-----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, SRbXc/tDIhnJKRMY41zjg7TX3DDAeFwtifEVcKRh8SNlhXlxuF3t1BpT0r5yTfGM J2qwT93ZJ3MGxnTFHOgTxA== 0000035348-00-000002.txt : 20000216 0000035348-00-000002.hdr.sgml : 20000216 ACCESSION NUMBER: 0000035348-00-000002 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000215 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: SEC FILE NUMBER: 811-00215 FILM NUMBER: 545305 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 FIDELITY(REGISTERED TRADEMARK) CONTRAFUND(REGISTERED TRADEMARK) II SEMIANNUAL REPORT DECEMBER 31, 1999 (2_FIDELITY_LOGOS)(registered trademark) 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 17 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 21 Notes to the financial statements. Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Other third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. 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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial Average all closed 1999 at record highs. Investors should note, however, that much of the year's returns were driven by a single sector: technology. Most other stocks were flat or down in 1999. Likewise, bond investors had little cause to celebrate at year's end. Steadily rising interest rates left the benchmark 30-year Treasury at its highest yield level in two years. 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 an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these types of funds. 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. Of course, you should consider your financial ability to continue your purchases through periods of low price levels before undertaking such a strategy. If you have questions, please call us at 1-800-544-6666, or visit our web site at www.fidelity.com. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND FIDELITY CONTRAFUND II 26.01% 42.52% 58.77% FIDELITY CONTRAFUND II (INCL. 22.23% 38.25% 54.01% 3.00% SALES CHARGE) S&P 500 7.71% 21.04% 36.58% Growth Funds Average 15.57% 29.27% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year or since the fund started on March 31, 1998. 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 500SM Index - a market capitalization-weighted index of common stocks. To measure how the fund's performance stacked up against its peers, you can compare it to the growth funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past six months average represents a peer group of 1,149 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. Lipper has created new comparison categories that group funds according to portfolio characteristics and capitalization, as well as by capitalization only. These averages are listed on page 5 of this report.* AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1999 PAST 1 YEAR LIFE OF FUND FIDELITY CONTRAFUND II 42.52% 30.23% FIDELITY CONTRAFUND II (INCL. 38.25% 27.99% 3.00% SALES CHARGE) S&P 500 21.04% 19.50% Growth Funds Average 29.27% 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 arithmatic average. This may produce a different figure than that obtained by averaging the cumulative total returns and annualizing the result.) $10,000 OVER LIFE OF FUND Contrafund II S&P 500 00339 SP001 1998/03/31 9700.00 10000.00 1998/04/30 9738.80 10100.60 1998/05/31 9457.50 9926.97 1998/06/30 10039.50 10330.20 1998/07/31 9787.30 10220.19 1998/08/31 7992.80 8742.55 1998/09/30 8691.20 9302.60 1998/10/31 8914.30 10059.27 1998/11/30 9797.00 10668.97 1998/12/31 10805.80 11283.71 1999/01/31 11416.90 11755.60 1999/02/28 10999.80 11390.23 1999/03/31 11630.30 11845.96 1999/04/30 11921.30 12304.75 1999/05/31 11717.60 12014.24 1999/06/30 12222.00 12681.03 1999/07/31 11921.30 12285.12 1999/08/31 11744.29 12224.31 1999/09/30 11506.72 11889.24 1999/10/31 12260.75 12641.60 1999/11/30 13200.70 12898.60 1999/12/31 15400.82 13658.33 IMATRL PRASUN SHR__CHT 19991231 20000113 114812 R00000000000024 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Contrafund II on March 31, 1998, when the fund started, and the current 3.00% sales charge was paid. As the chart shows, by December 31, 1999, the value of the investment would have grown to $15,401 - a 54.01% increase on the initial investment. For comparison, look at how the Standard & Poor's 500 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $13,658 - a 36.58% increase. (checkmark)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. * THE LIPPER MULTI-CAP GROWTH FUNDS AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO CHARACTERISTICS AND CAPITALIZATION. THE LIPPER MULTI-CAP SUPERGROUP AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR CAPITALIZATION. AS OF DECEMBER 31, 1999, THE SIX MONTH AND ONE YEAR CUMULATIVE TOTAL RETURNS FOR THE MULTI-CAP GROWTH FUNDS AVERAGE WERE, 31.76% AND 52.34%, RESPECTIVELY. THE ONE YEAR AVERAGE ANNUAL TOTAL RETURN WAS, 52.34%. THE SIX MONTH AND ONE YEAR CUMULATIVE TOTAL RETURNS FOR THE MULTI-CAP SUPERGROUP AVERAGE WERE, 11.38%, AND 24.95%, RESPECTIVELY. THE ONE YEAR AVERAGE ANNUAL TOTAL RETURN WAS 24.95%. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP Technology. If one could use only a single word to sum up what characterized the U.S. equity markets for the second half of 1999, no other term would be more appropriate. The performance of the technology sector during the six-month period ending December 31, 1999, dwarfed all others. To illustrate: The Goldman Sachs Indexes monitor the performance of seven sectors - Consumer, Cyclical, Financial, Health Care, Natural Resources, Technology and Utilities. Of those, Utilities was the second-best performer, returning 7.64% for the final six months of 1999. In comparison, the Goldman Sachs Technology Index returned an astonishing 49.40%. That performance was mirrored by the tech-heavy NASDAQ Index, which was up 51.69% during the same time frame. On a broader scale and reflective of the extreme narrowness of the market, the Standard & Poor's 500 Index - a market-capitalization-weighted index of 500 widely held U.S. stocks - returned a more modest 7.71%. The Dow Jones Industrial Average - an index of 30 blue-chip stocks - posted a 5.60% return during the period. On the last day of the period - - in fact, the last day of the decade, century and millennium - the NASDAQ, Dow and S&P all closed at record high levels. (photograph of Jason Weiner) An interview with Jason Weiner, Portfolio Manager of Contrafund II Q. HOW DID THE FUND PERFORM, JASON? A. During the second half of 1999, the fund more than tripled the performance of the Standard & Poor's 500 Index in a strong overall equity environment. For the six months ending December 31, 1999, the fund returned 26.01%, compared to 7.71% for the S&P 500 and 15.57% for the growth funds average monitored by Lipper Inc. For the 12 months ending December 31, 1999, the fund returned 42.52%, while the index and average had returns of 21.04% and 29.27%, respectively. Q. WHAT KIND OF MARKET CONDITIONS DID YOU ENCOUNTER DURING THE PAST SIX MONTHS? A. To put the past six months in proper context, we need to step back for a moment. A year ago I mentioned that the performance of large companies was significantly outpacing that of smaller companies and that this phenomenon detracted from the fund's relative performance. This trend reversed in 1999 and the fund benefited accordingly. I also said then that the market was benefiting from the Federal Reserve Board lowering interest rates. The opposite is true today - since my report six months ago, the Fed raised rates twice, for a total of three rate increases in 1999. Q. WERE THERE ANY SIMILARITIES? A. Yes, there were. The technology sector continued to lead the overall market by a wide margin. For instance, during the period the technology sector gained 38.5% compared to the overall market's return of 8%. That is a large divergence. Put another way, in the past six months all but one of the 10 best contributors to the fund's performance were technology stocks, including Cisco Systems, VeriSign, Microsoft, Optical Coating Lab and PE Biosystems Group. The biggest winners were Internet companies, which exhibited unprecedented growth rates, and the market gave them extraordinary valuations. BroadVision and Vignette, two Internet infrastructure companies that are positioned to grow as more companies expand their Web presence, performed extremely well during the period. Q. WERE THERE OTHER TECHNOLOGY SECTORS THAT YOU LIKED? A. The fund owned the stocks of several wireless communications service providers and networking companies. In particular, I am on the lookout for successful companies in the wireless data area. Q. YOU DECREASED THE FUND'S FINANCE HOLDINGS FROM 15.6% OF NET ASSETS SIX MONTHS AGO TO 8.8% AT THE END OF THE PERIOD. WHY? A. Most of the reduction occurred in bank stocks, which I felt were vulnerable to slowing earnings growth and fears of increasing competition from Internet banking. The branch office structure maintained by traditional banks is an anachronism - and a costly one, at that - in this age of on-line banking. The Fed's interest-rate hikes also contributed to the unfavorable environment for bank stocks. Q. WHICH STOCKS WERE DETRIMENTAL TO PERFORMANCE? A. Republic Services, a waste management company, pulled back when the company reported earnings that were slightly below analysts' expectations. Unfortunately, the stock was punished partly because of negative investor sentiment created by even greater earnings shortfalls experienced by other major industry players. Clothing retailer Abercrombie & Fitch, previously one of the fund's star performers, stumbled badly when the company's same-store sales growth went from astronomical to merely good. Philip Morris continued to struggle in the absence of any real progress toward reducing its risks from smoking-related lawsuits. I sold the first two stocks but held on to Philip Morris, which at the end of the period was trading around seven times earnings and had a dividend yield of approximately 8%. Unfortunately, Philip Morris exemplified the poor performance of most value stocks during the period. Q. WHAT'S YOUR OUTLOOK, JASON? A. The story remains the same. The market is trading at a rich valuation, and breadth - a measure of how many stocks are following the market leaders - is poor. The economy is nine years into an expansion that may slow down. Inflation remains a risk, as do higher interest rates. The S&P 500's average annual return for the past five years is an amazing 28.5%. I cannot help but be cautious. Nonetheless, I am sticking to a bias in favor of earnings growth over value. My belief is that the stocks with the best earnings growth win over the long haul. 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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. (checkmark)FUND FACTS GOAL: to increase the value of the fund's shares over the long term by investing in companies whose value FMR believes is not fully recognized by the public FUND NUMBER: 339 TRADING SYMBOL: FCONX START DATE: March 31, 1998 SIZE: as of December 31, 1999, more than $1.3 billion MANAGER: Jason Weiner, since inception; associate manager, VIP: Contrafund, since March 1998; Fidelity Export and Multinational Fund, 1997-1998; Fidelity Select Computers Portfolio, 1996-1997; Fidelity Select Air Transportation Portfolio, 1994-1996; joined Fidelity in 1991 JASON WEINER ON INVESTING IN INTERNET STOCKS: "The universe of Internet stocks can be split into three groups: business-to-consumer e-tailers, business-to-business e-commerce companies and Internet infrastructure companies. I am focusing on infrastructure companies, which should be the most immediate beneficiaries of the ongoing build-out of the Internet. There will no doubt be winners in all three categories, but I believe that infrastructure stocks are the safest way to play the wildly volatile Internet group. "I look for companies that address large markets and enjoy a time-to-market advantage over their competition. In a nascent technology market, it is critical to gain an early advantage to cement a list of reference accounts, consultants and integrators that are committed to a product as a platform for their growth. "Why avoid business-to-consumer e-tailers? The traditional bricks-and-mortar retail business was already a fiercely competitive marketplace before the Internet existed. Internet retailing is even more cutthroat and could get even worse as the bricks-and-mortar retailers focus on the Net. As for the business-to-business market, you'll notice that the fund did not own any pure plays. That was due to their extreme valuations. It is a market I am watching carefully, though, to see what emerges as the business models for those companies develop." INVESTMENT CHANGES
TOP TEN STOCKS AS OF DECEMBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Microsoft Corp. 5.3 4.2 Cisco Systems, Inc. 3.3 1.4 General Electric Co. 2.6 0.0 Exxon Mobil Corp. 2.2 1.1 Sprint Corp. - PCS Group 2.1 0.0 Series 1 Fannie Mae 1.8 3.2 American International Group, 1.5 0.0 Inc. Warner-Lambert Co. 1.4 0.0 AT&T Corp. - Liberty Media 1.3 1.1 Group Class A Mannesmann AG (Reg.) 1.3 0.0 22.8 11.0 TOP FIVE MARKET SECTORS AS OF DECEMBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 30.5 17.0 UTILITIES 10.4 8.5 FINANCE 8.8 15.6 HEALTH 8.0 13.7 INDUSTRIAL MACHINERY & 7.4 4.1 EQUIPMENT
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF DECEMBER 31, 1999 * AS OF JUNE 30, 1999 ** Stocks 93.8% Stocks 98.9% Short-Term Investments and Short-Term Investments and Net Other Assets 6.2% Net Other Assets 1.1% * FOREIGN INVESTMENTS 8.2% ** FOREIGN INVESTMENTS 3.3% Row: 1, Col: 1, Value: 93.8 Row: 1, Col: 1, Value: 98.90000000000001 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 8, Value: 6.2 Row: 1, Col: 8, Value: 1.1
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS. INVESTMENTS DECEMBER 31, 1999 (UNAUDITED) Showing Percentage of Net Assets
COMMON STOCKS - 93.8% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 0.6% Textron, Inc. 99,300 $ 7,615 BASIC INDUSTRIES - 3.2% CHEMICALS & PLASTICS - 0.5% Georgia Gulf Corp. 225,000 6,848 METALS & MINING - 1.9% Alcoa, Inc. 120,000 9,960 Furukawa Electric Co. Ltd. 1,100,000 16,683 26,643 PACKAGING & CONTAINERS - 0.8% Corning, Inc. 80,000 10,315 TOTAL BASIC INDUSTRIES 43,806 DURABLES - 1.1% AUTOS, TIRES, & ACCESSORIES - 0.3% Danaher Corp. 100,000 4,825 HOME FURNISHINGS - 0.3% Miller (Herman), Inc. 197,000 4,531 TEXTILES & APPAREL - 0.5% Shaw Industries, Inc. 420,000 6,484 TOTAL DURABLES 15,840 ENERGY - 7.2% ENERGY SERVICES - 4.4% BJ Services Co. (a) 309,200 12,928 ENSCO International, Inc. 400,000 9,150 Noble Drilling Corp. (a) 373,100 12,219 Smith International, Inc. (a) 256,350 12,737 Weatherford International, 345,500 13,798 Inc. (a) 60,832 OIL & GAS - 2.8% Cooper Cameron Corp. (a) 165,500 8,099 Exxon Mobil Corp. 381,100 30,702 38,801 TOTAL ENERGY 99,633 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - 8.8% BANKS - 0.9% Bank of New York Co., Inc. 167,600 $ 6,704 Chase Manhattan Corp. 67,100 5,213 11,917 CREDIT & OTHER FINANCE - 1.0% Citigroup, Inc. 144,500 8,029 Concord EFS, Inc. (a) 249,000 6,412 14,441 FEDERAL SPONSORED CREDIT - 2.7% Fannie Mae 388,400 24,251 Freddie Mac 264,300 12,439 36,690 INSURANCE - 3.9% AFLAC, Inc. 150,100 7,083 Ambac Financial Group, Inc. 204,000 10,646 American International Group, 187,800 20,306 Inc. CIGNA Corp. 87,400 7,041 Hartford Life, Inc. Class A 185,000 8,140 53,216 SECURITIES INDUSTRY - 0.3% Charles Schwab Corp. 130,000 4,989 TOTAL FINANCE 121,253 HEALTH - 8.0% DRUGS & PHARMACEUTICALS - 7.2% Amgen, Inc. (a) 130,000 7,808 Bristol-Myers Squibb Co. 179,200 11,502 Celgene Corp. (a) 92,500 6,475 Eli Lilly & Co. 100,000 6,650 IDEC Pharmaceuticals Corp. (a) 96,914 9,522 Immunex Corp. (a) 83,500 9,143 Medimmune, Inc. (a) 69,800 11,578 QLT PhotoTherapeutics, Inc. 125,500 7,374 (a) Schering-Plough Corp. 250,000 10,547 Warner-Lambert Co. 234,300 19,198 99,797 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) HEALTH - CONTINUED MEDICAL EQUIPMENT & SUPPLIES - - 0.4% Cygnus, Inc. (a) 300,000 $ 5,475 MEDICAL FACILITIES MANAGEMENT - - 0.4% Express Scripts, Inc. Class A 80,000 5,120 (a) TOTAL HEALTH 110,392 INDUSTRIAL MACHINERY & EQUIPMENT - 7.4% ELECTRICAL EQUIPMENT - 4.3% General Electric Co. 230,300 35,639 Hutchison Whampoa Ltd. 452,000 6,575 Omnipoint Corp. (a) 136,900 16,514 58,728 INDUSTRIAL MACHINERY & EQUIPMENT - 3.1% Ingersoll-Rand Co. 145,000 7,984 Kaydon Corp. 300,000 8,044 Kennametal, Inc. 200,000 6,725 MSC Industrial