(2_FIDELITY_LOGOS)FIDELITY
TREND
FUND
SEMIANNUAL REPORT
JUNE 30, 1996
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 22 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 26 Notes to the financial statements.
To reduce expenses and demonstrate respect for our environment, we have
begun mailing only one copy of most financial reports and prospectuses to
most households, even if they have more than one account in the fund. If
you need additional copies of financial reports, prospectuses, or
historical account information, please call 1-800-544-6666.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first six
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term. You also can help to manage some of the risks of investing
through diversification. A stock fund is already diversified because it
invests in many issues. You can diversify even further by placing some of
your money in several different types of stock funds or in other investment
categories, such 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, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide 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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(or income) and capital gains (the profits the fund earns when it sells
securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Trend 8.33% 19.00% 101.20% 197.45%
S&P 500(registered trademark) 10.10% 26.00% 107.63% 264.95%
Growth Funds Average 10.08% 22.20% 99.86% 216.52%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Standard & Poor's 500 Index -
a widely recognized, unmanaged index of common stock prices. The index
figures assume reinvestment of all dividends paid by stocks included in the
index. They do not, however, include any allowance for the brokerage
commissions or other fees you would pay if you actually invested in those
stocks. To measure how the fund's performance stacked up against its peers,
you can compare it to the growth funds average, which reflects the
performance of 668 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. over the past six months. Both benchmarks include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Trend 19.00% 15.01% 11.52%
S&P 500 26.00% 15.73% 13.79%
Growth Funds Average 22.20% 14.55% 11.79%
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
IMAHDR PRASUN SHR__CHT 19960630 19960711 164824 S00000000000001
Trend SP Standard & Poor 500
00005 SP001
1986/06/30 10000.00 10000.00
1986/07/31 9183.20 9441.00
1986/08/31 9679.11 10141.52
1986/09/30 8918.71 9302.82
1986/10/31 9336.83 9839.59
1986/11/30 9523.53 10078.69
1986/12/31 9276.73 9821.69
1987/01/31 10390.03 11144.67
1987/02/28 11048.61 11584.88
1987/03/31 11200.35 11919.68
1987/04/30 11024.90 11813.60
1987/05/31 10906.35 11916.38
1987/06/30 11337.86 12518.16
1987/07/31 12049.15 13152.83
1987/08/31 12423.76 13643.43
1987/09/30 12115.53 13344.63
1987/10/31 8533.03 10470.20
1987/11/30 8051.73 9607.46
1987/12/31 8890.98 10338.58
1988/01/31 9335.53 10773.84
1988/02/29 10088.72 11275.90
1988/03/31 10213.30 10927.47
1988/04/30 10521.94 11048.77
1988/05/31 10295.42 11144.89
1988/06/30 11045.77 11656.44
1988/07/31 10901.37 11612.15
1988/08/31 10561.58 11217.34
1988/09/30 10816.42 11695.19
1988/10/31 10875.88 12020.32
1988/11/30 10581.40 11848.43
1988/12/31 11053.93 12055.78
1989/01/31 11922.18 12938.26
1989/02/28 11901.63 12616.10
1989/03/31 12232.23 12910.05
1989/04/30 12967.89 13580.08
1989/05/31 13578.46 14130.08
1989/06/30 13411.67 14049.54
1989/07/31 14272.42 15318.21
1989/08/31 14814.49 15618.45
1989/09/30 14885.97 15554.41
1989/10/31 14043.09 15193.55
1989/11/30 14212.86 15503.50
1989/12/31 14552.75 15875.58
1990/01/31 13295.59 14810.33
1990/02/28 13624.40 15001.38
1990/03/31 13868.76 15398.92
1990/04/30 13195.13 15013.95
1990/05/31 14446.62 16477.81
1990/06/30 14469.73 16365.76
1990/07/31 14182.45 16313.39
1990/08/31 12769.16 14838.66
1990/09/30 11791.74 14116.01
1990/10/31 11293.13 14055.32
1990/11/30 12303.57 14963.29
1990/12/31 12710.41 15380.76
1991/01/31 13507.93 16051.37
1991/02/28 14710.85 17199.04
1991/03/31 15039.82 17615.25
1991/04/30 15192.68 17657.53
1991/05/31 15903.80 18420.34
1991/06/30 14783.96 17576.69
1991/07/31 15807.43 18395.76
1991/08/31 16192.90 18831.74
1991/09/30 16086.56 18517.25
1991/10/31 16256.04 18765.38
1991/11/30 15325.60 18009.13
1991/12/31 17321.32 20069.38
1992/01/31 17429.51 19696.09
1992/02/29 17846.06 19952.14
1992/03/31 17266.30 19563.07
1992/04/30 17164.40 20138.23
1992/05/31 17586.04 20236.90
1992/06/30 17185.48 19935.37
1992/07/31 18151.75 20750.73
1992/08/31 17863.63 20325.34
1992/09/30 18130.67 20565.18
1992/10/31 18562.85 20637.16
1992/11/30 19655.61 21340.88
1992/12/31 20226.50 21603.38
1993/01/31 20711.64 21784.85
1993/02/28 20590.46 22081.12
1993/03/31 21454.63 22547.03
1993/04/30 20665.28 22001.39
1993/05/31 21787.58 22591.03
1993/06/30 22187.87 22656.54
1993/07/31 22128.01 22565.92
