.4%
BANKS - 0.4%
Citicorp 3,000 379,313
HEALTH - 22.2%
DRUGS & PHARMACEUTICALS - 13.2%
American Home Products Corp. 55,002 4,207,653
Lilly (Eli) & Co. 18,236 1,269,682
Merck & Co., Inc. 45,886 4,875,388
Pharmacia & Upjohn, Inc. 35,743 1,309,087
11,661,810
MEDICAL EQUIPMENT & SUPPLIES - 9.0%
Guidant Corp. 60,932 3,793,017
Johnson & Johnson 62,654 4,127,332
7,920,349
TOTAL HEALTH 19,582,159
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 7.2%
ELECTRICAL EQUIPMENT - 6.6%
General Electric Co. 79,400 $ 5,825,975
POLLUTION CONTROL - 0.6%
Waste Management, Inc. 20,000 550,000
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 6,375,975
MEDIA & LEISURE - 3.5%
PUBLISHING - 3.5%
Knight-Ridder, Inc. 60,000 3,120,000
NONDURABLES - 18.4%
BEVERAGES - 7.7%
Anheuser-Busch Companies, Inc. 52,472 2,308,768
Coca-Cola Co. (The) 67,698 4,510,379
6,819,147
FOODS - 6.3%
Campbell Soup Co. 58,911 3,424,202
Heinz (H.J.) Co. 42,859 2,177,773
5,601,975
HOUSEHOLD PRODUCTS - 1.3%
Colgate-Palmolive Co. 15,466 1,136,751
TOBACCO - 3.1%
Philip Morris Companies, Inc. 60,000 2,718,750
TOTAL NONDURABLES 16,276,623
TECHNOLOGY - 12.6%
COMPUTERS & OFFICE EQUIPMENT - 6.7%
Hewlett-Packard Co. 67,200 4,200,000
International Business Machines Corp. 16,422 1,717,125
5,917,125
ELECTRONICS - 3.3%
Motorola, Inc. 51,200 2,921,600
PHOTOGRAPHIC EQUIPMENT - 2.6%
Eastman Kodak Co. 37,637 2,288,800
TOTAL TECHNOLOGY 11,127,525
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TRANSPORTATION - 0.7%
RAILROADS - 0.7%
Union Pacific Corp. 9,660 $ 603,146
UTILITIES - 6.7%
ELECTRIC UTILITY - 2.4%
Consolidated Edison Co. of New York, Inc. 26,264 1,076,824
Potomac Electric Power Co. 40,000 1,032,500
2,109,324
TELEPHONE SERVICES - 4.3%
GTE Corp. 71,838 3,753,536
TOTAL UTILITIES 5,862,860
TOTAL COMMON STOCKS
(Cost $14,703,751) 84,379,651
CASH EQUIVALENTS - 4.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.40%, dated
12/31/97 due 1/2/98 $ 3,939,400 3,938,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $18,641,751) $ 88,317,651
INCOME TAX INFORMATION
At December 31, 1997, the aggregate cost of investment securities for
income tax purposes was $18,641,751. Net unrealized appreciation
aggregated $69,675,900, all of which was related to appreciated
investment securities.
At December 31, 1997, the fund had a capital loss carryforward of
approximately $940,400 of which $940,000 and $400 will expire on
December 31, 1999 and 2000, respectively.
