(2_FIDELITY_LOGOS)FIDELITY
TREND
FUND
ANNUAL REPORT
DECEMBER 31, 1993
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 23 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 27 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 31 The auditor's opinion.
ACCOUNTANTS
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. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
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. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Trend 19.15% 118.02% 270.03%
S&P 500(Registered trademark) 10.08% 97.26% 302.35%
Average Growth Fund 10.61% 99.76% 234.70%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. For example, if
you had invested $1,000 in a fund that had a 5% return over the past year,
you would have $1,050. You can compare these figures to the performance of
the Standard & Poor's 500 Composite Stock Price Index - a common proxy
for the U.S. stock market. You can also compare them to the average growth
fund, which reflects the performance of 488 growth funds tracked by Lipper
Analytical Services. Both benchmarks include reinvested dividends and
capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Trend 19.15% 16.87% 13.98%
S&P 500(Registered trademark) 10.08% 14.55% 14.94%
Average Growth Fund 10.61% 14.51% 12.38%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
Trend (005) S&P 500
12/31/83 10000.00 10000.00
01/31/84 9577.28 9944.00
02/29/84 8915.97 9593.97
03/31/84 9162.34 9759.95
04/30/84 9157.15 9852.67
05/31/84 8664.42 9306.83
06/30/84 8926.35 9508.79
07/31/84 8679.98 9390.88
08/31/84 9834.02 10428.57
09/30/84 9613.59 10430.66
10/31/84 9623.96 10471.34
11/30/84 9499.48 10354.06
12/31/84 9782.31 10627.40
01/31/85 10849.50 11455.28
02/28/85 10827.59 11596.18
03/31/85 10589.35 11604.30
04/30/85 10348.38 11593.85
05/31/85 10967.25 12263.98
06/30/85 11309.55 12456.52
07/31/85 11493.02 12437.84
08/31/85 11309.55 12332.11
09/30/85 10816.64 11946.12
10/31/85 11180.85 12498.03
11/30/85 12087.25 13355.39
12/31/85 12546.40 14001.80
01/31/86 13000.66 14080.21
02/28/86 14219.52 15133.40
03/31/86 15070.54 15977.85
04/30/86 14718.19 15797.30
05/31/86 15321.37 16637.72
06/30/86 15354.22 16918.89
07/31/86 14100.08 15973.13
08/31/86 14861.52 17158.33
09/30/86 13693.98 15739.34
10/31/86 14335.98 16647.50
11/30/86 14622.64 17052.03
12/31/86 14243.69 16617.21
01/31/87 15953.07 18855.54
02/28/87 16964.26 19600.34
03/31/87 17197.25 20166.79
04/30/87 16927.86 19987.30
05/31/87 16745.84 20161.19
06/30/87 17408.39 21179.33
07/31/87 18500.51 22253.12
08/31/87 19075.70 23083.17
09/30/87 18602.44 22577.65
10/31/87 13101.80 17714.42
11/30/87 12362.80 16254.75
12/31/87 13651.40 17491.74
01/31/88 14333.97 18228.14
02/29/88 15490.43 19077.57
03/31/88 15681.72 18488.08
04/30/88 16155.61 18693.29
05/31/88 15807.80 18855.92
06/30/88 16959.91 19721.41
07/31/88 16738.18 19646.47
08/31/88 16216.47 18978.49
09/30/88 16607.76 19786.97
10/31/88 16699.05 20337.05
11/30/88 16246.91 20046.23
12/31/88 16972.45 20397.04
01/31/89 18305.57 21890.10
02/28/89 18274.03 21345.04
03/31/89 18781.64 21842.38
04/30/89 19911.19 22976.00
05/31/89 20848.67 23906.53
06/30/89 20592.58 23770.26
07/31/89 21914.20 25916.71
08/31/89 22746.50 26424.68
09/30/89 22856.25 26316.34
10/31/89 21562.07 25705.80
11/30/89 21822.74 26230.20
12/31/89 22344.63 26859.73
01/31/90 20414.36 25057.44
02/28/90 20919.23 25380.68
03/31/90 21294.42 26053.27
04/30/90 20260.12 25401.94
05/31/90 22181.69 27878.62
06/30/90 22217.18 27689.05
07/31/90 21776.08 27600.44
08/31/90 19606.08 25105.36
09/30/90 18105.33 23882.73
10/31/90 17339.74 23780.04
11/30/90 18891.19 25316.23
12/31/90 19515.88 26022.55
01/31/91 20740.40 27157.13
02/28/91 22587.40 29098.87
03/31/91 23092.51 29803.06
04/30/91 23327.21 29874.59
05/31/91 24419.08 31165.17
06/30/91 22699.64 29737.81
07/31/91 24271.12 31123.59
08/31/91 24862.97 31861.22
09/30/91 24699.70 31329.13
10/31/91 24959.91 31748.94
11/30/91 23531.30 30469.46
12/31/91 26595.58 33955.17
01/31/92 26761.70 33323.60
02/29/92 27401.26 33756.81
03/31/92 26511.08 33098.55
04/30/92 26354.62 34071.65
05/31/92 27002.03 34238.60
06/30/92 26386.99 33728.44
07/31/92 27870.62 35107.94
08/31/92 27428.23 34388.23
09/30/92 27838.25 34794.01
10/31/92 28501.84 34915.79
11/30/92 30179.69 36106.41
12/31/92 31056.27 36550.52
01/31/93 31801.17 36857.55
02/28/93 31615.09 37358.81
03/31/93 32941.95 38147.08
04/30/93 31729.97 37223.92
05/31/93 33453.17 38221.52
06/30/93 34067.78 38332.36
07/31/93 33975.88 38179.04
08/31/93 35756.52 39626.02
09/30/93 36537.71 39320.90
10/31/93 37204.02 40134.84
11/30/93 35480.81 39753.56
12/31/93 37002.99 40234.58
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity Trend
Fund on December 31, 1983. As the chart shows, by December 31, 1993, the
value of your investment would have grown to $37,003 - a 270.03% increase
on your initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends reinvested, the same $10,000
investment would have grown to $40,235 - a 302.35% 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
growth in the long run and
volatility in the short run. 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
Low inflation, falling interest rates
and a gradually improving
economy boosted U.S. stocks
during the 12 months ended
December 31, 1993. The
Standard & Poor's 500 stock
index rose 10.08%, in line with
the market's long-term average
annual return. Some tobacco,
drug and brand-name consumer
products stocks began to pick up
by year end, but had weak
returns for the year, overall.