1993/08/31 23287.72 23421.17
1993/09/30 23796.50 23240.82
1993/10/31 24230.45 23721.91
1993/11/30 23108.15 23496.55
1993/12/31 24099.54 23780.86
1994/01/31 25058.13 24589.41
1994/02/28 24181.12 23923.03
1994/03/31 22614.73 22879.99
1994/04/30 22741.18 23172.85
1994/05/31 22790.13 23552.89
1994/06/30 22153.79 22975.84
1994/07/31 22749.34 23729.45
1994/08/31 24062.82 24702.36
1994/09/30 23544.77 24097.15
1994/10/31 23650.83 24639.34
1994/11/30 22349.59 23741.97
1994/12/31 22485.62 24094.07
1995/01/31 22296.00 24718.82
1995/02/28 23028.03 25682.12
1995/03/31 23380.82 26440.00
1995/04/30 23715.96 27218.65
1995/05/31 24231.91 28306.58
1995/06/30 24994.81 28964.15
1995/07/31 26211.91 29924.60
1995/08/31 26921.89 29999.71
1995/09/30 27750.94 31265.70
1995/10/31 27049.78 31154.08
1995/11/30 27900.87 32521.74
1995/12/31 27458.25 33148.11
1996/01/31 28012.86 34276.47
1996/02/29 28940.64 34594.21
1996/03/31 28924.77 34927.36
1996/04/30 29697.22 35442.19
1996/05/31 30517.29 36356.24
1996/06/28 29744.84 36494.76
IMATRL PRASUN SHR__CHT 19960630 19960711 164829 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Trend Fund on June 30, 1986. As the chart shows, by June 30,
1996, the value of the investment would have grown to $29,745 - a 197.45%
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 $36,495 - a
264.95% 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
NOTE TO SHAREHOLDERS: Abigail Johnson became Portfolio Manager of Fidelity
Trend Fund on June 3, 1996.
Q. ABBY, HOW DID THE FUND PERFORM?
A. For the six months ended June 30, 1996, the fund had a total return of
8.33%. That trailed the total return of the growth funds average, which was
10.08%, according to Lipper Analytical Services. The fund also finished
slightly behind its peer group average for the trailing 12-month period.
During the 12 months ended June 30, 1996, the fund rose 19.00%, while the
Lipper growth funds average was up 22.20%.
Q. WHY DID THE FUND LAG THE MAJORITY OF ITS PEERS OVER THE PAST SIX MONTHS?
A. Although I only managed the fund during the last month of the period, I
am aware of some of the factors that affected its performance. The fund
performed pretty much in line with its peer group during the first quarter
of 1996. During the second quarter, the fund's underweighting in certain
sectors relative to the Standard & Poor's 500 Index - a standard stock
market benchmark - negatively affected its performance. One example is the
energy sector. Energy stocks performed well, fueled by a combination of an
improving outlook for oil prices and relatively low stock valuations -
stock prices relative to earnings. However, the fund had only a little more
than 1% invested in energy stocks at the end of the period. In addition,
late in the period, some of fund's investments that had performed well
early in 1996 began to show signs of weakness.
Q. CAN YOU GIVE US SOME EXAMPLES?
A. Sure. Although the stocks of gaming companies such as Circus Circus and
Mirage performed well during much of the period, investors took some
profits in June. Earlier in 1996, a slowdown on the part of state and local
governments in establishing new gaming jurisdictions hurt some of the
smaller start-up companies whose growth was predicated on the spread of
legalized gambling. However, this was perceived as a positive trend for the
more established companies such as Circus Circus and Mirage. Investors felt
this trend would only contribute to the growth of gaming in the big meccas
of Las Vegas and Atlantic City - strongholds for these companies. These
stocks were very cheap six months ago, which also contributed to their
steady rise. As I mentioned, the performance of these stocks fell off in
June. However, I was still positive on their business prospects at the end
of the period.
Q. WHICH OTHER GROUPS DROVE THE FUND'S PERFORMANCE?
A. There were groups that investors might consider less glamorous, but were
strong contributors to the fund's performance nonetheless. An example is
defense companies, several of which are considered conglomerates because
they own businesses in multiple industries. Companies such as McDonnell
Douglas, General Dynamics, Harsco and Rockwell International shared many
positive attributes that helped lift their stock prices during the period.
First, in my opinion, the stocks were cheap to begin with. Second, all have
restructured their companies through cost cutting and other measures
designed to strengthen earnings growth. And third, the defense and
aerospace industry experienced strong merger and acquisition activity,
which helped drive up stock prices. Another group of stocks that helped
drive performance was specialty chemical companies, which benefited from a
shift in investor sentiment toward cyclical stocks - those that tend to do
well when the economy does well. Examples include Witco, Monsanto and Cytec
Industries.
