-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nuz7w9IFS6Oo8AjrVKqeNh1PNohjjP2NhSjIh5nGyx+IxUWR+2OiV4XQdj2zTNFs 74ZXpUDNMGNA5tAA8almHQ== 0000035348-97-000004.txt : 19970815 0000035348-97-000004.hdr.sgml : 19970815 ACCESSION NUMBER: 0000035348-97-000004 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY HASTINGS STREET TRUST CENTRAL INDEX KEY: 0000035348 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046026953 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-00215 FILM NUMBER: 97660641 BUSINESS ADDRESS: STREET 1: 82 DEVONSHIRE ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6173300814 MAIL ADDRESS: STREET 1: 82 DEVONSHIRE STREET STREET 2: MAIL ZONE ZH-1 CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY FUND INC DATE OF NAME CHANGE: 19851205 N-30D 1 (2_FIDELITY_LOGOS) FIDELITY FIFTY ANNUAL REPORT JUNE 30, 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 16 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 20 Notes to the financial statements. REPORT OF INDEPENDENT 24 The auditor's opinion. ACCOUNTANTS DISTRIBUTIONS 25 PROXY VOTING RESULTS 26 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. To reduce expenses and demonstrate respect for our environment, we have initiated a project through which we will begin eliminating duplicate copies of most financial reports and prospectuses to most households, even if they have more than one account in the fund. If additional copies of financial reports, prospectuses or historical account information are needed, please call 1-800-544-6666. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: Through the first six months of 1997, stock and bond markets experienced the kind of short-term volatility that can affect them periodically. The stock market rebounded strongly from its early spring correction to continue on its record-setting pace, as seen by the roughly 20% year-to-date gain by the Standard & Poor's 500 Index. The bond market posted moderate returns over the first half of the year, as positive news on the inflation front helped soften the effects of a hike in short-term interest rates by the Federal Reserve Board in late March. 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). Fidelity Fifty has a 3% sales charge, which was waived beginning January 1, 1995 through December 31, 1998. CUMULATIVE TOTAL RETURNS PERIODS ENDED JUNE 30, 1997 PAST 1 LIFE OF YEAR FUND Fidelity Fifty 24.75% 95.96% Fidelity Fifty (incl. 3% sales charge) 21.01% 90.08% S&P 500(registered trademark) 34.70% 111.51% Capital Appreciation Funds Average 14.44% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on September 17, 1993. For example, if you had invested $1,000 in a fund that had a 5% return, over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the 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 capital appreciation 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 203 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 JUNE 30, 1997 PAST 1 LIFE OF YEAR FUND Fidelity Fifty 24.75% 19.43% Fidelity Fifty (incl. 3% sales charge) 21.01% 18.47% S&P 500 34.70% 21.86% Capital Appreciation Funds Average 14.44% n/a AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. (Note: Lipper calculates average annual total returns by annualizing each fund's total return, then taking an arithmetic average. This may produce a slightly different figure than that obtained by averaging the cumulative total returns and annualizing the result.) $10,000 OVER LIFE OF FUND 1993/09/17 9700.00 10000.00 1993/09/30 9971.60 9999.89 1993/10/31 10369.30 10206.89 1993/11/30 10204.40 10109.92 1993/12/31 10272.24 10232.25 1994/01/31 10660.60 10580.15 1994/02/28 10505.25 10293.43 1994/03/31 9990.67 9844.63 1994/04/30 10116.89 9970.64 1994/05/31 10126.60 10134.16 1994/06/30 9874.16 9885.88 1994/07/31 10262.53 10210.13 1994/08/31 10796.53 10628.75 1994/09/30 10767.40 10368.34 1994/10/31 10990.71 10601.63 1994/11/30 10495.55 10215.52 1994/12/31 10682.65 10367.02 1995/01/31 10623.74 10635.83 1995/02/28 11065.57 11050.31 1995/03/31 11536.87 11376.41 1995/04/30 11860.88 11711.44 1995/05/31 12302.72 12179.55 1995/06/30 12862.38 12462.48 1995/07/31 13520.22 12875.73 1995/08/31 13547.85 12908.05 1995/09/30 13994.60 13452.77 1995/10/31 13610.19 13404.75 1995/11/30 14181.61 13993.21 1995/12/31 14115.33 14262.72 1996/01/31 14474.47 14748.23 1996/02/29 14866.26 14884.94 1996/03/31 14909.79 15028.29 1996/04/30 15225.40 15249.80 1996/05/31 15508.36 15643.09 1996/06/30 15236.28 15702.69 1996/07/31 14126.21 15008.95 1996/08/31 14412.90 15325.49 1996/09/30 15039.55 16188.01 1996/10/31 15358.57 16634.47 1996/11/30 16497.93 17891.87 1996/12/31 16362.51 17537.43 1997/01/31 17201.62 18633.17 1997/02/28 17026.80 18779.26 1997/03/31 16001.23 18007.62 1997/04/30 16817.03 19082.67 1997/05/31 18157.26 20244.42 1997/06/30 19008.02 21151.37 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Fifty on September 17, 1993, when the fund started, and the current maximum 3% sales charge was paid. As the chart shows, by June 30, 1997, the value of the investment would have grown to $19,008 - a 90.08% increase on the initial investment. For comparison, look at how the S&P 500 did over the same period. With dividends and capital gain, if any, reinvested, the same $10,000 investment would have grown to $21,151 - a 111.51% 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 Concerns in March and April over higher interest rates and the possibility of weaker corporate earnings provided the only significant pause in the U.S. stock market's upward climb during the 12 months that ended June 30, 1997. The Standard & Poor's 500 Index returned 34.70% during the period - well above its long-term annual average of about 11%. The stock market spent much of the period breaking price and trading volume records. Solid corporate earnings, large inflows into mutual funds, widespread optimism, moderate economic growth, low inflation and a generally favorable interest rate environment propelled share prices higher, especially among large-capitalization stocks. In February, however, Federal Reserve Board Chairman Alan Greenspan indicated the Fed's inclination to raise short-term interest rates to head off inflation that might be caused by a tight labor market. Because higher interest rates tend to slow economic growth and increase borrowing costs, the stock market faltered as the Fed's March meeting approached. At that meeting, the Fed raised a key short-term interest rate. The stock market - already at historically high valuations - sold off sharply through mid-April, when positive news on the inflation front emerged. The market recovered from that point, with the Dow Jones Industrial Average closing above the 7700 mark for the first time in June. The market broadened to include many small- and mid-capitalization stocks in the rally that continued through the end of June. An interview with Scott Stewart, Portfolio Manager of Fidelity Fifty Q. SCOTT, HOW DID THE FUND PERFORM? A. Very well against its peer group, while underperforming the index. For the 12-month period that ended June 30, 1997, the fund posted a return of 24.75%. By comparison, the average capital appreciation fund, as tracked by Lipper Analytical Services, was up 14.44% over the same period. The Standard & Poor's 500 Index returned 34.70% over the same time frame. Q. WHAT'S BEHIND THE FUND'S NOTABLE OUTPERFORMANCE OF ITS PEER GROUP? A. I believe the fund was helped tremendously over the period by strong, broad-based, individual stock selection. Individual stock selection is the engine of this fund, and I'm pleased to see that it worked well over the past 12 months. The fund's performance also was helped because it held more larger-capitalization companies than most of its peers, and, as a group, large-cap stocks were definitely the top performers over the period. Q. IT SEEMS UNUSUAL THAT THE FUND WOULD DO SO WELL AGAINST ITS PEERS WHILE UNDERPERFORMING THE INDEX. A. We are in an unusual market environment. As I mentioned, large-capitalization stocks were the best performers over the period, and the S&P index had 80% of its value in companies with market capitalizations of $10 billion or more. By definition, capital appreciation funds, such as this one, tend to focus on smaller-cap stocks or at least a variety of small- to large-cap stocks. So while this fund had a slightly higher-capitalization weighting than its peers - about 33% of the fund was invested in stocks of $10 billion or more at the end of the period - its capitalization size is always smaller than the S&P index. Investors might be aware that the index's holdings are weighted by their market capitalizations. That is, the larger the capitalization of a stock, the more of it the index owned. Very few actively managed funds are weighted in a similar way. I also should add that capital appreciation funds were not alone in finding it difficult to beat the index over the period. Over the one year period, only about 6% of all actively managed funds beat the S&P. Q. WHICH OF THE FUND'S STOCKS WERE STANDOUT PERFORMERS OVER THE PERIOD? A. Many technology stocks were strong performers. For example, Pentium chip producer Intel, the fund's largest holding six months ago, almost doubled over the year. It benefited from very low fixed and variable costs and a huge margin increase. At the end of the period, I still owned it but had sold a large portion of it shortly before its stock peaked. Financial stocks - which made up the fund's largest sector weighting at the end of the period - also generated strong earnings and stock performance. That's mostly because many banks were restructuring their balance sheets, improving loan structures and buying out other banks, which allowed them to get rid of extra branch offices. They also benefited somewhat from the low interest rate environment over the period. The fund's largest holding at the end of the period, BankAmerica, was up about 75%, which was especially good news because I was able to buy it for the fund at about a 15% discount to other major banks. National City and NationsBank also turned in strong performances over the period. Q. OBVIOUSLY THE FUND'S PERFORMANCE WAS STRONG. DID ANYTHING GO WRONG OVER THE PERIOD? A. As I said, I was pleased with the fund's performance. While I don't expect to be perfect on every stock, things can always be better. For example, I could have reduced my position in Intel at a price closer to its peak. Q. SCOTT, HOW DOES THE FUND LOOK GOING FORWARD? A. I'm very comfortable with the structure of the fund, especially from the sector-weightings point of view. Near the end of the period, I slightly lowered the capitalization size of the fund to take advantage of a drop in the price of lower-cap stocks and to bring the fund in line with its competitors. Right now, I think many capital appreciation fund managers are waiting for large-capitalization stocks to disappoint, and are positioned to benefit if and when that happens. 