Those losses were offset by
impressive gains in other sectors,
including technology, although
semiconductors gave back part
of their gains in the fall. Other
market leaders were finance,
notably securities brokers;
economically-sensitive sectors
like autos and steel;
entertainment; heavy machinery;
and precious metals.
Communications stocks soared
as traditional telephone utilities,
cellular companies, and
entertainment firms scrambled to
form strategic alliances. The
NASDAQ Composite Index -
which tracks over-the-counter
stocks - rose 14.75% for the
year, but was outpaced by
the Dow Jones Industrial Average
- - an index of 30 blue-chip stocks
- - which rose 17.04%. In
mid-November, the Dow closed
above 3700 for the first time and
finished the year at 3754. Most
international markets easily
outpaced U.S. returns. The
Morgan Stanley EAFE (Europe,
Australia, Far East) index rose
32.56%, while the Morgan
Stanley Emerging Markets Index
was up 73.21% for the year.
An interview with Alan Leifer, Portfolio Manager of Fidelity
Trend Fund
Q. ALAN, HOW DID THE FUND PERFORM?
A. I'm very pleased with 1993's results. Total return was 19.15% for the 12
months ended December 31, 1993. That beat the 10.61% return for the average
growth fund tracked by Lipper Analytical Services.
Q. WHERE DID YOU FIND THE BIG GAINERS?
A. The biggest winners were in the technology group. Stocks in this sector
had strong returns during the first six months of '93. I took some profits
in the second half of the year, and reduced the fund's technology
investment from 5.6% on June 30 to 4.2% on December 31. Semiconductor
companies like Texas Instruments, Micron Technology and Applied Materials
did well. Two factors worked in our favor. First, Japanese firms stopped
gaining market share; and second, demand picked up due to increased sales
of cellular phones and personal computers. Defense technology companies
like Loral - which manufactures military electronic systems - also had
strong returns. And finally, technology network equipment stocks did well.
These included International Game, a leading maker of slot machines, and
Sensormatics, which produces security equipment like those plastic tags you
see in clothing stores. General Instruments also helped the fund. The
company manufactures cable TV and communications equipment that will help
build the so-called information superhighway.
Q. WE HEAR A LOT ABOUT THE INFORMATION SUPERHIGHWAY BRINGING TOGETHER
COMPUTER, TELEPHONE AND TELEVISION TECHNOLOGIES TO PROVIDE US WITH
INTERACTIVE SERVICES WE CAN USE AT HOME. ARE THERE OTHER INVESTMENTS YOU'RE
MAKING IN THIS AREA?
A. Yes, because I see it as an investment theme for the '90s, and a
business trend for the next decade. Many of the fund's technology
investments are companies that are already hard at work building the
highway. Some of the fund's newer investments are in companies that I would
call suppliers of the "off-ramps" and "signs;" firms whose products and
services surround the merging of these technologies, which hasn't actually
happened yet. As always, I look for companies that the fund can hold for a
while. In the cable television area, for example, Tele-Communications,
Inc., Viacom and QVC have already helped the fund. I've also seen good
results from certain telephone-related stocks, including Telephone &
Data Systems and Cellular Communications.
Q. ANY OTHER INVESTMENT THEMES FOR THE `90S THAT ARE ALREADY PRODUCING
RESULTS?
A. Housing, for one. In the 1980s, skyrocketing home prices and high
interest rates kept many would-be buyers out of the market. All of that has
changed. With more moderate prices and lower rates, buying a home is 40%
more affordable today than it was even three or four years ago. About 64%
of Americans now own homes; I see that number increasing to 70% in the next
decade. The stocks of home builders like Toll Brothers (up 34.3% for the
six months ended December 31), Centex (up 23.1%), and Lennar (up 14.2%) all
helped the fund. Also, companies that provide building materials, like
Lafarge (a cement supplier), had a strong year. The fund's two largest
investments at the end of the year - Federal National Mortgage Association
and Golden West - both finance home purchases. Golden West was a
disappointment in '93, mainly because of the recession in California, its
home base. But the company is a strong competitor which is building assets.
Plus, California's economy is showing signs of life. So I'm not about to
jump ship.
Q. CONSUMER NON-DURABLES HAD A LACKLUSTER YEAR ON WALL STREET. HOW HEAVILY
WAS THE FUND INVESTED IN THIS AREA?