Q. HAVE YOU MADE MANY CHANGES TO THE FUND SINCE TAKING OVER IN EARLY JUNE?
A. Not too many. When I took over the fund, I moved slowly, while
thoroughly acquainting myself with the fund's holdings. In addition, stock
valuations overall had risen significantly over the past six- and 12-month
periods, which gave me reason for caution. That said, I did slightly
increase the fund's stake in technology stocks, from 12.8% six months ago
to more than 15% on June 30. I focused on companies that are leaders within
their respective industries, such as microchip manufacturer Intel. In
addition, I had an eye out for stocks that had experienced strong
sell-offs, but whose long-term prospects looked attractive, such as America
Online.
Q. THUS FAR, YOU'VE RETAINED PHILIP MORRIS AS THE FUND'S LARGEST INVESTMENT
. . .
A. I have. The stock fell sharply near the end of the first quarter as
litigation-related fears were rekindled by unanticipated talk of settlement
elsewhere in the industry. But by the end of the second quarter, it had
risen from those depressed valuations to beyond its previous six-month
high. Interestingly, despite this rise, the market continued to place a
value on the company that reflected the perception that its litigation risk
was very high. In other words, the stock remained quite cheap, given the
litigation risk, while the company's earnings prospects remained positive.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND, ABBY?
A. I certainly plan to be very valuation-conscious going forward. As the
market has risen and become more expensive, cheap stocks are harder to
find. The other half of the equation is corporate profits. Companies in
several industries have begun to report weaker-than-expected profit growth,
which means that good stock picking will be at a premium. I'll continue to
look carefully for those companies that I feel offer above-average
prospects for earnings with below-average valuations.
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.
FUND FACTS
GOAL: to increase the value
of the fund's shares by
investing mainly in equity
securities of companies likely
to benefit from economic,
financial or market trends
START DATE: June 16, 1958
SIZE: as of June 30, 1996,
more than $1.3 billion
MANAGER: Abigail Johnson,
since June 1996; also
manager, Fidelity OTC
Portfolio, 1994-June 1996;
Fidelity Dividend Growth
Fund, 1993-1994; Fidelity
Select Developing
Communications Portfolio,
1991-1993; Fidelity Select
Telecommunications
Portfolio, 1991-1992; Fidelity
Select Industrial Equipment
Portfolio, 1988-1991; joined
Fidelity in 1988
(checkmark)
ABIGAIL JOHNSON ON HER
INVESTING STYLE:
"There are many criteria that I
look at when picking stocks,
but two stand out: earnings
growth and stock valuation.
Essentially, I look for
companies with above-average
prospects for earnings growth
coupled with below-average
stock valuations. I'm searching
for companies that are doing
the right things internally to
grow their earnings. That may
include cutting costs or larger
restructuring. Often, it takes a
lot of legwork to uncover
improving earnings prospects
that others may have missed.
I'll be taking a
company-by-company,
stock-by-stock approach.
Visiting these companies
frequently and talking to their
managers is a critical element
of my stock-picking style."
(solid bullet) The fund was more fully
invested in the stock market
on June 30 than it was six
months ago. On June 30,
3.3% of the fund was in