The fund hereby designates approximately $20,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 88,317,651
AGREEMENTS OF $3,938,000) (COST $18,641,751) -
SEE ACCOMPANYING SCHEDULE
DIVIDENDS RECEIVABLE 172,049
TOTAL ASSETS 88,489,700
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 7,601
PAYABLE FOR FUND SHARES REDEEMED 987
DISTRIBUTIONS PAYABLE 437,875
ACCRUED MANAGEMENT FEE 98,546
OTHER PAYABLES AND ACCRUED EXPENSES 41,670
TOTAL LIABILITIES 586,679
NET ASSETS $ 87,903,021
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 19,132,869
UNDISTRIBUTED NET INVESTMENT INCOME 34,622
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) (940,370)
ON INVESTMENTS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 69,675,900
NET ASSETS, FOR 288,190 SHARES OUTSTANDING $ 87,903,021
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $305.02
PER SHARE ($87,903,021 (DIVIDED BY) 288,190 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1997
INVESTMENT INCOME $ 1,743,452
DIVIDENDS
INTEREST 199,507
TOTAL INCOME 1,942,959
EXPENSES
MANAGEMENT FEE $ 390,825
TRANSFER AGENT FEES 72,889
ACCOUNTING FEES AND EXPENSES 60,446
NON-INTERESTED TRUSTEES' COMPENSATION 464
CUSTODIAN FEES AND EXPENSES 8,533
REGISTRATION FEES 125
AUDIT 32,754
LEGAL 409
MISCELLANEOUS 600
TOTAL EXPENSES BEFORE REDUCTIONS 567,045
EXPENSE REDUCTIONS (1,081) 565,964
NET INVESTMENT INCOME 1,376,995
REALIZED AND UNREALIZED GAIN (LOSS) 15,998,653
NET REALIZED GAIN (LOSS) ON INVESTMENT SECURITIES
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON 238,686
INVESTMENT SECURITIES
NET GAIN (LOSS) 16,237,339
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 17,614,334
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 1,376,995 $ 1,651,802
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 15,998,653 5,440,605
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 238,686 10,268,240
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 17,614,334 17,360,647
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (1,333,915) (1,696,301)
SHARE TRANSACTIONS 281,550 286,262
REINVESTMENT OF DISTRIBUTIONS
COST OF SHARES REDEEMED (20,005,272) (6,434,931)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (19,723,722) (6,148,669)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,443,303) 9,515,677
NET ASSETS
BEGINNING OF PERIOD 91,346,324 81,830,647
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION OF $ 87,903,021 $ 91,346,324
NET INVESTMENT INCOME OF $34,622 AND $(8,458),
RESPECTIVELY)
OTHER INFORMATION
SHARES
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 946 1,161
REDEEMED (75,033) (28,466)
NET INCREASE (DECREASE) (74,087) (27,305)
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 252.14 $ 210.05 $ 155.04 $ 150.47 $ 142.93
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME 4.57 B 4.48 4.45 4.29 3.73
NET REALIZED AND UNREALIZED 52.81 42.21 55.06 4.38 7.66
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS 57.38 46.69 59.51 8.67 11.39
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (4.50) (4.60) (4.50) (4.10) (3.80)
IN EXCESS OF NET INVESTMENT - - - - (.05)
INCOME
TOTAL DISTRIBUTIONS (4.50) (4.60) (4.50) (4.10) (3.85)
NET ASSET VALUE, END OF PERIOD $ 305.02 $ 252.14 $ 210.05 $ 155.04 $ 150.47
TOTAL RETURN A 22.81% 22.32% 38.63% 5.86% 8.05%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 87,903 $ 91,346 $ 81,831 $ 61,307 $ 64,440
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .65% .67% .67% .60% .61%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE NET .65% .66% .67% .60% .61%
ASSETS AFTER EXPENSE REDUCTIONS C
RATIO OF NET INVESTMENT INCOME 1.59% 1.92% 2.42% 2.82% 2.52%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 0% 0% 0% 0% 0%
AVERAGE COMMISSION RATE D $ .0000 $ .0320
</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 FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Congress Street Fund (the fund) 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 and is authorized to issue 3.8 million shares. The
financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities 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.
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 fund intends to retain and
pay federal income taxes at year-end on undistributed net long-term
capital gains. 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. Non-cash dividends included in dividend income, if any, are
recorded at the fair market value of the securities received. Interest
income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
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 redemptions in kind and capital loss carryforwards. The
fund also utilized earnings and profits distributed to shareholders on
redemption of shares as 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 may include temporary book and tax
basis differences that will reverse in a subsequent period.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR),
may transfer uninvested cash balances into one or more joint trading
accounts. These balances are invested in one or more repurchase
agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Sales of securities, other than short-term securities, aggregated
$18,745,050, which represents the current value of securities
delivered in redemption of fund shares. There were no purchases of
securities during the period.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
quarterly fee that is computed monthly at an annual rate of .50% of
the fund's average net assets. The management fee is subject to a
reduction to the extent that the monthly average net assets of all
mutual funds advised by FMR exceed $4 billion in any month. The
management fee payable by the fund on its portion of the excess is
reduced by 10%. For the period, the management fee was reduced by
$43,043. For the period, the management fee rate was equivalent to an
annual rate of .45% of average net assets.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .08% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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.
5. EXPENSE REDUCTIONS.
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
$10 and $1,071, respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and the Shareholders of Fidelity Congress Street Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Congress Street Fund, including the schedule of portfolio
investments, as of December 31, 1997, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1997, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Congress Street Fund as of December 31,
1997, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 9, 1998
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate
the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
0
*
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
4001 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard A. Spillane, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Congress Street Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Exchange Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