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, normally 50-60 stocks FUND NUMBER: 500 TRADING SYMBOL: FFTYX START DATE: September 17, 1993 SIZE: as of June 30, 1997, more than $156 million MANAGER: Scott Stewart, since 1993; founder and head of Fidelity's Structured Equity Group, since 1987; joined Fidelity in 1987 (checkmark) SCOTT STEWART ON HOLDING CASH AND FUTURES IN THE FUND: "At the end of the period, cash - - or short-term investments - - made up over 2.6% of the fund. While these short-term investments actually made up about 12% of the fund, they were offset by an investment of approximately 9% of the fund in futures. "I try to manage the fund's cash exposure by using futures. At the end of the period, the fund owned mostly small-capitalization futures, such as the Russell 2000 Futures I bought this spring. Investing in these futures allows me to stay fully invested in the market. The way I think of it is that returns from the futures plus the fund's cash equals the approximate return of stocks. That is, the profits from futures, plus the fund's base of cash added together perform very much like stocks do. As a result, I use futures. They're cheap, they're quick, and, over the period, they helped the fund outperform its peers." INVESTMENT CHANGES TOP TEN STOCKS AS OF JUNE 30, 1997 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE STOCKS 6 MONTHS AGO BankAmerica Corp. 3.2 2.2 Procter & Gamble Co. 3.1 2.2 PepsiCo, Inc. 3.0 2.4 Coastal Corp. (The) 2.8 2.1 Tenet Healthcare Corp. 2.7 1.7 AMR Corp. 2.6 2.1 Case Corp. 2.5 1.4 NationsBank Corp. 2.4 2.5 WorldCom, Inc. 2.4 0.0 National City Corp. 2.3 2.5 TOP FIVE MARKET SECTORS AS OF JUNE 30, 1997 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE MARKET SECTORS 6 MONTHS AGO Finance 12.6 11.2 Technology 11.6 21.3 Services 9.3 1.0 Health 7.3 6.3 Retail & Wholesale 7.1 4.5 ASSET ALLOCATION (% OF FUND'S INVESTMENTS) AS OF JUNE 30, 1997 * AS OF DECEMBER 31, 1996** Row: 1, Col: 1, Value: 2.6 Row: 1, Col: 2, Value: 47.4 Row: 1, Col: 3, Value: 50.0 Stocks and equity futures 96.4% Short-term investments 3.6% FOREIGN INVESTMENTS 1.1% Stocks and equity futures 97.4% Short-term investments 2.6% FOREIGN INVESTMENTS 4.7% Row: 1, Col: 1, Value: 3.6 Row: 1, Col: 2, Value: 46.4 Row: 1, Col: 3, Value: 50.0 * ** INVESTMENTS JUNE 30, 1997 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 88.5% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 1.2% Boeing Co. 34,400 $ 1,825,300 BASIC INDUSTRIES - 4.9% CHEMICALS & PLASTICS - 1.0% Monsanto Co. 36,900 1,589,006 PAPER & FOREST PRODUCTS - 3.9% Boise Cascade Corp. 85,300 3,012,156 Kimberly-Clark Corp. 60,000 2,985,000 5,997,156 TOTAL BASIC INDUSTRIES 7,586,162 CONSTRUCTION & REAL ESTATE - 2.4% BUILDING MATERIALS - 2.4% American Standard Companies, Inc. (a) 57,100 2,555,225 Coltec Industries, Inc. (a) 56,600 1,103,700 3,658,925 DURABLES - 1.6% AUTOS, TIRES, & ACCESSORIES - 1.6% Tower Automotive, Inc. (a) 57,000 2,451,000 ENERGY - 5.2% ENERGY SERVICES - 2.4% BJ Services Co. (a) 31,376 1,682,538 Falcon Drilling, Inc. (a) 33,750 1,944,844 3,627,382 OIL & GAS - 2.8% Coastal Corp. (The) 80,900 4,302,869 TOTAL ENERGY 7,930,251 FINANCE - 12.6% BANKS - 7.9% BankAmerica Corp. 76,200 4,919,663 National City Corp. 67,300 3,533,250 NationsBank Corp. 57,000 3,676,500 12,129,413 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) FINANCE - CONTINUED CREDIT & OTHER FINANCE - 1.0% Aames Financial Corp. 81,550 $ 1,508,675 INSURANCE - 2.6% AFLAC, Inc. 53,100 2,508,975 AMBAC, Inc. 18,900 1,443,488 3,952,463 SAVINGS & LOANS - 1.1% Dime Bancorp., Inc. 98,700 1,727,250 TOTAL FINANCE 19,317,801 HEALTH - 7.3% DRUGS & PHARMACEUTICALS - 1.6% Merck & Co., Inc. 23,100 2,390,850 MEDICAL FACILITIES MANAGEMENT - 5.7% Humana, Inc. (a) 126,000 2,913,750 Tenet Healthcare Corp. (a) 141,400 4,180,138 United HealthCare Corp. 31,400 1,632,800 8,726,688 TOTAL HEALTH 11,117,538 INDUSTRIAL MACHINERY & EQUIPMENT - 6.7% ELECTRICAL EQUIPMENT - 2.1% Westinghouse Electric Corp. 137,476 3,179,133 INDUSTRIAL MACHINERY & EQUIPMENT - 3.1% Case Corp. 55,600 3,829,450 Harnischfeger Industries, Inc. 22,300 925,450 4,754,900 POLLUTION CONTROL - 1.5% United Waste Systems, Inc. (a) 56,000 2,296,000 TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 10,230,033 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MEDIA & LEISURE - 4.8% ENTERTAINMENT - 1.1% Viacom, Inc. Class B (non-vtg.) (a) 57,400 $ 1,722,000 LODGING & GAMING - 3.2% HFS, Inc. (a) 44,500 2,581,000 Mirage Resorts, Inc. (a) 93,200 2,353,300 4,934,300 PUBLISHING - 0.5% Times Mirror Co. Class A 13,800 762,450 TOTAL MEDIA & LEISURE 7,418,750 NONDURABLES - 6.1% BEVERAGES - 3.0% PepsiCo, Inc. 122,300 4,593,894 HOUSEHOLD PRODUCTS - 3.1% Procter & Gamble Co. 34,100 4,816,625 TOTAL NONDURABLES 9,410,519 PRECIOUS METALS - 1.2% Newmont Gold Co. 47,300 1,889,044 RETAIL & WHOLESALE - 7.1% APPAREL STORES - 3.4% Payless ShoeSource, Inc. (a) 31,900 1,744,531 TJX Companies, Inc. 130,600 3,444,575 5,189,106 GENERAL MERCHANDISE STORES - 1.5% Consolidated Stores Corp. (a) 65,875 2,289,156 RETAIL & WHOLESALE, MISCELLANEOUS - 2.2% Corporate Express, Inc. 108,000 1,559,250 Toys "R" Us, Inc. (a) 51,000 1,785,000 3,344,250 TOTAL RETAIL & WHOLESALE 10,822,512 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SERVICES - 9.3% ADVERTISING - 2.2% Omnicom Group, Inc. 56,000 $ 3,451,000 PRINTING - 1.4% ASM Lithography Holding NV (a) 35,400 2,070,900 SERVICES - 5.7% ADT Ltd. (a) 75,000 2,475,000 AccuStaff, Inc. (a) 105,500 2,499,031 Premier Technologies, Inc. (a) 53,200 1,383,200 Sitel Corp. (a) 114,300 2,357,438 8,714,669 TOTAL SERVICES 14,236,569 TECHNOLOGY - 11.6% COMMUNICATIONS EQUIPMENT - 1.7% Alcatel Alsthom Compagnie Generale d'Electricite SA sponsored ADR 105,700 2,668,925 COMPUTER SERVICES & SOFTWARE - 3.6% Microsoft Corp. (a) 22,000 2,780,250 SunGard Data Systems, Inc. (a) 59,600 2,771,400 5,551,650 COMPUTERS & OFFICE EQUIPMENT - 1.5% Bell & Howell Co. (a) 40,900 1,260,231 Pitney Bowes, Inc. 14,600 1,014,700 2,274,931 ELECTRONICS - 4.8% Altera Corp. (a) 9,200 464,600 Brightpoint, Inc. (a) 43,500 1,416,469 Intel Corp. 7,400 1,049,413 Solectron Corp. (a) 28,000 1,960,000 Texas Instruments, Inc. 29,600 2,488,250 7,378,732 TOTAL TECHNOLOGY 17,874,238 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TRANSPORTATION - 4.1% AIR TRANSPORTATION - 2.6% AMR Corp. (a) 43,800 $ 4,051,500 TRUCKING & FREIGHT - 1.5% USFreightways Corp. 89,300 2,310,638 TOTAL TRANSPORTATION 6,362,138 UTILITIES - 2.4% TELEPHONE SERVICES - 2.4% WorldCom, Inc. (a) 114,570 3,666,287 TOTAL COMMON STOCKS (Cost $111,959,151) 135,797,067 U.S. TREASURY OBLIGATIONS - 0.3% PRINCIPAL AMOUNT U.S. Treasury Bills, yields at date of purchase 5.26% - 5.28%, 1/8/98 (c) (Cost $437,753) $ 450,000 437,706 CASH EQUIVALENTS - 11.2% SHARES Taxable Central Cash Fund (b) (cost $17,157,064) 17,157,064 17,157,064 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $129,553,968) $ 153,391,837 FUTURES CONTRACTS EXPIRATION UNDERLYING FACE UNREALIZED DATE AMOUNT AT VALUE GAIN/(LOSS) PURCHASED 12 Midcap 400 Stock Index Futures Contracts Sep. 1997 $ 1,737,600 $ 7,510 55 Russell 2000 Stock Index Futures Contracts Sep. 1997 10,969,750 74,963 2 S&P 500 Stock Index Futures Contracts Sep. 1997 890,250 (8,015) $ 74,458 THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 8.9% LEGEND 1. Non-income producing 2. At period end, the seven-day yield on the Taxable Central Cash Fund was 5.58%. The yield refers to the income earned by investing in the fund over the seven-day period, expressed as an annual percentage. 3. Security pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $437,706. INCOME TAX INFORMATION At June 30, 1997, the aggregate cost of investment securities for income tax purposes was $129,561,745. Net unrealized appreciation aggregated $23,830,092 of which $25,691,076 related to appreciated investment securities and $1,860,984 related to depreciated investment securities. The fund hereby designates approximately $6,813,000 as a capital gain dividend for the purpose of the dividend paid deduction. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 ASSETS Investment in securities, at value (cost $129,553,968) - $ 153,391,837 See accompanying schedule Receivable for fund shares sold 3,318,336 Dividends receivable 107,521 Interest receivable 71,236 Receivable for daily variation on futures contracts 38,385 Other receivables 7,335 TOTAL ASSETS 156,934,650 LIABILITIES Payable for investments purchased $ 262,177 Payable for fund shares redeemed 422,875 Accrued management fee 54,417 Other payables and accrued expenses 58,847 TOTAL LIABILITIES 798,316 NET ASSETS $ 156,136,334 Net Assets consist of: Paid in capital $ 111,994,185 Undistributed net investment income 505,676 Accumulated undistributed net realized gain (loss) on 19,724,146 investments and foreign currency transactions Net unrealized appreciation (depreciation) on 23,912,327 investments NET ASSETS, for 9,574,742 shares outstanding $ 156,136,334 NET ASSET VALUE, offering price and redemption price $16.31 per share ($156,136,334 (divided by) 9,574,742 shares)