A. I use a broad definition of consumer non-durables. Under this category,
I include lodging and gaming, entertainment, services, and transportation,
as well as the traditional non-durables: beverages, household products and
tobacco. Using this breakdown, the fund had a 12.8% stake in consumer
non-durables on December 31.
Q. WHERE DID YOU FIND OPPORTUNITIES?
A. Most of the fund's consumer non-durable investments were in two areas:
travel and gaming. Americans crawled out of their cocoons last year and
began to take more vacations. That helped companies like Hospitality
Franchise Systems, which operates lower-cost hotel chains like Day's Inn,
Ramada and Super 8. The fund also benefited from owning stocks like
Carnival Cruise Lines - the number one cruise company in the United States
- - and Southwest Airlines, a real up-and-comer in the airline industry. It's
true, however, many traditional big-name consumer non-durable stocks
suffered in 1993. Consumers showed they were no longer going to pay full
price for name-brand goods. They actively sought out generic and
off-brands, especially on items like cigarettes. Philip Morris was the most
obvious example. The stock was disappointing early in the year until I
eventually sold all of the fund's shares.
Q. WHAT ABOUT THE FUND'S 11.3% STAKE IN HEALTH CARE?
A. Again, a similar story. Mediocre performance by the sector, but shining
stars within if you looked hard enough. Despite uncertainty over
health-care reform, many companies continued to grow their earnings and
helped the fund. U.S. Healthcare is an East Coast-based health maintenance
organization, or HMO, that grabbed a bigger share of the market in '93.
Despite a volatile year, the stock ended 1993 with a big gain. The fund
didn't completely escape the retreat from health-care stocks, however.
Synergen's stock fell 68% in one day in late February last year, after the
company announced disappointing results of its drug Antril for sepsis, a
blood infection. But when an industry makes up 16-17% of the U.S. economy,
as health care does, many companies can prosper while others falter.
Q. HOW DO YOU FEEL ABOUT INVESTING OVERSEAS, WHERE SO MANY MARKETS HAD A
STRONG YEAR?
A. The fund had a 12.6% foreign stake on December 31, of which about 5% was
in Canadian companies. Many international stocks did enjoy a strong year,
but many were also extremely volatile. I'm conservative about buying
foreign stocks. I believe that if you're looking for stocks that will go up
ten-fold in five or so years, as this fund is, you can't beat the United
States. There are ways to make money investing in emerging markets and in
countries whose currencies fluctuate, but usually not by investing in
companies that build new businesses that grow very quickly. The United
States is one of the few countries in the world that truly fosters an
entrepreneurial spirit; that allows an upstart company to become an
industry leader. Those are the kinds of companies I like to invest in and I
find them most often here.
Q. WHAT'S YOUR OUTLOOK FOR '94?
A. I expect we'll see greater highs and lows in the stock market this year.
If so, that will be quite different from 1993, when stocks in the Standard
& Poor's 500 index were on a pretty even keel, and set a record for low
volatility. Overall, I'm encouraged by what I see for the next six months.
Stock prices are high, but so are the earnings of many mid-sized companies
in which the fund invests. I'm never sure what the market will do, but I do
see opportunities for the fund's companies to grow their earnings in '94.
This fund has a low turnover rate compared to many others. That's because I
buy companies that I think the fund can hang onto for five years. With a
long-term approach, I think the fund can weather downturns in the market
that might happen in the meantime.
FUND FACTS
GOAL: to increase the value
of the fund's shares over the
long term by investing in
stocks with growth potential
START DATE: June 16, 1958
SIZE: as of December 31,
1993, over $1.3 billion
MANAGER: Alan Leifer, since
1987; manager, Fidelity
Contrafund, 1984-1987;
Fidelity Select Industrial
Materials, 1986-1988
(checkmark)
ALAN LEIFER ON CHOOSING STOCKS:
"When looking at a company
that's trading for $30 per
share, most investors say,
`Can this stock get to $40 and
how quickly can it get there?' I
ask, `Is this the kind of
company that could get to
$140, and can it get there in
the next five years?' I use a
long-term, five-year horizon
and pick my companies very
carefully. In the investment
game there are sprinters and
there are marathoners. The
Trend fund is filled with
marathoners. These
companies really love what
they're doing in good times
and bad, and put everything
they have into performing for
the long haul."
(bullet) The percentage of the
fund's investments in cyclical
stocks - those that tend to
move up and down in tandem
with the economy -
increased over the last six
months, from 19.7% on June
30 to 24.1% on December 31.
(bullet) Over the next six months,
there may be investment
opportunities in companies
that do business in California
and Europe; both areas
appear to be emerging from
economic recessions, and
some of these companies are
seeing improving business
prospects.
(bullet) At 16.1%, finance was the
fund's largest sector
investment on December 31.
Investments were divided
among federally sponsored
credit associations 5.7%,
banks 3.6%, savings &
loans 3.4%, insurance
companies 1.6%, securities
companies 1.2%, and credit
and other institutions 0.6%.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Federal National Mortgage
Association 5.3 4.4
Telephone & Data Systems, 3.6 3.3
Inc.
Golden West Financial Corp. 3.4 3.7
Centex Corp. 2.4 2.2
U.S. Healthcare, Inc. 2.2 1.8
Cellular Communications, Inc.