short-term investments
compared to 14.0% on
December 31.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JUNE 30, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Philip Morris Companies, Inc. 3.3 3.6
U.S. Healthcare, Inc. 1.7 0.0
Mirage Resorts, Inc. 1.6 0.6
RJR Nabisco Holdings Corp. 1.6 0.0
Circus Circus Enterprises, Inc. 1.4 0.7
WorldCom, Inc. 1.4 1.0
McDonnell Douglas Corp. 1.3 1.7
General Dynamics Corp. 1.3 1.8
Harsco Corp. 1.3 1.5
Rockwell International Corp. 1.2 1.1
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO
Technology 15.4 12.8
Aerospace & Defense 9.7 9.9
Media & Leisure 9.7 4.5
Health 8.1 9.6
Retail & Wholesale 7.9 3.1
ASSET ALLOCATION
AS OF JUNE 30, 1996 * AS OF DECEMBER 31, 1995 **
Row: 1, Col: 1, Value: 3.3
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 50.0
Row: 1, Col: 4, Value: 46.7
Row: 1, Col: 1, Value: 14.0
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 44.5
Row: 1, Col: 4, Value: 40.0
Stocks 96.7%
Bonds 0.0%
Short-term
investments 3.3%
FOREIGN
INVESTMENTS 3.1%
Stocks 85.9%
Bonds 0.1%
Short-term
investments 14.0%
FOREIGN
INVESTMENTS 6.2%
*
**
INVESTMENTS JUNE 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.7%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 9.7%
AEROSPACE & DEFENSE - 7.7%
Boeing Co. 90,000 $ 7,819
British Aerospace PLC 1,895 29
Harsco Corp. 250,000 16,812
Lockheed Martin Corp. 70,000 5,880
McDonnell Douglas Corp. 360,000 17,460
Precision Castparts Corp. 99,900 4,296
Rockwell International Corp. 280,000 16,030
Rohr Industries, Inc. (a) 265,100 5,534
Sturm Ruger & Co., Inc. 130,000 6,045
Sundstrand Corp. 340,000 12,453
Teleflex, Inc. 122,600 5,854
Wyman-Gordon Co. (a) 86,100 1,528
99,740
DEFENSE ELECTRONICS - 0.7%
Litton Industries, Inc. (a) 150,000 6,525
Raytheon Co. 50,000 2,581
9,106
SHIP BUILDING & REPAIR - 1.3%
General Dynamics Corp. 280,000 17,360
TOTAL AEROSPACE & DEFENSE 126,206
BASIC INDUSTRIES - 7.2%
CHEMICALS & PLASTICS - 5.6%
Cytec Industries, Inc. (a) 88,900 7,601
du Pont (E.I.) de Nemours & Co. 100,000 7,912
FMC Corp. (a) 28,500 1,860
Fuller (H.B.) Co. 255,280 9,254
Hanna (M.A.) Co. 71,300 1,488
Hercules, Inc. 100,000 5,525
IMC Fertilizer Group, Inc. 242,100 9,109
Monsanto Co. 200,000 6,500
Sealed Air Corp. (a) 78,600 2,643
Valspar Corp. 113,600 5,226
Witco Corp. 461,200 15,854
72,972
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - 0.7%
Hexcel Corp. (a) 201,000 $ 3,065
Northwest Pipe Co. (a)(b) 170,000 2,890
TriMas Corp. 100,000 2,337
8,292
PACKAGING & CONTAINERS - 0.3%
Tupperware Corp. (a) 100,000 4,225
PAPER & FOREST PRODUCTS - 0.6%
Pentair, Inc. 274,600 8,238
TOTAL BASIC INDUSTRIES 93,727
CONGLOMERATES - 2.9%
Allied-Signal, Inc. 130,000 7,426
ITT Industries, Inc. 195,600 4,914
Mark IV Industries, Inc. 215,250 4,870
Tyco International Ltd. 350,000 14,263
United Technologies Corp. 50,000 5,750
37,223
CONSTRUCTION & REAL ESTATE - 0.8%
BUILDING MATERIALS - 0.6%
Lafarge Corp. 1 -
RPM, Inc. 100,000 1,562
Shaw Group (a) 12,500 236
Sherwin-Williams Co. 130,000 6,045
7,843
ENGINEERING - 0.2%
MasTec, Inc. (a) 90,500 2,285
TOTAL CONSTRUCTION & REAL ESTATE 10,128
DURABLES - 3.5%
AUTOS, TIRES, & ACCESSORIES - 2.3%
Autozone, Inc. (a) 145,600 5,059
Borg-Warner Automotive, Inc. 50,600 1,999
Ford Motor Co. 166,000 5,374
General Motors Corp. 50,000 2,619
Standard Products Co. 111,700 2,597
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Tower Automotive, Inc. (a) 353,300 $ 8,656
Volvo AB Class B 89,400 2,031