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997 INVESTMENT INCOME $ 1,420,545 Dividends Interest 655,094 TOTAL INCOME 2,075,639 EXPENSES Management fee $ 917,847 Basic fee Performance adjustment (230,173) Transfer agent fees 443,577 Accounting fees and expenses 92,406 Non-interested trustees' compensation 1,153 Custodian fees and expenses 17,767 Registration fees 55,846 Audit 30,008 Legal 1,576 Reports to shareholders 10,309 Total expenses before reductions 1,340,316 Expense reductions (67,507) 1,272,809 NET INVESTMENT INCOME 802,830 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 21,910,281 Foreign currency transactions 218 Futures contracts 895,634 22,806,133 Change in net unrealized appreciation (depreciation) on: Investment securities 7,695,431 Assets and liabilities in foreign currencies (32) Futures contracts 162,486 7,857,885 NET GAIN (LOSS) 30,664,018 NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 31,466,848 FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED JUNE 30, JUNE 30, 1997 1996 INCREASE (DECREASE) IN NET ASSETS Operations $ 802,830 $ 1,944,040 Net investment income Net realized gain (loss) 22,806,133 16,750,199 Change in net unrealized appreciation (depreciation) 7,857,885 6,555,135 NET INCREASE (DECREASE) IN NET ASSETS RESULTING 31,466,848 25,249,374 FROM OPERATIONS Distributions to shareholders (1,070,638) (1,413,153) From net investment income From net realized gain (9,845,020) (13,362,095) TOTAL DISTRIBUTIONS (10,915,658) (14,775,248) Share transactions 143,303,825 172,795,915 Net proceeds from sales of shares Reinvestment of distributions 10,824,055 14,630,874 Cost of shares redeemed (199,525,490) (145,489,851) NET INCREASE (DECREASE) IN NET ASSETS RESULTING (45,397,610) 41,936,938 FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) IN NET ASSETS (24,846,420) 52,411,064 NET ASSETS Beginning of period 180,982,754 128,571,690 End of period (including undistributed net investment $ 156,136,334 $ 180,982,754 income of $505,676 and $1,141,826, respectively) OTHER INFORMATION Shares Sold 9,988,553 12,765,610 Issued in reinvestment of distributions 823,934 1,127,988 Redeemed (14,161,512) (10,786,198) Net increase (decrease) (3,349,025) 3,107,400
FINANCIAL HIGHLIGHTS YEARS ENDED JUNE 30, SEPTEMBER 17, 1993 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1997 1996 1995 1994
SELECTED PER-SHARE DATA Net asset value, beginning of period $ 14.00 $ 13.10 $ 10.17 $ 10.00 Income from Investment Operations Net investment income .07 E .15 .08 .02 Net realized and unrealized 3.16 2.12 2.97 .16 gain (loss) Total from investment operations 3.23 2.27 3.05 .18 Less Distributions From net investment income (.09) (.13) (.02) (.01) From net realized gain (.83) (1.24) (.10) - Total distributions (.92) (1.37) (.12) (.01) Net asset value, end of period $ 16.31 $ 14.00 $ 13.10 $ 10.17 TOTAL RETURN B, C 24.75% 18.46% 30.26% 1.80% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $ 156,136 $ 180,983 $ 128,572 $ 48,359 Ratio of expenses to average net assets .88% 1.03% 1.22% 1.58% A Ratio of expenses to average net assets .84% .99% 1.19% D 1.58% A D D after expense reductions Ratio of net investment income to .53% 1.20% 1.15% .23% A average net assets Portfolio turnover rate 131% 152% 180% 320% A Average commission rate F $ .0439
A ANNUALIZED B 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). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. 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 5 OF NOTES TO FINANCIAL STATEMENTS). E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. F 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 June 30, 1997 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Fifty Fund (the fund) is a fund of Fidelity Hastings Street Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The financial statements have been prepared in conformity with generally accepted accounting principles which 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 forward 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 information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in 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, which includes accretion of original issue discount, is accrued as earned. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for futures and options transactions, market discount 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. 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. 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 FMR Texas, an affiliate of FMR. The Cash Fund is an open-end money market fund available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Fund seeks preservation of capital, liquidity, and current income by investing in U.S. Treasury securities and repurchase agreements for these securities. Income distributions from the Cash Fund are declared daily and paid monthly from net interest income. Income distributions received by the fund are recorded as interest income in the accompanying financial statements. FUTURES CONTRACTS. The fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase the fund's exposure to the underlying instrument, while selling futures tends to decrease the fund's exposure to the underlying instrument or hedge other fund investments. 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, if there is an illiquid secondary market for the contracts, or if the counterparties do not perform under the contracts' terms. Gains and 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. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $183,496,694 and $241,050,955, respectively. The market value of futures contracts opened and closed during the period amounted to $116,751,923 and $115,702,093, 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 ".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 .45% of average net assets after the performance adjustment. SALES LOAD. For the period January 1, 1995 through December 31, 1998, Fidelity Distributors Corporation (FDC), an affiliate of FMR and the general distributor of the fund, will voluntarily waive the sales charge (3% of the offering price) on the sales of shares. 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 .29% 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 $36,245 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 $63,800 under this arrangement. In addition, the fund has entered into arrangements with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the fund's expenses. During the period, the fund's custodian and transfer agent fees were reduced by $1,473 and $2,234, respectively, under these arrangements. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Hastings Street Trust and the Shareholders of Fidelity Fifty: We have audited the accompanying statement of assets and liabilities of Fidelity Hastings Street Trust: Fidelity Fifty, including the schedule of portfolio investments, as of June 30, 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 three years in the period then ended and for the period September 17,1993 (commencement of operations) to June 30, 1994. 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 June 30, 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 Hastings Street Trust: Fidelity Fifty as of June 30, 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 three years in the period then ended and for the period September 17, 1993 (commencement of operations) to June 30, 1994, in conformity with generally accepted accounting principles. /s/COOPERS & LYBRAND L.L.P. Boston, Massachusetts August 4, 1997 DISTRIBUTIONS The Board of Trustees of Fidelity Fifty voted to pay on August 4, 1997, to shareholders of record at the opening of business on August 1, 1997, a distribution of $1.36 per share derived from capital gains realized from sales of portfolio securities and a dividend of $.04 per share from net investment income. A total of .57% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax. A total of 28% of the dividend distributed during the fiscal year qualifies for the dividends-received-deductions for corporate shareholders. The fund will notify shareholders in January 1998 of these percentages for use in preparing 1997 income tax returns. PROXY VOTING RESULTS A special meeting of the fund's shareholders was held on July 16, 1997. The results of votes taken among shareholders on proposals are listed below. PROPOSAL 1 To elect as Trustees the following twelve nominees. # OF % OF SHARES VOTED SHARES VOTED J. GARY BURKHEAD Affirmative 105,692,081.014 97.033 Withheld 3,231,430.067 2.967 TOTAL 108,923,511.081 100.000 RALPH F. COX Affirmative 105,680,605.875 97.023 Withheld 3,242,905.206 2.977 TOTAL 108,923,511.081 100.00 PHYLLIS BURKE DAVIS Affirmative 105,651,999.712 96.997 Withheld 3,271,511.369 3.003 TOTAL 108,923,511.081 100.000 ROBERT M. GATES Affirmative 105,511,218.744 96.867 Withheld 3,412,292.337 3.133 TOTAL 108,923,511.081 100.000 EDWARD C. JOHNSON 3D Affirmative 105,632,223.614 96.978 Withheld 3,291,287.467 3.022 TOTAL 108,923,511.081 100.000 E. BRADLEY JONES Affirmative 105,521,432.110 96.877 Withheld 3,402,078.971 3.123 TOTAL 108,923,511.081 100.000 # OF % OF SHARES VOTED SHARES VOTED DONALD J. KIRK Affirmative 105,713,930.272 97.053 Withheld 3,209,580.809 2.947 TOTAL 108,923,511.081 100.000 PETER S. LYNCH Affirmative 105,733,536.173 97.071 Withheld 3,189,974.908 2.929 TOTAL 108,923,511.081 100.000 WILLIAM O. MCCOY Affirmative 105,749,629.803 97.086 Withheld 3,173,881.278 2.914 TOTAL 108,923,511.081 100.000 GERALD C. MCDONOUGH Affirmative 105,573,768.259 96.925 Withheld 3,349,742.822 3.075 TOTAL 108,923,511.081 100.000 MARVIN L. MANN Affirmative 105,739,307.496 97.077 Withheld 3,184,203.585 2.923 TOTAL 108,923,511.081 100.000 THOMAS R. WILLIAMS Affirmative 105,548,338.446 96.901 Withheld 3,375,172.635 3.099 TOTAL 108,923,511.081 100.000 PROPOSAL 2 To ratify the selection of Coopers & Lybrand L.L.P. as independent accountants of Fidelity Hastings Street Trust. # OF % OF SHARES VOTED SHARES VOTED Affirmative 104,484,632.950 95.925 Against 1,151,276.434 1.057 Abstain 