Direct, Inc. 277,100 3,672 (a) Parker-Hannifin Corp. 180,000 9,236 PRI Automation, Inc. (a) 115,000 7,719 43,380 TOTAL INDUSTRIAL MACHINERY & 102,108 EQUIPMENT MEDIA & LEISURE - 7.1% BROADCASTING - 5.3% AT&T Corp. - Liberty Media 319,800 18,149 Group Class A (a) Cablevision Systems Corp. 85,000 6,418 Class A (a) CBS Corp. (a) 172,000 10,997 Comcast Corp. Class A 234,500 11,857 (special) Cox Communications, Inc. 291,300 15,002 Class A (a) Time Warner, Inc. 150,351 10,891 73,314 ENTERTAINMENT - 0.9% Royal Carribbean Cruises Ltd. 130,000 6,411 Viacom, Inc. Class B 100,000 6,044 (non-vtg.) (a) 12,455 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) MEDIA & LEISURE - CONTINUED LODGING & GAMING - 0.5% Four Seasons Hotels, Inc. 125,000 $ 6,636 RESTAURANTS - 0.4% McDonald's Corp. 122,000 4,918 TOTAL MEDIA & LEISURE 97,323 NONDURABLES - 1.9% FOODS - 0.4% Keebler Foods Co. (a) 205,000 5,766 HOUSEHOLD PRODUCTS - 1.1% Procter & Gamble Co. 133,700 14,649 TOBACCO - 0.4% Philip Morris Companies, Inc. 271,800 6,302 TOTAL NONDURABLES 26,717 PRECIOUS METALS - 1.1% Newmont Mining Corp. 600,000 14,700 RETAIL & WHOLESALE - 2.8% GENERAL MERCHANDISE STORES - 1.8% Dollar Tree Stores, Inc. (a) 160,300 7,765 Wal-Mart Stores, Inc. 241,900 16,721 24,486 RETAIL & WHOLESALE, MISCELLANEOUS - 1.0% Home Depot, Inc. 207,900 14,254 TOTAL RETAIL & WHOLESALE 38,740 SERVICES - 3.0% ADVERTISING - 1.1% DoubleClick, Inc. (a) 40,000 10,123 Young & Rubicam, Inc. 75,000 5,306 15,429 LEASING & RENTAL - 0.9% Hertz Corp. Class A 235,000 11,779 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) SERVICES - CONTINUED SERVICES - 1.0% Caremark Rx, Inc. (a) 1,100,000 $ 5,569 CheckFree Holdings Corp. (a) 75,000 7,838 13,407 TOTAL SERVICES 40,615 TECHNOLOGY - 30.5% COMMUNICATIONS EQUIPMENT - 5.2% Cisco Systems, Inc. (a) 427,600 45,807 Efficient Networks, Inc. 15,200 1,034 Nokia AB sponsored ADR 60,000 11,400 Nortel Networks Corp. 133,300 13,439 71,680 COMPUTER SERVICES & SOFTWARE - - 17.7% Affiliated Computer Services, 75,000 3,450 Inc. Class A (a) Affymetrix, Inc. (a) 85,000 14,423 America Online, Inc. (a) 159,800 12,055 Automatic Data Processing, 237,000 12,768 Inc. Banyan Systems, Inc. (a) 229,400 4,588 BroadVision, Inc. (a) 41,100 6,990 Cambridge Technology 46,400 1,218 Partners, Inc. (a) Ceridian Corp. (a) 375,000 8,086 Citrix Systems, Inc. (a) 138,500 17,036 DSET Corp. (a) 61,200 2,287 DST Systems, Inc. (a) 111,500 8,509 Exodus Communications, Inc. 110,000 9,769 (a) Liquid Audio, Inc. 200,000 5,250 Microsoft Corp. (a) 625,000 72,963 National Instrument Corp. (a) 165,000 6,311 Sabre Group Holdings, Inc. 150,000 7,688 Class A (a) Siebel Systems, Inc. (a) 90,000 7,560 Software.com, Inc. 7,600 730 Student Advantage, Inc. 265,000 5,880 Usinternetworking, Inc. 100,000 6,988 VeriSign, Inc. (a) 51,600 9,852 Vignette Corp. 79,000 12,877 Yahoo!, Inc. (a) 15,000 6,490 243,768 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMPUTERS & OFFICE EQUIPMENT - - 3.4% Alteon Websystems, Inc. 70,000 $ 6,143 Comverse Technology, Inc. (a) 57,200 8,280 EMC Corp. (a) 90,000 9,833 Seagate Technology, Inc. (a) 160,000 7,450 Symbol Technologies, Inc. 236,600 15,039 46,745 ELECTRONIC INSTRUMENTS - 1.5% Optical Coating Laboratories, 25,000 7,400 Inc. PE Corp. - Biosystems Group 106,100 12,765 20,165 ELECTRONICS - 2.7% AstroPower, Inc. (a) 86,300 1,208 Celestica, Inc. (sub. vtg.) 137,800 7,696 (a) Flextronics International 182,800 8,409 Ltd. (a) KEMET Corp. (a) 100,000 4,506 Motorola, Inc. 50,000 7,363 PMC-Sierra, Inc. (a) 50,000 8,016 37,198 TOTAL TECHNOLOGY 419,556 TRANSPORTATION - 0.7% TRUCKING & FREIGHT - 0.7% Eagle USA Airfreight, Inc. (a) 135,000 5,822 Expeditors International of 72,900 3,194 Washington, Inc. 9,016 UTILITIES - 10.4% CELLULAR - 6.9% Mannesmann AG (Reg.) 72,700 17,705 Nextel Communications, Inc. 147,600 15,221 Class A (a) Powertel, Inc. (a) 100,000 10,038 Sprint Corp. - PCS Group 279,000 28,598 Series 1 (a) Telephone & Data Systems, 59,000 7,434 Inc. Vodafone AirTouch PLC 322,500 15,964 sponsored ADR 94,960 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) UTILITIES - CONTINUED ELECTRIC UTILITY - 1.0% Calpine Corp. (a) 217,341 $ 13,910 TELEPHONE SERVICES - 2.5% BellSouth Corp. 50,400 2,359 CenturyTel, Inc. 150,000 7,106 Global TeleSystems Group, 150,000 5,194 Inc. (a) McLeodUSA, Inc. Class A (a) 160,000 9,420 Metromedia Fiber Network, 225,500 10,810 Inc. Class A (a) 34,889 TOTAL UTILITIES 143,759 TOTAL COMMON STOCKS 1,291,073 (Cost $1,015,492) CASH EQUIVALENTS - 9.0% Central Cash Collateral Fund, 30,984,800 30,985 4.97% (b) Taxable Central Cash Fund, 93,087,474 93,087 5.12% (b) TOTAL CASH EQUIVALENTS 124,072 (Cost $124,072) TOTAL INVESTMENT PORTFOLIO - 1,415,145 102.8% (Cost $1,139,564) NET OTHER ASSETS - (2.8)% (38,920) NET ASSETS - 100% $ 1,376,225
LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. INCOME TAX INFORMATION At December 31, 1999, the aggregate cost of investment securities for income tax purposes was $1,146,281,000. Net unrealized appreciation aggregated $268,864,000, of which $292,742,000 related to appreciated investment securities and $23,878,000 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) DECEMBER 31, 1999 (UNAUDITED) ASSETS Investment in securities, at $ 1,415,145 value (cost $1,139,564) - See accompanying schedule Cash 2,075 Foreign currency held at 9 value (cost $9) Receivable for investments 3,443 sold Receivable for fund shares 10,627 sold Dividends receivable 462 Interest receivable 350 Other receivables 83 TOTAL ASSETS 1,432,194 LIABILITIES Payable for investments $ 21,300 purchased Payable for fund shares 2,770 redeemed Accrued management fee 672 Other payables and accrued 242 expenses Collateral on securities 30,985 loaned, at value TOTAL LIABILITIES 55,969 NET ASSETS $ 1,376,225 Net Assets consist of: Paid in capital $ 1,030,331 Accumulated net investment (815) (loss) Accumulated undistributed net 71,135 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 275,574 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 92,292 shares $ 1,376,225 outstanding NET ASSET VALUE and $14.91 redemption price per share ($1,376,225 (divided by) 92,292 shares) Maximum offering price per $15.37 share (100/97.00 of $14.91) STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED) INVESTMENT INCOME $ 2,300 Dividends Interest 873 Security lending 51 TOTAL INCOME 3,224 EXPENSES Management fee Basic fee $ 2,764 Performance adjustment 165 Transfer agent fees 1,032 Accounting and security 174 lending fees Non-interested trustees' 1 compensation Custodian fees and expenses 30 Registration fees 96 Audit 13 Legal 7 Interest 6 Miscellaneous 3 Total expenses before 4,291 reductions Expense reductions (252) 4,039 NET INVESTMENT INCOME (LOSS) (815) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 81,348 Foreign currency transactions (25) 81,323 Change in net unrealized appreciation (depreciation) on: Investment securities 179,912 Assets and liabilities in (8) 179,904 foreign currencies NET GAIN (LOSS) 261,227 NET INCREASE (DECREASE) IN $ 260,412 NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS SIX MONTHS ENDED DECEMBER YEAR ENDED JUNE 30, 31,1999 (UNAUDITED) 1999 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ (815) $ (29) income (loss) Net realized gain (loss) 81,323 51,202 Change in net unrealized 179,904 79,239 appreciation (depreciation) NET INCREASE (DECREASE) IN 260,412 130,412 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (51,448) - from net realized gains Share transactions Net 422,465 800,818 proceeds from sales of shares Reinvestment of distributions 50,104 - Cost of shares redeemed (206,242) (349,422) NET INCREASE (DECREASE) IN 266,327 451,396 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 475,291 581,808 IN NET ASSETS NET ASSETS Beginning of period 900,934 319,126 End of period (including $ 1,376,225 $ 900,934 undistributed net investment income (loss) of $(815) and $8, respectively) OTHER INFORMATION Shares Sold 33,101 73,180 Issued in reinvestment of 4,514 - distributions Redeemed (16,821) (32,501) Net increase (decrease) 20,794 40,679
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED DECEMBER 31, YEARS ENDED JUNE 30, 1999 (UNAUDITED) 1999 1998 E SELECTED PER-SHARE DATA Net asset value, beginning of $ 12.60 $ 10.35 $ 10.00 period Income from Investment Operations Net investment income (loss) D (.01) .00 (.01) Net realized and unrealized 3.04 2.25 .36 gain (loss) Total from investment 3.03 2.25 .35 operations Less Distributions From net realized gain (.72) - - Net asset value, end of period $ 14.91 $ 12.60 $ 10.35 TOTAL RETURN B, C 26.01% 21.74% 3.50% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in $ 1,376 $ 901 $ 319 millions) Ratio of expenses to average .89% A .93% 1.28% A net assets Ratio of expenses to average .84% A, F .86% F 1.23% A, F net assets after expense reductions Ratio of net investment (.17)% A (.01)% (.28)% A income (loss) to average net assets Portfolio turnover rate 340% A 293% 141% A
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD MARCH 31, 1998 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1998. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. NOTES TO FINANCIAL STATEMENTS For the period ended December 31, 1999 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Contrafund II (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, 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 require 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. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of the business of the fund, are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. 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. 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. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. 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 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INCOME TAXES - CONTINUED 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 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 among 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 foreign currency transactions, non-taxable dividends and losses deferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. 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 & 2. OPERATING POLICIES - CONTINUED JOINT TRADING ACCOUNT - CONTINUED Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC, the fund may invest in the Taxable Central Cash Fund and the Central Cash Collateral Fund(the Cash Funds) managed by Fidelity Investments Money Management, Inc., an affiliate of FMR. The Cash Funds are open-end money market funds available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Funds seek preservation of capital, liquidity, and current income. Income distributions from the Cash Funds are declared daily and paid monthly from net interest income. Income distributions earned by the fund are recorded as either interest income or security lending income in the accompanying financial statements. INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the fund to borrow from, or lend money to, other participating funds. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $1,748,709,000 and $1,609,638,000, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly basic fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .2167% 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 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED MANAGEMENT FEE - CONTINUED same or a lower management fee. The basic fee is subject to a performance adjustment (up to a maximum of (plus/minus).20% of the fund's average net assets over the performance period) based on the fund's investment performance as compared to the appropriate index over a specified period of time. The fund's performance adjustment took effect in March 1999. For the period, the management fee was equivalent to an annualized rate of .61% of average net assets after the performance adjustment. SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an affiliate of FMR and the general distributor of the fund, received sales charges of $1,253,000 on sales of shares of the fund all of which was retained. 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 annualized rate of .21% 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 $67,000 for the period. 5. INTERFUND LENDING PROGRAM. The fund participated in the interfund lending program as a borrower. The average daily loan balance during the period for which loans were outstanding amounted to $8,857,000. The weighted average interest rate was 5.42%. Interest expense includes $5,000 paid under the interfund lending program. 6. SECURITY LENDING. The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral in the form of U.S. Treasury obligations, letters of credit, and/or cash against the loaned securities, and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. At period end, the 6. SECURITY LENDING - CONTINUED value of the securities loaned amounted to $30,544,000. The fund received cash collateral of $30,985,000 which was invested in cash equivalents. 7. 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. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $3,119,000. The weighted average interest rate was 5.57%. Interest expense includes $1,000 paid under the bank borrowing program. 8. 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 $248,000 under this arrangement. In addition, through arrangements with the fund's custodian and transfer agent, 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 $3,000 and $1,000, respectively, under these arrangements. 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 Automated Service Telephone provides 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. (PHONE_GRAPHIC)FIDELITY AUTOMATED SERVICE TELEPHONE (FASTSM) 1-800-544-5555 PRESS 1 For mutual fund and brokerage trading. 2 For quotes.* 3 For account balances and holdings. 4 To review orders and mutual fund activity. 5 To change your PIN. *0 To speak to a Fidelity representative. 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. (COMPUTER_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call EarthLink Sprint at 1-800-288-2967, and be sure to ask for registration number SMD004 to receive a special Fidelity package that includes 30 days of free Internet access. EarthLink is North America's #1 independent Internet access provider. (COMPUTER_GRAPHIC) FIDELITY ON-LINE XPRESS+(registered trademark) 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 1-800-544-0240 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 WRITE FIDELITY If more than one address is listed, please locate the address that is closest to you. We'll give your correspondence immediate attention and send you written confirmation upon completion of your request. (LETTER_GRAPHIC)MAKING CHANGES TO YOUR ACCOUNT (such as changing name, address, bank, etc.) Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0002 (LETTER_GRAPHIC)FOR NON-RETIREMENT ACCOUNTS BUYING SHARES Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 OVERNIGHT EXPRESS Fidelity Investments 2300 Litton Lane - KH1A Hebron, KY 41048 SELLING SHARES Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 OVERNIGHT EXPRESS Fidelity Investments Attn: Redemptions - CP6I 400 East Colinas Blvd. Irving, TX 75039-5587 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 (LETTER_GRAPHIC)FOR RETIREMENT ACCOUNTS BUYING SHARES Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 SELLING SHARES Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 OVERNIGHT EXPRESS Fidelity Investments Attn: Redemptions - CP6R 400 East Colinas Blvd. Irving, TX 75039-5587 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. 