Class P 1.8 1.6
Reynolds Metals Co. 1.7 1.6
Schering-Plough Corp. 1.6 1.5
TJX Companies, Inc. 1.6 1.9
Rogers Communications, Inc. 1.6 0.8
Class B
TOP FIVE INDUSTRIES AS OF DECEMBER 31, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Finance 16.3 16.7
Health 11.3 11.4
Utilities 11.0 10.4
Energy 10.2 10.0
Media & Leisure 9.1 8.5
ASSET ALLOCATION
AS OF DECEMBER 31, 1993* AS OF JUNE 30, 1993**
Row: 1, Col: 1, Value: 1.0
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 38.5
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 20.0
Row: 1, Col: 6, Value: 20.0
Row: 1, Col: 1, Value: 9.0
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 29.5
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 20.0
Row: 1, Col: 6, Value: 20.0
Stocks 98.5%
Bonds 1.0%
Short-term
Investments 0.5%
Stocks 89.5%
Bonds 1.5%
Short-term
Investments 9.0%
* FOREIGN
INVESTMENTS 12.6%
** FOREIGN
INVESTMENTS 9.8%
INVESTMENTS DECEMBER 31, 1993
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 98.5%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.9%
DEFENSE ELECTRONICS - 0.9%
Loral Corp. 339,800 $ 12,827 54385910
BASIC INDUSTRIES - 5.2%
CHEMICALS & PLASTICS - 0.0%
NOVA Corp. of Alberta Class A 80,000 568 66977110
IRON & STEEL - 0.7%
Nucor Corp. 189,700 10,054 67034610
METALS & MINING - 3.5%
Aluminum Co. of America 98,000 6,799 02224910
Broken Hill Proprietary Co. Ltd. (The) 593,000 7,087 05599810
Noranda, Inc. 566,200 11,084 65542210
Reynolds Metals Co. 534,200 24,239 76176310
49,209
PACKAGING & CONTAINERS - 0.2%
Owens-Illinois, Inc. (a) 248,100 3,070 69076840
PAPER & FOREST PRODUCTS - 0.8%
Bowater, Inc. 140,800 3,239 10218310
Federal Paper Board Co., Inc. 300 6 31369310
Louisiana-Pacific Corp. 96,100 3,964 54634710
Repola OY 206,200 3,205 75999A92
10,414
TOTAL BASIC INDUSTRIES 73,315
CONGLOMERATES - 1.7%
Brierley Investments Ltd. 9,598,643 7,401 10901410
Canadian Pacific Ltd. Ord. 432,700 7,079 13644030
PEC Israel Economic Corp. (a) 283,900 8,872 70509810
Triton Group Ltd. (a) 1,835 3 89675710
Triton Group Ltd. (warrants) (a) 2,875 1 89675711
23,356
CONSTRUCTION & REAL ESTATE - 6.8%
BUILDING MATERIALS - 0.7%
Lafarge Corp. 445,200 10,184 50586210
CONSTRUCTION - 5.9%
Centex Corp. 785,300 32,983 15231210
Engle Homes, Inc. 68,700 996 29289610
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - CONTINUED
Kaufman & Broad Home Corp. 322,100 $ 7,650 48616810
Lennar Corp. 550,900 18,799 52605710
Oakwood Homes Corp. 163,100 4,404 67409810
Toll Brothers, Inc. (a) 644,100 11,030 88947810
Webb (Del E.) Corp. 373,200 5,971 94742310
81,833
REAL ESTATE - 0.2%
Hovnanian Enterprises, Inc. (a):
Class A 105,350 1,593 44248720
Class B 114,250 1,714 44248730
Koll Real Estate Group, Inc. (a) 170,000 74 50043410
Major Realty Corp. (a) 40,000 68 56084010
3,449
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Crown American Realty Trust (SBI) 36,000 540 22818610
Equity Residential Properties Trust (SBI) 4,800 153 29476L10
693
TOTAL CONSTRUCTION & REAL ESTATE 96,159
DURABLES - 3.6%
AUTOS, TIRES, & ACCESSORIES - 1.7%
Chrysler Corp. 301,700 16,065 17119610
Dana Corp. 67,300 4,030 23581110
Discount Auto Parts, Inc. (a) 103,300 2,841 25464210
Grupo Dina (Consorcio G) ADR 30,700 856 21030610
23,792
CONSUMER ELECTRONICS - 0.7%
Whirlpool Corp. 144,200 9,589 96332010
TEXTILES & APPAREL - 1.2%
Fruit of the Loom, Inc. (a) 290,800 7,015 35941610
NIKE, Inc. 59,600 2,764 65410610
Reebok International Ltd. 48,100 1,443 75811010
Unifi, Inc. 201,200 5,407 90467710
Westpoint Stevens, Inc. (a) 1,800 34 96123810
16,663
TOTAL DURABLES 50,044
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 9.8%
COAL - 0.1%
Pittston Co. Minerals Group 37,600 $ 897 72570120
ENERGY SERVICES - 4.2%
Global Marine, Inc. (a) 3,657,000 15,085 37935240
Lone Star Technologies, Inc. (a) 122,500 965 54231210
Oceaneering International, Inc. (a) 746,000 10,164 67523210
Offshore Logistics, Inc. (a) 272,600 3,748 67625510