3,287,601.697 3.018 TOTAL 108,923,511.081 100.000 PROPOSAL 3 To amend the Declaration of Trust to provide voting rights based on a shareholder's total dollar investment in a fund, rather than on the number of shares owned. TRUST LEVEL # OF % OF SHARES VOTED SHARES VOTED OF THE TRUST OF THE TRUST Affirmative 94,915,172.474 88.458 Against 5,484,184.492 5.112 Abstain 6,899,772.115 6.430 TOTAL 107,299,129.081 100.000 Not Voting 1,624,382.000 FUND LEVEL # OF % OF SHARES VOTED SHARES VOTED OF THE FUND OF THE FUND Affirmative 3,925,373.934 83.461 Against 378,913.446 8.057 Abstain 398,951.504 8.482 TOTAL 4,703,238.884 100.000 Not Voting 67,978.000 PROPOSAL 4 To amend the Declaration of Trust to eliminate the requirement that shareholders be notified in the event of an appointment of a trustee within three months of the appointment. # OF % OF SHARES VOTED SHARES VOTED Affirmative 98,686,816.986 91.974 Against 3,875,803.557 3.612 Abstain 4,736,508.538 4.414 TOTAL 107,299,129.081 100.000 Not Voting 1,624,382.000 PROPOSAL 5 To amend the Declaration of Trust to clarify that the Trustees may authorize the investment of all of a fund's assets in another open-end investment company with substantially the same investment objective and policies. # OF % OF SHARES VOTED SHARES VOTED Affirmative 92,479,709.631 86.189 Against 9,779,633.919 9.114 Abstain 5,039,785.531 4.697 TOTAL 107,299,129.081 100.000 Not Voting 1,624,382.000 PROPOSAL 6 To adopt a new fundamental investment policy for the fund that would permit it to invest all of its assets in another open-end investment company managed by FMR or an affiliate with substantially the same investment objective and policies. # OF % OF SHARES VOTED SHARES VOTED Affirmative 3,678,463.038 78.211 Against 581,068.600 12.355 Abstain 443,707.246 9.434 TOTAL 4,703,238.884 100.000 Not Voting 67,978.000 PROPOSAL 7 To approve an amended management contract for the fund that would reduce the management fee payable to FMR by the fund as FMR's assets under management increase and would modify the performance adjustment calculation to calculate the fund's investment performance and that of its comparative index to the nearest 0.01%. # OF % OF SHARES VOTED SHARES VOTED Affirmative 3,894,184.927 82.798 Against 322,609.296 6.859 Abstain 486,444.661 10.343 TOTAL 4,703,238.884 100.000 Not Voting 67,978.000 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)(PHONE_GRAPHIC)TOUCHTONE XPRESS 1-800-544-5555 PRESS For mutual fund and brokerage trading. 1 For quotes.* 2 For account balances and holdings. 3 To review orders and mutual fund activity. 4 To change your PIN. 5 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)(PHONE_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call Fidelity at 1-800-544-7272 for significant savings on Web access from internetMCI. SM (PHONE_GRAPHIC)(PHONE_GRAPHIC) FIDELITY ON-LINE XPRESS+ TM Fidelity On-line Xpress+ software for Windows combines comprehensive portfolio management capabilities, securities trading and access to research and analysis tools . . . all on your desktop. Call Fidelity at 1-800-544-7272 or visit our Web site for more information on how to manage your investments via your PC. * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. Scottsdale Road Scottsdale, AZ CALIFORNIA 815 East Birch Street Brea, CA 851 East Hamilton Avenue Campbell, CA 527 North Brand Boulevard Glendale, CA 19100 Von Karman Avenue Irvine, CA 10100 Santa Monica Blvd. Los Angeles, CA 251 University Avenue Palo Alto, CA 1760 Challenge Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 455 Market Street San Francisco, CA 950 Northgate Drive San Rafael, CA 1400 Civic Drive Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA COLORADO 1625 Broadway Denver, CO CONNECTICUT 265 Church Street New Haven, CT 300 Atlantic Street Stamford, CT 29 South Main Street West Hartford, CT DELAWARE 222 Delaware Avenue Wilmington, DE FLORIDA 4400 N. Federal Highway Boca Raton, FL 90 Alhambra Plaza Coral Gables, FL 4090 N. Ocean Boulevard Ft. Lauderdale, FL 1907 West State Road 434 Longwood, FL 4001 Tamiami Trail, North Naples, FL 2401 PGA Boulevard Palm Beach Gardens, FL 8065 Beneva Road Sarasota, FL 1502 N. Westshore Blvd. Tampa, FL GEORGIA 3525 Piedmont Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA HAWAII 700 Bishop Street Honolulu, HI ILLINOIS 215 East Erie Street Chicago, IL One North Franklin Street Chicago, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL 3232 Lake Avenue Wilmette, IL INDIANA 4729 East 82nd Street Indianapolis, IN LOUISIANA 201 St. Charles Avenue New Orleans, LA MAINE 3 Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD 1 West Pennsylvania Ave. Towson, MD MASSACHUSETTS 470 Boylston Street Boston, MA 155 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 29155 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 501 Route 17, South Paramus, NJ NEW YORK 1055 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY 10 Bank Street White Plains, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC 2200 West Main Street Durham, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH 1903 East Ninth Street Cleveland, OH OREGON 121 S.W. Morrison Street Portland, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 6150 Poplar Road Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 7001 Preston Road Dallas, TX 1155 Dairy Ashford Street Houston, TX 2701 Drexel Drive Houston, TX 400 East Las Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VERMONT 199 Main Street Burlington, VT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 511 Pine Street Seattle, WA WASHINGTON, DC 1900 K Street, N.W. Washington, DC WISCONSIN 595 North Barker Road Brookfield, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research Company (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 William J. Hayes, Vice President Robert A. Lawrence, Vice President Scott Stewart, Vice President Arthur S. Loring, Secretary Richard A. Silver, Treasurer Robert H. Morrison, Manager, Security Transactions John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox* Phyllis Burke Davis * Richard 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 Brown Brothers Harriman & Co. Boston, MA FIDELITY'S GROWTH FUNDS Blue Chip Growth Fund Capital Appreciation Fund Contrafund Disciplined Equity Fund Dividend Growth Fund Emerging Growth Fund Export and Multinational 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 TechnoQuant(trademark) Growth Fund Trend Fund Value Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions 1-800-544-7777 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) (registered trademark) TouchTone Xpress 1-800-544-5555 SM AUTOMATED LINE FOR QUICKEST SERVICE (2_FIDELITY_LOGOS) FIDELITY FUND ANNUAL REPORT JUNE 30, 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 28 The auditor's opinion. ACCOUNTANTS DISTRIBUTIONS 29 PROXY VOTING RESULTS 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: Through the first six months of 1997, stock and bond markets experienced the kind of short-term volatility that can affect them periodically. The stock market rebounded strongly from its early spring correction to continue on its record-setting pace, as seen by the roughly 20% year-to-date gain by the Standard & Poor's 500 Index. The bond market posted moderate returns over the first half of the year, as positive news on the inflation front helped soften the effects of a hike in short-term interest rates by the Federal Reserve Board in late March. 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 JUNE 30, 1997 PAST 1 PAST 5 PAST 10 YEAR YEARS YEARS Fidelity Fund 27.97% 142.46% 264.02% S&P 500(registered trademark) 34.70% 146.59% 292.69% Growth & Income Funds Average 28.07% 122.51% 232.50% 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 & income funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Analytical Services, Inc. The past one year average represents a peer group of 547 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 JUNE 30, 1997 PAST 1 PAST 5 PAST 10 YEAR YEARS YEARS Fidelity Fund 27.97% 19.38% 13.79% S&P 500 34.70% 19.78% 14.64% Growth & Income Funds Average 28.07% 17.25% 12.67% 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 1987/06/30 10000.00 10000.00 1987/07/31 10601.09 10507.00 1987/08/31 10775.96 10898.91 1987/09/30 10694.95 10660.22 1987/10/31 8055.58 8364.01 1987/11/30 7648.67 7674.82 1987/12/31 8270.79 8258.87 1988/01/31 8477.86 8606.57 1988/02/29 9026.00 9007.64 1988/03/31 8860.32 8729.30 1988/04/30 8995.40 8826.20 1988/05/31 9038.38 8902.98 1988/06/30 9551.00 9311.63 1988/07/31 9458.15 9276.25 1988/08/31 9198.18 8960.85 1988/09/30 9515.56 9342.59 1988/10/31 9715.23 9602.31 1988/11/30 9590.43 9465.00 1988/12/31 9746.99 9630.63 1989/01/31 10284.28 10335.60 1989/02/28 10082.01 10078.24 1989/03/31 10329.09 10313.06 1989/04/30 10876.75 10848.31 1989/05/31 11411.67 11287.67 1989/06/30 11372.49 11223.33 1989/07/31 12257.15 12236.79 1989/08/31 12558.45 12476.64 1989/09/30 12540.14 12425.48 1989/10/31 12120.85 12137.21 1989/11/30 12295.02 12384.81 1989/12/31 12554.25 12682.05 1990/01/31 11882.07 11831.08 1990/02/28 12127.14 11983.70 1990/03/31 12365.78 12301.27 1990/04/30 12048.53 11993.74 1990/05/31 12943.88 13163.13 1990/06/30 12865.73 13073.62 1990/07/31 12745.09 13031.78 1990/08/31 11829.66 11853.71 1990/09/30 11300.18 11276.43 1990/10/31 11178.67 11227.94 1990/11/30 11671.85 11953.27 1990/12/31 11914.37 12286.77 1991/01/31 12682.33 12822.47 1991/02/28 13516.11 13739.28 1991/03/31 13824.63 14071.77 1991/04/30 13839.35 14105.54 1991/05/31 14538.68 14714.90 1991/06/30 13733.34 14040.96 1991/07/31 14348.16 14695.26 1991/08/31 14585.19 15043.54 1991/09/30 14459.31 14792.31 1991/10/31 14600.93 14990.53 1991/11/30 13721.44 14386.41 1991/12/31 14791.21 16032.22 1992/01/31 15023.58 15734.02 1992/02/29 15448.24 15938.56 1992/03/31 14980.70 15627.76 1992/04/30 15085.52 16087.22 1992/05/31 15222.58 16166.04 1992/06/30 15013.54 15925.17 1992/07/31 15337.63 16576.51 1992/08/31 15021.65 16236.69 1992/09/30 15175.05 16428.28 1992/10/31 