(2_FIDELITY_LOGOS)FIDELITY
TREND
FUND
ANNUAL REPORT
DECEMBER 31, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 6 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 9 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 10 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 20 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 24 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 29 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 30
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Although financial turmoil in Pacific Basin countries was a catalyst
for significant volatility in U.S. markets throughout the fourth
quarter, the Standard & Poor's 500 Index rose more than 33% in 1997,
about three times its historical annual average. Meanwhile, bond
markets - primarily influenced by a relatively steady flow of positive
news on the inflation front - continued to post solid returns as the
year drew to a close.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY TREND 8.55% 72.39% 292.19%
S&P 500 (REGISTERED TRADEMARK) 33.36% 151.62% 425.77%
GROWTH FUNDS AVERAGE 25.30% 117.56% 356.18%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. 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 mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past one year average
represents a peer group of 820 mutual funds. These benchmarks reflect
reinvestment of dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY TREND 8.55% 11.51% 14.64%
S&P 500 33.36% 20.27% 18.05%
GROWTH FUNDS AVERAGE 25.30% 16.47% 15.93%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by
annualizing each fund's total return, then taking an arithmetic
average. This may produce a slightly different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19971231 19980120 135914 S00000000000001
Trend S&P 500
00005 SP001
1987/12/31 10000.00 10000.00
1988/01/31 10500.00 10421.00
1988/02/29 11347.13 10906.62
1988/03/31 11487.26 10569.60
1988/04/30 11834.39 10686.93
1988/05/31 11579.62 10779.90
1988/06/30 12423.57 11274.70
1988/07/31 12261.15 11231.86
1988/08/31 11878.98 10849.97
1988/09/30 12165.61 11312.18
1988/10/31 12232.48 11626.66
1988/11/30 11901.27 11460.40
1988/12/31 12432.74 11660.96
1989/01/31 13409.29 12514.54
1989/02/28 13386.18 12202.93
1989/03/31 13758.02 12487.26
1989/04/30 14585.44 13135.34
1989/05/31 15272.17 13667.32
1989/06/30 15084.57 13589.42
1989/07/31 16052.69 14816.55
1989/08/31 16662.37 15106.95
1989/09/30 16742.77 15045.01
1989/10/31 15794.75 14695.97
1989/11/30 15985.70 14995.77
1989/12/31 16367.98 15355.66
1990/01/31 14954.02 14325.30
1990/02/28 15323.84 14510.09
1990/03/31 15598.67 14894.61
1990/04/30 14841.02 14522.25
1990/05/31 16248.62 15938.17
1990/06/30 16274.62 15829.79
1990/07/31 15951.50 15779.13
1990/08/31 14361.92 14352.70
1990/09/30 13262.59 13653.72
1990/10/31 12701.78 13595.01
1990/11/30 13838.25 14473.25
1990/12/31 14295.85 14877.05
1991/01/31 15192.84 15525.69
1991/02/28 16545.81 16635.78
1991/03/31 16915.82 17038.36
1991/04/30 17087.74 17079.26
1991/05/31 17887.56 17817.08
1991/06/30 16628.03 17001.06
1991/07/31 17779.17 17793.31
1991/08/31 18212.72 18215.01
1991/09/30 18093.12 17910.82
1991/10/31 18283.73 18150.82
1991/11/30 17237.24 17419.34
1991/12/31 19481.89 19412.12
1992/01/31 19603.58 19051.05
1992/02/29 20072.09 19298.72
1992/03/31 19420.01 18922.39
1992/04/30 19305.40 19478.71
1992/05/31 19779.64 19574.15
1992/06/30 19329.11 19282.50
1992/07/31 20415.91 20071.15
1992/08/31 20091.85 19659.70
1992/09/30 20392.20 19891.68
1992/10/31 20878.29 19961.30
1992/11/30 22107.35 20641.98
1992/12/31 22749.46 20895.88
1993/01/31 23295.11 21071.40
1993/02/28 23158.81 21357.97
1993/03/31 24130.78 21808.63
1993/04/30 23242.97 21280.86
1993/05/31 24505.26 21851.19
1993/06/30 24955.47 21914.55
1993/07/31 24888.15 21826.90
1993/08/31 26192.52 22654.14
1993/09/30 26764.75 22479.70
1993/10/31 27252.84 22945.03
1993/11/30 25990.55 22727.05
1993/12/31 27105.59 23002.05
1994/01/31 28183.76 23784.12
1994/02/28 27197.35 23139.57
1994/03/31 25435.58 22130.68
1994/04/30 25577.80 22413.96
1994/05/31 25632.86 22781.54
1994/06/30 24917.14 22223.40
1994/07/31 25586.98 22952.32
1994/08/31 27064.30 23893.37
1994/09/30 26481.63 23307.98
1994/10/31 26600.92 23832.41
1994/11/30 25137.36 22964.43
1994/12/31 25290.37 23305.00
1995/01/31 25077.09 23909.30
1995/02/28 25900.43 24841.04
1995/03/31 26297.22 25574.10
1995/04/30 26674.17 26327.26
1995/05/31 27254.47 27379.56
1995/06/30 28112.53 28015.58
1995/07/31 29481.46 28944.58
1995/08/31 30279.99 29017.23
1995/09/30 31212.45 30241.76
1995/10/31 30423.83 30133.80
1995/11/30 31381.09 31456.67
1995/12/31 30883.26 32062.53
1996/01/31 31507.04 33153.93
1996/02/29 32550.55 33461.27
1996/03/31 32532.70 33783.50
1996/04/30 33401.50 34281.47
1996/05/31 34323.87 35165.59
1996/06/30 33455.06 35299.57