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Westshore Blvd. Tampa, FL GEORGIA 3445 Peachtree Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA ILLINOIS One North Franklin Street Chicago, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL 3232 Lake Avenue Wilmette, IL INDIANA 4729 East 82nd Street Indianapolis, IN MAINE 3 Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD 1 West Pennsylvania Ave. Towson, MD MASSACHUSETTS 470 Boylston Street Boston, MA 155 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 29155 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 501 Route 17, South Paramus, NJ NEW YORK 1055 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH OREGON 16850 SW 72 Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 6150 Poplar Road Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 4017 Northwest Parkway Dallas, TX 1155 Dairy Ashford Street Houston, TX 2701 Drexel Drive Houston, TX 400 East Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 511 Pine Street Seattle, WA WASHINGTON, DC 1900 K Street, N.W. Washington, DC WISCONSIN 595 North Barker Road Brookfield, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc., London, England Fidelity Management & Research (Far East) Inc., Tokyo, Japan OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Bart A. Grenier, Vice President Jason L. Weiner, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer Matthew N. Karstetter, Deputy Treasurer John H. Costello, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead Ned C. Lautenbach 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 Aggressive Growth Fund Blue Chip Growth Fund Capital Appreciation Fund Contrafund (registered trademark) Contrafund(registered trademark) II Disciplined Equity Fund Dividend Growth Fund Export and Multinational Fund Fidelity FiftySM Growth Company Fund Large Cap Stock Fund Low-Priced Stock Fund Magellan(registered trademark) Fund Mid-Cap Stock Fund New Millennium Fund (registered trademark) OTC Portfolio Retirement Growth Fund Small Cap Selector Small Cap Stock Fund Stock Selector Tax Managed Stock Fund TechnoQuant(registered trademark) Growth Fund Trend Fund Value Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions and Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 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) Fidelity Automated Service Telephone (FASTSM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)(registered trademark) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 www.fidelity.com FIDELITY(REGISTERED TRADEMARK) FUND SEMIANNUAL REPORT DECEMBER 31, 1999 (2_FIDELITY_LOGOS)(registered trademark) 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 21 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 25 Notes to the financial statements. Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Other third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. 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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial Average all closed 1999 at record highs. Investors should note, however, that much of the year's returns were driven by a single sector: technology. Most other stocks were flat or down in 1999. Likewise, bond investors had little cause to celebrate at year's end. Steadily rising interest rates left the benchmark 30-year Treasury at its highest yield level in two years. 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 an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these types of funds. 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. Of course, you should consider your financial ability to continue your purchases through periods of low price levels before undertaking such a strategy. If you have questions, please call us at 1-800-544-6666, or visit our web site at www.fidelity.com. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY FUND 12.40% 24.21% 242.08% 430.74% S&P 500 7.71% 21.04% 251.12% 432.89% Growth & Income Funds Average 2.35% 13.76% 167.25% 293.90%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, five years or ten 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 500SM Index - a market capitalization-weighted 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 Inc. The past six months average represents a peer group of 972 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. Lipper has created new comparison categories that group funds according to portfolio characteristics and capitalization, as well as by capitalization only. These averages are listed on page 5 of this report.* AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY FUND 24.21% 27.89% 18.16% S&P 500 21.04% 28.56% 18.21% Growth & Income Funds Average 13.76% 21.34% 14.42% 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 different figure than that obtained by averaging the cumulative total returns and annualizing the result.) $10,000 OVER 10 YEARS Fidelity S&P 500 00003 SP001 1989/12/31 10000.00 10000.00 1990/01/31 9464.58 9329.00 1990/02/28 9659.79 9449.34 1990/03/31 9849.88 9699.75 1990/04/30 9597.17 9457.26 1990/05/31 10310.36 10379.34 1990/06/30 10248.11 10308.76 1990/07/31 10152.01 10275.77 1990/08/31 9422.83 9346.84 1990/09/30 9001.08 8891.65 1990/10/31 8904.30 8853.42 1990/11/30 9297.13 9425.35 1990/12/31 9490.31 9688.32 1991/01/31 10102.02 10110.73 1991/02/28 10766.17 10833.64 1991/03/31 11011.91 11095.82 1991/04/30 11023.64 11122.45 1991/05/31 11580.68 11602.94 1991/06/30 10939.20 11071.52 1991/07/31 11428.93 11587.46 1991/08/31 11617.74 11862.08 1991/09/30 11517.47 11663.98 1991/10/31 11630.27 11820.28 1991/11/30 10929.72 11343.92 1991/12/31 11781.84 12641.67 1992/01/31 11966.93 12406.53 1992/02/29 12305.19 12567.82 1992/03/31 11932.77 12322.74 1992/04/30 12016.27 12685.03 1992/05/31 12125.45 12747.19 1992/06/30 11958.94 12557.26 1992/07/31 12217.09 13070.85 1992/08/31 11965.39 12802.90 1992/09/30 12087.58 12953.97 1992/10/31 12236.73 12999.31 1992/11/30 12509.09 13442.58 1992/12/31 12778.63 13607.93 1993/01/31 13115.98 13722.24 1993/02/28 13229.98 13908.86 1993/03/31 13622.95 14202.33 1993/04/30 13622.95 13858.64 1993/05/31 13956.54 14230.05 1993/06/30 13977.93 14271.32 1993/07/31 13991.62 14214.23 1993/08/31 14642.83 14752.95 1993/09/30 14776.70 14639.35 1993/10/31 15021.01 14942.39 1993/11/30 14621.24 14800.44 1993/12/31 15125.00 14979.52 1994/01/31 15768.62 15488.82 1994/02/28 15454.66 15069.08 1994/03/31 14751.81 14412.07 1994/04/30 15098.73 14596.54 1994/05/31 15082.96 14835.92 1994/06/30 14734.36 14472.44 1994/07/31 15217.32 14947.14 1994/08/31 15879.25 15559.97 1994/09/30 15545.65 15178.75 1994/10/31 15879.60 15520.27 1994/11/30 15320.23 14955.03 1994/12/31 15515.34 15176.81 1995/01/31 15490.16 15570.34 1995/02/28 16019.09 16177.12 1995/03/31 16599.78 16654.51 1995/04/30 17004.86 17144.98 1995/05/31 17291.79 17830.27 1995/06/30 17841.60 18244.46 1995/07/31 18655.67 18849.45 1995/08/31 18960.26 18896.76 1995/09/30 19517.12 19694.21 1995/10/31 19289.67 19623.90 1995/11/30 20103.24 20485.39 1995/12/31 20611.83 20879.93 1996/01/31 21113.22 21590.69 1996/02/29 21377.59 21790.83 1996/03/31 21779.32 22000.68 1996/04/30 22127.21 22324.97 1996/05/31 22557.48 22900.73 1996/06/30 22658.08 22987.98 1996/07/31 21674.54 21972.37 1996/08/31 22279.31 22435.77 1996/09/30 23419.52 23698.46 1996/10/31 23803.93 24352.06 1996/11/30 25233.15 26192.83 1996/12/31 24697.87 25673.95 1997/01/31 25737.78 27278.06 1997/02/28 25987.76 27491.92 1997/03/31 24703.34 26362.28 1997/04/30 26137.59 27936.10 1997/05/31 27571.85 29636.85 1997/06/30 28995.89 30964.59 1997/07/31 31439.87 33428.44 1997/08/31 29819.18 31555.78 1997/09/30 31408.60 33284.09 1997/10/31 30534.70 32172.40 1997/11/30 31887.17 33661.66 1997/12/31 32615.91 34239.63 1998/01/31 32780.02 34618.32 1998/02/28 35044.87 37114.99 1998/03/31 36875.61 39015.65 1998/04/30 37149.81 39408.15 1998/05/31 36919.48 38730.72 1998/06/30 38720.98 40303.96 1998/07/31 38885.90 39874.73 1998/08/31 33052.60 34109.64 1998/09/30 34521.82 36294.70 1998/10/31 37064.93 39246.91 1998/11/30 39377.89 41625.67 1998/12/31 42727.84 44024.14 1999/01/31 44230.13 45865.23 1999/02/28 43310.13 44439.74 1999/03/31 45196.47 46217.77 1999/04/30 46164.80 48007.79 1999/05/31 44729.80 46874.32 1999/06/30 47219.76 49475.85 1999/07/31 45746.70 47931.21 1999/08/31 45087.88 47693.95 1999/09/30 44127.82 46386.66 1999/10/31 46043.18 49322.01 1999/11/30 47933.66 50324.73 1999/12/31 53074.38 53288.85 IMATRL PRASUN SHR__CHT 19991231 20000113 115009 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Fund on December 31, 1989. As the chart shows, by December 31, 1999, the value of the investment would have grown to $53,074 - a 430.74% increase on the initial investment. For comparison, look at how the Standard & Poor's 500 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $53,289 - a 432.89% increase. (checkmark)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. * THE LIPPER LARGE-CAP CORE FUNDS AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO CHARACTERISTICS AND CAPITALIZATION. THE LIPPER LARGE-CAP SUPERGROUP AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR CAPITALIZATION. AS OF DECEMBER 31, 1999, THE SIX MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP CORE FUNDS AVERAGE WERE 9.96%, 22.35%, 213.20%, 373.15%, AND 22.35%, 25.53%, 16.66%, RESPECTIVELY; AND THE SIX MONTH, ONE YEAR, FIVE YEAR, AND 10 YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP SUPERGROUP AVERAGES WERE 11.64%, 24.93%, 227.59%, 397.83%, AND 24.93%, 26.34%, 17.07%, RESPECTIVELY. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP Technology. If one could use only a single word to sum up what characterized the U.S. equity markets for the second half of 1999, no other term would be more appropriate. The performance of the technology sector during the six-month period ending December 31, 1999, dwarfed all others. To illustrate: The Goldman Sachs Indexes monitor the performance of seven sectors - Consumer, Cyclical, Financial, Health Care, Natural Resources, Technology and Utilities. Of those, Utilities was the second-best performer, returning 7.64% for the final six months of 1999. In comparison, the Goldman Sachs Technology Index returned an astonishing 49.40%. That performance was mirrored by the tech-heavy NASDAQ Index, which was up 51.69% during the same time frame. On a broader scale and reflective of the extreme narrowness of the market, the Standard & Poor's 500 Index - a market-capitalization-weighted index of 500 widely held U.S. stocks - returned a more modest 7.71%. The Dow Jones Industrial Average - an index of 30 blue-chip stocks - posted a 5.60% return during the period. On the last day of the period - - in fact, the last day of the decade, century and millennium - the NASDAQ, Dow and S&P all closed at record high levels. (photograph of Beth Terrana) An interview with Beth Terrana, Portfolio Manager of Fidelity Fund Q. HOW DID THE FUND PERFORM, BETH? A. Very well, on both an absolute and relative basis. For the six months ending December 31, 1999, Fidelity Fund returned 12.40%. The growth and income funds average, as tracked by Lipper Inc., returned 2.35% during that time frame, while the Standard & Poor's 500 Index returned 7.71%. The fund's 12-month return of 24.21% also outperformed its Lipper peer average and the S&P 500, which returned 13.76% and 21.04%, respectively. Q. WHAT HELPED THE FUND OUTPACE BOTH ITS BENCHMARK AND PEER GROUP DURING THE SIX-MONTH PERIOD? A. Strong stock selection across several sectors, particularly in utilities and technology, spurred fund performance in the second half of 1999. While I still underweighted both sectors relative to the S&P 500 at the period's end, eight of the fund's top 10 performing stocks were from those two industries. In the fund's utilities position - which is almost entirely a wireless play - VoiceStream Wireless and Qualcomm were top performers. Both were strong beneficiaries of advancing the delivery of digital voice and data. Q. YOU ALSO MENTIONED TECHNOLOGY. WHAT WERE SOME OF THE BETTER-PERFORMING STOCKS IN THAT SECTOR? A. Familiar names such as Microsoft, Cisco, Nokia, Motorola and several others were tremendously beneficial to the fund's return. For most of the past year, I underweighted technology because I have always been value-oriented and did not find many attractive valuations in the sector. In hindsight, that was a mistake. Therefore, I increased the fund's technology weighting from 15% six months ago to nearly 28% of net assets at the end of 1999. Technology has done well for obvious reasons. In recent years, many tech companies have had among the highest earnings growth rates and the greatest improvements in return on capital. The market has been willing to pay a premium for this superior growth, with the expectation that earnings will continue to improve. As I compared various investment alternatives, I found a number of technology companies that I believe have the ability to continuously improve profitability and return on assets. Q. WHAT OTHER STOCKS PERFORMED WELL FOR THE FUND? A. GE, the fund's largest holding, also was its top contributor to performance. The company continued to be rewarded for its tremendous product line and for maintaining dominant market share. Several media and leisure positions, including CBS, Comcast and Viacom, also stood out. Overweighting this sector in general was a key contributor to the fund's relative performance, and the individual securities I just mentioned all offered a compelling combination of attractive valuations and strong fundamentals, which the market justly rewarded them for. Q. WHICH STOCKS DID NOT PERFORM AS YOU HOPED? A. Xerox was a disappointment. For the past three years, Xerox had the market for digital products largely to itself. Recently, Canon and Ricoh have developed strong competing products. In addition, Xerox has been slow to implement its announced sales force reorganization. These two factors left it vulnerable to increased competition and earnings disappointments. The fund no longer held this stock at the end of the period. Several of the fund's consumer nondurables holdings, most notably Clorox, also detracted from returns. Clorox, along with many consumer nondurables companies, was hurt by increased competition as well as by a slowdown in unit volumes. Q. LOOKING AHEAD, WHAT AREAS OF THE MARKET APPEAR PARTICULARLY INTERESTING TO YOU? A. In the U.S., I have been focusing some of my time on the wireless sector. Once critical masses of people are using wireless communications, it becomes an attractive alternative for everyday communication. Although I primarily concentrate on U.S. companies, international stocks - particularly Japan - are another area of focus for me. When comparing the relative earnings growth rates between U.S. and foreign companies, many opportunities now exist overseas that may not have several years ago. In Europe, corporate restructuring has picked up, merger and acquisition activity has been heavy and the economy is improving. These three factors should drive better earnings growth and improved profitability going forward. In Japan, the economy also is improving. Many companies finally seem to be serious about restructuring. If Japanese managements remain committed to it, we could see the beginning of long-term improvement in profitability for Japanese companies. 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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. (checkmark)FUND FACTS GOAL: seeks long-term capital growth FUND NUMBER: 003 TRADING SYMBOL: FFIDX START DATE: April 30, 1930 SIZE: as of December 31, 1999 more than $16.1 billion MANAGER: Beth Terrana, since 1993; joined Fidelity in 1983 BETH TERRANA TALKS ABOUT OPPORTUNITIES IN JAPAN: "Japan appears to have many of the conditions that helped propel the U.S. market to dizzying heights over the past few years - (1) improving corporate earnings, (2) favorable consumer demographics, and (3) healthy capital markets activity. First, if Japanese management remains committed to restructuring, we could see the beginning of long-term improvement in profitability and earnings growth for Japanese companies. Second, if even a modest portion of Japanese consumer savings is re-directed to the Japanese equity market, the effect could be powerful. Japanese households have among the highest savings rates in the world, close to 30% recently. In contrast, according to the Federal Reserve Board, the savings rate for U.S. households is - -1.3%. According to a recent study by the Bank of Japan, however, the average Japanese household had only 9% of household financial assets invested in equities - compared to 43% for U.S. households. Most Japanese consumers' savings are invested in `postal savings,' which are government-sponsored savings accounts with low returns. Daiwa Securities Group of Japan estimates that more than $100 trillion yen (about $1 trillion in U.S. dollars) in postal savings will mature by the end of 2001 - and thus be available for investing in the stock market. Finally, more corporate asset sales, spin-offs, and mergers and acquisitions should fuel increased capital markets activity and help sustain a vibrant Japanese market." INVESTMENT CHANGES