Production Operators Corp. 92,900 2,497 74308010
Rowan Companies, Inc. (a) 1,482,600 13,343 77938210
Schlumberger Ltd. 195,900 11,583 80685710
Varco International, Inc. (a) 269,200 1,615 92212610
59,000
OIL & GAS - 5.5%
Amerada Hess Corp. 379,700 17,134 02355110
Apache Corp. 488,600 11,421 03741110
Cabot Oil & Gas Corp. Class A 405,500 8,566 12709710
Louisiana Land & Exploration Co. 97,000 3,892 54626810
Maxus Energy Corp. (a) 542,100 2,982 57773010
Mesa, Inc. (a) 465,800 2,620 59091110
Noble Affiliates, Inc. 213,000 5,645 65489410
North Canadian Oils Ltd. 115,300 1,134 65813610
Parker & Parsley Petroleum Co. 29,300 725 70101810
Renaissance Energy Ltd. (a) 658,400 14,072 75966610
Santa Fe Energy Resources, Inc. 482,538 4,343 80201210
Union Texas Petroleum Holdings, Inc. 244,600 4,984 90864010
77,518
TOTAL ENERGY 137,415
FINANCE - 16.1%
BANKS - 3.6%
Citicorp (a) 302,400 11,113 17303410
Deutsche Bank AG 13,300 6,783 25152592
Fleet Financial Group, Inc. 541,224 18,062 33891510
Northern Trust Corp. 193,100 7,652 66585910
State Street Boston Corp. 165,000 6,188 85747310
49,798
CREDIT & OTHER FINANCE - 0.6%
MBNA Corp. 258,900 8,641 55262L10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
FEDERAL SPONSORED CREDIT - 5.7%
Federal National Mortgage Association 942,437 $ 73,981 31358610
Student Loan Marketing Association 132,300 5,937 86387150
79,918
INSURANCE - 1.6%
Chubb Corp. (The) 72,300 5,630 17123210
Exel Ltd. 67,200 2,982 30161610
First Central Financial Corp. (d) 376,500 2,118 31890810
Loews Corp. 121,400 11,290 54042410
22,020
SAVINGS & LOANS - 3.4%
Golden West Financial Corp. 1,206,200 47,042 38131710
SECURITIES INDUSTRY - 1.2%
Salomon, Inc. 211,500 10,073 79549B10
United Asset Management Corp. 173,300 7,084 90942010
17,157
TOTAL FINANCE 224,576
HEALTH - 11.3%
DRUGS & PHARMACEUTICALS - 5.3%
ALZA Corp. Class A 548,300 15,352 02261510
Chiron Corp. (a) 84,400 7,090 17004010
Elan PLC (a):
ADR 123,700 5,242 28413120
(1 Advanced Therapeutic Systems Common & 1 ADR
warrant) 16,587 535 28413140
Glaxo Holdings PLC sponsored ADR 132,200 2,760 37732730
Pfizer, Inc. 97,000 6,693 71708110
Schering-Plough Corp. 336,100 23,023 80660510
Schering-Plough Corp. (equity unit) (a)(e) 3,800 91 80660540
Teva Pharmaceutical Industries Ltd. ADR 328,200 9,887 88162420
Therapeutic Discovery Corp. (1 share Class A and 1 share
ALZA Corp. warrant) (a) 44,830 246 88337620
Warner-Lambert Co. 50,000 3,375 93448810
74,294
MEDICAL EQUIPMENT & SUPPLIES - 1.4%
Owens & Minor, Inc. 136,200 3,133 69073010
Pall Corp. 208,500 3,831 69642930
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
SciMed Life Systems, Inc. (a) 305,100 $ 11,975 80861410
Tokos Medical Corp. (a) 130,000 682 88910010
19,621
MEDICAL FACILITIES MANAGEMENT - 4.6%
Columbia Healthcare Corp. 74,477 2,476 19767910
Community Psychiatric Centers 211,600 2,962 20401510
HCA - Hospital Corporation of America (a) 100,000 3,413 40412010
HEALTHSOUTH Rehabilitation Corp. (a) 366,450 9,253 42192410
Healthwise America, Inc. (a) 15,160 375 42221L10
Medical Care America, Inc. (a) 358,420 8,199 58450C10
Surgical Care Affiliates, Inc. 151,600 2,350 86881810
U.S. Healthcare, Inc. 543,300 31,308 91191010
Vivra, Inc. (a) 177,900 4,114 92855M10
64,450
TOTAL HEALTH 158,365
INDUSTRIAL MACHINERY & EQUIPMENT - 4.8%
ELECTRICAL EQUIPMENT - 3.0%
BBC Brown Boveri & Cie (Bearer) 15,075 10,982 05599099
Duracell International, Inc. 326,900 11,728 26633L10
Itel Corp. (a) 336,200 9,414 46564210
Lifeline Systems, Inc. (a)(d) 280,800 1,334 53219210
Sensormatic Electronics Corp. 237,000 8,265 81726510
41,723
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Deere & Co. 156,300 11,566 24419910
Joy Technologies, Inc. Class A (a) 96,100 1,153 48120610
Singer Company 132,900 4,967 82930F10
Stewart & Stevenson Services, Inc. 57,200 2,932 86034210
20,618
POLLUTION CONTROL - 0.3%
Attwoods PLC:
ADR 281,744 2,817 04987020