1996/07/31 31544.87 33740.04
1996/08/31 32282.76 34451.61
1996/09/30 34222.71 36390.55
1996/10/31 33853.76 37394.20
1996/11/30 36198.35 40220.83
1996/12/31 36128.30 39424.06
1997/01/31 37616.42 41887.27
1997/02/28 35793.58 42215.67
1997/03/31 33009.28 40481.03
1997/04/30 32594.19 42897.74
1997/05/31 37032.46 45509.36
1997/06/30 39459.15 47548.18
1997/07/31 42192.36 51331.58
1997/08/31 41860.29 48455.99
1997/09/30 45315.12 51109.92
1997/10/31 41489.90 49402.85
1997/11/30 39970.03 51689.71
1997/12/31 39218.84 52577.22
IMATRL PRASUN SHR__CHT 19971231 19980120 135917 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Trend Fund on December 31, 1987. As the chart
shows, by December 31, 1997, the value of the investment would have
grown to $39,219 - a 292.19% increase on the initial investment. For
comparison, look at how the S&P 500 did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $52,577 - a 425.77% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks will
vary. That means if you sell
your shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a bout with global volatility
in late October, the U.S. equity
market still managed to register
strong gains for the third
consecutive calendar year. For the
12 months that ended December
31, 1997, the Standard & Poor's
500 Index - a measure of the U.S.
stock market - returned 33.36%.
The strength of the S&P 500 reflected
the continued dominance of
large-capitalization stocks during
most of the period. For most of
1996 and part of 1997, stocks of
the largest companies performed
well as investors sought reliability
and consistent earnings growth
track records. Stock prices surged,
investor enthusiasm was high and
the Dow Jones Industrial Average
reached the 8,000-point mark in
August for the first time ever. But
the adage "what goes up, must
come down" may have crept into
investors' minds as many felt the
market had risen too rapidly. In
mid-August, several multinational
companies announced earnings
shortfalls and stocks of smaller
companies came into favor. From
August through December, the S&P
500 returned 2.43%, while the S&P
MidCap 400 Index - a measure
of medium-sized stocks - returned
6.50%. In October, currency
turmoil in several Asian countries
bubbled over, causing concern in
many world markets. As we
entered 1998, sentiment indicated
that the effects of this crisis could
linger, placing pressure on U.S.
economic growth as well as
corporate profits.
An interview with Arieh Coll, Portfolio Manager of Fidelity Trend Fund
Q. HOW DID THE FUND PERFORM, ARIEH?
A. For the 12 months that ended December 31, 1997, the fund had a
total return of 8.55%. During the same period, the growth funds
average tracked by Lipper Analytical Services returned 25.30%.
Q. WHY DID THE FUND UNDERPERFORM ITS PEER GROUP?
A. For a couple of reasons. First of all, significant trading costs
were incurred as I restructured the fund upon becoming manager in
January 1997. Following that transition, the fund performed extremely
well, rising 37% from the end of March through the end of September -
versus a 26% gain for the Standard & Poor's 500 Index. This
performance was driven by my emphasis on small-cap stocks and the
technology sector. Unfortunately, this same focus hurt the fund as
economic difficulties spread throughout Asia in the fourth quarter.
Specifically, the technology sector was hardest hit by the Asian
turmoil because many companies that sell personal computers or
cellular phones are exposed to a slowdown in the Far East. Finally, we
saw a "flight to quality" in the fourth quarter. With the uncertainty
created by the Asian crisis and concerns about earnings growth,
investors fled to safety and large-capitalization stocks, such as
regional Bell operating companies (RBOCs) and utilities. Normally, the
fund avoids investments in these industries.
Q. WHAT IS THE FUND'S STRATEGY?
A. The fund typically invests in small- and mid-cap stocks because I
believe their valuations are more attractive and their earnings growth
is more rapid than the stocks in the Standard & Poor's 500 Index. This
strategy may sometimes cause more volatile performance, which we
experienced in the final quarter of 1997. However, investment results
should excel over time as these companies continue to report swift
sales and earnings growth.
Q. WHICH INDIVIDUAL HOLDINGS AFFECTED PERFORMANCE?
A. Anchor Gaming more than doubled in the first nine months of the
year, but it hurt performance in the fourth quarter. The company
designs proprietary slot machines, which are among the most popular in
the country. The company experienced remarkable growth and its stock
peaked at 99 in October. However, misplaced concerns about earnings
growth and insider selling - stock sales by a company executive - led
to a decline in the stock's price in the fourth quarter.