TOP TEN STOCKS AS OF DECEMBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO General Electric Co. 4.2 3.3 Microsoft Corp. 3.9 2.6 Nokia AB sponsored ADR 2.3 0.9 Cisco Systems, Inc. 1.9 1.1 Citigroup, Inc. 1.7 2.0 Chase Manhattan Corp. 1.7 2.0 Lucent Technologies, Inc. 1.5 1.4 American Express Co. 1.5 2.1 Motorola, Inc. 1.4 0.5 Home Depot, Inc. 1.4 0.8 21.5 16.7 TOP FIVE MARKET SECTORS AS OF DECEMBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 28.2 15.1 UTILITIES 10.4 9.2 MEDIA & LEISURE 10.4 9.7 FINANCE 10.2 11.9 HEALTH 9.8 9.3
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF DECEMBER 31, 1999 * AS OF JUNE 30, 1999 ** Stocks 93.7% Stocks 92.9% Convertible Securities 1.3% Convertible Securities 1.1% Short-Term Investments and Short-Term Investments and Net Other Assets 5.0% Net Other Assets 6.0% * FOREIGN INVESTMENTS 15.2% ** FOREIGN INVESTMENTS 5.7% Row: 1, Col: 1, Value: 93.7 Row: 1, Col: 1, Value: 92.90000000000001 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 4, Value: 1.3 Row: 1, Col: 4, Value: 1.1 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 8, Value: 5.0 Row: 1, Col: 8, Value: 6.0
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS. INVESTMENTS DECEMBER 31, 1999 (UNAUDITED) Showing Percentage of Net Assets
COMMON STOCKS - 93.7% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 1.2% AEROSPACE & DEFENSE - 0.9% Boeing Co. 2,509,200 $ 104,289 British Aerospace PLC 779,545 5,167 Textron, Inc. 433,200 33,221 142,677 SHIP BUILDING & REPAIR - 0.3% General Dynamics Corp. 1,102,100 58,136 TOTAL AEROSPACE & DEFENSE 200,813 BASIC INDUSTRIES - 2.4% CHEMICALS & PLASTICS - 0.7% Praxair, Inc. 2,006,000 100,927 Rohm & Haas Co. 304,072 12,372 113,299 IRON & STEEL - 0.1% Nucor Corp. 141,500 7,756 METALS & MINING - 1.5% Alcoa, Inc. 2,432,400 201,889 Furukawa Electric Co. Ltd. 2,977,000 45,150 247,039 PACKAGING & CONTAINERS - 0.1% Owens-Illinois, Inc. (a) 563,800 14,130 TOTAL BASIC INDUSTRIES 382,224 CONSTRUCTION & REAL ESTATE - 0.3% BUILDING MATERIALS - 0.1% Masco Corp. 824,000 20,909 ENGINEERING - 0.2% Fluor Corp. 487,400 22,359 TOTAL CONSTRUCTION & REAL 43,268 ESTATE DURABLES - 1.1% AUTOS, TIRES, & ACCESSORIES - 0.3% Danaher Corp. 1,001,500 48,322 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) DURABLES - CONTINUED CONSUMER DURABLES - 0.0% Minnesota Mining & 83,100 $ 8,133 Manufacturing Co. CONSUMER ELECTRONICS - 0.6% Sony Corp. 327,400 93,227 HOME FURNISHINGS - 0.2% Leggett & Platt, Inc. 1,404,800 30,115 TOTAL DURABLES 179,797 ENERGY - 3.1% ENERGY SERVICES - 0.3% Halliburton Co. 894,100 35,988 Schlumberger Ltd. 243,600 13,703 Transocean Sedco Forex, Inc. 47,160 1,589 51,280 OIL & GAS - 2.8% BP Amoco PLC sponsored ADR 1,275,300 75,641 Chevron Corp. 413,600 35,828 Exxon Mobil Corp. 2,492,556 200,807 Royal Dutch Petroleum Co. (NY 2,035,000 122,990 Registry Gilder 1.25) USX - Marathon Group 230,000 5,678 440,944 TOTAL ENERGY 492,224 FINANCE - 10.0% BANKS - 2.5% Bank of New York Co., Inc. 2,502,360 100,094 Chase Manhattan Corp. 3,533,100 274,478 U.S. Bancorp 1,454,900 34,645 409,217 CREDIT & OTHER FINANCE - 3.5% American Express Co. 1,428,964 237,565 Associates First Capital 1,471,000 40,361 Corp. Class A Citigroup, Inc. 5,020,125 278,931 556,857 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED FEDERAL SPONSORED CREDIT - 0.8% Fannie Mae 1,100,400 $ 68,706 Freddie Mac 1,295,600 60,974 129,680 INSURANCE - 1.6% AFLAC, Inc. 955,200 45,074 American International Group, 1,885,400 203,859 Inc. MBIA, Inc. 256,800 13,562 262,495 SECURITIES INDUSTRY - 1.6% Daiwa Securities Co. Ltd. 5,160,000 80,732 Morgan Stanley Dean Witter & 695,800 99,325 Co. Nikko Securities Co. Ltd. 6,471,000 81,869 261,926 TOTAL FINANCE 1,620,175 HEALTH - 9.8% DRUGS & PHARMACEUTICALS - 7.9% Allergan, Inc. 139,300 6,930 American Home Products Corp. 2,419,200 95,407 Amgen, Inc. (a) 2,558,400 153,664 Biogen, Inc. (a) 551,500 46,602 Bristol-Myers Squibb Co. 2,652,300 170,245 Elan Corp. PLC sponsored ADR 595,600 17,570 (a) Eli Lilly & Co. 2,487,300 165,405 Genentech, Inc. 1,287,000 173,102 Merck & Co., Inc. 1,321,000 88,590 Millennium Pharmaceuticals, 106,800 13,030 Inc. (a) Pfizer, Inc. 79,100 2,566 Schering-Plough Corp. 4,531,900 191,190 Warner-Lambert Co. 1,832,000 150,110 1,274,411 MEDICAL EQUIPMENT & SUPPLIES - - 1.9% Abbott Laboratories 2,338,900 84,931 Biomet, Inc. 994,600 39,784 Cardinal Health, Inc. 1,471,982 70,471 Guidant Corp. 257,600 12,107 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) HEALTH - CONTINUED MEDICAL EQUIPMENT & SUPPLIES - - CONTINUED Johnson & Johnson 949,100 $ 88,385 Medtronic, Inc. 458,800 16,718 312,396 TOTAL HEALTH 1,586,807 INDUSTRIAL MACHINERY & EQUIPMENT - 7.4% ELECTRICAL EQUIPMENT - 5.9% ABB Ltd. (Sweden) (a) 547,593 67,271 General Electric Co. 4,374,500 676,944 Hutchison Whampoa Ltd. 6,348,000 92,343 Koninklijke Philips 339,400 45,819 Electronics NV (NY Shares) Mitsubishi Electric Corp. 9,483,000 61,241 943,618 INDUSTRIAL MACHINERY & EQUIPMENT - 1.5% Deere & Co. 950,500 41,228 Illinois Tool Works, Inc. 113,800 7,689 Ingersoll-Rand Co. 670,800 36,936 Parker-Hannifin Corp. 71,600 3,674 Tyco International Ltd. 3,830,000 148,891 238,418 TOTAL INDUSTRIAL MACHINERY & 1,182,036 EQUIPMENT MEDIA & LEISURE - 9.4% BROADCASTING - 4.6% CBS Corp. (a) 2,497,800 159,703 Clear Channel Communications, 1,201,100 107,198 Inc. (a) Comcast Corp. Class A 4,322,600 218,561 (special) Infinity Broadcasting Corp. 1,122,900 40,635 Class A Time Warner, Inc. 1,461,640 105,878 USA Networks, Inc. (a) 2,042,800 112,865 744,840 ENTERTAINMENT - 2.2% Carnival Corp. 1,388,800 66,402 Fox Entertainment Group, Inc. 1,829,600 45,626 Class A COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) MEDIA & LEISURE - CONTINUED ENTERTAINMENT - CONTINUED News Corp. Ltd. sponsored: ADR 842,300 $ 32,218 ADR (preferred ltd. vtg.) 730,000 24,409 Viacom, Inc. Class B 2,825,600 170,772 (non-vtg.) (a) Walt Disney Co. 423,500 12,387 351,814 PUBLISHING - 1.5% McGraw-Hill Companies, Inc. 3,605,400 222,183 Reader's Digest Association, 572,200 16,737 Inc. Class A (non-vtg.) 238,920 RESTAURANTS - 1.1% McDonald's Corp. 3,293,600 132,773 Starbucks Corp. (a) 1,607,700 38,987 171,760 TOTAL MEDIA & LEISURE 1,507,334 NONDURABLES - 2.7% BEVERAGES - 0.3% Anheuser-Busch Companies, 795,500 56,381 Inc. FOODS - 0.3% Flowers Industries, Inc. 610,700 9,733 Keebler Foods Co. (a) 1,180,700 33,207 42,940 HOUSEHOLD PRODUCTS - 1.7% Avon Products, Inc. 492,500 16,253 Clorox Co. 2,432,354 122,530 Colgate-Palmolive Co. 1,090,500 70,883 Estee Lauder Companies, Inc. 428,480 21,611 Procter & Gamble Co. 343,800 37,668 268,945 TOBACCO - 0.4% Philip Morris Companies, Inc. 2,888,700 66,982 TOTAL NONDURABLES 435,248 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) RETAIL & WHOLESALE - 5.8% APPAREL STORES - 0.5% Abercrombie & Fitch Co. Class 2,379,200 $ 63,495 A (a) The Limited, Inc. 424,400 18,382 81,877 DRUG STORES - 0.8% CVS Corp. 3,324,726 132,781 GENERAL MERCHANDISE STORES - 2.6% Cifra SA de CV Series V (a) 15,180,000 30,472 Costco Wholesale Corp. (a) 976,900 89,142 Dayton Hudson Corp. 1,122,500 82,434 Kohls Corp. (a) 153,700 11,095 Nordstrom, Inc. 862,400 22,584 Wal-Mart Stores, Inc. 2,483,500 171,672 407,399 RETAIL & WHOLESALE, MISCELLANEOUS - 1.9% Home Depot, Inc. 3,397,894 232,968 Staples, Inc. (a) 3,107,800 64,487 Webvan Group, Inc. 621,600 10,256 307,711 TOTAL RETAIL & WHOLESALE 929,768 SERVICES - 2.0% ADVERTISING - 1.1% DoubleClick, Inc. (a) 121,200 30,671 Omnicom Group, Inc. 1,472,200 147,220 177,891 LEASING & RENTAL - 0.2% Marubeni Corp. 5,422,000 22,760 SERVICES - 0.7% Cendant Corp. (a) 1,858,100 49,356 Ecolab, Inc. 1,552,100 60,726 Gartner Group, Inc. Class B 510,736 7,055 (a) 117,137 TOTAL SERVICES 317,788 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - 28.1% COMMUNICATIONS EQUIPMENT - 7.3% ADC Telecommunications, Inc. 845,300 $ 61,337 (a) Cabletron Systems, Inc. (a) 1,184,500 30,797 Cisco Systems, Inc. (a) 2,942,950 315,264 Jabil Circuit, Inc. (a) 386,800 28,236 Lucent Technologies, Inc. 3,177,820 237,741 Marconi PLC 1,818,000 32,195 NEC Corp. 1,454,000 34,643 Nokia AB sponsored ADR 1,994,500 378,955 Telefonaktiebolaget LM 1,097,400 72,085 Ericsson sponsored ADR 1,191,253 COMPUTER SERVICES & SOFTWARE - - 9.3% Amazon.com, Inc. (a) 374,300 28,494 America Online, Inc. (a) 1,791,000 135,109 At Home Corp. Series A (a) 864,692 37,074 Automatic Data Processing, 430,600 23,199 Inc. BEA Systems, Inc. (a) 120,600 8,434 Computer Sciences Corp. (a) 528,200 49,981 Exodus Communications, Inc. 439,600 39,042 (a) Healtheon/Web Maryland Corp. 755,700 28,339 IMS Health, Inc. 2,128,900 57,879 Inktomi Corp. (a) 363,600 32,270 Intuit, Inc. (a) 1,757,100 105,316 Lycos, Inc. (a) 221,600 17,631 Microsoft Corp. (a) 5,362,200 626,037 Trans Cosmos, Inc. 75,900 32,380 Unisys Corp. (a) 3,780,209 120,730 Yahoo Japan Corp. 45 40,245 Yahoo!, Inc. (a) 270,300 116,955 1,499,115 COMPUTERS & OFFICE EQUIPMENT - - 6.3% Comverse Technology, Inc. (a) 169,500 24,535 Dell Computer Corp. (a) 3,477,300 177,342 EMC Corp. (a) 1,537,500 167,972 Fujitsu Ltd. 2,258,000 102,958 Hewlett-Packard Co. 444,300 50,622 International Business 814,300 87,944 Machines Corp. Lexmark International Group, 527,200 47,712 Inc. Class A (a) Pitney Bowes, Inc. 1,284,700 62,067 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMPUTERS & OFFICE EQUIPMENT - - CONTINUED SCI Systems, Inc. (a) 291,100 $ 23,925 Softbank Corp. 141,800 135,695 Sun Microsystems, Inc. (a) 1,807,400 139,961 1,020,733 ELECTRONIC INSTRUMENTS - 0.1% PE Corp. - Biosystems Group 106,900 12,861 ELECTRONICS - 5.1% Analog Devices, Inc. (a) 873,000 81,189 DII Group, Inc. (a) 659,200 46,783 Flextronics International 222,800 10,249 Ltd. (a) Intel Corp. 283,800 23,360 Motorola, Inc. 1,592,100 234,437 Samsung Electronics Co. Ltd. 300,910 70,491 Sanmina Corp. (a) 754,600 75,366 Solectron Corp. (a) 605,200 57,570 Texas Instruments, Inc. 2,265,600 219,480 818,925 TOTAL TECHNOLOGY 4,542,887 UTILITIES - 10.4% CELLULAR - 7.4% ALLTEL Corp. 1,544,500 127,711 China Telecom (Hong Kong) 18,554,600 119,271 Ltd. (a) Hikari Tsushin, Inc. 20,000 40,117 Mannesmann AG (Reg.) 444,750 108,313 Nextel Communications, Inc. 1,003,400 103,476 Class A (a) QUALCOMM, Inc. (a) 860,400 151,538 Sprint Corp. - PCS Group 1,317,000 134,993 Series 1 (a) United States Cellular Corp. 303,600 30,645 (a) Vodafone AirTouch PLC 3,981,000 197,060 sponsored ADR VoiceStream Wireless Corp. (a) 1,090,500 155,192 Western Wireless Corp. Class A 378,700 25,278 1,193,594 ELECTRIC UTILITY - 1.0% AES Corp. (a) 1,112,400 83,152 Illinova Corp. 1,074,900 37,353 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) UTILITIES - CONTINUED ELECTRIC UTILITY - CONTINUED PG&E Corp. 199,200 $ 4,084 Unicom Corp. 841,500 28,190 152,779 GAS - 0.0% Dynegy, Inc. 305,800 7,435 TELEPHONE SERVICES - 2.0% AT&T Corp. 704,194 35,738 BellSouth Corp. 411,200 19,249 CenturyTel, Inc. 612,200 29,003 DDI Corp. 4,278 58,603 MCI WorldCom, Inc. (a) 2,438,199 129,377 SBC Communications, Inc. 983,900 47,965 319,935 TOTAL UTILITIES 1,673,743 TOTAL COMMON STOCKS 15,094,112 (Cost $9,747,524) CONVERTIBLE PREFERRED STOCKS - - 0.9% MEDIA & LEISURE - 0.9% BROADCASTING - 0.9% Comcast Corp.: $1.44 ZONES 292,200 28,964 $1.63 ZONES 148,200 14,653 Cox Communications, Inc. 149,500 14,502 $6.858 PRIZES MediaOne Group, Inc. 702,700 75,892 (Vodafone AirTouch PLC) $3.63 PIES UnitedGlobalCom, Inc. $3.50 242,700 15,351 TOTAL CONVERTIBLE PREFERRED 149,362 STOCKS (Cost $114,560)
CORPORATE BONDS - 0.4% MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) CONVERTIBLE BONDS - 0.4% FINANCE - 0.2% CREDIT & OTHER FINANCE - 0.2% Elan Finance Corp. Ltd. Baa3 $ 48,100 $ 25,002 liquid yield option notes 0% 12/14/18 (c) MEDIA & LEISURE - 0.1% BROADCASTING - 0.1% Liberty Media Corp. 4% Baa3 10,870 13,642 11/15/29 (c) TECHNOLOGY - 0.1% COMPUTERS & OFFICE EQUIPMENT - - 0.1% EMC Corp. 3.25% 3/15/02 Ba2 2,230 21,508 TOTAL CONVERTIBLE BONDS 60,152 NONCONVERTIBLE BONDS - 0.0% AEROSPACE & DEFENSE - 0.0% British Aerospace PLC 7.45% - GBP 246 388 11/30/03 TOTAL CORPORATE BONDS 60,540 (Cost $40,393)
CASH EQUIVALENTS - 5.8% SHARES Central Cash Collateral Fund, 143,491,594 143,492 4.97% (b) Taxable Central Cash Fund, 792,256,599 792,257 5.12% (b) TOTAL CASH EQUIVALENTS 935,749 (Cost $935,749) TOTAL INVESTMENT PORTFOLIO - 16,239,763 100.8% (Cost $10,838,226) NET OTHER ASSETS - (0.8)% (121,552) NET ASSETS - 100% $ 16,118,211 CURRENCY TYPE ABBREVIATIONS GBP - British pound SECURITY TYPE ABBREVIATIONS PIES - Premium Income Equity Securities PRIZES - Participating Redeemable Indexed Zero- Premium Exchangable Securities ZONES - Zero-Premium Option Note Exchangeable Securities LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) 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 $38,644,000 or 0.3% of net assets. Distribution of investments by country of issue, as a percentage of net assets, is as follows: United States of America 84.8% Japan 5.3 Finland 2.3 United Kingdom 1.9 Hong Kong 1.3 Netherlands 1.1 Others (individually less 3.3 than 1%) 100.0% INCOME TAX INFORMATION At December 31, 1999, the aggregate cost of investment securities for income tax purposes was $10,874,189,000. Net unrealized appreciation aggregated $5,365,574,000, of which $5,621,223,000 related to appreciated investment securities and $255,649,000 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) DECEMBER 31, 1999 (UNAUDITED) ASSETS Investment in securities, at $ 16,239,763 value (cost $10,838,226) - See accompanying schedule Receivable for investments 46,138 sold Receivable for fund shares 26,303 sold Dividends receivable 7,305 Interest receivable 3,191 Other receivables 742 TOTAL ASSETS 16,323,442 LIABILITIES Payable to custodian bank $ 4 Payable for investments 31,532 purchased Payable for fund shares 23,325 redeemed Accrued management fee 4,634 Other payables and accrued 2,244 expenses Collateral on securities 143,492 loaned, at value TOTAL LIABILITIES 205,231 NET ASSETS $ 16,118,211 Net Assets consist of: Paid in capital $ 10,669,434 Distributions in excess of (5,067) net investment income Accumulated undistributed net 52,298 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 5,401,546 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 378,301 $ 16,118,211 shares outstanding NET ASSET VALUE, offering $42.61 price and redemption price per share ($16,118,211 (divided by) 378,301 shares) STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED) INVESTMENT INCOME $ 58,128 Dividends Interest 21,358 Security lending 272 TOTAL INCOME 79,758 EXPENSES Management fee $ 25,852 Transfer agent fees 12,101 Accounting and security 517 lending fees Non-interested trustees' 18 compensation Custodian fees and expenses 203 Registration fees 464 Audit 38 Legal 48 Miscellaneous 32 Total expenses before 39,273 reductions Expense reductions (1,601) 37,672 NET INVESTMENT INCOME 42,086 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 93,726 Foreign currency transactions (669) 93,057 Change in net unrealized appreciation (depreciation) on: Investment securities 1,629,796 Assets and liabilities in 11 1,629,807 foreign currencies NET GAIN (LOSS) 1,722,864 NET INCREASE (DECREASE) IN $ 1,764,950 NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS SIX MONTHS ENDED DECEMBER 31, YEAR ENDED JUNE 30, 1999 1999 (UNAUDITED) INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 42,086 $ 93,003 income Net realized gain (loss) 93,057 919,878 Change in net unrealized 1,629,807 1,192,377 appreciation (depreciation) NET INCREASE (DECREASE) IN 1,764,950 2,205,258 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (52,377) (88,023) From net investment income From net realized gain (778,627) (476,294) TOTAL DISTRIBUTIONS (831,004) (564,317) Share transactions Net 2,770,105 6,719,777 proceeds from sales of shares Reinvestment of distributions 779,366 528,255 Cost of shares redeemed (2,207,282) (3,772,952) NET INCREASE (DECREASE) IN 1,342,189 3,475,080 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 2,276,135 5,116,021 IN NET ASSETS NET ASSETS Beginning of period 13,842,076 8,726,055 End of period (including $ 16,118,211 $ 13,842,076 under (over) distribution of net investment income of $(5,067) and $5,224, respectively) OTHER INFORMATION Shares Sold 71,916 186,703 Issued in reinvestment of 21,619 15,678 distributions Redeemed (57,972) (107,375) Net increase (decrease) 35,563 95,006