Ord. 636,000 1,287 04987010
TETRA Technologies, Inc. (a) 50,300 358 88162F10
4,462
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 66,803
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 9.1%
BROADCASTING - 2.7%
Home Shopping Network, Inc. 49,250 $ 733 43735110
International Cablecasting Technologies, Inc. (a) 384,200 1,249 45921L10
International Cabletel, Inc. (a) 107,589 2,528 45921610
Jones Intercable, Inc. Class A 319,100 5,624 48020620
Silver King Communications, Inc. (a) 17,750 177 82774010
Tele-Communications, Inc. Class A (a) 463,500 14,021 87924010
Television Broadcast Limited Ord. 766,000 3,172 87953110
Valuevision International, Inc. (a) 148,800 2,288 92047K10
Viacom, Inc. (non-vtg.) (a) 170,800 7,665 92552430
37,457
ENTERTAINMENT - 1.1%
Carnival Cruise Lines, Inc. 228,200 10,811 14365810
Cedar Fair LP 112,900 3,966 15018510
14,777
LODGING & GAMING - 4.8%
Autotote Corp. Class A (a) 248,800 5,474 05332310
Caesars World, Inc. (a) 122,800 6,554 12769510
Delta Queen Steamboat Co. 96,100 1,670 24779L10
Four Seasons Hotels, Inc. 377,400 3,712 35100E10
Hospitality Franchise Systems, Inc. (a) 310,600 16,501 44091210
La Quinta Motor Inns, Inc. 204,150 7,196 50419510
Mirage Resorts, Inc. (a) 341,250 8,147 60462E10
President Riverboat Casinos, Inc. (a) 232,700 5,119 74084810
Promus Companies, Inc. (a) 286,800 13,121 74342A10
67,494
PUBLISHING - 0.2%
Scholastic Corp. (a) 77,900 3,388 80706610
RESTAURANTS - 0.3%
Au Bon Pain, Inc. (a) 138,100 3,142 05010310
Buffets, Inc. (a) 48,000 1,236 11988210
4,378
TOTAL MEDIA & LEISURE 127,494
NONDURABLES - 1.7%
BEVERAGES - 0.5%
COTT Corp. 40,000 984 22163N10
Guinness PLC Ord. 910,000 6,411 40203310
7,395
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.6%
Colgate-Palmolive Co. 137,400 $ 8,570 19416210
TOBACCO - 0.6%
Universal Corp. 292,100 7,485 91345610
TOTAL NONDURABLES 23,450
PRECIOUS METALS - 0.1%
Sunshine Mining Co. (a) 340,000 893 86783310
RETAIL & WHOLESALE - 7.1%
APPAREL STORES - 3.0%
Catherines Stores Corp. (a) 120,000 2,100 14916F10
Filene's Basement Corp. (a) 303,300 3,298 31686610
Limited, Inc. (The) 242,300 4,149 53271610
Petrie Stores Corp. 337,600 9,833 71643410
TJX Companies, Inc. 762,500 22,208 87254010
41,588
GENERAL MERCHANDISE STORES - 1.6%
Carter Hawley Hale Stores, Inc. (a) 319,100 3,031 14622730
Mac Frugals Bargains C/O, Inc. (a) 227,100 4,457 55415210
Meyer (Fred), Inc. (a) 96,100 3,460 59309810
Sears, Roebuck & Co. 38,400 2,026 81238710
Wal-Mart Stores, Inc. 384,500 9,612 93114210
22,586
GROCERY STORES - 0.8%
Food Lion, Inc. Class A 604,800 3,931 34477520
Stop & Shop Companies, Inc. (a) 378,600 7,667 86209910
11,598
RETAIL & WHOLESALE, MISCELLANEOUS - 1.7%
CML Group, Inc. 240,550 5,683 12582010
Fingerhut Companies, Inc. 65,600 1,845 31786710
International Semi-Tech Microelectronics, Inc. (a) 96,100 545 46031K50
Lowe's Companies, Inc. 140,500 8,325 54866110
Sun Television & Appliances, Inc. 165,500 3,517 86688110
Waban, Inc. (a) 302,600 4,123 92939410
24,038
TOTAL RETAIL & WHOLESALE 99,810
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 1.9%
LEASING & RENTAL - 1.0%
Agency Rent-A-Car, Inc. (a) 415,400 $ 5,452 00845010
Blockbuster Entertainment Corp. 261,500 8,009 09367610
13,461
PRINTING - 0.1%
Bowne & Co., Inc. 77,800 1,692 10304310
SERVICES - 0.8%
Block (H&R), Inc. 188,300 7,673 09367110
National Education Corp. (a) 230,000 1,438 63577110
Supercuts, Inc. (a) 186,000 2,767 86805710
11,878
TOTAL SERVICES 27,031
TECHNOLOGY - 4.2%
COMMUNICATIONS EQUIPMENT - 0.2%
Cisco Systems, Inc. (a) 38,500 2,488 17275R10
COMPUTER SERVICES & SOFTWARE - 1.6%
Cheyenne Software, Inc. (a) 35,000 967 16688810
ECI Telecom Ltd. 282,600 7,242 26825810
Electronics For Imaging, Inc. (a) 66,500 1,097 28608210
Intuit (a) 19,200 818 46120210
Microsoft Corp. (a) 128,850 10,389 59491810
Software Toolworks, Inc. (a) 230,600 2,335 83404420
22,848
COMPUTERS & OFFICE EQUIPMENT - 0.0%