Q. WHICH OTHER HOLDINGS HURT PERFORMANCE?
A. APAC Teleservices, a provider of call-center outsourcing, suffered
from "Murphy's Law" in 1997 - meaning that everything that could go
wrong did. Although I believed the company had good business
prospects, APAC experienced problems with its two biggest accounts -
United Parcel Service (UPS) had a strike and AT&T cancelled some
marketing programs. Nevertheless, call-center outsourcing is an
industry with huge growth potential. It is an $80-billion business
where only 5% of the industry has been outsourced to date. At the end
of the period, I continued to believe that APAC should be a primary
beneficiary of this outsourcing trend.
Q. HOW DID YOUR INVESTMENT STRATEGIES HELP YOU FIND ATTRACTIVE
OPPORTUNITIES?
A. I used my global arbitrage strategy to find a few good performers.
Global arbitrage means looking for opportunities to invest in
companies outside of the U.S. that are engaged in the same business as
successful U.S. competitors, but whose stocks are selling at a
discount to their U.S. counterparts. For example, Orbotech, an Israeli
semiconductor equipment company, was selling at 10 times earnings,
while most of its U.S. competitors were selling at about 20 times
earnings. I saw no good reason for Orbotech to be trading at such a
huge discount to its competitors, so I bought the stock and it doubled
in about six months as other people arrived at the same conclusion.
Q. WHAT'S YOUR OUTLOOK?
A. At the end of the period, small- and mid-cap stocks were
undervalued relative to their large-cap cousins. For example, stocks
in the large-cap-oriented S&P 500 were trading at about 20 times 1998
earnings, even though earnings are only expected to grow 5% on average
in 1998. At the same time, many small- and mid-cap stocks were growing
earnings at 15% a year, but they were only trading at 14 times
earnings. In addition, a reduction in the capital gains tax to 20%,
brought about by the Taxpayer Relief Act of 1997, favors smaller-cap
stocks that do not pay dividends. I continue to believe that the
market will become increasingly supportive of smaller-cap companies in
1998 as the valuation mismatch begins to right itself. The market is
efficient over time - just maybe not on a daily or a quarterly basis.
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.
ARIEH COLL ON FINDING
ATTRACTIVE OPPORTUNITIES IN A
VOLATILE MARKET ENVIRONMENT:
"I use the same strategies for
finding good, undiscovered
companies regardless of changes
in the market environment. I look
for spin-offs, new-product cycles
and companies that are making a
comeback. For example, King
World Productions was trading
at a low valuation relative to its
cash flow, so I bought the shares.
The company brought in new
management, which I thought
could revitalize the company so
that its earnings would grow faster.
"I also tend to buy into `panics' -
when other investors are fleeing
because the stocks have dropped
about 50% in a short period of
time. I constantly do research to
find good companies. I make a list
of the stocks I want to own, but if
they currently are not selling at the
right price, I wait. Then, if
something unexpected happens
and the stock falls, there's a good
chance I'll become a buyer. In
general, I'm looking for growth
companies at reasonable prices, no
matter what the market
environment."
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
FUND NUMBER: 005
TRADING SYMBOL: FTRNX
START DATE: June 16, 1958
SIZE: as of December 31,
1997, more than $1.4 billion
MANAGER: Arieh Coll, since
January 1997; manager,
Fidelity Export and
Multinational Fund,
1994-1997; Fidelity
Select Brokerage and
Investment Management
Portfolio, 1993-1995;
Fidelity Select Software and
Computer Services Portfolio,
1991-1994; Fidelity Select
Technology Portfolio,
1992-1993; joined Fidelity
in 1989
(checkmark)
INVESTMENT CHANGES
TOP TEN STOCKS AS OF DECEMBER 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
CENDANT CORP. 4.7 0.5
ANCHOR GAMING 4.5 3.6
CREDIT SUISSE GROUP (REG.) 3.1 3.2
AMERICAN EXPRESS CO. 3.0 3.3
MERCK & CO., INC. 2.7 0.0
AT&T CORP. 2.4 0.0
COGNIZANT CORP. 2.2 2.3
U. S. OFFICE PRODUCTS CO. 2.0 0.4
TELEBRAS SPONSORED ADR 1.9 0.0