15362.29 16485.78 1992/11/30 15704.22 17047.95 1992/12/31 16042.61 17257.64 1993/01/31 16466.12 17402.60 1993/02/28 16609.25 17639.28 1993/03/31 17102.59 18011.46 1993/04/30 17102.59 17575.59 1993/05/31 17521.39 18046.61 1993/06/30 17548.24 18098.95 1993/07/31 17565.43 18026.55 1993/08/31 18382.97 18709.76 1993/09/30 18551.04 18565.69 1993/10/31 18857.74 18950.00 1993/11/30 18355.86 18769.98 1993/12/31 18988.30 18997.10 1994/01/31 19796.32 19643.00 1994/02/28 19402.16 19110.67 1994/03/31 18519.79 18277.45 1994/04/30 18955.31 18511.40 1994/05/31 18935.52 18814.98 1994/06/30 18497.88 18354.02 1994/07/31 19104.20 18956.03 1994/08/31 19935.21 19733.23 1994/09/30 19516.39 19249.76 1994/10/31 19935.65 19682.88 1994/11/30 19233.39 18966.03 1994/12/31 19478.35 19247.30 1995/01/31 19446.73 19746.38 1995/02/28 20110.76 20515.90 1995/03/31 20839.78 21121.32 1995/04/30 21348.33 21743.34 1995/05/31 21708.55 22612.42 1995/06/30 22398.79 23137.71 1995/07/31 23420.78 23904.96 1995/08/31 23803.18 23964.96 1995/09/30 24502.27 24976.28 1995/10/31 24216.72 24887.12 1995/11/30 25238.11 25979.66 1995/12/31 25876.60 26480.03 1996/01/31 26506.06 27381.41 1996/02/29 26837.96 27635.23 1996/03/31 27342.30 27901.36 1996/04/30 27779.04 28312.63 1996/05/31 28319.22 29042.81 1996/06/30 28445.51 29153.46 1996/07/31 27210.75 27865.46 1996/08/31 27970.00 28453.15 1996/09/30 29401.44 30054.49 1996/10/31 29884.04 30883.39 1996/11/30 31678.32 33217.87 1996/12/31 31006.32 32559.82 1997/01/31 32311.85 34594.16 1997/02/28 32625.68 34865.38 1997/03/31 31013.18 33432.76 1997/04/30 32813.78 35428.69 1997/05/31 34614.38 37585.59 1997/06/30 36402.15 39269.43 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Fund on June 30, 1987. As the chart shows, by June 30, 1997, the value of the investment would have grown to $36,402 - a 264.02% increase on the initial investment. For comparison, look at how the S&P 500 did over the same period. With dividends and capital gain, if any, reinvested, the same $10,000 investment would have grown to $39,269 - a 292.69% 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 Concerns in March and April over higher interest rates and the possibility of weaker corporate earnings provided the only significant pause in the U.S. stock market's upward climb during the 12 months that ended June 30, 1997. The Standard & Poor's 500 Index returned 34.70% during the period - well above its long-term annual average of about 11%. The stock market spent much of the period breaking price and trading volume records. Solid corporate earnings, large inflows into mutual funds, widespread optimism, moderate economic growth, low inflation and a generally favorable interest rate environment propelled share prices higher, especially among large-capitalization stocks. In February, however, Federal Reserve Board Chairman Alan Greenspan indicated the Fed's inclination to raise short-term interest rates to head off inflation that might be caused by a tight labor market. Because higher interest rates tend to slow economic growth and increase borrowing costs, the stock market faltered as the Fed's March meeting approached. At that meeting, the Fed raised a key short-term interest rate. The stock market - already at historically high valuations - sold off sharply through mid-April, when positive news on the inflation front emerged. The market recovered from that point, with the Dow Jones Industrial Average closing above the 7700 mark for the first time in June. The market broadened to include many small- and mid-capitalization stocks in the rally that continued through the end of June. An interview with Beth Terrana, Portfolio Manager of Fidelity Fund Q. HOW DID THE FUND PERFORM, BETH? A. For the 12 months that ended June 30, 1997, the fund produced a return of 27.97%. During the same period, the growth & income funds average, as tracked by Lipper Analytical Services, returned 28.07% while the Standard & Poor's 500 Index returned 34.70%. Q. WHICH STRATEGIES BENEFITED PERFORMANCE? A. Broadly, my decision to emphasize selected stocks in the strong finance, health and diversified industrials sectors was particularly helpful. Within the finance and health areas, I focused on money-center banks and pharmaceuticals, including BankAmerica and Bristol-Myers Squibb - two of the more significant contributors to fund performance during the period. General Electric - the fund's top holding - was another positive contributor, based on its strong overall performance as well as its overweighting in the fund compared to the index. Additionally, a significant underweighting of generally weak electric and telecommunications utilities stocks proved very helpful. Q. THE FUND PERFORMED WELL IN ABSOLUTE TERMS, BUT TRAILED THE INDEX. WHY WAS THIS? A. A significant portion of the fund's underperformance resulted from underexposure to a number of large-capitalization technology and nondurables stocks, which accounted for a disproportionate amount of the index's return. Microsoft and Coca-Cola - two of the largest index constituents - illustrate this point particularly well. Together, these TWO stocks alone accounted for approximately 2.4% of the index's 34.7% return. While in hindsight I clearly wish I'd owned more of these stocks, fundamentals for these companies didn't appear to support their valuations, which were at steep premiums to the overall market and comparable firms. That being said, the fund's larger positions performed well in this environment. Seven of the fund's top 10 holdings outperformed the index, and most of those that lagged only underperformed by slight margins. Q. WITH THE MARKET BEING DRIVEN MOSTLY BY THE LARGE-CAP STOCKS YOU MENTIONED EARLIER, DID YOU CHANGE YOUR FOCUS TO EMPHASIZE MORE OF THESE TYPES OF STOCKS? A. No. While larger-capitalization stocks - and some of the top 50 stocks in the S&P 500, notably General Electric - do comprise a portion of the fund's investments, my investment universe encompasses a much wider spectrum of stocks. Typically, my investments are an eclectic mix of medium-to-large capitalization stocks - in a variety of industries - with solid fundamentals and attractive valuations. Some of the fund's non-large-cap holdings performed well, including Tyco International and Consolidated Stores. Q. IN TERMS OF THE PORTFOLIO, WHERE DID YOU LOOK FOR OPPORTUNITIES? A. The finance and health care sectors - the two largest sector exposures for the fund - continued to perform well. Within the finance sector, I concentrated on larger banks and diversified financials, based on positive trends that began several years ago. Specifically, these firms have been reducing their cost structures through restructurings, improving their balance sheets through better portfolio management and buying back their stock. In addition, mergers and acquisitions continued to reduce industry overcapacity and generated economies of scale for many larger banks. Within the health care group, selected pharmaceuticals stocks offered compelling characteristics, based largely on rising drug utilization - which has driven unit sales growth rates higher - and solid pipelines of exciting new products. The fund's largest health care holdings during the period were Bristol-Myers Squibb and SmithKline Beecham. Q. WHAT'S YOUR OUTLOOK? A. It's likely that the supportive environment we've seen - that of moderate economic growth and low inflation - will continue. Also, given that there are few signs of inflation, I don't foresee any significant action by the Federal Reserve Board to raise interest rates - an event that likely would be a negative for the stock market. Assuming these conditions continue, the critical factor going forward will be the sustainability of corporate earnings. I'll try to remain focused on those companies capable of delivering exceptional numbers, particularly given the recent propensity of the market to dramatically reduce stock prices upon earnings disappointments. Recently, even earnings numbers that come in as expected have resulted in large stock price declines, partly because analysts' "real" expectations were even higher. 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, normally 50-60 stocks FUND NUMBER: 500 TRADING SYMBOL: FFTYX START DATE: September 17, 1993 SIZE: as of June 30, 1997, more than $156 million MANAGER: Scott Stewart, since 1993; founder and head of Fidelity's Structured Equity Group, since 1987; joined Fidelity in 1987 (checkmark) SCOTT STEWART ON HOLDING CASH AND FUTURES IN THE FUND: "At the end of the period, cash - - or short-term investments - - made up over 2.6% of the fund. While these short-term investments actually made up about 12% of the fund, they were offset by an investment of approximately 9% of the fund in futures. "I try to manage the fund's cash exposure by using futures. At the end of the period, the fund owned mostly small-capitalization futures, such as the Russell 2000 Futures I bought this spring. Investing in these futures allows me to stay fully invested in the market. The way I think of it is that returns from the futures plus the fund's cash equals the approximate return of stocks. That is, the profits from futures, plus the fund's base of cash added together perform very much like stocks do. As a result, I use futures. They're cheap, they're quick, and, over the period, they helped the fund outperform its peers." INVESTMENT CHANGES TOP TEN STOCKS AS OF JUNE 30, 1997 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE STOCKS 6 MONTHS AGO General Electric Co. 3.6 3.7 Philip Morris Companies, Inc. 2.5 2.1 BankAmerica Corp. 2.4 1.9 Tyco International Ltd. 2.3 2.0 Citicorp 1.9 1.8 Consolidated Stores Corp. 1.8 1.7 Bristol-Myers Squibb Co. 1.8 1.3 Praxair, Inc. 1.5 1.8 International Business Machines Corp. 1.4 2.5 Federated Department Stores, Inc. 1.4 0.0 TOP FIVE MARKET SECTORS AS OF JUNE 30, 1997 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE MARKET SECTORS 6 MONTHS AGO Finance 15.0 14.2 Health 12.6 10.7 Retail & Wholesale 9.7 5.9 Industrial Machinery & Equipment 9.6 6.4 