XYVision, Inc. (a) 165,750 52 98418010
ELECTRONIC INSTRUMENTS - 0.6%
Kulicke & Soffa Industries, Inc. (a) 186,600 2,612 50124210
Teradyne, Inc. (a) 197,900 5,492 88077010
8,104
ELECTRONICS - 1.8%
Anthem Electronics, Inc. (a) 344,400 9,944 03673210
Solectron Corp. (a) 196,400 5,573 83418210
Texas Instruments, Inc. 142,500 9,049 88250810
24,566
TOTAL TECHNOLOGY 58,058
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 3.3%
AIR TRANSPORTATION - 1.5%
AMR Corp. (a) 98,000 $ 6,566 00176510
Southwest Airlines Co. 369,100 13,841 84474110
20,407
RAILROADS - 0.8%
Conrail, Inc. 112,600 7,530 20836810
Kansas City Southern Industries, Inc. 69,600 3,585 48517010
11,115
SHIPPING - 1.0%
Bergesen Group:
Class A 34,400 669 08399010
Class B 322,500 6,271 08399011
Overseas Shipholding Group, Inc. 325,700 7,695 69036810
14,635
TOTAL TRANSPORTATION 46,157
UTILITIES - 10.9%
CELLULAR - 4.7%
Cellular, Inc. (a) 201,800 3,532 15116310
Cellular Communications, Inc. Class P (a) 521,933 25,199 15091793
Cellular Communications International, Inc. (a) 35,789 787 15091810
Cellular Communications Puerto Rico, Inc. (a) 72,735 1,637 15091910
Pactel Corp. (a) 20,100 500 69525210
Rogers Communications, Inc. Class B (a) 1,315,968 21,779 77510920
Securicor Group A 690,000 8,805 81399110
United States Cellular Corp. (a) 110,400 3,864 91168410
66,103
ELECTRIC UTILITY - 2.2%
Central & South West Corp. 100,000 3,025 15235710
Entergy Corp. 455,500 16,384 29364F10
NIPSCO Industries, Inc. 325,000 10,684 62914010
30,093
TELEPHONE SERVICES - 3.7%
Bell Atlantic Corp. 388 23 07785310
Telebras PN (Pfd. Reg.) 55,500,000 1,892 95499792
Telephone & Data Systems, Inc. 957,753 49,923 87943310
51,838
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
WATER - 0.3%
Welsh Water PLC Ord. 350,000 $ 3,619 94999395
TOTAL UTILITIES 151,653
TOTAL COMMON STOCKS
(Cost $1,053,457) 1,377,406
CORPORATE BONDS - 1.0%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - 0.4%
FINANCE - 0.2%
CREDIT & OTHER FINANCE - 0.2%
Leucadia National Corp. 5 1/4%, 2/1/03 Ba2 $ 2,230 2,230 527288AG
HEALTH - 0.0%
DRUGS & PHARMACEUTICALS - 0.0%
Chiron Corp. 1.90%, 11/17/00 (e) Ba3 1,150 989 170040AB
RETAIL & WHOLESALE - 0.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
CML Group, Inc. 5 1/2%, 1/15/03 (e) - 1,000 1,145 125820AB
UTILITIES - 0.1%
CELLULAR - 0.1%
Rogers Communications, Inc. liquid yield option
notes 0%, 5/20/13 Ba3 2,590 1,030 775109AD
TOTAL CONVERTIBLE BONDS 5,394
NONCONVERTIBLE BONDS - 0.6%
ENERGY - 0.4%
ENERGY SERVICES - 0.4%
Global Marine, Inc. 12 3/4%, 12/15/99 B1 5,000 5,550 379352AG
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.2%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
International Semi-Tech Microelectronics, Inc.
secured 0%, 8/15/03 (c) Ba2 $ 4,000 $ 2,080 46031KAA
TECHNOLOGY - 0.0%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
XYVision, Inc. 15%, 6/30/95 (b) - 773 580 983995AB
TOTAL NONCONVERTIBLE BONDS 8,210
TOTAL CORPORATE BONDS
(Cost $13,043) 13,604
REPURCHASE AGREEMENTS - 0.5%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.23%
dated 12/31/93 due 1/3/94 $ 6,891 6,889
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,073,389) $ 1,397,899
LEGEND
1. Non-income producing
2. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
3. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
4. Affiliated company (see Note 5 of Notes to Financial Statements).
5. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $2,225,000 or 0.2% of net
assets.
OTHER INFORMATION
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 87.4%
Canada 4.6
United Kingdom 1.8
Israel 1.2
Others (individually less than 1%) 5.0
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $1,074,291,000. Net unrealized appreciation
aggregated $323,608,000, of which $384,805,000 related to appreciated
investment securities and $61,197,000 related to depreciated investment
securities.