CITRIX SYSTEMS, INC. 1.9 0.0
TOP FIVE MARKET SECTORS AS OF DECEMBER 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 14.6 22.8
FINANCE 13.9 11.5
SERVICES 13.8 11.1
MEDIA & LEISURE 13.5 13.5
UTILITIES 9.9 5.6
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF DECEMBER 31, 1997 * AS OF JUNE 30, 1997 **
ROW: 1, COL: 1, VALUE: 2.7
ROW: 1, COL: 2, VALUE: 0.0
ROW: 1, COL: 3, VALUE: 97.3
STOCKS 98.9%
CONVERTIBLE
SECURITIES 0.2%
SHORT-TERM
INVESTMENTS 0.9%
FOREIGN
INVESTMENTS 21.6%
STOCKS AND
EQUITY FUTURES 97.3%
CONVERTIBLE
SECURITIES 0.0%
SHORT-TERM
INVESTMENTS 2.7%
FOREIGN
INVESTMENTS 17.4%
ROW: 1, COL: 1, VALUE: 1.9
ROW: 1, COL: 2, VALUE: 1.2
ROW: 1, COL: 3, VALUE: 96.90000000000001
**
*
INVESTMENTS DECEMBER 31, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 93.0%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.2%
Alliant Techsystems, Inc. (a) 128,900 $ 7,186
BE Aerospace, Inc. (a) 357,200 9,555
16,741
BASIC INDUSTRIES - 0.5%
CHEMICALS & PLASTICS - 0.5%
Lawter International, Inc. 175,000 1,903
Zag Industries Ltd. (a)(d) 613,500 5,445
7,348
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.3%
American Residential Services, Inc. (a) 240,000 3,750
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Imperial Credit Commercial Mortgage Investment Corp. 1,000 15
Total construction & real estate 3,765
DURABLES - 1.9%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Car Group PLC (The) 3,000 9
CONSUMER DURABLES - 0.1%
Samsonite Corp. (a) 42,900 1,357
TEXTILES & APPAREL - 1.8%
Timberland Co. Class A (a)(d) 440,700 25,588
total durables 26,954
FINANCE - 13.9%
BANKS - 5.2%
BANACCI SA de CV Class B (a) 238,000 712
BHI Corp. (non-vtg.) 42,100 1,295
Bank of Ireland, Inc. 200,000 3,071
BHF Bank (Bank Berlin Hand) 10,000 289
Citicorp 50,000 6,322
Credit Suisse Group (Reg.) 290,700 44,937
Istituto Bancario San Paolo 500 5
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
National Bank of Canada 588,000 $ 9,707
Societe Generale Class A 68,700 9,352
Sumitomo Bank California 10,000 546
76,236
CREDIT & OTHER FINANCE - 6.4%
American Express Co. 481,500 42,974
CIT Group, Inc. Class A 70,900 2,287
FIRSTPLUS Financial Group, Inc. (a) 629,300 24,149
Fleet Financial Group, Inc. 100 7
Greenpoint Financial Corp. 16,000 1,161
Long Beach Financial Corp. 1,149,300 13,361
Perpetual PLC 185,000 8,534
92,473
INSURANCE - 0.2%
Conseco, Inc. 20,000 909
Paula Financial (a) 600 14
Penncorp. Financial Group, Inc. 50,000 1,784
2,707
SAVINGS & LOANS - 1.3%
Bank United Corp. Class A 10,000 489
CenFed Financial Corp. 51,600 2,322
Dime Bancorp., Inc. 408,400 12,354
Washington Mutual, Inc. 50,000 3,191
18,356
SECURITIES INDUSTRY - 0.8%
Alliance Capital Management LP 230,000 9,157
New England Investment Companies LP 43,200 1,237
PIMCO Advisors LP Class A unit 37,800 1,141
11,535
TOTAL FINANCE 201,307
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 9.8%
DRUGS & PHARMACEUTICALS - 8.9%
Allergan, Inc. 175,000 $ 5,873
Alliance Pharmaceutical Corp. (a) 66,400 481
American Home Products Corp. 281,100 21,504
Astra AB Class A Free shares 1,000 17
Barr Laboratories, Inc. (a) 92,500 3,157
Cellegy Pharmaceuticals, Inc. (a) 6,800 57
Elan Corp. PLC ADR (a) 67,460 3,453
Elf Sanofi SA 80,000 8,898
Forest Laboratories, Inc. (a) 375,400 18,512
Gilead Sciences, Inc. (a) 1,600 61
Glaxo PLC sponsored ADR 27,400 1,312
Glaxo Wellcome PLC 294,300 6,982
Heska Corp. 10,000 124
ICN Pharmaceuticals, Inc. 131,800 6,433
Inhale Therapeutic Systems (a) 19,200 499
Merck & Co., Inc. 365,000 38,781
Rexall Sundown, Inc. (a) 45,100 1,361
Roberts Pharmaceutical Corp. (a) 682,000 6,522
Schering-Plough Corp. 70,500 4,380
Zonagen, Inc. (a) 26,100 475
128,882
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
ESC Medical Systems Ltd. (a) 50,000 1,938
Laser Industries Ltd. Ord. (a) 247,200 6,767
St. Jude Medical, Inc. 50,000 1,525
10,230
MEDICAL FACILITIES MANAGEMENT - 0.2%
Columbia/HCA Healthcare Corp. 83,700 2,480
TOTAL HEALTH 141,592
INDUSTRIAL MACHINERY & EQUIPMENT - 1.1%
ELECTRICAL EQUIPMENT - 0.7%
Echostar Communications Corp. Class A (a) 421,400 7,058
Loral Space & Communications Ltd. (a) 134,100 2,875
9,933
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