Nondurables 9.2 8.7 ASSET ALLOCATION (% OF FUND'S INVESTMENTS) AS OF JUNE 30, 1997 * AS OF DECEMBER 31,1996 ** Row: 1, Col: 1, Value: 3.0 Row: 1, Col: 2, Value: 1.8 Row: 1, Col: 3, Value: 45.2 Row: 1, Col: 4, Value: 50.0 Stocks 94.9% Bonds 1.1% Short-term investments 4.0% FOREIGN INVESTMENTS 7.1% Stocks 96.3% Bonds 0.8% Short-term investments 2.9% FOREIGN INVESTMENTS 7.4% Row: 1, Col: 1, Value: 4.0 Row: 1, Col: 2, Value: 2.0 Row: 1, Col: 3, Value: 44.0 Row: 1, Col: 4, Value: 50.0 * ** INVESTMENTS JUNE 30, 1997 Showing Percentage of Total Value of Investment in Securities COMMON STOCKS - 95.3% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 4.6% AEROSPACE & DEFENSE - 4.2% AlliedSignal, Inc. 841,700 $ 70,703 Boeing Co. 543,760 28,853 Lockheed Martin Corp. 365,200 37,821 Textron, Inc. 654,900 43,469 United Technologies Corp. 583,800 48,455 229,301 DEFENSE ELECTRONICS - 0.4% Raytheon Co. 465,900 23,761 TOTAL AEROSPACE & DEFENSE 253,062 BASIC INDUSTRIES - 5.3% CHEMICALS & PLASTICS - 4.1% Air Products & Chemicals, Inc. 311,300 25,293 Avery Dennison Corp. 189,500 7,604 Cytec Industries, Inc. (a) 135,300 5,057 Goodrich (B.F.) Co. 396,600 17,178 Hercules, Inc. 72,800 3,485 Monsanto Co. 1,142,300 49,190 Praxair, Inc. 1,446,260 80,991 Raychem Corp. 179,700 13,365 Sealed Air Corp. (a) 449,300 21,342 223,505 PAPER & FOREST PRODUCTS - 1.2% Fort Howard Corp. (a) 237,000 11,998 International Paper Co. 123,200 5,983 James River Corp. of Virginia 344,300 12,739 Kimberly-Clark Corp. 704,000 35,024 65,744 TOTAL BASIC INDUSTRIES 289,249 CONSTRUCTION & REAL ESTATE - 3.1% BUILDING MATERIALS - 1.8% American Standard Companies, Inc. (a) 629,400 28,166 Masco Corp. 1,244,200 51,945 Sherwin-Williams Co. 673,700 20,800 100,911 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) CONSTRUCTION & REAL ESTATE - CONTINUED REAL ESTATE INVESTMENT TRUSTS - 1.3% Beacon Properties Corp. 429,800 $ 14,345 Duke Realty Investors, Inc. 293,883 11,902 Equity Residential Properties Trust (SBI) 405,100 19,242 Public Storage, Inc. 580,100 16,968 Storage USA, Inc. 175,100 6,698 69,155 TOTAL CONSTRUCTION & REAL ESTATE 170,066 DURABLES - 3.3% AUTOS, TIRES, & ACCESSORIES - 0.4% Eaton Corp. 164,400 14,354 Navistar International Corp. (a) 574,900 9,917 24,271 CONSUMER DURABLES - 1.8% Corning, Inc. 417,100 23,202 Minnesota Mining & Manufacturing Co. 738,200 75,296 98,498 CONSUMER ELECTRONICS - 0.3% Newell Co. 444,900 17,629 TEXTILES & APPAREL - 0.8% Liz Claiborne, Inc. 643,600 30,007 VF Corp. 164,200 13,978 43,985 TOTAL DURABLES 184,383 ENERGY - 7.7% ENERGY SERVICES - 1.0% Halliburton Co. 184,900 14,653 McDermott International, Inc. 232,200 6,777 Schlumberger Ltd. 246,200 30,775 52,205 OIL & GAS - 6.7% Amoco Corp. 424,600 36,914 British Petroleum PLC ADR 949,380 71,085 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) ENERGY - CONTINUED OIL & GAS - CONTINUED Exxon Corp. 703,100 $ 43,241 Mobil Corp. 459,900 32,136 Royal Dutch Petroleum Co. 1,052,800 57,246 Texaco, Inc. 481,800 52,396 Tosco Corp. 661,800 19,813 Total SA sponsored ADR 442,300 22,391 USX-Marathon Group 1,026,100 29,628 Unocal Corp. 182,511 7,083 371,933 TOTAL ENERGY 424,138 FINANCE - 15.0% BANKS - 8.1% Bank of New York Co., Inc. 1,127,100 49,029 BankBoston Corp. 242,831 17,499 BankAmerica Corp. 2,067,800 133,502 Citicorp 878,900 105,962 First Bank System, Inc. 579,500 49,475 First Union Corp. 257,500 23,819 Mellon Bank Corp. 626,400 28,266 NationsBank Corp. 475,900 30,696 Wells Fargo & Co. 36,900 9,945 448,193 CREDIT & OTHER FINANCE - 1.8% American Express Co. 522,664 38,938 Associates First Capital Corp. 264,000 14,652 Household International, Inc. 404,411 47,493 101,083 FEDERAL SPONSORED CREDIT - 1.9% Federal Home Loan Mortgage Corporation 1,584,200 54,457 Federal National Mortgage Association 1,181,500 51,543 106,000 INSURANCE - 2.4% AFLAC, Inc. 234,800 11,094 Allstate Corp. 752,500 54,933 MGIC Investment Corp. 107,000 5,129 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED INSURANCE - CONTINUED PMI Group, Inc. 52,000 $ 3,244 Progressive Corp. 10,900 948 Travelers Group, Inc. (The) 917,900 57,885 133,233 SAVINGS & LOANS - 0.8% Ahmanson (H.F.) & Co. 157,500 6,773 Charter One Financial Corp. 175,800 9,471 Great Western Financial Corp. 461,400 24,800 41,044 TOTAL FINANCE 829,553 HEALTH - 12.3% DRUGS & PHARMACEUTICALS - 8.2% American Home Products Corp. 861,500 65,905 Bristol-Myers Squibb Co. 1,209,900 98,002 Cytyc Corp. (a) 136,000 3,688 Merck & Co., Inc. 538,000 55,683 Pfizer, Inc. 511,000 61,065 Schering-Plough Corp. 1,167,000 55,870 SmithKline Beecham PLC ADR 833,900 76,406 Warner-Lambert Co. 263,700 32,765 449,384 MEDICAL EQUIPMENT & SUPPLIES - 3.8% Bard (C.R.), Inc. 395,200 14,350 Baxter International, Inc. 847,900 44,303 Boston Scientific Corp. (a) 450,300 27,665 Johnson & Johnson 1,097,500 70,652 McKesson Corp. 331,600 25,699 Medtronic, Inc. 309,800 25,094 207,763 MEDICAL FACILITIES MANAGEMENT - 0.3% Columbia/HCA Healthcare Corp. 96,462 3,793 Humana, Inc. (a) 658,700 15,232 19,025 TOTAL HEALTH 676,172 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) HOLDING COMPANIES - 0.1% CINergy Corp. 197,700 $ 6,882 INDUSTRIAL MACHINERY & EQUIPMENT - 9.0% ELECTRICAL EQUIPMENT - 4.7% Emerson Electric Co. 681,400 37,520 General Electric Co. 3,043,100 198,942 Harris Corp. 100,000 8,400 Westinghouse Electric Corp. 647,551 14,975 259,837 INDUSTRIAL MACHINERY & EQUIPMENT - 4.1% Illinois Tool Works, Inc. 742,100 37,059 Ingersoll-Rand Co. 314,300 19,408 Stanley Works 1,038,600 41,544 Tyco International Ltd. 1,810,716 125,958 223,969 POLLUTION CONTROL - 0.2% Waste Management, Inc. 380,100 12,211 TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 496,017 MEDIA & LEISURE - 4.7% BROADCASTING - 1.1% Evergreen Media Corp. Class A (a) 644,500 28,761 Time Warner, Inc. 657,928 31,745 60,506 ENTERTAINMENT - 0.6% Disney (Walt) Co. 397,500 31,899 LEISURE DURABLES & TOYS - 0.5% Mattel, Inc. 856,700 29,021 LODGING & GAMING - 0.3% Host Marriott Corp. (a) 985,659 17,557 PUBLISHING - 2.2% Cognizant Corp. 485,100 19,647 Harcourt General, Inc. 291,800 13,897 McGraw-Hill, Inc. 393,600 23,149 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) MEDIA & LEISURE - CONTINUED PUBLISHING - CONTINUED Scholastic Corp. (a) 216,700 $ 7,584 Times Mirror Co. Class A 880,100 48,626 World Color Press, Inc. (a) 235,900 5,602 118,505 TOTAL MEDIA & LEISURE 257,488 NONDURABLES - 9.2% BEVERAGES - 0.7% PepsiCo, Inc. 998,900 37,521 FOODS - 1.6% Campbell Soup Co. 1,340,700 67,035 Heinz (H.J.) Co. 273,200 12,601 Hershey Foods Corp. 215,700 11,931 91,567 HOUSEHOLD PRODUCTS - 4.4% Avon Products, Inc. 612,000 43,184 Clorox Co. 213,900 28,235 Colgate-Palmolive Co. 41,100 2,682 Procter & Gamble Co. 396,800 56,048 Rubbermaid, Inc. 307,000 9,133 Unilever NV ADR 345,200 73,894 Unilever PLC Ord. 975,600 27,959 241,135 TOBACCO - 2.5% Philip Morris Companies, Inc. 3,139,600 139,320 TOTAL NONDURABLES 509,543 PRECIOUS METALS - 0.2% Getchell Gold Corp. (a) 382,887 13,497 RETAIL & WHOLESALE - 9.5% APPAREL STORES - 1.4% Gap, Inc. 943,900 36,694 Payless ShoeSource, Inc. (a) 763,900 41,776 78,470 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) RETAIL & WHOLESALE - CONTINUED DRUG STORES - 1.5% CVS Corp. 1,184,713 $ 60,717 Walgreen Co. 456,700 24,491 85,208 GENERAL MERCHANDISE STORES - 5.3% Coles Myer Ltd. 2,257,500 11,724 Consolidated Stores Corp. (a) 2,838,593 98,641 Dayton Hudson Corp. 620,400 32,998 Federated Department Stores, Inc. (a) 2,254,800 78,354 Sears, Roebuck & Co. 650,510 34,965 Wal-Mart Stores, Inc. 974,200 32,940 289,622 GROCERY STORES - 0.7% American Stores Co. 331,900 16,388 Asda Group PLC 5,599,900 11,559 Ahold NV 112,800 9,511 37,458 RETAIL & WHOLESALE, MISCELLANEOUS - 0.6% Home Depot, Inc. (The) 513,200 35,378 TOTAL RETAIL & WHOLESALE 526,136 SERVICES - 3.0% ADVERTISING - 1.1% Omnicom Group, Inc. 902,700 55,629 Outdoor Systems, Inc. (a) 151,800 5,806 61,435 LEASING & RENTAL - 0.3% Hanover Compressor Co. 4,000 78 Republic Industries, Inc. (a) 178,300 4,435 Ryder Systems, Inc. 383,600 12,659 17,172 PRINTING - 0.4% Donnelley (R.R.) & Sons Co. 490,800 17,976 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) SERVICES - CONTINUED SERVICES - 1.2% ADT Ltd. (a) 624,800 $ 20,618 Ecolab, Inc. 451,500 21,559 National Service Industries, Inc. 198,300 9,655 Service Corp. International 464,609 15,274 67,106 TOTAL SERVICES 163,689 TECHNOLOGY - 7.6% COMMUNICATIONS EQUIPMENT - 0.6% Alcatel Alsthom Compagnie Generale d'Electricite SA sponsored ADR 77,200 1,949 Alcatel Alsthom Compagnie Generale d'Electricite SA 206,900 25,897 Andrew Corp. 158,200 4,449 32,295 COMPUTER SERVICES & SOFTWARE - 1.7% Adobe Systems, Inc. 80,800 2,833 Automatic Data Processing, Inc. 267,800 12,587 CUC International, Inc. (a) 491,400 12,684 CompUSA, Inc. (a) 611,400 13,145 Microsoft Corp. (a) 301,500 38,102 Oracle Systems Corp. (a) 306,700 15,450 94,801 COMPUTERS & OFFICE EQUIPMENT - 4.0% Compaq Computer Corp. (a) 459,700 45,625 Diebold, Inc. 407,650 15,898 International Business Machines Corp. 886,800 79,978 Pitney Bowes, Inc. 646,900 44,960 Xerox Corp. 421,200 33,223 219,684 ELECTRONICS - 1.3% Intel Corp. 364,000 51,620 Texas Instruments, Inc. 268,200 22,545 74,165 TOTAL TECHNOLOGY 420,945 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) UTILITIES - 0.7% ELECTRIC UTILITY - 0.3% Edison International 694,400 $ 17,273 TELEPHONE SERVICES - 0.4% WorldCom, Inc. (a) 653,600 20,915 TOTAL UTILITIES 38,188 TOTAL COMMON STOCKS (Cost $3,870,670) 5,259,008 CONVERTIBLE PREFERRED STOCKS - 1.0% CONSTRUCTION & REAL ESTATE - 0.2% REAL ESTATE INVESTMENT TRUSTS - 0.2% Vornado Realty Trust $3.25 Series A 167,000 9,039 DURABLES - 0.1% AUTOS, TIRES, & ACCESSORIES - 0.1% Republic Industries, Inc. $1.55 271,000 6,639 ENERGY - 0.3% OIL & GAS - 0.3% Tosco Financing Trust $2.875 (b) 258,200 14,556 HEALTH - 0.3% MEDICAL EQUIPMENT & SUPPLIES - 0.3% McKesson Financing Trust $2.50 (b) 297,400 18,067 MEDIA & LEISURE - 0.1% LODGING & GAMING - 0.1% Host Marriott Financial Trust $3.375 (b) 152,000 8,797 TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $50,955) 57,098 CONVERTIBLE BONDS - 0.8% PRINCIPAL AMOUNT INDUSTRIAL MACHINERY & EQUIPMENT - 0.6% POLLUTION CONTROL - 0.6% USA Waste Services, Inc. 4%, 2/1/02 Ba2 $ 20,270 $ 21,588 United Waste Systems, Inc. 4 1/2%, 6/1/01 B1 6,250 8,578 30,166 RETAIL & WHOLESALE - 0.2% GENERAL MERCHANDISE STORES - 0.1% Federated Department Stores, Inc. 5%, 10/1/03 Baa3 6,940 8,276 RETAIL & WHOLESALE, MISCELLANEOUS - 0.1% Staples, Inc. 4 1/2%, 10/1/00 (b) Ba2 2,916 3,543 TOTAL RETAIL & WHOLESALE 11,819 TOTAL CONVERTIBLE BONDS (Cost $39,788) 41,985 CASH EQUIVALENTS - 2.9% MATURITY AMOUNT (000S) Investments in repurchase agreements (U.S. Treasury obligations) in a joint trading account at 5.93%, dated 6/30/97 due 7/1/97 $ 160,364 160,338 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $4,121,751) $ 5,518,429 LEGEND 1. Non-income producing 2. Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $44,963,000 or 0.8% of net assets. 3. Standard & Poor's credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. INCOME TAX INFORMATION At June 30, 1997, the aggregate cost of investment securities for income tax purposes was $4,127,965,000. Net unrealized appreciation aggregated $1,390,464,000, of which $1,405,424,000 related to appreciated investment securities and $14,960,000 related to depreciated investment securities. The fund hereby designates approximately $23,537,000 as a capital gain dividend for the purpose of the dividend paid deduction. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