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED DECEMBER 31, YEARS ENDED JUNE 30, 1999 (UNAUDITED) 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 40.39 $ 35.22 $ 28.83 $ 24.65 $ 21.04 $ 18.61 period Income from Invest- ment Operations Net investment income .11 D .31 D .32 D .34 D .39 .38 Net realized and unrealized 4.46 6.96 8.74 5.99 5.04 3.35 gain (loss) Total from investment 4.57 7.27 9.06 6.33 5.43 3.73 operations Less Distributions From net investment income (.14) (.29) (.31) (.33) (.41) (.36) From net realized gain (2.21) (1.81) (2.36) (1.82) (1.41) (.94) Total distributions (2.35) (2.10) (2.67) (2.15) (1.82) (1.30) Net asset value, end of $ 42.61 $ 40.39 $ 35.22 $ 28.83 $ 24.65 $ 21.04 period TOTAL RETURN B, C 12.40% 21.95% 33.54% 27.97% 27.00% 21.09% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 16,118 $ 13,842 $ 8,726 $ 5,509 $ 3,947 $ 2,404 (in millions) Ratio of expenses to average .56% A .57% .58% .62% .63% .66% net assets Ratio of expenses to average .53% A, E .55% E .56% E .59% E .60% E .64% E net assets after expense reductions Ratio of net invest- ment .60% A .87% 1.01% 1.34% 1.71% 2.18% income to average net assets Portfolio turnover rate 79% A 71% 65% 107% 150% 157%
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. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. NOTES TO FINANCIAL STATEMENTS For the period ended December 31, 1999 (Unaudited) 1. 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, 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 require 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. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of the business of the fund, are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. 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. 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. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. 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." 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 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 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 among the funds in the trust. DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the Plan) non-interested Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the fund or are invested in a cross-section of other Fidelity funds. Deferred amounts remain in the fund until distributed in accordance with the Plan. 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, 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. Distributions in excess of 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. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the 2. OPERATING POLICIES - CONTINUED JOINT TRADING ACCOUNT - CONTINUED fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC, the fund may invest in the Taxable Central Cash Fund and the Central Cash Collateral Fund(the Cash Funds) managed by Fidelity Investments Money Management, Inc., an affiliate of FMR. The Cash Funds are open-end money market funds available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Funds seek preservation of capital, liquidity, and current income. Income distributions from the Cash Funds are declared daily and paid monthly from net interest income. Income distributions earned by the fund are recorded as either interest income or security lending income in the accompanying financial statements. 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). 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $5,879,084,000 and $5,311,087,000, respectively. 4. 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 .2167% 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, 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED MANAGEMENT FEE - CONTINUED the management fee was equivalent to an annualized rate of .37% 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 annualized rate of .17% 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 $255,000 for the period. 5. SECURITY LENDING. The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral in the form of U.S. Treasury obligations, letters of credit, and/or cash against the loaned securities, and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. At period end, the value of the securities loaned amounted to $145,505,000. The fund received cash collateral of $143,492,000 which was invested in cash equivalents. 6. 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 $1,422,000 under this arrangement. In addition, through an arrangement with the fund's transfer agent, 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 transfer agent fees were reduced by $179,000 under this arrangement. 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 Automated Service Telephone provides 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. (PHONE_GRAPHIC)FIDELITY AUTOMATED SERVICE TELEPHONE (FASTSM) 1-800-544-5555 PRESS 1 For mutual fund and brokerage trading. 2 For quotes.* 3 For account balances and holdings. 4 To review orders and mutual fund activity. 5 To change your PIN. *0 To speak to a Fidelity representative. 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. (COMPUTER_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call EarthLink Sprint at 1-800-288-2967, and be sure to ask for registration number SMD004 to receive a special Fidelity package that includes 30 days of free Internet access. EarthLink is North America's #1 independent Internet access provider. (COMPUTER_GRAPHIC) FIDELITY ON-LINE XPRESS+(registered trademark) 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 1-800-544-0240 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 19200 Von Karman Avenue Irvine, CA 10100 Santa Monica Blvd. Los Angeles, CA 251 University Avenue Palo Alto, CA 1760 Challenge Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 455 Market Street San Francisco, CA 950 Northgate Drive San Rafael, CA 1400 Civic Drive Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA COLORADO 1625 Broadway Denver, CO CONNECTICUT 48 West Putnam Avenue Greenwich, CT 265 Church Street New Haven, CT 300 Atlantic Street Stamford, CT 29 South Main Street West Hartford, CT DELAWARE 222 Delaware Avenue Wilmington, DE FLORIDA 4400 N. Federal Highway Boca Raton, FL 90 Alhambra Plaza Coral Gables, FL 4090 N. Ocean Boulevard Ft. Lauderdale, FL 1907 West State Road 434 Longwood, FL 8880 Tamiami Trail, North Naples, FL 2401 PGA Boulevard Palm Beach Gardens, FL 8065 Beneva Road Sarasota, FL 1502 N. Westshore Blvd. Tampa, FL GEORGIA 3445 Peachtree Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA ILLINOIS One North Franklin Street Chicago, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL 3232 Lake Avenue Wilmette, IL INDIANA 4729 East 82nd Street Indianapolis, IN MAINE 3 Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD 1 West Pennsylvania Ave. Towson, MD MASSACHUSETTS 470 Boylston Street Boston, MA 155 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 29155 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 501 Route 17, South Paramus, NJ NEW YORK 1055 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH OREGON 16850 SW 72 Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 6150 Poplar Road Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 4017 Northwest Parkway Dallas, TX 1155 Dairy Ashford Street Houston, TX 2701 Drexel Drive Houston, TX 400 East Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 511 Pine Street Seattle, WA WASHINGTON, DC 1900 K Street, N.W. Washington, DC WISCONSIN 595 North Barker Road Brookfield, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc., London, England Fidelity Management & Research (Far East) Inc., Tokyo, Japan OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Richard A. Spillane, Jr., Vice President Beth Terrana, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer Matthew N. Karstetter, Deputy Treasurer John H. Costello, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead Ned C. Lautenbach * INDEPENDENT TRUSTEES GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA CUSTODIAN The Chase Manhattan Bank New York, NY FIDELITY'S GROWTH AND INCOME FUNDS Balanced Fund Convertible Securities Fund Equity-Income Fund Equity-Income II Fund Fidelity(registered trademark) Fund Global Balanced Fund Growth & Income Portfolio Growth & Income II Portfolio Puritan(registered trademark) Fund Real Estate Investment Portfolio Utilities Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions and Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 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) Fidelity Automated Service Telephone (FASTSM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)(registered trademark) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 www.fidelity.com FIDELITY FIFTYSM SEMIANNUAL REPORT DECEMBER 31, 1999 (2_FIDELITY_LOGOS)(registered trademark) 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 15 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 19 Notes to the financial statements. Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Other third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. 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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial Average all closed 1999 at record highs. Investors should note, however, that much of the year's returns were driven by a single sector: technology. Most other stocks were flat or down in 1999. Likewise, bond investors had little cause to celebrate at year's end. Steadily rising interest rates left the benchmark 30-year Treasury at its highest yield level in two years. 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 an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these types of funds. 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. Of course, you should consider your financial ability to continue your purchases through periods of low price levels before undertaking such a strategy. If you have questions, please call us at 1-800-544-6666, or visit our web site at www.fidelity.com. 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. Effective January 1, 1999, the fund's 3% sales charge has been reinstated.
CUMULATIVE TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY FIFTY 14.92% 45.79% 217.60% 249.78% FIDELITY FIFTY (INCL. 3.00% 11.47% 41.42% 208.07% 239.28% SALES CHARGE) S&P 500 (registered trademark) 7.71% 21.04% 251.12% 264.45% Capital Appreciation Funds 23.51% 41.56% 209.17% n/a Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, five years 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 market capitalization-weighted 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 Inc. The past six months average represents a peer group of 292 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. Lipper has created new comparison categories that group funds according to portfolio characteristics and capitalization, as well as by capitalization only. These averages are listed on page 5 of this report.* AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY FIFTY 45.79% 26.00% 22.03% FIDELITY FIFTY (INCL. 3.00% 41.42% 25.24% 21.44% SALES CHARGE) S&P 500 21.04% 28.56% 22.83% Capital Appreciation Funds 41.56% 22.88% n/a Average 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 different figure than that obtained by averaging the cumulative total returns and annualizing the result.) $10,000 OVER LIFE OF FUND Fidelity Fifty S&P 500 00500 SP001 1993/09/17 9700.00 10000.00 1993/09/30 9971.60 10012.20 1993/10/31 10369.30 10219.45 1993/11/30 10204.40 10122.36 1993/12/31 10272.24 10244.84 1994/01/31 10660.60 10593.17 1994/02/28 10505.25 10306.09 1994/03/31 9990.67 9856.75 1994/04/30 10116.89 9982.91 1994/05/31 10126.60 10146.63 1994/06/30 9874.16 9898.04 1994/07/31 10262.53 10222.70 1994/08/31 10796.53 10641.83 1994/09/30 10767.40 10381.10 1994/10/31 10990.71 10614.68 1994/11/30 10495.55 10228.09 1994/12/31 10682.65 10379.77 1995/01/31 10623.74 10648.92 1995/02/28 11065.57 11063.91 1995/03/31 11536.87 11390.41 1995/04/30 11860.88 11725.85 1995/05/31 12302.72 12194.54 1995/06/30 12862.38 12477.82 1995/07/31 13520.22 12891.58 1995/08/31 13547.85 12923.94 1995/09/30 13994.60 13469.33 1995/10/31 13610.19 13421.24 1995/11/30 14181.61 14010.43 1995/12/31 14115.33 14280.28 1996/01/31 14474.47 14766.38 1996/02/29 14866.26 14903.26 1996/03/31 14909.79 15046.78 1996/04/30 15225.40 15268.57 1996/05/31 15508.36 15662.35 1996/06/30 15236.28 15722.02 1996/07/31 14126.21 15027.42 1996/08/31 14412.90 15344.35 1996/09/30 15039.55 16207.93 1996/10/31 15358.57 16654.94 1996/11/30 16497.93 17913.89 1996/12/31 16362.51 17559.02 1997/01/31 17201.62 18656.10 1997/02/28 17026.80 18802.37 1997/03/31 16001.23 18029.78 1997/04/30 16817.03 19106.16 1997/05/31 18157.26 20269.34 1997/06/30 19008.02 21177.40 1997/07/31 20534.72 22862.49 1997/08/31 19821.88 21581.73 1997/09/30 20974.46 22763.77 1997/10/31 19467.24 22003.46 1997/11/30 19707.88 23022.00 1997/12/31 20134.90 23417.28 1998/01/31 20201.04 23676.28 1998/02/28 21775.32 25383.81 1998/03/31 23204.08 26683.72 1998/04/30 23428.98 26952.15 1998/05/31 22330.95 26488.85 1998/06/30 22820.43 27564.82 1998/07/31 22569.08 27271.26 1998/08/31 17584.99 23328.38 1998/09/30 18095.70 24822.80 1998/10/31 19669.24 26841.88 1998/11/30 21063.34 28468.77 1998/12/31 23271.81 30109.14 1999/01/31 26349.88 31368.30 1999/02/28 25742.55 30393.38 1999/03/31 29427.94 31609.42 1999/04/30 29924.85 32833.65 1999/05/31 28254.69 32058.45 1999/06/30 29524.56 33837.69 1999/07/31 28599.76 32781.28 1999/08/31 28707.47 32619.01 1999/09/30 28305.86 31724.92 1999/10/31 29332.19 33732.48 1999/11/30 30566.76 34418.26 1999/12/31 33928.36 36445.49 IMATRL PRASUN SHR__CHT 19991231 20000112 161701 R00000000000079 $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 3.00% sales charge was paid. As the chart shows, by December 31, 1999, the value of the investment would have grown to $33,928 - a 239.28% increase on the initial investment. For comparison, look at how the Standard & Poor's 500 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $36,445 - a 264.45% increase. (checkmark)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. * THE LIPPER LARGE-CAP GROWTH FUNDS AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO CHARACTERISTICS AND CAPITALIZATION. THE LIPPER LARGE-CAP SUPERGROUP AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR CAPITALIZATION. AS OF DECEMBER 31, 1999, THE SIX MONTH, ONE YEAR AND FIVE YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP GROWTH FUNDS AVERAGE WERE 22.26%, 38.09%, 279.21% AND 38.09%, 30.14%, RESPECTIVELY; AND THE SIX MONTH, ONE YEAR AND FIVE YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP SUPERGROUP AVERAGE WERE 11.64%, 24.93%, 227.59% AND 24.93%, 26.34%, RESPECTIVELY. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP Technology. If one could use only a single word to sum up what characterized the U.S. equity markets for the second half of 1999, no other term would be more appropriate. The performance of the technology sector during the six-month period ending December 31, 1999, dwarfed all others. To illustrate: The Goldman Sachs Indexes monitor the performance of seven sectors - Consumer, Cyclical, Financial, Health Care, Natural Resources, Technology and Utilities. Of those, Utilities was the second-best performer, returning 7.64% for the final six months of 1999. In comparison, the Goldman Sachs Technology Index returned an astonishing 49.40%. That performance was mirrored by the tech-heavy NASDAQ Index, which was up 51.69% during the same time frame. On a broader scale and reflective of the extreme narrowness of the market, the Standard & Poor's 500 Index - a market-capitalization-weighted index of 500 widely held U.S. stocks - returned a more modest 7.71%. The Dow Jones Industrial Average - an index of 30 blue-chip stocks - posted a 5.60% return during the period. On the last day of the period - - in fact, the last day of the decade, century and millennium - the NASDAQ, Dow and S&P all closed at record high levels. (photograph of John Muresianu) An interview with John Muresianu, Portfolio Manager of Fidelity Fifty Q. HOW DID THE FUND PERFORM, JOHN? A. For the six-month period that ended December 31, 1999, the fund had a total return of 14.92%. That outpaced the Standard & Poor's 500 Index, which was up 7.71% over the same period. The capital appreciation funds average tracked by Lipper Inc. returned 23.51% over the same time frame. For the 12 months that ended December 31, 1999, the fund returned 45.79%, while the S&P 500 and the Lipper group returned 21.04% and 41.56%, respectively. Q. WHY DID THE FUND OUTPERFORM ITS BENCHMARK DURING THE SIX-MONTH PERIOD? A. Simply put, strong stock picking within the technology and health care sectors, along with a timely investment in Japan, powered fund returns. Our exposure to the explosive growth of the Internet, as well as to voice and data communications, further bolstered fund performance relative to the index. Out-of-benchmark positions in Amazon.com, eBay and Nokia, as well as an overweighting in America Online and Yahoo!, contributed meaningfully to returns. The fund no longer held eBay at the close of the period. The fund's stake in health care, most notably in biotechnology and genomics concerns, also added appreciably to performance. Additionally, we were rewarded for our position in Softbank, a Japanese venture capital firm investing in Internet start-ups, which benefited from a resurgent economy in that nation. The fund trailed the Lipper average as many of its peers remained heavier in tech for much of the period. Q. WHAT ELSE INFLUENCED FUND PERFORMANCE? A. Having an average underweighting in financial stocks relative to the index helped, as sharply rising interest rates kept most issues in check during the period. Holding some strong retailer names, such as Home Depot and Wal-Mart, also gave us a boost. Overweighting CBS and global communications equipment provider Nortel Networks garnered additional returns for the fund. On the flip side, the fund suffered from maintaining a higher-than-normal cash weighting at times during the period. It's important to note that the fund's cash position will vary as I become more or less concerned with the general valuation levels of the market. Over the past six months during the dramatic run-up in tech stocks, I became as concerned as ever. Thus, I restructured the fund, taking profits from some of the fund's richly valued positions. The cash that accumulated from these moves was re-deployed as soon as I could find quality investment opportunities elsewhere in the marketplace. Q. COULD YOU NAME SOME OTHER STOCKS THAT WERE KEY CONTRIBUTORS? A. Sure. The market rallied around the earnings growth potential of PE Biosystems and Celera Genomics. These companies provide technology and information solutions to life science customers involved in the quest to decode the blueprint of human life. Genentech - a biotechnology company that uses human genetic information in the development of biopharmaceuticals - soared on the back of strong sales of its core drug products. Q. WHAT STOCKS DETRACTED FROM PERFORMANCE? A. Many defensive names that are traditionally considered safe havens were quite the opposite over the past six months. Incredibly cheap stocks that had been out of favor for so long became even cheaper and even more out of favor. A good example of this was Waste Management, which fell precipitously during the period. Investors' waning confidence in the nation's largest trash collector, felled by accounting irregularities and repeated earnings shortfalls, pushed the stock further downward. Other not-so-safe havens included energy services provider PG&E and tobacco giant Philip Morris, each of which lost ground during the period. Q. WHAT'S YOUR OUTLOOK, JOHN? A. I will continue to focus my efforts on trying to pick the best stocks. In the past, my success has overwhelmingly come from picking stocks, not betting on sectors or timing the market. I remain concerned about the lofty valuation levels in certain sectors along with their inherent risks. Stock prices have seemed to amass much of their buoyancy from the market's optimism about the U.S. economy's strong prospects. With world economies picking up and technological innovation influencing further openness of the global economy, tremendous potential exists for growth in the world's leading companies. However, fear of higher interest rates and further tightening in monetary policy may temper Wall Street's enthusiasm and continue to fuel volatility in the coming months. 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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. (checkmark)FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in equity securities, normally 50 to 60 stocks FUND NUMBER: 500 TRADING SYMBOL: FFTYX START DATE: September 17, 1993 SIZE: as of December 31, 1999, more than $609 million MANAGER: John Muresianu, since 1999; manager, Fidelity American Trust Portfolio, since 1997; Fidelity Advisor Utilities Growth Fund, 1996-1997; several Fidelity Select Portfolios, 1992-1997; joined Fidelity in 1986 JOHN MURESIANU ON HOW CORPORATE EARNINGS HELP GUIDE HIS INVESTMENT DECISIONS: "In researching an investment opportunity, I take a longer-term perspective than most in this business, namely looking 10-20 years in either direction. I use a wide range of analytical tools that combine the elements of fundamental, valuation and technical analysis. I concentrate more on business mix and management than I do on earnings or revenue momentum. I apply customized metrics to individual securities, which help me drill down deeper than surface-level earnings to understand what fuels stock prices. In our business, the mantra is that `earnings drive stocks.' But earnings alone tell me very little. What's more important to understand is that, over the long term, revenues drive earnings. Taking it two steps further, units drive revenues and value-added drives units. To really get ahead of the curve as an analyst, it's essential to have a clear understanding of whether or not a company actually adds value for its customers. One must see the company through the eyes of its customers. This involves re-directing the research focus away from simply talking to company management to speaking directly to its customers. By digging deeper, I reaped the rewards as an early Internet and genomics investor. If I had been obsessed solely with earnings, there's a good chance that I would have completely missed many of the greatest companies of the past few years." INVESTMENT CHANGES
TOP TEN STOCKS AS OF DECEMBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Microsoft Corp. 5.0 4.4 PE Corp. - Celera Genomics 4.1 0.4 Group Citigroup, Inc. 4.1 1.1 Exxon Mobil Corp. 3.9 2.3 Genentech, Inc. 3.1 0.0 General Electric Co. 3.0 3.0 AT&T Corp. 2.8 3.5 Motorola, Inc. 2.7 0.0 Wal-Mart Stores, Inc. 2.6 2.3 Softbank Corp. 2.6 0.0 33.9 17.0 TOP FIVE MARKET SECTORS AS OF DECEMBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 27.0 20.6 HEALTH 15.0 12.5 UTILITIES 10.6 15.5 FINANCE 10.6 8.7 ENERGY 7.7 7.6
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF DECEMBER 31, 1999 * AS OF JUNE 30, 1999 ** Stocks 93.8% Stocks 92.9% Short-Term Investments and Short-Term Investments and Net Other Assets 6.2% Net Other Assets 7.1% * FOREIGN INVESTMENTS 10.6% ** FOREIGN INVESTMENTS 10.1% Row: 1, Col: 1, Value: 93.8 Row: 1, Col: 1, Value: 93.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 8, Value: 6.2 Row: 1, Col: 8, Value: 7.0
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS. INVESTMENTS DECEMBER 31, 1999 (UNAUDITED) Showing Percentage of Net Assets COMMON STOCKS - 93.8% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 0.8% Boeing Co. 123,300 $ 5,124,656 BASIC INDUSTRIES - 4.9% IRON & STEEL - 1.8% Bethlehem Steel Corp. (a) 1,328,200 11,123,675 METALS & MINING - 3.1% Inco Ltd. 382,100 8,874,376 Phelps Dodge Corp. 142,800 9,585,450 18,459,826 TOTAL BASIC INDUSTRIES 29,583,501 ENERGY - 7.7% ENERGY SERVICES - 2.3% Schlumberger Ltd. 248,700 13,989,375 Transocean Sedco Forex, Inc. 8,148 274,486 14,263,861 OIL & GAS - 5.4% Burlington Resources, Inc. 270,400 8,940,100 Exxon Mobil Corp. 294,700 23,741,769 32,681,869 TOTAL ENERGY 46,945,730 FINANCE - 10.6% CREDIT & OTHER FINANCE - 4.1% Citigroup, Inc. 447,050 24,839,216 FEDERAL SPONSORED CREDIT - 3.3% Fannie Mae 172,400 10,764,225 Freddie Mac 137,400 6,466,388 SLM Holding Corp. 68,100 2,877,225 20,107,838 INSURANCE - 2.6% American International Group, 95,925 10,371,891 Inc. Berkshire Hathaway, Inc. 97 5,441,700 Class A (a) 15,813,591 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) FINANCE - CONTINUED SECURITIES INDUSTRY - 0.6% Nomura Securities Co. Ltd. 209,000 $ 3,773,043 TOTAL FINANCE 64,533,688 HEALTH - 15.0% DRUGS & PHARMACEUTICALS - 13.6% Biogen, Inc. (a) 49,000 4,140,500 Bristol-Myers Squibb Co. 91,500 5,873,156 Eli Lilly & Co. 92,600 6,157,900 Genentech, Inc. 142,500 19,166,250 Merck & Co., Inc. 104,300 6,994,619 PE Corp. - Celera Genomics 167,700 24,987,300 Group (a) Pfizer, Inc. 99,100 3,214,556 Pharmacia & Upjohn, Inc. 69,100 3,109,500 Schering-Plough Corp. 108,000 4,556,250 Warner-Lambert Co. 54,800 4,490,175 82,690,206 MEDICAL EQUIPMENT & SUPPLIES - - 1.4% Guidant Corp. 79,600 3,741,200 Medtronic, Inc. 134,700 4,908,131 8,649,331 TOTAL HEALTH 91,339,537 INDUSTRIAL MACHINERY & EQUIPMENT - 4.6% ELECTRICAL EQUIPMENT - 3.0% General Electric Co. 119,100 18,430,725 POLLUTION CONTROL - 1.6% Waste Management, Inc. 564,600 9,704,063 TOTAL INDUSTRIAL MACHINERY & 28,134,788 EQUIPMENT MEDIA & LEISURE - 4.5% BROADCASTING - 3.1% CBS Corp. (a) 189,400 12,109,763 Clear Channel Communications, 72,700 6,488,475 Inc. (a) 18,598,238 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MEDIA & LEISURE - CONTINUED ENTERTAINMENT - 0.7% Walt Disney Co. 138,900 $ 4,062,825 RESTAURANTS - 0.7% McDonald's Corp. 111,000 4,474,688 TOTAL MEDIA & LEISURE 27,135,751 NONDURABLES - 2.6% FOODS - 0.5% Nabisco Group Holdings Corp. 284,600 3,023,875 HOUSEHOLD PRODUCTS - 1.0% Procter & Gamble Co. 56,100 6,146,456 TOBACCO - 1.1% Philip Morris Companies, Inc. 278,300 6,453,081 TOTAL NONDURABLES 15,623,412 PRECIOUS METALS - 1.5% Newmont Mining Corp. 382,100 9,361,450 RETAIL & WHOLESALE - 4.0% GENERAL MERCHANDISE STORES - 2.6% Wal-Mart Stores, Inc. 234,200 16,189,075 RETAIL & WHOLESALE, MISCELLANEOUS - 1.4% Home Depot, Inc. 120,600 8,268,638 TOTAL RETAIL & WHOLESALE 24,457,713 TECHNOLOGY - 27.0% COMMUNICATIONS EQUIPMENT - 7.7% Cisco Systems, Inc. (a) 126,000 13,497,750 Lucent Technologies, Inc. 151,500 11,334,094 Nokia AB sponsored ADR 67,700 12,863,000 Nortel Networks Corp. 91,500 9,224,632 46,919,476 COMPUTER SERVICES & SOFTWARE - - 8.5% Amazon.com, Inc. (a) 26,400 2,009,700 America Online, Inc. (a) 167,700 12,650,869 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TECHNOLOGY - CONTINUED COMPUTER SERVICES & SOFTWARE - - CONTINUED Microsoft Corp. (a) 260,800 $ 30,448,395 Yahoo!, Inc. (a) 15,000 6,490,313 51,599,277 COMPUTERS & OFFICE EQUIPMENT - - 4.0% International Business 75,900 8,197,200 Machines Corp. Softbank Corp. 16,800 16,076,713 24,273,913 ELECTRONIC INSTRUMENTS - 2.1% PE Corp. - Biosystems Group 109,500 13,174,219 ELECTRONICS - 4.7% Intel Corp. 70,200 5,778,338 Motorola, Inc. 113,800 16,757,050 Texas Instruments, Inc. 66,400 6,432,500 28,967,888 TOTAL TECHNOLOGY 164,934,773 UTILITIES - 10.6% CELLULAR - 2.7% QUALCOMM, Inc. (a) 44,000 7,749,500 Sprint Corp. - PCS Group 86,500 8,866,250 Series 1 (a) 16,615,750 ELECTRIC UTILITY - 0.3% PG&E Corp. 100,800 2,066,400 TELEPHONE SERVICES - 7.6% AT&T Corp. 336,900 17,097,675 MCI WorldCom, Inc. (a) 177,150 9,400,022 SBC Communications, Inc. 294,423 14,353,121 Sprint Corp. - FON Group 79,800 5,371,538 46,222,356 TOTAL UTILITIES 64,904,506 TOTAL COMMON STOCKS 572,079,505 (Cost $462,952,884) CASH EQUIVALENTS - 6.4% SHARES VALUE (NOTE 1) Taxable Central Cash Fund, 38,794,969 $ 38,794,969 5.12% (b) (Cost $38,794,969) TOTAL INVESTMENT PORTFOLIO - 610,874,474 100.2% (Cost $501,747,853) NET OTHER ASSETS - (0.2)% (1,031,810) NET ASSETS - 100% $ 609,842,664 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. Distribution of investments by country of issue, as a percentage of net assets, is as follows: United States of America 89.4% Japan 3.2 Canada 3.0 Netherlands Antilles 2.3 Finland 2.1 100.0% INCOME TAX INFORMATION At December 31, 1999, the aggregate cost of investment securities for income tax purposes was $509,788,097. Net unrealized appreciation aggregated $101,086,377, of which $129,112,698 related to appreciated investment securities and $28,026,321 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1999 (UNAUDITED) ASSETS Investment in securities, at $ 610,874,474 value (cost $501,747,853) - See accompanying schedule Receivable for investments 4,473,177 sold Receivable for fund shares 3,048,717 sold Dividends receivable 452,238 Interest receivable 136,361 Other receivables 67,575 TOTAL ASSETS 619,052,542 LIABILITIES Payable for investments $ 6,545,463 purchased Payable for fund shares 2,281,788 redeemed Accrued management fee 271,618 Other payables and accrued 111,009 expenses TOTAL LIABILITIES 9,209,878 NET ASSETS $ 609,842,664 Net Assets consist of: Paid in capital $ 505,006,169 Undistributed net investment 1,300,356 income Accumulated undistributed net (5,590,572) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 109,126,711 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 26,737,901 $ 609,842,664 shares outstanding NET ASSET VALUE, offering $22.81 price and redemption price per share ($609,842,664 (divided by) 26,737,901 shares) Maximum offering price per $23.52 share (100/97.00 of $22.81) STATEMENT OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED) INVESTMENT INCOME $ 2,375,763 Dividends Interest 1,005,955 Security lending 19,153 TOTAL INCOME 3,400,871 EXPENSES Management fee Basic fee $ 1,510,293 Performance adjustment (167,442) Transfer agent fees 653,188 Accounting and security 115,898 lending fees Non-interested trustees' 707 compensation Custodian fees and expenses 13,587 Registration fees 51,718 Audit 10,414 Legal 3,978 Miscellaneous 1,043 Total expenses before 2,193,384 reductions Expense reductions (138,964) 2,054,420 NET INVESTMENT INCOME 1,346,451 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (279,077) Foreign currency transactions 44,617 (234,460) Change in net unrealized appreciation (depreciation) on: Investment securities 77,436,768 Assets and liabilities in 1,378 77,438,146 foreign currencies NET GAIN (LOSS) 77,203,686 NET INCREASE (DECREASE) IN $ 78,550,137 NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED DECEMBER 31, YEAR ENDED JUNE 30, 1999 INCREASE (DECREASE) IN NET (UNAUDITED) 1999 ASSETS Operations Net investment $ 1,346,451 $ 1,012,415 income Net realized gain (loss) (234,460) 53,806,045 Change in net unrealized 77,438,146 (1,923,062) appreciation (depreciation) NET INCREASE (DECREASE) IN 78,550,137 52,895,398 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (720,994) (220,177) From net investment income From net realized gain (28,983,875) (7,371,283) In excess of net realized (5,356,112) - gain TOTAL DISTRIBUTIONS (35,060,981) (7,591,460) Share transactions Net 270,663,146 861,346,449 proceeds from sales of shares Reinvestment of distributions 34,464,635 7,510,494 Cost of shares redeemed (260,851,242) (584,704,549) NET INCREASE (DECREASE) IN 44,276,539 284,152,394 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 87,765,695 329,456,332 IN NET ASSETS NET ASSETS Beginning of period 522,076,969 192,620,637 End of period (including $ 609,842,664 $ 522,076,969 undistributed net investment income of $1,300,356 and $1,125,208, respectively) OTHER INFORMATION Shares Sold 13,273,011 42,455,516 Issued in reinvestment of 1,832,249 472,062 distributions Redeemed (12,771,001) (29,688,090) Net increase (decrease) 2,334,259 13,239,488