PRI Automation, Inc. 57,200 $ 1,652
THK Co. Ltd. 176,300 1,715
3,367
POLLUTION CONTROL - 0.2%
USA Waste Services, Inc. (a) 79,800 3,132
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 16,432
MEDIA & LEISURE - 13.5%
BROADCASTING - 0.6%
Central European Media Class C (a) 12,500 316
Grupo Televisa SA de CV sponsored ADR (a) 139,000 5,378
Univision Communications, Inc. Class A (a) 50,700 3,539
9,233
ENTERTAINMENT - 4.2%
AMF Bowling, Inc. 333,700 8,343
Cinar Films, Inc. Class B (sub-vtg.) (a) 7,200 281
Disney (Walt) Co. 135,000 13,373
GameTech International, Inc. 30,500 328
King World Productions, Inc. 468,800 27,073
Viacom, Inc. Class B (non-vtg.) (a) 263,900 10,935
60,333
LEISURE DURABLES & TOYS - 0.0%
Silicon Gaming, Inc. (a) 44,000 459
LODGING & GAMING - 6.3%
Anchor Gaming (a)(d) 1,158,990 64,614
Hollywood Park, Inc.(a) 37,500 825
Penn National Gaming, Inc. (a)(d) 1,510,000 14,723
Sun International Hotels Ltd. Ord. (a) 286,500 10,780
90,942
PUBLISHING - 2.4%
Cognizant Corp. 726,100 32,357
US WEST Media Group (a) 100,000 2,887
35,244
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.0%
Star Buffet, Inc. 3,600 $ 41
TOTAL MEDIA & LEISURE 196,252
NONDURABLES - 8.0%
AGRICULTURE - 0.0%
Northland Cranberries, Inc. Class A 10,000 155
FOODS - 0.3%
Sara Lee Corp. 80,000 4,505
HOUSEHOLD PRODUCTS - 3.7%
Avon Products, Inc. 100,000 6,138
Gillette Co. 252,000 25,310
Procter & Gamble Co. 200,000 15,963
Revlon, Inc. Class A (a) 179,600 6,342
53,753
TOBACCO - 4.0%
Consolidated Cigar Holdings, Inc. Class A (a) 315,000 8,682
General Cigar Holdings, Inc. (a):
Class A (d) 693,900 14,789
Class B 425,885 9,077
Philip Morris Companies, Inc. 559,600 25,357
57,905
TOTAL NONDURABLES 116,318
RETAIL & WHOLESALE - 5.4%
APPAREL STORES - 0.2%
Stage Stores, Inc. (a) 65,000 2,429
GENERAL MERCHANDISE STORES - 0.1%
Hudson's Bay Co. Ord. 88,700 1,976
RETAIL & WHOLESALE, MISCELLANEOUS - 5.1%
Best Buy Co., Inc. (a) 505,500 18,640
Friedmans, Inc. Class A (a) 173,100 2,358
Micro Warehouse, Inc. (a) 1,274,300 17,761
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Sodak Gaming, Inc. (a) 981,700 $ 6,258
U.S.A. Floral Products, Inc. 32,100 506
U.S. Office Products Co. (a) 1,444,082 28,340
73,863
TOTAL RETAIL & WHOLESALE 78,268
SERVICES - 13.8%
ADVERTISING - 0.8%
Outdoor Systems, Inc. (a) 297,500 11,417
LEASING & RENTAL - 2.2%
Budget Group, Inc. Class A (a) 138,000 4,770
Danka Business Systems PLC sponsored ADR 1,340,000 21,356
Hollywood Entertainment Corp. (a) 578,500 6,147
Thorn PLC 38,000 99
32,372
PRINTING - 0.1%
Valassis Communications, Inc. (a) 50,000 1,850
SERVICES - 10.7%
APAC Teleservices, Inc. (a) 1,625,300 21,942
BA Merchant Services, Inc. Class A (a) 106,500 1,890
Cendant Corp. (a) 1,981,115 68,101
Computer Horizons Corp. (a) 176,900 8,049
Corrections Corp. of America (a) 303,900 11,263
Employee Solutions, Inc. (a) 97,500 420
Gartner Group, Inc. Class A (a) 553,200 20,607
Lawyers Title Corp. 140,000 4,401
Lazare Kaplan International, Inc. (a) 293,900 3,968
Sitel Corp. (a) 564,300 5,149
Telespectrum Worldwide, Inc. (a)(d) 2,521,100 9,139
154,929
TOTAL SERVICES 200,568
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - 14.6%
COMMUNICATIONS EQUIPMENT - 0.9%
Advanced Fibre Communication, Inc. 130,000 $ 3,786
Applied Signal Technology, Inc. (a) 157,300 2,163
Aspect Telecommunications Corp. (a) 206,000 4,300
Davox Corp. (a) 100 3
IFR Systems, Inc. 152,950 2,371
Mosaix, Inc. (a) 47,500 419
Positron Fiber Systems Corp. Class A 24,900 163
13,205
COMPUTER SERVICES & SOFTWARE - 10.0%
Advantage Learning Systems, Inc. 700 15
Affiliated Computer Services, Inc. Class A (a) 231,500 6,091
Advant Corp. (a) 664,100 11,124
Business Objects SA sponsored ADR (a)(d) 880,000 9,130
Ceridian Corp. (a) 354,900 16,259
Check Point Software Technologies Ltd. (a) 100,000 4,075
Citrix Systems, Inc. (a) 363,100 27,596
DST Systems, Inc. (a) 154,600 6,599
EIS International, Inc. (a) 50,000 275
Electronic Data Systems Corp. 106,300 4,671
Electronics for Imaging, Inc. (a) 843,700 14,027
First Data Corp. 400,000 11,700
ICG Communications, Inc. (a) 100,000 2,725
Inso Corp. (a) 50,000 925
Meta Group, Inc. (a) 90,000 1,980
New Dimension Software Ltd. (a) 113,500 2,185