(EXCEPT PER-SHARE AMOUNT) JUNE 30, 1997 ASSETS Investment in securities, at value (including repurchase $ 5,518,429 agreements of $160,338) (cost $4,121,751) - See accompanying schedule Receivable for investments sold 19,840 Receivable for fund shares sold 10,475 Dividends receivable 5,313 Interest receivable 463 Other receivables 304 TOTAL ASSETS 5,554,824 LIABILITIES Payable for investments purchased $ 20,342 Payable for fund shares redeemed 11,458 Accrued management fee 1,742 Other payables and accrued expenses 1,155 Collateral on securities loaned, at value 11,444 TOTAL LIABILITIES 46,141 NET ASSETS $ 5,508,683 Net Assets consist of: Paid in capital $ 3,908,689 Undistributed net investment income 492 Accumulated undistributed net realized gain (loss) on 202,826 investments and foreign currency transactions Net unrealized appreciation (depreciation) on 1,396,676 investments and assets and liabilities in foreign currencies NET ASSETS, for 191,106 shares outstanding $ 5,508,683 NET ASSET VALUE, offering price and redemption price $28.83 per share ($5,508,683 (divided by) 191,106 shares)
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997 INVESTMENT INCOME $ 73,284 Dividends Interest (including income on securities loaned of $243) 13,677 TOTAL INCOME 86,961 EXPENSES Management fee $ 17,689 Transfer agent fees 8,472 Accounting and security lending fees 818 Non-interested trustees' compensation 25 Custodian fees and expenses 97 Registration fees 363 Audit 79 Legal 30 Interest 2 Reports to shareholders 173 Miscellaneous 15 Total expenses before reductions 27,763 Expense reductions (1,128) 26,635 NET INVESTMENT INCOME 60,326 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 255,005 Foreign currency transactions (14) 254,991 Change in net unrealized appreciation (depreciation) on: Investment securities 835,119 Assets and liabilities in foreign currencies 3 835,122 NET GAIN (LOSS) 1,090,113 NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,150,439 FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED JUNE 30, JUNE 30, 1997 1996 INCREASE (DECREASE) IN NET ASSETS Operations $ 60,326 $ 55,643 Net investment income Net realized gain (loss) 254,991 395,343 Change in net unrealized appreciation (depreciation) 835,122 296,062 NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,150,439 747,048 FROM OPERATIONS Distributions to shareholders (59,829) (58,669) From net investment income From net realized gain (294,229) (182,544) TOTAL DISTRIBUTIONS (354,058) (241,213) Share transactions 2,094,284 1,833,400 Net proceeds from sales of shares Reinvestment of distributions 325,419 217,154 Cost of shares redeemed (1,654,747) (1,013,515) NET INCREASE (DECREASE) IN NET ASSETS RESULTING 764,956 1,037,039 FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) IN NET ASSETS 1,561,337 1,542,874 NET ASSETS Beginning of period 3,947,346 2,404,472 End of period (including undistributed net investment $ 5,508,683 $ 3,947,346 income of $492 and $1,218, respectively) OTHER INFORMATION Shares Sold 82,904 79,709 Issued in reinvestment of distributions 13,949 9,745 Redeemed (65,855) (43,626) Net increase (decrease) 30,998 45,828
FINANCIAL HIGHLIGHTS YEARS ENDED JUNE 30, SIX MONTHS YEAR ENDED ENDED DECEMBER JUNE 30, 31, 1997 1996 1995 1994 F 1993 1992
SELECTED PER-SHARE DATA Net asset value, $ 24.65 $ 21.04 $ 18.61 $ 20.42 $ 18.94 $ 18.46 beginning of period Income from Investment Operations Net investment income .34 D .39 .38 .27 .29 E .45 Net realized and 5.99 5.04 3.35 .79 1.48 1.09 unrealized gain (loss) Total from investment 6.33 5.43 3.73 1.06 1.77 1.54 operations Less Distributions From net investment (.33) (.41) (.36) (.31) (.22) (.48) income From net realized gain (1.82) (1.41) (.94) (2.56) (.07) (.58) Total distributions (2.15) (1.82) (1.30) (2.87) (.29) (1.06) Net asset value, $ 28.83 $ 24.65 $ 21.04 $ 18.61 $ 20.42 $ 18.94 end of period TOTAL RETURN B, C 27.97% 27.00% 21.09% 5.41% 9.39% 8.46% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 5,509 $ 3,947 $ 2,404 $ 1,592 $ 1,439 $ 1,354 (in millions) Ratio of expenses to .62% .63% .66% .68% .66% A .67% average net assets Ratio of expenses to .59% .60% .64% .65% G .66%A .67% average net assets after G G G expense reductions Ratio of net investment 1.34% 1.71% 2.18% 1.85% 2.94%A, E 2.37% income to average net assets Portfolio turnover rate 107% 150% 157% 207% 261%A 151% Average commission $ .0420 rate H
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 7 OF NOTES TO FINANCIAL STATEMENTS). D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.06 PER SHARE. F EFFECTIVE JULY 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. G 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). H 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 June 30, 1997 6. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Fund (the fund) is a fund of Fidelity Hastings Street Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The financial statements have been prepared in conformity with generally accepted accounting principles which 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 (including restricted securities) for which exchange quotations are not readily available (and in certain cases debt securities which trade on an exchange) are valued primarily using dealer-supplied valuations or at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. 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 forward 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 information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of original issue 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INVESTMENT INCOME - CONTINUED discount, is accrued as earned. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for litigation proceeds, foreign currency transactions, market discount, partnerships, non-taxable dividends and losses deferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 7. 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 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 2. OPERATING POLICIES - CONTINUED REPURCHASE AGREEMENTS - CONTINUED 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. RESTRICTED SECURITIES. The fund is permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, the fund had no investments in restricted securities (excluding 144A issues). 8. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $5,101,426,000 and $4,607,534,000, respectively. 9. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .2500% to .5200% for the period. The annual individual fund fee rate is .09%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. For the period, the management fee was equivalent to an annual rate of .39% of average net assets. TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .19% of average net assets. ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting records and administers the security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses. BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $1,568,000 for the period. 10. SECURITY LENDING. The fund loaned securities to certain brokers who paid the fund negotiated lenders' fees. These fees are included in interest income. The fund receives U.S. Treasury obligations and/or cash as collateral against the loaned securities, in an amount at least equal to 102% of the market value of the loaned securities at the inception of each loan. This collateral must be maintained at not less than 100% of the market value of the loaned securities during the period of the loan. At period end, the value of the securities loaned and the value of collateral amounted to $11,167,000 and $11,444,000, respectively. 11. 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 balance during the period for which the loan was outstanding amounted to $9,765,000. The weighted average interest rate was 5.975%. 12. 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 $973,000 under this arrangement. In addition, the fund has entered into arrangements with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the fund's expenses. During the period, the fund's custodian and transfer agent fees were reduced by $8,000 and $147,000, respectively, under these arrangements. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Hastings Street Trust and the Shareholders of Fidelity Fund: We have audited the accompanying statement of assets and liabilities of Fidelity Hastings Street Trust: Fidelity Fund, including the schedule of portfolio investments, as of June 30, 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 periods indicated therein. 