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED DECEMBER 31, YEARS ENDED JUNE 30, 1999 (UNAUDITED) 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 21.39 $ 17.25 $ 16.31 $ 14.00 $ 13.10 $ 10.17 period Income from Investment Operations Net investment income .05 D .07 D .04 D .07 D .15 .08 Net realized and unrealized 2.83 4.76 2.95 3.16 2.12 2.97 gain (loss) Total from investment 2.88 4.83 2.99 3.23 2.27 3.05 operations Less Distributions From net investment income (.03) (.02) (.05) (.09) (.13) (.02) From net realized gain (1.21) (.67) (2.00) (.83) (1.24) (.10) In excess of net realized gain (.22) - - - - - Total distributions (1.46) (.69) (2.05) (.92) (1.37) (.12) Net asset value, end of $ 22.81 $ 21.39 $ 17.25 $ 16.31 $ 14.00 $ 13.10 period TOTAL RETURN B, C 14.92% 29.38% 20.06% 24.75% 18.46% 30.26% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 609,843 $ 522,077 $ 192,621 $ 156,136 $ 180,983 $ 128,572 (000 omitted) Ratio of expenses to average .83% A .83% .80% .88% 1.03% 1.22% net assets Ratio of expenses to average .78% A, E .79% E .77% E .84% E .99% E 1.19% E net assets after expense reductions Ratio of net investment .51% A .37% .27% .53% 1.20% 1.15% income to average net assets Portfolio turnover rate 184% A 316% 121% 131% 152% 180%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. NOTES TO FINANCIAL STATEMENTS For the period ended December 31, 1999 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Fifty (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, 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 require 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. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of the business of the fund, are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. 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. 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. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. 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." 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 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 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 among 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, futures transactions, foreign currency transactions, passive foreign investment companies (PFIC) 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. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the fund, or to the Joint Trading Account, at a bank 2. OPERATING POLICIES - CONTINUED REPURCHASE AGREEMENTS - CONTINUED 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 Fidelity Investments Money Management, Inc., 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. Income distributions from the Cash Fund are declared daily and paid monthly from net interest income. Income distributions earned by the fund are recorded as interest income in the accompanying financial statements. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $466,426,231 and $456,716,954, 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 .2167% to .5200% for the period. The annual individual fund fee rate is .30%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The basic fee is subject to a performance adjustment (up to a maximum of (plus/minus).20% of the fund's average net assets over the performance period) based on the fund's investment performance as compared to the appropriate index over a specified period of time. For the period, the management fee was equivalent to an annualized rate of .51% of average net assets after the performance adjustment. SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an affiliate of FMR and the general distributor of the fund, received sales charges of $473,580 on sales of shares of the fund of which $473,489 was retained. Beginning on January 31, 2000, through December 31, 2000, FDC will voluntarily waive the sales charge (3% of the offering price on sales of shares). The fund will adopt a 0.75% redemption fee for shares held less than 30 days, which will apply to shares redeemed after April 28, 2000. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED 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 annualized rate of .25% 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 $38,172 for the period. 5. SECURITY LENDING. The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral in the form of U.S. Treasury obligations, letters of credit, and/or cash against the loaned securities, and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. At period end there were no loans outstanding. 6. 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 $132,233 under this arrangement. In addition, through arrangements with the fund's custodian and transfer agent, 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 $75 and $6,656, respectively, under these arrangements. 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 Automated Service Telephone provides 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. (PHONE_GRAPHIC)FIDELITY AUTOMATED SERVICE TELEPHONE (FASTSM) 1-800-544-5555 PRESS 1 For mutual fund and brokerage trading. 2 For quotes.* 3 For account balances and holdings. 4 To review orders and mutual fund activity. 5 To change your PIN. *0 To speak to a Fidelity representative. 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. (COMPUTER_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call EarthLink Sprint at 1-800-288-2967, and be sure to ask for registration number SMD004 to receive a special Fidelity package that includes 30 days of free Internet access. EarthLink is North America's #1 independent Internet access provider. (COMPUTER_GRAPHIC) FIDELITY ON-LINE XPRESS+(registered trademark) 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 1-800-544-0240 or visit our Web site for more information on how to manage your investments via your PC. * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research 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 Robert A. Lawrence, Vice President John M. Muresianu, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer Matthew N. Karstetter, Deputy Treasurer John H. Costello, 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 Ned C. Lautenbach 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 Aggressive Growth Fund Blue Chip Growth Fund Capital Appreciation Fund Contrafund (registered trademark) Contrafund(registered trademark) II Disciplined Equity Fund Dividend Growth Fund Export and Multinational Fund Fidelity FiftySM Growth Company Fund Large Cap Stock Fund Low-Priced Stock Fund Magellan(registered trademark) Fund Mid-Cap Stock Fund New Millennium Fund (registered trademark) OTC Portfolio Retirement Growth Fund Small Cap Selector Small Cap Stock Fund Stock Selector Tax Managed Stock Fund TechnoQuant (registered trademark) Growth Fund Trend Fund Value Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions and Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 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) Fidelity Automated Service Telephone (FASTSM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)(registered trademark) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 www.fidelity.com FIDELITY(REGISTERED TRADEMARK) GROWTH & INCOME II PORTFOLIO SEMIANNUAL REPORT DECEMBER 31, 1999 (2_FIDELITY_LOGOS)(registered trademark) 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. Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Other third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. 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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial Average all closed 1999 at record highs. Investors should note, however, that much of the year's returns were driven by a single sector: technology. Most other stocks were flat or down in 1999. Likewise, bond investors had little cause to celebrate at year's end. Steadily rising interest rates left the benchmark 30-year Treasury at its highest yield level in two years. 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 an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these types of funds. 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. Of course, you should consider your financial ability to continue your purchases through periods of low price levels before undertaking such a strategy. If you have questions, please call us at 1-800-544-6666, or visit our web site at www.fidelity.com. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND FIDELITY GROWTH & INCOME II 1.26% 8.09% 9.17% S&P 500 7.71% 21.04% 21.43% Growth & Income Funds Average 2.35% 13.76% n/a CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, or since the fund started on December 28, 1998. 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 500SM Index - a market capitalization-weighted index of common stocks. To measure how the fund's performance stacked up against its peers, you can compare it to the growth and income funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past six months average represents a peer group of 972 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. Lipper has created new comparison categories that group funds according to portfolio characteristics and capitalization, as well as by capitalization only. These averages are listed on page 5 of this report.* AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1999 PAST 1 YEAR LIFE OF FUND FIDELITY GROWTH & INCOME II 8.09% 9.09% S&P 500 21.04% 21.24% Growth & Income Funds Average 13.76% 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. $10,000 LIFE OF FUND Growth & Income II S&P 500 00361 SP001 1998/12/28 10000.00 10000.00 1998/12/31 10100.00 10031.66 1999/01/31 10290.00 10451.19 1999/02/28 10060.00 10126.36 1999/03/31 10360.00 10531.52 1999/04/30 10640.00 10939.40 1999/05/31 10340.00 10681.13 1999/06/30 10781.46 11273.93 1999/07/31 10400.35 10921.96 1999/08/31 10270.62 10867.89 1999/09/30 10088.51 10570.00 1999/10/31 10613.64 11238.87 1999/11/30 10674.23 11467.36 1999/12/31 10917.10 12142.79 IMATRL PRASUN SHR__CHT 19991231 20000113 154418 R00000000000016 $10,000 LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Growth & Income II Portfolio on December 28, 1998, when the fund started. As the chart shows, by December 31, 1999, the value of the investment would have grown to $10,917 - a 9.17% increase on the initial investment. For comparison, look at how the Standard & Poor's 500 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $12,143 - a 21.43% increase. (checkmark)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. * THE LIPPER LARGE-CAP VALUE FUNDS AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO CHARACTERISTICS AND CAPITALIZATION. THE LIPPER LARGE-CAP SUPERGROUP AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR CAPITALIZATION. AS OF DECEMBER 31, 1999, THE ONE YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP VALUE FUNDS AVERAGE WERE 11.23% AND 11.23%, RESPECTIVELY; AND THE ONE YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP SUPERGROUP AVERAGE WERE 24.93% AND 24.93%, RESPECTIVELY. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP Technology. If one could use only a single word to sum up what characterized the U.S. equity markets for the second half of 1999, no other term would be more appropriate. The performance of the technology sector during the six-month period ending December 31, 1999, dwarfed all others. To illustrate: The Goldman Sachs Indexes monitor the performance of seven sectors - Consumer, Cyclical, Financial, Health Care, Natural Resources, Technology and Utilities. Of those, Utilities was the second-best performer, returning 7.64% for the final six months of 1999. In comparison, the Goldman Sachs Technology Index returned an astonishing 49.40%. That performance was mirrored by the tech-heavy NASDAQ Index, which was up 51.69% during the same time frame. On a broader scale and reflective of the extreme narrowness of the market, the Standard & Poor's 500 Index - a market-capitalization-weighted index of 500 widely held U.S. stocks - returned a more modest 7.71%. The Dow Jones Industrial Average - an index of 30 blue-chip stocks - posted a 5.60% return during the period. On the last day of the period - - in fact, the last day of the decade, century and millennium - the NASDAQ, Dow and S&P all closed at record high levels. (photograph of Louis Salemy) An interview with Louis Salemy, Portfolio Manager of Fidelity Growth & Income II Portfolio Q. HOW DID THE FUND PERFORM, LOUIS? A. The fund's performance fell considerably short of the return of its benchmark index. For the six months that ended December 31, 1999, the fund had a total return of 1.26%. That compared with a 7.71% return for the Standard & Poor's 500 Index and 2.35% for the growth and income funds average monitored by Lipper Inc. For the 12 months that ended December 31, 1999, the fund returned 8.09%, while the S&P 500 and Lipper average returned 21.04% and 13.76%, respectively. Q. WHY DID THE FUND UNDERPERFORM THE INDEX BY SUCH A WIDE MARGIN OVER THE PAST SIX MONTHS? A. Underweighting the technology sector was the most important reason. In the second half of 1999, there were essentially two stock markets - technology stocks and everything else. The discrepancy was so pronounced that the non-technology part of the S&P 500, as a group, was actually down for the year. I brought the fund's technology weighting up from 12.9% of net assets six months ago to 20.9% at the end of the period. However, it was not enough to make up the performance shortfall. Another factor that hurt performance relative to the index was investors' emphasis within the technology sector on a small number of stocks with very high price-to-earnings ratios. The fund's policy of pursuing growth at a reasonable price prevented me from buying these stocks. Q. WHY DID YOU MAINTAIN AN OVERWEIGHTING IN FINANCE STOCKS - WHICH WERE 18.1% OF NET ASSETS AT THE END OF THE PERIOD - IN THE FACE OF RISING INTEREST RATES? A. Rising interest rates do not affect all types of finance stocks equally. Banks, which I underweighted, tend to have more difficulty responding quickly to rate increases. Furthermore, during the period many banks had earnings problems related to recent mergers and acquisitions. However, consumer finance companies and credit card companies, which I overweighted relative to the index, can do well when interest rates are rising, as long as the economy is growing vigorously and the rate hikes are not too steep. This phenomenon was reflected in the strong earnings reported by many of the fund's finance holdings. Unfortunately, investors chose to focus, for the time being, on interest rates instead of earnings. Q. WHAT STOCKS DID WELL FOR THE FUND? A. Microsoft topped the list of stocks that helped performance. Investors put aside earlier concerns over the government's antitrust lawsuit against the company, and the stock rallied sharply as the period drew to a close. In addition, Microsoft was helped by positive momentum in the technology sector generally and by the upcoming launch of the company's Windows 2000 operating system. American Express was another strong holding, benefiting from the introduction of a credit card aimed specifically at Internet users. Also doing well was Home Depot, which enjoyed strong sales at existing stores as well as good results from new stores. Q. WHAT STOCKS DETRACTED FROM PERFORMANCE? A. Philip Morris was one disappointing holding. Although the stock was already cheap when I bought it, it got cheaper during the period due to ongoing litigation concerns. Associates First, a consumer credit company, consistently reported earnings that matched analysts' estimates, but the stock took a hit because of concerns about higher interest rates and a slight deterioration in the credit quality of the company's loan portfolio. Freddie Mac and Fannie Mae, two government-sponsored mortgage companies, also made the list of disappointments. Apparently frightened by higher interest rates, investors chose to ignore the excellent earnings outlook for these two stocks. Q. WHAT'S YOUR OUTLOOK, LOUIS? A. My decisions about sector allocations will be influenced to some extent by what happens in the bond market and the economy. Right now the economy looks strong, and if that trend continues, there may be further opportunities in cyclical stocks. The technology sector also bears careful watching, especially for signs of a reacceleration of spending following the Y2K phenomenon. On the other hand, if prospects for the bond market improve, perhaps because of a softening economy, I would consider moving more assets into the finance sector, where investor sentiment has been overly negative. My main focus, though, is to add value through stock selection by finding stocks with the potential to contribute meaningfully to the fund's goal of a high total return through a combination of current income and capital appreciation. 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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. (checkmark)FUND FACTS GOAL: seeks a high total return through a combination of current income and capital appreciation by investing mainly in common stocks FUND NUMBER: 361 TRADING SYMBOL: FGRTX START DATE: December 28, 1998 SIZE: as of December 31, 1999, more than $218 million MANAGER: Louis Salemy, since inception; manager, Fidelity VIP: Growth & Income Portfolio, since 1998; various Fidelity Select Portfolios, 1992-1998; joined Fidelity in 1992 LOUIS SALEMY ON THE EFFECT OF EXPANDING AND CONTRACTING PRICE-TO-EARNING MULTIPLES ON STOCK PRICES: "During the period, we saw two good examples of one factor that makes investing challenging: dramatic expansion or contraction in P/E ratios, or multiples, for stocks in a specific sector. Because investors were enamored of the prospects for technology stocks during the period, especially those with Internet ties, there was a marked expansion of the multiples thought to be reasonable for that group. What's interesting about this phenomenon is that many companies saw their multiples skyrocket simply by virtue of the business they were in, not because of substantial improvements in their earnings prospects. "Conversely, finance stocks experienced a deflation of their multiples. The trigger in that case was rising interest rates, which many investors - incorrectly, I think - assumed would negatively affect the earnings of finance stocks across the board. Yet many of the fund's finance holdings continued to meet, and sometimes beat, their earnings estimates during the latter half of 1999, even as their stock prices headed south. "When investor psychology is at odds with earnings prospects, the latter will generally win out in the long run. This implies that the technology sector will eventually settle down, as investors become more selective and focus on stocks with genuinely strong earnings prospects. For their part, finance stocks should recover from their malaise as long as rising interest rates do not interfere with the fundamentally sound economy and favorable outlook for many companies in that sector." INVESTMENT CHANGES