PRT Group, Inc. 6,300 72
Scopus Technology, Inc. (a) 188,100 2,257
Shared Medical Systems Corp. 70,000 4,620
Siebel Systems, Inc. (a) 10,100 422
SunGard Data Systems, Inc. (a) 413,000 12,803
Systems Software Associates, Inc. (a) 603,900 5,284
144,835
COMPUTERS & OFFICE EQUIPMENT - 0.8%
Digital Lightwave, Inc. 100 1
Unisys Corp. (a) 804,000 11,156
11,157
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - 2.4%
JDS Fitel, Inc. (a) 448,300 $ 26,671
Novellus Systems, Inc. 2,100 68
Smart Modular Technologies, Inc. (a) 42,640 981
Thermo Electron Corp. (a) 162,600 7,235
34,955
ELECTRONICS - 0.4%
Celeritek, Inc. (a) 65,800 922
Etec Systems, Inc. (a) 20,200 939
International Rectifier Corp. (a) 185,600 2,192
Taiwan Semiconductor Manufacturing Co. sponsored ADR 23,200 422
Unitrode Corp. 80,300 1,725
6,200
PHOTOGRAPHIC EQUIPMENT - 0.1%
Polaroid Corp. 36,800 1,792
TOTAL TECHNOLOGY 212,144
TRANSPORTATION - 0.4%
AIR TRANSPORTATION - 0.2%
Transat AT, Inc. (a) 10,000 90
Virgin Express Holdings PLC sponsored ADR 159,400 3,308
3,398
SHIPPING - 0.2%
Sea Containers Ltd., Class A 94,500 3,024
TOTAL TRANSPORTATION 6,422
UTILITIES - 8.6%
CELLULAR - 1.6%
Centennial Cellular Corp. Class A (a) 200,000 4,100
Mobile Telecommunications Technologies, Inc. (a) 200,000 4,400
Paging Network, Inc. (a) 1,411,400 15,173
23,673
ELECTRIC UTILITY - 0.0%
Niagara Mohawk Power Corp. (a) 100 1
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 7.0%
AT&T Corp. 562,100 $ 34,428
EXCEL Communications, Inc (a). 949,267 13,764
Metromedia Fiber Network, Inc. Class A (a) 100 2
Tel-Save Holdings, Inc. (a) 1,024,700 20,366
Telebras sponsored ADR 240,000 27,945
Telefonica de Argentina SA sponsored ADR 126,600 4,716
101,221
TOTAL UTILITIES 124,895
TOTAL COMMON STOCKS
(Cost $1,249,760) 1,349,006
NONCONVERTIBLE PREFERRED STOCKS - 1.3%
UTILITIES - 1.3%
TELEPHONE SERVICES - 1.3%
Telecom Italia:
Mobile Spa de Risp 4,060,000 11,487
Spa 1,792,200 7,875
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $15,378) 19,362
U.S. TREASURY OBLIGATIONS - 0.1%
PRINCIPAL
AMOUNT (000S)
U.S. Treasury Bill yield at date of purchase
5.44%, 3/05/98 (c) (Cost $1,682) $ 1,700 1,685
CASH EQUIVALENT - 5.6%
SHARES
Taxable Central Cash Fund (b)
(Cost $80,629) 80,628,494 80,628
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,347,449) $ 1,450,681
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS) (000S) (000S)
Purchased
100 Russell 2000 Stock
Index Futures Contract Mar. 1998 $ 22,067 $ 519
90 S&P 500 Stock
Index Futures Contract Mar. 1998 $ 22,030 331
$ 850
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 3.0%
LEGEND
1. Non-income producing
2. At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.69%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Security was pledged to cover margin requirements for futures
contracts. At the period end the value of securities pledged amounted
to $1,685,000.
4. Affiliated company (see Note 8 of Notes to Financial Statements).
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 82.6%
Switzerland 3.1
United Kingdom 2.9
Canada 2.7
France 1.9
Brazil 1.9
Isreal 1.4
Italy 1.3
Others (individually less than 1%) 2.2
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1997, the aggregate cost of investment securities for
income tax purposes was $1,357,176,000. Net unrealized appreciation
aggregated $93,505,000, of which $189,631,000 related to appreciated
investment securities and $96,126,000 related to depreciated
investment securities.
The fund hereby designates approximately $109,099,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending December
31, 1998 approximately $46,531,000 of losses recognized during the
period November 1, 1997 to December 31, 1997.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) DECEMBER 31, 1997
5.ASSETS 6. 7.
8.INVESTMENT IN SECURITIES, AT VALUE (COST $1,347,449) - 9. $ 1,450,681
SEE ACCOMPANYING SCHEDULE
10.RECEIVABLE FOR INVESTMENTS SOLD 11. 14,791
12.RECEIVABLE FOR FUND SHARES SOLD 13. 6,836
14.DIVIDENDS RECEIVABLE 15. 1,153
16.INTEREST RECEIVABLE 17. 293
18.RECEIVABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 19. 126
20.OTHER RECEIVABLES 21. 196
22. 23.TOTAL ASSETS 24. 1,474,076
25.LIABILITIES 26. 27.