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 June 30, 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 Hastings Street Trust: Fidelity Fund as of June 30, 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 periods indicated therein, in conformity with generally accepted accounting principles. /s/COOPERS & LYBRAND L.L.P. Boston, Massachusetts August 4, 1997 DISTRIBUTIONS The Board of Trustees of Fidelity Fund voted to pay on August 4, 1997, to shareholders of record at the opening of business on August 1, 1997, a distribution of $.95 per share derived from capital gains realized from sales of portfolio securities. A total of 24% of the dividends distributed during the fiscal year qualifies for the dividends-received deduction for corporate shareholders. The fund will notify shareholders in January 1998 of the applicable percentage for use in preparing 1997 income tax returns. PROXY VOTING RESULTS A special meeting of the fund's shareholders was held on July 16, 1997. The results of votes taken among shareholders on proposals are listed below. PROPOSAL 1 To elect as Trustees the following twelve nominees. # OF % OF SHARES VOTED SHARES VOTED J. GARY BURKHEAD Affirmative 105,692,081.014 97.033 Withheld 3,231,430.067 2.967 TOTAL 108,923,511.081 100.000 RALPH F. COX Affirmative 105,680,605.875 97.023 Withheld 3,242,905.206 2.977 TOTAL 108,923,511.081 100.000 PHYLLIS BURKE DAVIS Affirmative 105,651,999.712 96.997 Withheld 3,271,511.369 3.003 TOTAL 108,923,511.081 100.000 ROBERT M. GATES Affirmative 105,511,218.744 96.867 Withheld 3,412,292.337 3.133 TOTAL 108,923,511.081 100.000 EDWARD C. JOHNSON 3RD Affirmative 105,632,223.614 96.978 Withheld 3,291,287.467 3.022 TOTAL 108,923,511.081 100.000 E. BRADLEY JONES Affirmative 105,521,432.110 96.877 Withheld 3,402,078.971 3.123 TOTAL 108,923,511.081 100.000 # OF % OF SHARES VOTED SHARES VOTED DONALD J. KIRK Affirmative 105,713,930.272 97.053 Withheld 3,209,580.809 2.947 TOTAL 108,923,511.081 100.000 PETER S. LYNCH Affirmative 105,733,536.173 97.071 Withheld 3,189,974.908 2.929 TOTAL 108,923,511.081 100.000 WILLIAM O. MCCOY Affirmative 105,749,629.803 97.086 Withheld 3,173,881.278 2.914 TOTAL 108,923,511.081 100.000 GERALD C. MCDONOUGH Affirmative 105,573,768.259 96.925 Withheld 3,349,742.822 3.075 TOTAL 108,923,511.081 100.000 MARVIN L. MANN Affirmative 105,739,307.496 97.077 Withheld 3,184,203.585 2.923 TOTAL 108,923,511.081 100.000 THOMAS R. WILLIAMS Affirmative 105,548,338.446 96.901 Withheld 3,375,172.635 3.099 TOTAL 108,923,511.081 100.000 PROPOSAL 2 To ratify the selection of Coopers & Lybrand L.L.P. as independent accountants of the trust. # OF % OF SHARES VOTED SHARES VOTED Affirmative 104,484,632.950 95.925 Against 1,151,276.434 1.057 Abstain 3,287,601.697 3.018 TOTAL 108,923,511.081 100.000 PROPOSAL 3 To amend the Declaration of Trust to provide voting rights based on a shareholder's total dollar investment in a fund, rather than on the number of shares owned. TRUST LEVEL # OF % OF SHARES VOTED SHARES VOTED OF THE TRUST OF THE TRUST Affirmative 94,915,172.474 88.458 Against 5,484,184.492 5.112 Abstain 6,899,772.115 6.430 TOTAL 107,299,129.081 100.000 Not Voting 1,624,382.000 FUND LEVEL # OF % OF SHARES VOTED SHARES VOTED OF THE FUND OF THE FUND Affirmative 90,989,798.540 88.688 Against 5,105,271.046 4.976 Abstain 6,500,820.611 6.336 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 4 To amend the Declaration of Trust to eliminate the requirement that shareholders be notified in the event of an appointment of a trustee within three months of the appointment. # OF % OF SHARES VOTED SHARES VOTED Affirmative 98,686,816.986 91.974 Against 3,875,803.557 3.612 Abstain 4,736,508.538 4.414 TOTAL 107,299,129.081 100.000 Not Voting 1,624,382.000 PROPOSAL 5 To amend the Declaration of Trust to clarify that the Trustees may authorize the investment of all of a fund's assets in another open-end investment company with substantially the same investment objective and policies. # OF % OF SHARES VOTED SHARES VOTED Affirmative 92,479,709.631 86.189 Against 9,779,633.919 9.114 Abstain 5,039,785.531 4.697 TOTAL 107,299,129.081 100.000 Not Voting 1,624,382.000 PROPOSAL 6 To adopt a new fundamental investment policy for the fund that would permit it to invest all of its assets in another open-end investment company managed by FMR or an affiliate with substantially the same investment objective and policies. # OF % OF SHARES VOTED SHARES VOTED Affirmative 87,981,749.480 85.756 Against 9,889,893.476 9.639 Abstain 4,724,247.241 4.605 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 7 To approve an amended management contract for the fund that would reduce the management fee payable to FMR by the fund as FMR's assets under management increase. # OF % OF SHARES VOTED SHARES VOTED Affirmative 93,518,526.609 89.790 Against 3,159,099.460 3.033 Abstain 7,474,668.128 7.177 TOTAL 104,152,294.197 100.000 PROPOSAL 8 To approve a new sub-advisory agreement with FMR Far East to provide investment advice and research services or investment management services. # OF % OF SHARES VOTED SHARES VOTED Affirmative 92,043,042.194 88.374 Against 3,845,290.830 3.692 Abstain 8,263,961.173 7.934 TOTAL 104,152,294.197 100.000 PROPOSAL 9 To approve a new sub-advisory agreement with FMR U.K. to provide investment advice and research services or investment management services. # OF % OF SHARES VOTED SHARES VOTED Affirmative 92,287,606.635 88.608 Against 3,733,079.350 3.585 Abstain 8,131,608.212 7.807 TOTAL 104,152,294.197 100.000 PROPOSAL 10 Real Estate - To make explicit the ability of the fund to purchase any security or instrument backed by real estate or real estate interests and any security of companies engaged in the real estate business. # OF % OF SHARES VOTED SHARES VOTED Affirmative 86,861,108.712 84.663 Against 8,092,212.801 7.888 Abstain 7,642,568.684 7.449 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 11 Diversification - To replace the fund's fundamental investment limitation concerning diversification with a fundamental diversification limitation permitting increased investment in the securities of any single issuer. # OF % OF SHARES VOTED SHARES VOTED Affirmative 86,516,544.025 84.327 Against 8,586,642.355 8.370 Abstain 7,492,703.817 7.303 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 12 Diversification - To amend the diversification limitation to exclude "securities of other investment companies" from issuer diversification limits. # OF % OF SHARES VOTED SHARES VOTED Affirmative 86,769,851.064 84.574 Against 7,922,643.204 7.723 Abstain 7,903,395.929 7.703 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 13 Short Sales - To eliminate the fundamental investment limitation on short sales and adopt a similar non-fundamental investment limitation. # OF % OF SHARES VOTED SHARES VOTED Affirmative 80,232,582.387 78.203 Against 11,834,188.614 11.534 Abstain 10,529,119.196 10.263 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 14 Margin Purchases - To eliminate the fundamental investment limitation on margin purchases and adopt a similar non-fundamental investment limitation. # OF % OF SHARES VOTED SHARES VOTED Affirmative 83,798,708.832 81.678 Against 10,698,517.260 10.428 Abstain 8,098,664.105 7.894 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 15 Other Investment Companies - To eliminate the fundamental investment limitation restricting ownership of other investment companies. # OF % OF SHARES VOTED SHARES VOTED Affirmative 83,715,883.540 81.598 Against 8,159,736.309 7.953 Abstain 10,720,270.348 10.449 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 16 Newly-Formed Issuers - To eliminate the fundamental investment limitation restricting ownership of newly-formed issuers. # OF % OF SHARES VOTED SHARES VOTED Affirmative 83,990,480.597 81.865 Against 7,775,529.605 7.579 Abstain 10,829,879.995 10.556 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 17 Senior Securities - To add the ability to issue senior securities to the extent permitted under the Investment Company Act of 1940. # OF % OF SHARES VOTED SHARES VOTED Affirmative 85,523,658.031 83.360 Against 6,210,469.550 6.053 Abstain 10,861,762.616 10.587 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 18 Borrowing - To amend the borrowing limitation to require a reduction in borrowing if borrowings exceed the 33 1/3% limit for any reason rather than solely because of a decline in net assets. # OF % OF SHARES VOTED SHARES VOTED Affirmative 81,944,278.972 79.871 Against 9,573,105.807 9.331 Abstain 11,078,505.418 10.798 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 19 Underwriting - To clarify the fundamental policy with respect to underwriting. # OF % OF SHARES VOTED SHARES VOTED Affirmative 83,649,067.256 81.533 Against 7,443,282.017 7.255 Abstain 11,503,540.924 11.212 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 20 Concentration - To standardize the language of the limitation on industry concentration and modify it to refer to "companies with principal business activities in the same industry" rather than "companies in any one industry." # OF % OF SHARES VOTED SHARES VOTED Affirmative 83,431,313.555 81.320 Against 7,487,715.392 7.299 Abstain 11,676,861.250 11.381 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 PROPOSAL 21 Lending - To clarify that the fund can purchase an entire issue of debt securities and to eliminate the reference to "portfolio securities" in the exception for repurchase agreements. # OF % OF SHARES VOTED SHARES VOTED Affirmative 82,312,308.875 80.230 Against 8,745,486.476 8.524 Abstain 11,538,094.846 11.246 TOTAL 102,595,890.197 100.000 Not Voting 1,556,404.000 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)(PHONE_GRAPHIC)TOUCHTONE XPRESS 1-800-544-5555 PRESS For mutual fund and brokerage trading. 1 For quotes.* 2 For account balances and holdings. 3 To review orders and mutual fund activity. 4 To change your PIN. 5 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. 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