The fund hereby designates $43,055,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXEPT PER-SHARE AMOUNTS) DECEMBER 31, 1993
ASSETS
Investment in securities, at value (including repurchase $ 1,397,899
agreements of $6,889) (cost $1,073,389) (Notes 1 and
2) - See accompanying schedule
Cash 1
Receivable for investments sold 6,657
Receivable for fund shares sold 7,414
Dividends receivable 1,494
Interest receivable 161
Other receivables 784
TOTAL ASSETS 1,414,410
LIABILITIES
Payable for fund shares redeemed $ 9,913
Dividends payable 10,048
Accrued management fee 882
Other payables and accrued expenses 371
TOTAL LIABILITIES 21,214
NET ASSETS $ 1,393,196
Net Assets consist of (Note 1):
Paid in capital $ 1,026,922
Undistributed net investment income 215
Accumulated undistributed net realized gain (loss) on 41,549
investments
Net unrealized appreciation (depreciation) on investment 324,510
securities
NET ASSETS, for 23,580 shares outstanding $ 1,393,196
NET ASSET VALUE, offering price and redemption price per $59.08
share ($1,393,196 (divided by) 23,580 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED DECEMBER 31, 1993
INVESTMENT INCOME $ 13,880
Dividends (including $38 received from affiliated issuers)
(Note 5)
Interest 3,624
TOTAL INCOME 17,504
EXPENSES
Management fee (Note 4) $ 6,847
Basic fee
Performance adjustment 1,627
Transfer agent fees (Note 4) 2,685
Accounting fees and expenses (Note 4) 543
Non-interested trustees' compensation 8
Custodian fees and expenses 98
Registration fees 70
Audit 31
Legal 25
Interest (Note 6) 2
Miscellaneous 104
Total expenses before reductions 12,040
Expense reductions (Note 7) (55) 11,985
NET INVESTMENT INCOME 5,519
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 149,580
(NOTES 1 AND 3)
Net realized gain (loss) on investment securities
(including realized gain (loss) of $4 on sales of
investment in affiliated issuers)
Change in net unrealized appreciation (depreciation) on 67,567
investment securities
NET GAIN (LOSS) 217,147
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 222,666
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations $ 5,519 $ 10,486
Net investment income
Net realized gain (loss) on investments 149,580 78,040
Change in net unrealized appreciation (depreciation) 67,567 61,878
on
investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 222,666 150,404
FROM
OPERATIONS
Distributions to shareholders (5,588) (8,360)
From net investment income
In excess of net investment income (294) -
From net realized gain (110,237) (60,966)
TOTAL DISTRIBUTIONS (116,119) (69,326)
Share transactions 934,377 650,645
Net proceeds from sales of shares
Reinvestment of distributions from: 5,260 7,425
Net investment income
Net realized gain 100,537 55,284
Cost of shares redeemed (868,788) (570,793)
Net increase (decrease) in net assets resulting from 171,386 142,561
share
transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 277,933 223,639
NET ASSETS
Beginning of period 1,115,263 891,624
End of period (including undistributed net investment $ 1,393,196 $ 1,115,263
income of $215 and $64,408, respectively)
OTHER INFORMATION
Shares
Sold 16,037 12,596
Issued in reinvestment of distributions from: 92 138
Net investment income
Net realized gain 1,751 1,038
Redeemed (14,878) (11,158)
Net increase (decrease) 3,002 2,614
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1993 1992(DAGGER) 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 54.20 $ 49.63 $ 38.25 $ 44.22 $ 37.43
period
Income from Investment
Operations
Net investment income .17 .58** .66 .61 .85
Net realized and unrealized 10.04 7.66 12.99 (6.20) 10.79
gain (loss) on
investments
Total from investment 10.21 8.24 13.65 (5.59) 11.64
operations
Less Distributions
From net investment (.26) (.44) (.48) (.24) (.63)
income
In excess of net investment (.01) - - - -
income
From net realized gain (5.06) (3.23) (1.79) (.14) (4.22)
Total distributions (5.33) (3.67) (2.27) (.38) (4.85)
Net asset value, end of $ 59.08 $ 54.20 $ 49.63 $ 38.25 $ 44.22
period
TOTAL RETURN 19.15%(double dagger) 16.77% 36.28% (12.66)% 31.65%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 1,393 $ 1,115 $ 892 $ 702 $ 889
(in millions)
Ratio of expenses to average .92%* .56% .53% .61% .58%
net assets
Ratio of expenses to average .93%* .56% .53% .61% .58%
net assets before expense
reductions
Ratio of net investment .43% 1.14% 1.43% 1.51% 1.76%
income to average net
assets
Portfolio turnover rate 50% 47% 57% 48% 67%
</TABLE>
* SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS.
** INVESTMENT INCOME AND EXPENSES PER SHARE HAVE BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING.
(dagger) AS OF JANUARY 1, 1992, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
(double dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Trend 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 an unlimited number of shares. 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 maturing within sixty days 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, other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
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 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 is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes where recovery of such taxes is not assured.
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 are primarily due to differing treatments for
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective January
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been reclassified to
reflect an increase in paid in capital of $148,404,000, a decrease in
undistributed net investment income of $62,225,000 and a decrease in
accumulated net realized gain on investments of $86,178,000.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $691,730,000 and $616,549,000, 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 ranging from
.30% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. Effective August 1, 1993, the individual fund
fee rate was raised to .30%. The basic fee is subject to a performance
adjustment (up to a maximum of + or - .20%) based on the fund's investment
performance as compared to the appropriate index over a specified period of
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
time. For the period, the management fee was equivalent to an annual rate
of .65% of average net assets after the performance adjustment.
On July 14,1993, the shareholders of the fund approved a new management
contract which took effect on August 1, 1993. The new management contract
increases the individual fund fee rate from .12% to .30% and revises the
group fee rate schedule.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. 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 $447,000 for the period.
5. 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 WITH COMPANIES WHICH ARE OR
WERE AFFILIATES ARE AS FOLLOWS:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
First Central Financial Corp. $ - $ 39 $ 38 $ 2,118
Lifeline Systems, Inc. (a) - - - 1,334
TOTALS $ - $ 39 $ 38 $ 3,452
(a) Non-income producing
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. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market .
6. BANK BORROWINGS -
CONTINUED
value in excess of 220% of the total bank borrowings The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $7,711,000. The weighted average
interest rate was 3.50%.
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
$55,000 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Fidelity Trend Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Trend Fund, including the schedule of portfolio investments, as of
December 31, 1993, 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, 1993, 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 Trend Fund as of December 31, 1993, the results of its
operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
February 4, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Alan J. Leifer, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, NY
FIDELITY GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Fidelity Fifty Fund
Growth Company Fund
Low-Priced Stock Fund
Magellan(Registered trademark) Fund
New Millennium Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
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)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