28.PAYABLE FOR INVESTMENTS PURCHASED $ 21,730 29.
30.PAYABLE FOR FUND SHARES REDEEMED 7,933 31.
32.DISTRIBUTIONS PAYABLE 13,570 33.
34.ACCRUED MANAGEMENT FEE 492 35.
36.OTHER PAYABLES AND ACCRUED EXPENSES 285 37.
38. 39.TOTAL LIABILITIES 40. 44,010
41.42.NET ASSETS 43. $ 1,430,066
44.NET ASSETS CONSIST OF: 45. 46.
47.PAID IN CAPITAL 48. $ 1,274,538
49.UNDISTRIBUTED NET INVESTMENT INCOME 50. 508
51.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 52. 50,943
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
53.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 54. 104,077
INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
55.56.NET ASSETS, FOR 26,430 SHARES OUTSTANDING 57. $ 1,430,066
58.59.NET ASSET VALUE, OFFERING PRICE AND REDEMPTION 60. $54.11
PRICE
PER SHARE ($1,430,067 (DIVIDED BY) 26,430 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED DECEMBER 31, 1997
61.INVESTMENT INCOME 63. $ 6,958
62.DIVIDENDS
64.INTEREST 65. 3,411
66. 67.TOTAL INCOME 68. 10,369
69.EXPENSES 70. 71.
72.MANAGEMENT FEE $ 8,608 73.
BASIC FEE
74. PERFORMANCE ADJUSTMENT (2,569) 75.
76.TRANSFER AGENT FEES 2,371 77.
78.ACCOUNTING FEES AND EXPENSES 585 79.
80.NON-INTERESTED TRUSTEES' COMPENSATION 9 81.
82.CUSTODIAN FEES AND EXPENSES 97 83.
84.REGISTRATION FEES 138 85.
86.AUDIT 59 87.
88.LEGAL 12 89.
90.INTEREST 11 91.
92.MISCELLANEOUS 9 93.
94. TOTAL EXPENSES BEFORE REDUCTIONS 9,330 95.
96. EXPENSE REDUCTIONS (803) 8,527
97.98.NET INVESTMENT INCOME 99. 1,842
100.REALIZED AND UNREALIZED GAIN (LOSS) 102. 103.
101.NET REALIZED GAIN (LOSS) ON:
104. INVESTMENT SECURITIES (INCLUDING REALIZED LOSS 216,783 105.
OF $1,348 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)
106. FOREIGN CURRENCY TRANSACTIONS (22) 216,761
107.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 108. 109.
ON:
110. INVESTMENT SECURITIES (106,920) 111.
112. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (5) 113.
114. FUTURES CONTRACTS 850 (106,075)
115.116.NET GAIN (LOSS) 117. 110,686
118.119.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 120. $ 112,528
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
121.INCREASE (DECREASE) IN NET ASSETS
122.OPERATIONS $ 1,842 $ 22,944
NET INVESTMENT INCOME
123. NET REALIZED GAIN (LOSS) 216,761 101,531
124. CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (106,075) 79,283
125. 112,528 203,758
126.NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
127.DISTRIBUTIONS TO SHAREHOLDERS (1,184) (10,104)
FROM NET INVESTMENT INCOME
128. FROM NET REALIZED GAIN (170,047) (91,162)
129. 130.TOTAL DISTRIBUTIONS (171,231) (101,266)
131.SHARE TRANSACTIONS 1,295,070 484,646
NET PROCEEDS FROM SALES OF SHARES
132. REINVESTMENT OF DISTRIBUTIONS 151,806 91,110
133. COST OF SHARES REDEEMED (1,289,760) (615,079)
134.135. 157,116 (39,323)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
136. 98,413 63,169
137.TOTAL INCREASE (DECREASE) IN NET ASSETS
138.NET ASSETS 139. 140.
141. BEGINNING OF PERIOD 1,331,653 1,268,484
142. $ 1,430,066 $ 1,331,653
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $508 AND $3,910, RESPECTIVELY)
143.OTHER INFORMATION 145. 146.
144.SHARES
147. SOLD 20,963 8,652
148. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 2,918 1,629
149. REDEEMED (20,892) (11,012)
150. NET INCREASE (DECREASE) 2,989 (731)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
151. YEARS ENDED DECEMBER 31,
152. 1997 1996 1995 1994 1993
153.SELECTED PER-SHARE DATA
154.NET ASSET VALUE, BEGINNING $ 56.81 $ 52.48 $ 50.99 $ 59.08 $ 54.20
OF PERIOD
155.INCOME FROM INVESTMENT
OPERATIONS
156. NET INVESTMENT INCOME .08 B .62 C .46 .20 .17
157. NET REALIZED AND 4.46 8.18 10.71 (4.24) 10.04
UNREALIZED GAIN (LOSS)
158. TOTAL FROM INVESTMENT 4.54 8.80 11.17 (4.04) 10.21
OPERATIONS
159.