Wynn's International, Inc. 54,400 1,537
29,872
CONSUMER DURABLES - 0.7%
Dupont Photomasks, Inc. (a) 1,000 21
Minnesota Mining & Manufacturing Co. 120,000 8,280
Swedish Match Co. ADR 17,340 535
8,836
CONSUMER ELECTRONICS - 0.2%
Maytag Co. 146,200 3,052
TEXTILES & APPAREL - 0.3%
Liz Claiborne, Inc. 100,000 3,462
TOTAL DURABLES 45,222
ENERGY - 1.2%
ENERGY SERVICES - 0.0%
Cliffs Drilling Co. (a) 2,400 81
OIL & GAS - 1.2%
Belco Oil & Gas Corp. (a) 43,400 1,541
Chesapeake Energy Corp. (a) 150,000 8,988
Forcenergy Gas Exploration, Inc. (a) 16,500 311
Royal Dutch Petroleum Co. ADR 20,000 3,075
Rutherford-Moran Oil Corp. 2,000 49
Santa Fe Energy Resources, Inc. 5,600 66
United Meridian Corp. (a) 50,000 1,800
15,830
TOTAL ENERGY 15,911
FINANCE - 5.7%
BANKS - 0.9%
Advanta Corp. 76,000 3,876
Allied Irish Bank 11,257 59
Canadian Imperial Bank of Commerce 100,000 3,231
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
U.S. Bancorp. 36,800 $ 1,329
Wells Fargo & Co. 15,000 3,583
12,078
CREDIT & OTHER FINANCE - 1.8%
American Express Co. 200,000 8,925
First USA, Inc. 93,800 5,159
Household International, Inc. 120,200 9,135
23,219
INSURANCE - 2.6%
ACE Ltd. 82,800 3,892
Aetna Life & Casualty Co. 120,000 8,580
Delphi Financial Group, Inc. Class A 62,400 1,685
General Re Corp. 37,500 5,709
Provident Companies, Inc. 100,000 3,700
SunAmerica, Inc. 42,200 2,384
UNUM Corp. 130,700 8,136
34,086
SECURITIES INDUSTRY - 0.4%
Lehman Brothers Holdings, Inc. 224,300 5,552
TOTAL FINANCE 74,935
HEALTH - 8.1%
DRUGS & PHARMACEUTICALS - 2.5%
Guilford Pharmaceuticals, Inc. 50,000 1,206
Pfizer, Inc. 30,000 2,145
Pharmacia & Upjohn, Inc. 350,000 15,531
Scherer R.P. Corp. (a) 90,000 4,084
Schering-Plough Corp. 160,000 10,040
33,006
MEDICAL EQUIPMENT & SUPPLIES - 3.0%
Beckman Instruments, Inc. 79,500 3,021
Guidant Corp. 80,000 3,940
Hillenbrand Industries, Inc. 137,400 5,118
Medtronic, Inc. 170,000 9,520
Mentor Corp. 70,000 1,785
Omnicare, Inc. 180,000 4,770
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Perrigo Co. (a) 220,000 $ 2,475
St. Jude Medical, Inc. (a) 260,000 8,710
39,339
MEDICAL FACILITIES MANAGEMENT - 2.6%
Health Care & Retirement Corp. 19,050 452
Magellan Health Services, Inc. (a) 125,000 2,688
Physicians Resource Group, Inc. (a) 20,000 668
Tenet Healthcare Corp. (a) 290,000 6,199
U.S. Healthcare, Inc. 400,000 22,000
Vencor, Inc. (a) 56,200 1,714
33,721
TOTAL HEALTH 106,066
HOLDING COMPANIES - 0.8%
Norfolk Southern Corp. 82,100 6,958
Triarc Companies, Inc. Class A (a) 331,000 3,807
10,765
INDUSTRIAL MACHINERY & EQUIPMENT - 4.0%
ELECTRICAL EQUIPMENT - 1.8%
Emerson Electric Co. 90,000 8,134
General Signal Corp. 161,100 6,102
Honeywell, Inc. 75,000 4,087
Loral Space & Communications Ltd. (a) 300,000 4,087
Scientific-Atlanta, Inc. 113,000 1,752
24,162
INDUSTRIAL MACHINERY & EQUIPMENT - 2.2%
Cooper Industries, Inc. 50,000 2,075
Duriron Co., Inc. 94,800 2,275
Giddings & Lewis, Inc. 100,000 1,625
Illinois Tool Works, Inc. 30,000 2,029
Ingersoll-Rand Co. 182,600 7,989
Kaydon Corp. 73,900 3,178
Kennametal, Inc. 56,300 1,914
PRI Automation, Inc. (a) 36,700 1,119
Regal-Beloit Corp. 43,200 853
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Scottsman Industries, Inc. 47,200 $ 950
Stewart & Stevenson Services, Inc. 200,000 4,550
28,557
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 52,719
MEDIA & LEISURE - 9.7%
ENTERTAINMENT - 0.7%
MGM Grand, Inc. (a) 175,400 6,994
Scientific Games Holdings Corp. (a) 67,100 1,946