TOP TEN STOCKS AS OF DECEMBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Microsoft Corp. 6.5 3.3 Exxon Mobil Corp. 4.6 2.9 Fannie Mae 4.1 3.5 Freddie Mac 3.4 2.4 Associates First Capital 3.3 4.4 Corp. Class A Procter & Gamble Co. 2.7 2.0 American Express Co. 2.6 3.0 Cisco Systems, Inc. 2.6 0.9 Warner-Lambert Co. 2.6 2.1 SBC Communications, Inc. 2.5 1.2 34.9 25.7 TOP FIVE MARKET SECTORS AS OF DECEMBER 31, 1999 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 20.9 12.9 FINANCE 18.1 21.7 HEALTH 12.3 11.6 RETAIL & WHOLESALE 8.6 5.3 UTILITIES 8.5 8.9
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF DECEMBER 31, 1999 * AS OF JUNE 30, 1999 ** Stocks 93.2% Stocks 90.7% Short-Term Investments and Short-Term Investments and Net Other Assets 6.8% Net Other Assets 9.3% * FOREIGN INVESTMENTS 4.5% ** FOREIGN INVESTMENTS 3.2% Row: 1, Col: 1, Value: 93.2 Row: 1, Col: 1, Value: 90.7 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 8, Value: 6.8 Row: 1, Col: 8, Value: 9.300000000000001
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS. INVESTMENTS DECEMBER 31, 1999 (UNAUDITED) Showing Percentage of Net Assets COMMON STOCKS - 93.2% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 0.9% AEROSPACE & DEFENSE - 0.5% Boeing Co. 27,800 $ 1,155,438 SHIP BUILDING & REPAIR - 0.4% General Dynamics Corp. 17,490 922,598 TOTAL AEROSPACE & DEFENSE 2,078,036 BASIC INDUSTRIES - 0.6% CHEMICALS & PLASTICS - 0.1% Avery Dennison Corp. 2,900 211,338 PACKAGING & CONTAINERS - 0.5% Ball Corp. 25,892 1,019,498 TOTAL BASIC INDUSTRIES 1,230,836 CONSTRUCTION & REAL ESTATE - 1.4% REAL ESTATE INVESTMENT TRUSTS - - 1.4% Equity Office Properties Trust 40,910 1,007,409 Equity Residential Properties 24,630 1,051,393 Trust (SBI) Public Storage, Inc. 39,690 900,467 2,959,269 DURABLES - 1.6% AUTOS, TIRES, & ACCESSORIES - 0.8% Ford Motor Co. 32,100 1,715,344 CONSUMER DURABLES - 0.8% Minnesota Mining & 18,400 1,800,900 Manufacturing Co. TOTAL DURABLES 3,516,244 ENERGY - 7.0% ENERGY SERVICES - 0.6% Schlumberger Ltd. 19,200 1,080,000 Transocean Sedco Forex, Inc. 3,717 125,216 1,205,216 OIL & GAS - 6.4% BP Amoco PLC sponsored ADR 49,958 2,963,134 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) ENERGY - CONTINUED OIL & GAS - CONTINUED Exxon Mobil Corp. 123,646 $ 9,961,231 Royal Dutch Petroleum Co. (NY 18,930 1,144,082 Registry Gilder 1.25) 14,068,447 TOTAL ENERGY 15,273,663 FINANCE - 18.1% BANKS - 3.6% Bank of New York Co., Inc. 69,290 2,771,600 Mellon Financial Corp. 42,200 1,437,438 Wachovia Corp. 53,000 3,604,000 7,813,038 CREDIT & OTHER FINANCE - 5.9% American Express Co. 34,500 5,735,625 Associates First Capital 261,390 7,171,888 Corp. Class A 12,907,513 FEDERAL SPONSORED CREDIT - 7.5% Fannie Mae 142,590 8,902,963 Freddie Mac 157,730 7,423,168 16,326,131 INSURANCE - 1.1% American International Group, 11,887 1,285,282 Inc. Hartford Financial Services 22,700 1,075,413 Group, Inc. 2,360,695 TOTAL FINANCE 39,407,377 HEALTH - 12.3% DRUGS & PHARMACEUTICALS - 11.4% American Home Products Corp. 42,200 1,664,263 Amgen, Inc. (a) 45,800 2,750,863 Bristol-Myers Squibb Co. 69,440 4,457,180 Eli Lilly & Co. 63,800 4,242,700 Merck & Co., Inc. 81,360 5,456,205 Schering-Plough Corp. 19,500 822,656 Warner-Lambert Co. 68,310 5,597,151 24,991,018 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) HEALTH - CONTINUED MEDICAL EQUIPMENT & SUPPLIES - - 0.9% Baxter International, Inc. 16,980 $ 1,066,556 Becton, Dickinson & Co. 33,310 891,043 1,957,599 TOTAL HEALTH 26,948,617 INDUSTRIAL MACHINERY & EQUIPMENT - 4.2% ELECTRICAL EQUIPMENT - 2.5% General Electric Co. 34,340 5,314,115 INDUSTRIAL MACHINERY & EQUIPMENT - 1.7% Caterpillar, Inc. 22,200 1,044,788 Ingersoll-Rand Co. 20,540 1,130,984 Tyco International Ltd. 41,360 1,607,870 3,783,642 TOTAL INDUSTRIAL MACHINERY & 9,097,757 EQUIPMENT MEDIA & LEISURE - 2.5% BROADCASTING - 1.7% Comcast Corp. Class A 35,800 1,810,138 (special) Infinity Broadcasting Corp. 52,187 1,888,517 Class A 3,698,655 ENTERTAINMENT - 0.5% Walt Disney Co. 33,800 988,650 PUBLISHING - 0.3% Times Mirror Co. Class A 10,370 694,790 TOTAL MEDIA & LEISURE 5,382,095 NONDURABLES - 5.3% FOODS - 1.1% Bestfoods 24,430 1,284,102 Ralston Purina Co. 36,450 1,016,044 2,300,146 HOUSEHOLD PRODUCTS - 2.7% Procter & Gamble Co. 54,340 5,953,626 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) NONDURABLES - CONTINUED TOBACCO - 1.5% Philip Morris Companies, Inc. 146,230 $ 3,390,708 TOTAL NONDURABLES 11,644,480 RETAIL & WHOLESALE - 8.6% APPAREL STORES - 0.6% Gap, Inc. 32,080 1,475,680 DRUG STORES - 1.3% CVS Corp. 33,100 1,321,931 Walgreen Co. 50,100 1,465,425 2,787,356 GENERAL MERCHANDISE STORES - 4.0% Costco Wholesale Corp. (a) 29,290 2,672,713 Dayton Hudson Corp. 21,210 1,557,609 Wal-Mart Stores, Inc. 64,820 4,480,683 8,711,005 GROCERY STORES - 0.3% Safeway, Inc. (a) 19,100 679,244 RETAIL & WHOLESALE, MISCELLANEOUS - 2.4% Bed Bath & Beyond, Inc. (a) 36,090 1,254,128 Home Depot, Inc. 58,035 3,979,024 5,233,152 TOTAL RETAIL & WHOLESALE 18,886,437 SERVICES - 0.8% ADVERTISING - 0.7% Omnicom Group, Inc. 15,600 1,560,000 SERVICES - 0.1% Gartner Group, Inc. Class B 11,566 159,755 (a) TOTAL SERVICES 1,719,755 TECHNOLOGY - 20.9% COMMUNICATIONS EQUIPMENT - 4.0% Cisco Systems, Inc. (a) 52,700 5,645,488 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TECHNOLOGY - CONTINUED COMMUNICATIONS EQUIPMENT - CONTINUED Lucent Technologies, Inc. 18,700 $ 1,398,994 Nokia AB sponsored ADR 8,700 1,653,000 8,697,482 COMPUTER SERVICES & SOFTWARE - - 10.7% Automatic Data Processing, 66,480 3,581,610 Inc. DST Systems, Inc. (a) 25,600 1,953,600 IMS Health, Inc. 92,380 2,511,581 Intuit, Inc. (a) 2,400 143,850 Litton Industries, Inc. (a) 19,200 957,600 Microsoft Corp. (a) 122,200 14,266,841 23,415,082 COMPUTERS & OFFICE EQUIPMENT - - 2.7% EMC Corp. (a) 19,340 2,112,895 Hewlett-Packard Co. 13,900 1,583,731 Pitney Bowes, Inc. 46,800 2,261,025 5,957,651 ELECTRONICS - 3.5% Intel Corp. 43,980 3,620,104 Motorola, Inc. 8,600 1,266,350 Solectron Corp. (a) 28,160 2,678,720 7,565,174 TOTAL TECHNOLOGY 45,635,389 TRANSPORTATION - 0.5% RAILROADS - 0.5% Burlington Northern Santa Fe 45,212 1,096,391 Corp. UTILITIES - 8.5% CELLULAR - 2.8% ALLTEL Corp. 20,910 1,728,996 Nextel Communications, Inc. 16,000 1,650,000 Class A (a) Vodafone AirTouch PLC 55,600 2,752,200 sponsored ADR 6,131,196 ELECTRIC UTILITY - 0.4% IPALCO Enterprises, Inc. 47,000 801,938 TELEPHONE SERVICES - 5.3% AT&T Corp. 36,410 1,847,808 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UTILITIES - CONTINUED TELEPHONE SERVICES - CONTINUED BellSouth Corp. 38,130 $ 1,784,961 MCI WorldCom, Inc. (a) 46,230 2,453,079 SBC Communications, Inc. 113,090 5,513,139 11,598,987 TOTAL UTILITIES 18,532,121 TOTAL COMMON STOCKS 203,408,467 (Cost $191,811,578) CASH EQUIVALENTS - 6.7% Taxable Central Cash Fund, 14,735,232 14,735,232 5.12% (b) (Cost $14,735,232) TOTAL INVESTMENT PORTFOLIO - 218,143,699 99.9% (Cost $206,546,810) NET OTHER ASSETS - 0.1% 149,644 NET ASSETS - 100% $ 218,293,343 LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. INCOME TAX INFORMATION At December 31, 1999, the aggregate cost of investment securities for income tax purposes was $206,822,126. Net unrealized appreciation aggregated $11,321,573, of which $27,997,313 related to appreciated investment securities and $16,675,740 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1999 (UNAUDITED) ASSETS Investment in securities, at $ 218,143,699 value (cost $206,546,810) - See accompanying schedule Receivable for investments 750,892 sold Receivable for fund shares 1,111,767 sold Dividends receivable 204,634 Interest receivable 84,530 TOTAL ASSETS 220,295,522 LIABILITIES Payable to custodian bank $ 893 Payable for investments 652,628 purchased Payable for fund shares 1,191,909 redeemed Accrued management fee 87,242 Other payables and accrued 69,507 expenses TOTAL LIABILITIES 2,002,179 NET ASSETS $ 218,293,343 Net Assets consist of: Paid in capital $ 208,015,708 Undistributed net investment 156,942 income Accumulated undistributed net (1,476,196) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 11,596,889 (depreciation) on investments NET ASSETS, for 20,235,490 $ 218,293,343 shares outstanding NET ASSET VALUE, offering $10.79 price and redemption price per share ($218,293,343 (divided by) 20,235,490 shares) STATEMENT OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED) INVESTMENT INCOME $ 1,282,328 Dividends Interest 622,520 Security lending 15 TOTAL INCOME 1,904,863 EXPENSES Management fee $ 523,691 Transfer agent fees 318,414 Accounting and security 49,395 lending fees Non-interested trustees' 300 compensation Custodian fees and expenses 8,079 Registration fees 16,246 Audit 8,811 Legal 1,502 Miscellaneous 396 Total expenses before 926,834 reductions Expense reductions (8,987) 917,847 NET INVESTMENT INCOME 987,016 REALIZED AND UNREALIZED GAIN (1,152,284) (LOSS) Net realized gain (loss) on investment securities Change in net unrealized 3,412,266 appreciation (depreciation) on investment securities NET GAIN (LOSS) 2,259,982 NET INCREASE (DECREASE) IN $ 3,246,998 NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED DECEMBER 31, DECEMBER 28, 1998 1999 (UNAUDITED) (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1999 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 987,016 $ 403,866 income Net realized gain (loss) (1,152,284) 943,152 Change in net unrealized 3,412,266 8,184,623 appreciation (depreciation) NET INCREASE (DECREASE) IN 3,246,998 9,531,641 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (830,074) (403,866) From net investment income In excess of net investment - (184,623) income From net realized gain (704,994) - In excess of net realized (323,912) - gain TOTAL DISTRIBUTIONS (1,858,980) (588,489) Share transactions Net 74,643,993 234,891,043 proceeds from sales of shares Reinvestment of distributions 1,775,661 561,168 Cost of shares redeemed (75,803,558) (28,106,134) NET INCREASE (DECREASE) IN 616,096 207,346,077 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 2,004,114 216,289,229 IN NET ASSETS NET ASSETS Beginning of period 216,289,229 - End of period (including $ 218,293,343 $ 216,289,229 undistributed net investment income of $156,942 and $0, respectively) OTHER INFORMATION Shares Sold 7,195,339 22,753,650 Issued in reinvestment of 173,697 54,748 distributions Redeemed (7,247,520) (2,694,424) Net increase (decrease) 121,516 20,113,974
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED DECEMBER 31, YEAR ENDED JUNE 30, 1999 1999 E (UNAUDITED) SELECTED PER-SHARE DATA Net asset value, beginning of $ 10.75 $ 10.00 period Income from Investment Operations Net investment income D .05 .03 Net realized and unrealized .08 .75 gain (loss) Total from investment .13 .78 operations Less Distributions From net investment income (.04) (.02) In excess of net investment - (.01) income From net realized gain (.03) - In excess of net realized gain (.02) - Total distributions (.09) (.03) Net asset value, end of period $ 10.79 $ 10.75 TOTAL RETURN B, C 1.26% 7.81% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 218,293 $ 216,289 (000 omitted) Ratio of expenses to average .84% A 1.14% A net assets Ratio of expenses to average .83% A, F 1.12% A, F net assets after expense reductions Ratio of net investment .90% A .62% A income to average net assets Portfolio turnover rate 60% A 59% A
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. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FOR THE PERIOD DECEMBER 28, 1998 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1999. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. NOTES TO FINANCIAL STATEMENTS For the period ended December 31, 1999 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Growth & Income II Portfolio (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, 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 require 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. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of the business of the fund, are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. 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. 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. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. 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." 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 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 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 among 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 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 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. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. 2. OPERATING POLICIES - CONTINUED CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC, the fund may invest in the Taxable Central Cash Fund and the Central Cash Collateral Fund(the Cash Funds) managed by Fidelity Investments Money Management, Inc., an affiliate of FMR. The Cash Funds are open-end money market funds available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Funds seek preservation of capital, liquidity, and current income. Income distributions from the Cash Funds are declared daily and paid monthly from net interest income. Income distributions earned by the fund are recorded as either interest income or security lending income in the accompanying financial statements. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $63,579,734 and $58,629,374, respectively. 4. 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 .2167% to .5200% for the period. The annual individual fund fee rate is .20%. 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 annualized rate of .48% 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 annualized rate of .29% 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 $4,283 for the period. 5. SECURITY LENDING. The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral in the form of U.S. Treasury obligations, letters of credit, and/or cash against the loaned securities, and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. At period end there were no loans outstanding. 6. 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 $8,987 under this arrangement. INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc., London, England Fidelity Management & Research (Far East) Inc., Tokyo, Japan OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Richard A. Spillane Jr., Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer Matthew N. Karstetter, Deputy Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead Ned C. Lautenbach * INDEPENDENT TRUSTEES GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA CUSTODIAN The Chase Manhattan Bank New York, NY FIDELITY'S GROWTH AND INCOME FUNDS Balanced Fund Convertible Securities Fund Equity-Income Fund Equity-Income II Fund Fidelity(registered trademark) Fund Global Balanced Fund Growth & Income Portfolio Growth & Income II Portfolio Puritan (registered trademark) Fund Real Estate Investment Portfolio Utilities Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions and Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 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) Fidelity Automated Service Telephone (FASTSM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)(registered trademark) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 www.fidelity.com -----END PRIVACY-ENHANCED MESSAGE-----