160.LESS DISTRIBUTIONS
161. FROM NET INVESTMENT (.05) (.45) (.47) (.21) (.26)
INCOME
162. IN EXCESS OF NET - - - - (.01)
INVESTMENT INCOME
163. FROM NET REALIZED GAIN (7.19) (4.02) (9.21) (3.84) (5.06)
164. TOTAL DISTRIBUTIONS (7.24) (4.47) (9.68) (4.05) (5.33)
165.NET ASSET VALUE, END OF $ 54.11 $ 56.81 $ 52.48 $ 50.99 $ 59.08
PERIOD
166.TOTAL RETURN A 8.55% 16.98% 22.11% (6.70)% 19.15%
167.RATIOS AND SUPPLEMENTAL
DATA
168.NET ASSETS, END OF PERIOD $ 1,430 $ 1,332 $ 1,268 $ 1,193 $ 1,393
(IN MILLIONS)
169.RATIO OF EXPENSES TO .65% .66% .85% 1.04% .93%
AVERAGE
NET ASSETS
170.RATIO OF EXPENSES TO .59% D .64% D .82% D 1.04% .92% D
AVERAGE
NET ASSETS AFTER EXPENSE
REDUCTIONS
171.RATIO OF NET INVESTMENT .13% 1.77% .82% .39% .43%
INCOME TO AVERAGE NET ASSETS
172.PORTFOLIO TURNOVER RATE 334% 142% 186% 29% 50%
173.AVERAGE COMMISSION RATE E $ .0384 $ .0384
</TABLE>
A THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.28 PER SHARE.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity 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 with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, 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 infor-mation regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, futures and options transactions,
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.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
for determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc.,
(fomerly FMR Texas, Inc.), a wholly owned subsidiary of FMR. The Cash
Fund is an open-end money market fund available only to investment
companies and other accounts managed by FMR and its affiliates. The
Cash Fund seeks preservation of capital, liquidity, and current income
by investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock markets. Buying futures tends to increase the
fund's exposure to the underlying instrument, while selling futures
tends to decrease the fund's exposure to the underlying instrument or
hedge other fund investments. Futures contracts involve, to varying
degrees, risk of loss in excess of the futures variation margin
reflected in the Statement of Assets and Liabilities. The underlying
face amount at value of any open futures contracts at period end is
shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the
underlying instrument at period end. Losses may arise from changes in
the value of the underlying instruments or if the counterparties do
not perform under the contracts' terms. Gains (losses) are realized
upon the expiration or closing of the futures contracts. Futures
contracts are valued at the settlement price established each day by
the board of trade or exchange on which they are traded.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the fund, along with other registered investment companies
having management contracts with FMR, may participate in an interfund
lending program. This program provides an alternative credit facility
allowing the fund to borrow from, or lend money to, other
participating funds.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $4,589,294,000 and $4,631,378,000, respectively.
The market value of futures contracts opened and closed during the
period amounted to $43,247,000 and $0, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .42% of average net
assets after the performance adjustment.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .16% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,030,000 for the
period.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower.
The maximum loan and the average daily loan balance during the period
for which the loan was outstanding amounted to $21,821,000. The
weighted average interest rate was 5.65%. Interest expense includes
$3,000 paid under the Interfund lending program.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balances during the period for which
6. BANK BORROWINGS - CONTINUED
loans were outstanding amounted to $15,406,000 and $4,444,000,
respectively. The weighted average interest rate was 5.84%. Interest
expense includes $8,000 paid under the bank borrowing program.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $765,000 under this arrangement.
In addition, the fund has entered into an arrangements with its
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of the fund's
expenses. During the period, the fund's custodian and transfer agent
fees were reduced by $13,000 and $25,000, respectively, under these
arrangements.
8. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND
AFFILIATE COST COST INCOME VALUE
Anchor Gaming $ 49,345 $ 14,896 $ - $ 64,614
Business Objects SA sponsored ADR 1,625 1,742 - 9,130
Carey International, Inc. 2,100 263 - -
Converse, Inc. 3,283 6,961 - -
Employee Solutions, Inc. 5,347 14,362 - -
General Cigar Holdings, Inc. Class A 16,318 8,657 - 14,789
Penn National Gaming, Inc. 10,710 - - 14,723
Sodak Gaming, Inc. 73 1,829 - -
Telespectrum Worldwide, Inc. 7,628 - - 9,139
Timberland Co. Class A 5,148 5,470 - 25,588
Zag Industries Ltd. 1,069 - - 5,445
TOTALS $ 102,646 $ 54,180 $ - $ 143,428
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, 1997, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1997 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Trend Fund as of December 31,1997, the
results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 9, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Trend Fund voted to pay to
shareholders of record at the opening of business on record date the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
PAY DATE 2/10/97 1/02/98
RECORD DATE 2/07/97 12/26/97
DIVIDENDS $ - $.05
SHORT-TERM
CAPITAL GAINS $.13 $4.05
LONG-TERM
CAPITAL GAINS $.11 $2.90
LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 100.00% 82.55%
20% rate 0.00% 17.45%
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate
the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
0
*
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
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(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Abigail Johnson, Vice President
Arieh Coll, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
The Chase Manhattan Bank
New York, NY
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THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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