8,940
LEISURE DURABLES & TOYS - 1.7%
Callaway Golf Co. 143,800 4,781
Coleman, Inc. (a) 139,800 5,924
Harley Davidson, Inc. 111,000 4,565
K2, Inc. (a) 70,400 1,910
Polaris Industries, Inc. 132,100 4,508
21,688
LODGING & GAMING - 6.2%
Anchor Gaming (a) 149,100 8,983
Aztar Corp. (a) 56,300 647
Boyd Gaming Corp. (a) 40,000 600
Circus Circus Enterprises, Inc. (a) 445,600 18,270
Doubletree Corp. (a) 67,000 2,379
HFS, Inc. (a) 40,000 2,800
Hilton Hotels Corp. 77,600 8,730
International Game Technology Corp. 250,000 4,219
Mirage Resorts, Inc. (a) 400,000 21,500
Rio Hotel & Casino, Inc. (a) 123,000 1,891
Showboat, Inc. 32,700 985
Suburban Lodges of America, Inc. (a) 43,000 994
Sun International Hotels Ltd. Ord. (a) 82,300 3,991
Trump Hotels & Casino Resorts, Inc. (a) 50,000 1,425
Wyndham Hotel Corp. (a) 151,000 3,152
80,566
PUBLISHING - 1.0%
Houghton Mifflin Co. 20,000 995
Media General, Inc. Class A 31,300 1,166
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - CONTINUED
Scholastic Corp. (a) 135,000 $ 8,370
Times Mirror Co. Class A 52,200 2,271
12,802
RESTAURANTS - 0.1%
Starbucks Corp. (a) 70,000 1,978
TOTAL MEDIA & LEISURE 125,974
NONDURABLES - 7.1%
HOUSEHOLD PRODUCTS - 0.3%
Premark International, Inc. 100,000 1,850
Safeskin Corp. (a) 64,400 2,673
4,523
TOBACCO - 6.8%
Dimon, Inc. 200,400 3,707
Philip Morris Companies, Inc. 420,000 43,680
RJR Nabisco Holdings Corp. 652,500 20,227
Schweitzer-Mauduit International, Inc. 271,100 7,625
UST, Inc. 390,000 13,358
88,597
TOTAL NONDURABLES 93,120
PRECIOUS METALS - 0.5%
Bre-X Minerals Ltd. (a) 63,600 1,063
Newmont Mining Corp. 100,000 4,938
6,001
RETAIL & WHOLESALE - 7.9%
APPAREL STORES - 0.8%
Melville Corp. 140,000 5,670
Ross Stores, Inc. 150,000 5,213
10,883
DRUG STORES - 0.2%
Walgreen Co. 65,800 2,204
GENERAL MERCHANDISE STORES - 3.3%
Dayton Hudson Corp. 55,400 5,713
Dillard Department Stores, Inc. Class A 210,000 7,665
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Family Dollar Stores, Inc. 600,000 $ 10,425
May Department Stores Co. (The) 60,000 2,625
Sears, Roebuck & Co. 30,000 1,459
Wal-Mart Stores, Inc. 270,000 6,851
Woolworth Corp. (a) 381,900 8,593
43,331
GROCERY STORES - 1.8%
Albertson's, Inc. 160,000 6,620
Performance Food Group Co. (a) 15,300 398
Richfood Holdings, Inc. Class A 148,200 4,816
Riser Foods, Inc. Class A 46,700 1,121
Safeway, Inc. (a) 300,000 9,900
22,855
RETAIL & WHOLESALE, MISCELLANEOUS - 1.8%
Home Depot, Inc., (The) 170,000 9,180
Lowe's Companies, Inc. 30,000 1,083
Micro Warehouse, Inc. (a) 70,000 1,400
Officemax, Inc. (a) 200,000 4,775
PETsMART, Inc. (a) 12,100 578
Sodak Gaming, Inc. (a) 26,000 793
Toys "R" Us, Inc. 216,700 6,176
23,985
TOTAL RETAIL & WHOLESALE 103,258
SERVICES - 3.6%
ADVERTISING - 1.6%
Interpublic Group of Companies, Inc. 180,000 8,437
Omnicom Group, Inc. 204,000 9,486
WPP Group PLC 1,025,000 3,453
21,376
SERVICES - 2.0%
Donna Karan International, Inc. 3,000 84
Ecolab, Inc. 90,800 2,996
HCIA, Inc. (a) 99,800 6,287
Lawyers Title Corp. 140,000 2,520
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Medaphis Corp. (a) 172,200 $ 6,845
Veterinary Centers of America, Inc. (a) 22,200 497
Zebra Technologies Corp. Class A (a) 390,000 6,923
26,152
TOTAL SERVICES 47,528
TECHNOLOGY - 15.4%
COMMUNICATIONS EQUIPMENT - 1.0%
Cisco Systems, Inc. (a) 110,000 6,229
Digital Link Corp. (a) 35,600 605
Network General Corp. (a) 50,000 1,075
3Com Corp. (a) 100,000 4,575
12,484
COMPUTER SERVICES & SOFTWARE - 8.8%
Affiliated Computer Services, Inc. Class A (a) 262,800 12,352
America Online, Inc. (a) 110,000 4,812
Ascend Communications, Inc. (a) 80,000 4,500
Automatic Data Processing, Inc. 21,900 846
Bisys Group, Inc. (The) (a) 59,500 2,246
Broderbund Software, Inc. (a) 115,000 3,709
CUC International, Inc. (a) 300,000 10,650
Ceridian Corp. (a) 226,400 11,433
CompuCom Systems, Inc. (a) 397,800 4,326
Computer Sciences Corp. (a) 70,000 5,232
Dassault Systemes SA sponsored ADR 2,000 62
ECI Telecom Ltd. 170,000 3,952
Electronic Arts, Inc. (a) 80,000 2,140
Equifax, Inc. 100,000 2,625
Factset Research Systems, Inc. 4,000 80
First Data Corp. 83,300 6,633
Fiserv, Inc. 31,600 948
GT Interactive Software, Inc. (a) 94,800 1,588
HBO & Co. 74,400 5,041
I2 Technologies, Inc. (a) 86,100 3,681
Legato Systems, Inc. (a) 50,000 2,750
Meridian Data, Inc. (a) 82,000 728
Oracle Corp. (a) 100,000 3,944
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
PeopleSoft, Inc. (a) 52,300 $ 3,726
Platinum Technology, Inc. (a) 50,000 756
Remedy Corp. (a) 25,000 1,825
Saville Systems PLC sponsored ADR (a) 260,000 7,183
Software 2000, Inc. (a) 65,000 1,048
SunGard Data Systems, Inc. (a) 70,000 2,809
Viewlogic Systems, Inc. (a) 218,100 3,026
114,651
COMPUTERS & OFFICE EQUIPMENT - 2.0%
Auspex Systems, Inc. (a) 105,700 1,585
Compaq Computer Corp. 20,000 985
Digital Equipment Corp. (a) 47,400 2,133
Exabyte Corp. (a) 240,300 3,139
Gateway 2000, Inc. (a) 61,400 2,088
Hewlett-Packard Co. 50,000 4,981
Kentek Information Systems, Inc. (a) 97,600 1,037
Pitney Bowes, Inc. 120,000 5,730
Sun Microsystems, Inc. (a) 25,000 1,472
Telxon Corp. 300,000 3,525
26,675
ELECTRONIC INSTRUMENTS - 0.1%
Micrion Corp. (a) 56,200 815
ELECTRONICS - 2.7%
Cirrus Logic, Inc. (a) 50,000 875
Cyrix Corp. (a) 298,400 5,147
ESS Technology, Inc. (a) 140,000 2,590
Intel Corp. 60,000 4,406
Linear Technology Corp. 313,900 9,417
Maxim Integrated Products, Inc. (a) 197,400 5,392
S-3, Inc. (a) 107,700 1,326
Sanmina Corp. (a) 30,000 810
Transwitch Corp. (a) 238,100 3,155
Zero Corp. 119,500 2,554
35,672
PHOTOGRAPHIC EQUIPMENT - 0.8%
Polaroid Corp. 228,400 10,421
TOTAL TECHNOLOGY 200,718
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 5.0%
AIR TRANSPORTATION - 2.8%
America West Airlines, Inc. Class B (a) 165,800 $ 3,648
Atlantic Southeast Airlines, Inc. 390,000 11,017
Comair Holdings, Inc. 205,800 5,557
Northwest Airlines Corp. Class A (a) 227,800 8,998
Trans World Airlines, Inc. (a) 560,000 7,980
37,200
RAILROADS - 1.1%
Bombardier, Inc. Class B 200,000 2,999
Burlington Northern Santa Fe Corp. 80,000 6,470
Tranz Rail Holdings Ltd. sponsored ADR (a) 70,000 971
Wisconsin Central Transportation Corp. (a) 115,900 3,767
14,207
TRUCKING & FREIGHT - 1.1%
Airborne Freight Corp. 287,800 7,483
American Freightways Corp. (a) 100,000 1,113
Consolidated Freightways, Inc. 130,000 2,746
M.S. Carriers, Inc. (a) 48,600 996
Werner Enterprises, Inc. 20,000 520
Yellow Corp. (a) 100,000 1,325
14,183
TOTAL TRANSPORTATION 65,590
UTILITIES - 3.6%
CELLULAR - 1.5%
Century Telephone Enterprises, Inc. 187,900 5,990
Nextel Communications, Inc. Class A (a) 50,000 953
360 Degrees Communications Co. (a) 500,000 12,000
18,943
TELEPHONE SERVICES - 2.1%
Ameritech Corp. 70,000 4,156
MFS Communications, Inc. 50,000 1,881
SBC Communications, Inc. 80,000 3,940
WorldCom, Inc. (a) 325,000 17,997
27,974
TOTAL UTILITIES 46,917
TOTAL COMMON STOCKS
(Cost $1,142,777) 1,262,008
REPURCHASE AGREEMENTS - 3.3%
MATURITY VALUE (NOTE 1)
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.46%, dated
6/28/96 due 7/1/96 $ 42,790 $ 42,771
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,185,548) $ 1,304,779
LEGEND
1. Non-income producing
2. Affiliated company (see Note 6 of Notes to Financial Statements).
INCOME TAX INFORMATION
At June 30, 1996, the aggregate cost of investment securities for income
tax purposes was $1,185,613,000. Net unrealized appreciation aggregated
$119,166,000, of which $155,182,000 related to appreciated investment
securities and $36,016,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JUNE 30, 1996 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 1,304,779
agreements of $42,771) (cost $1,185,548) -
See accompanying schedule
Receivable for investments sold 7,236
Receivable for fund shares sold 2,102
Dividends receivable 1,346
Other receivables 271
TOTAL ASSETS 1,315,734
LIABILITIES
Payable to custodian bank $ 35
Payable for investments purchased 9,759
Payable for fund shares redeemed 2,634
Accrued management fee 457
Other payables and accrued expenses 298
TOTAL LIABILITIES 13,183
NET ASSETS $ 1,302,551
Net Assets consist of:
Paid in capital $ 1,070,973
Undistributed net investment income 17,256
Accumulated undistributed net realized gain (loss) on 95,089
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 119,233
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 23,169 shares outstanding $ 1,302,551
NET ASSET VALUE, offering price and redemption price per $56.22
share ($1,302,551 (divided by) 23,169 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
INVESTMENT INCOME $ 11,022
Dividends
Special dividend from ADVO-Systems, Inc. 10,183
Interest 2,323
TOTAL INCOME 23,528
EXPENSES
Management fee
Basic fee $ 3,945
Performance adjustment (1,282)
Transfer agent fees 1,147
Accounting fees and expenses 273
Non-interested trustees' compensation 2
Custodian fees and expenses 67
Registration fees 16
Audit 18
Legal 5
Miscellaneous 10
Total expenses before reductions 4,201
Expense reductions (153) 4,048
NET INVESTMENT INCOME 19,480
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 95,147
Foreign currency transactions (5) 95,142
Change in net unrealized appreciation (depreciation) on:
Investment securities (11,638)
Assets and liabilities in foreign currencies 2 (11,636)
NET GAIN (LOSS) 83,506
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 102,986
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JUNE DECEMBER 31,
30,1996 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 19,480 $ 10,171
Net investment income
Net realized gain (loss) 95,142 254,447
Change in net unrealized appreciation (depreciation) (11,636) (17,996)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 102,986 246,622
FROM OPERATIONS
Distributions to shareholders - (9,996)
From net investment income
From net realized gain (14,375) (197,011)
TOTAL DISTRIBUTIONS (14,375) (207,007)
Share transactions 271,056 386,173
Net proceeds from sales of shares
Reinvestment of distributions 13,160 187,436
Cost of shares redeemed (338,760) (537,376)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (54,544) 36,233
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 34,067 75,848
NET ASSETS
Beginning of period 1,268,484 1,192,636
End of period (including undistributed net investment $ 1,302,551 $ 1,268,484
income (loss) of $17,256 and $(130), respectively)
OTHER INFORMATION
Shares
Sold 4,895 6,641
Issued in reinvestment of distributions 246 3,611
Redeemed (6,144) (9,471)
Net increase (decrease) (1,003) 781
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 1996
(UNAUDITED) 1995 1994 1993 G 1992 E 1991
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 52.48 $ 50.99 $ 59.08 $ 54.20 $ 49.63 $ 38.25
beginning of period
Income from Investment
Operations
Net investment .75 F .46 .20 .17 .58 D .66
income
Net realized and 3.59 10.71 (4.24) 10.04 7.66 12.99
unrealized gain
(loss)
Total from investment 4.34 11.17 (4.04) 10.21 8.24 13.65
operations
Less Distributions - (.47) (.21) (.26) (.44) (.48)
From net investment
income
In excess of net - - - (.01) - -
investment income
From net realized gain (.60) (9.21) (3.84) (5.06) (3.23) (1.79)
Total distributions (.60) (9.68) (4.05) (5.33) (3.67) (2.27)
Net asset value, end $ 56.22 $ 52.48 $ 50.99 $ 59.08 $ 54.20 $ 49.63
of period
TOTAL RETURN B, C 8.33% 22.11% (6.70) 19.15% 16.77% 36.28%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 1,303 $ 1,268 $ 1,193 $ 1,393 $ 1,115 $ 892
period (in millions)
Ratio of expenses to .65% A .85% 1.04% .93% .56% .53%
average net assets
Ratio of expenses to .63% A, .82% 1.04% .92% .56% .53%
average net assets H H H
after expense
reductions
Ratio of net investment 2.03% A, .82% .39% .43% 1.14% 1.43%
income to average J
net assets
Portfolio turnover rate 217% A 186% 29% 50% 47% 57%
Average commission $ .0377
rate I
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E AS OF JANUARY 1, 1992 THE FUND DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
F INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM
ADVO-SYSTEMS, INC. WHICH AMOUNTED TO $.39 PER SHARE.
G 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
I 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.
J RATIO DOES NOT INCLUDE THE EFFECT OF ANNUALIZING THE NON-RECURRING
SPECIAL DIVIDEND.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1996 (Unaudited)
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 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 maturing within sixty days of their purchase date are valued at
amortized cost or original cost plus accrued interest, both of which
approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for litigation
proceeds, foreign currency transactions, partnerships, 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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable income or
gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
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 that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,345,976,000 and $1,304,172,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2500% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. The
basic fee is subject to a performance adjustment (up to a maximum of
(plus/minus) .20%) based on the fund's investment performance as compared
to the appropriate index over a specified period of time. For the period,
the management fee was equivalent to an annualized rate of .41% of average
net assets after the performance adjustment.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annualized rate of
.18% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $549,000 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$104,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $2,000 and $47,000,
respectively, under these arrangements.
6. TRANSACTIONS WITH
AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Northwest Pipe Co. $ - $ - $ - $ 2,890
TOTALS $ - $ - $ - $ 2,890
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Abigail Johnson, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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 *
ADVISORY BOARD
William O. McCoy
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'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export Fund
Fidelity Fifty
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(trademark) 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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
