N-30D 1 0001.txt FIDELITY FIFTY(REGISTERED TRADEMARK) ANNUAL REPORT JUNE 30, 2000 (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. REPORT OF INDEPENDENT 23 The auditors' opinion. ACCOUNTANTS DISTRIBUTIONS 24 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 (photograph of Edward C. Johnson 3d) DEAR SHAREHOLDER: In stark contrast to the final six months of 1999, most major equity market indexes posted negative returns for the first half of 2000, due mainly to a correction in the technology sector during the second quarter. The majority of bond markets - with the notable exception of high yield - fared better, as Treasuries and non-Treasuries alike benefited as a haven from the volatility of stocks and riskier investment alternatives. 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(registered trademark) has a 3% sales charge, which was waived beginning January 31, 2000 through December 31, 2000. CUMULATIVE TOTAL RETURNS PERIODS ENDED JUNE 30, 2000 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY FIFTY 9.22% 150.71% 232.45% S&P 500 (registered trademark) 7.25% 190.84% 262.91% Capital Appreciation Funds 29.28% 176.99% n/a * Average CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, 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 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 capital appreciation funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past one year average represents a peer group of 287 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 JUNE 30, 2000 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY FIFTY 9.22% 20.18% 19.36% S&P 500 7.25% 23.80% 20.91% Capital Appreciation Funds 29.28% 20.48% 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.) * NOT AVAILABLE $10,000 OVER LIFE OF FUND Fidelity Fifty S&P 500 00500 SP001 1993/09/17 10000.00 10000.00 1993/09/30 10280.00 10012.20 1993/10/31 10690.00 10219.45 1993/11/30 10520.00 10122.36 1993/12/31 10589.93 10244.84 1994/01/31 10990.31 10593.17 1994/02/28 10830.16 10306.09 1994/03/31 10299.66 9856.75 1994/04/30 10429.78 9982.91 1994/05/31 10439.79 10146.63 1994/06/30 10179.55 9898.04 1994/07/31 10579.92 10222.70 1994/08/31 11130.44 10641.83 1994/09/30 11100.41 10381.10 1994/10/31 11330.63 10614.68 1994/11/30 10820.15 10228.09 1994/12/31 11013.04 10379.77 1995/01/31 10952.30 10648.92 1995/02/28 11407.81 11063.91 1995/03/31 11893.68 11390.41 1995/04/30 12227.71 11725.85 1995/05/31 12683.21 12194.54 1995/06/30 13260.18 12477.82 1995/07/31 13938.38 12891.58 1995/08/31 13966.86 12923.94 1995/09/30 14427.42 13469.33 1995/10/31 14031.12 13421.24 1995/11/30 14620.22 14010.43 1995/12/31 14551.88 14280.28 1996/01/31 14922.13 14766.38 1996/02/29 15326.04 14903.26 1996/03/31 15370.92 15046.78 1996/04/30 15696.29 15268.57 1996/05/31 15988.00 15662.35 1996/06/30 15707.51 15722.02 1996/07/31 14563.10 15027.42 1996/08/31 14858.66 15344.35 1996/09/30 15504.69 16207.93 1996/10/31 15833.58 16654.94 1996/11/30 17008.18 17913.89 1996/12/31 16868.57 17559.02 1997/01/31 17733.62 18656.10 1997/02/28 17553.40 18802.37 1997/03/31 16496.11 18029.78 1997/04/30 17337.14 19106.16 1997/05/31 18718.83 20269.34 1997/06/30 19595.89 21177.40 1997/07/31 21169.81 22862.49 1997/08/31 20434.92 21581.73 1997/09/30 21623.15 22763.77 1997/10/31 20069.32 22003.46 1997/11/30 20317.41 23022.00 1997/12/31 20757.62 23417.28 1998/01/31 20825.82 23676.28 1998/02/28 22448.78 25383.81 1998/03/31 23921.73 26683.72 1998/04/30 24153.58 26952.15 1998/05/31 23021.60 26488.85 1998/06/30 23526.22 27564.82 1998/07/31 23267.09 27271.26 1998/08/31 18128.85 23328.38 1998/09/30 18655.36 24822.80 1998/10/31 20277.56 26841.88 1998/11/30 21714.78 28468.77 1998/12/31 23991.56 30109.14 1999/01/31 27164.82 31368.30 1999/02/28 26538.71 30393.38 1999/03/31 30338.08 31609.42 1999/04/30 30850.36 32833.65 1999/05/31 29128.54 32058.45 1999/06/30 30437.69 33837.69 1999/07/31 29484.29 32781.28 1999/08/31 29595.33 32619.01 1999/09/30 29181.30 31724.92 1999/10/31 30239.37 33732.48 1999/11/30 31512.12 34418.26 1999/12/31 34977.69 36445.49 2000/01/31 33965.62 34614.47 2000/02/29 35928.42 33959.22 2000/03/31 36020.43 37281.45 2000/04/30 33551.60 36159.65 2000/05/31 33858.28 35417.65 2000/06/30 33244.91 36290.70 IMATRL PRASUN SHR__CHT 20000630 20000720 121557 R00000000000085 $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. As the chart shows, by June 30, 2000, the value of the investment would have grown to $33,245 - a 232.45% 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 $36,291 - a 262.91% 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 JUNE 30, 2000, THE ONE YEAR AND FIVE YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP GROWTH FUNDS AVERAGE WERE 26.35%, 216.97% AND 26.35%, 25.59%, RESPECTIVELY; AND THE ONE YEAR AND FIVE YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP SUPERGROUP AVERAGE WERE 13.48%, 176.32%, AND 13.48%, 22.13%, RESPECTIVELY. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP If ever there was a one-year period that investors could point to in support of the merits of diversification, the 12 months ending June 30, 2000, wouldn't be a bad place to start. New economy technology stocks, the performance darlings of six months ago, were being trounced by less-glamorous, old economy natural resources and real estate issues by the end of the period. The health sector, which looked anything but healthy in 1999, was the top-performing sector through the first half of 2000. And large-cap growth stocks, which dominated Wall Street a year ago, were looking up - way up - at their small-cap brethren. Yes, the past 12 months were remarkably volatile. Investors enjoyed record-setting highs in all major U.S. stock market indexes, and endured gut-wrenching declines, including a 10-week, 33% freefall in the NASDAQ Composite Index. But still, when the dust settled and the numbers tallied, most indexes were in positive territory. The tech-heavy NASDAQ index, despite its travails in the spring, finished the 12-month period up 47.99%. The broader-based Standard & Poor's 500SM Index returned 7.25%, and the Russell 2000(registered trademark) Index - a popular measure of small-cap stock performance - gained 14.32%. The Dow Jones Industrial Average - an index of 30 blue-chip stocks - was not as fortunate, declining 3.30% for the one-year period ending June 30, 2000. (photograph of John Muresianu) An interview with John Muresianu, Portfolio Manager of Fidelity Fifty Q. HOW DID THE FUND PERFORM, JOHN? A. For the 12 months that ended June 30, 2000, the fund returned 9.22%. During the same period, the Standard & Poor's 500 Index returned 7.25%, while the capital appreciation funds average tracked by Lipper Inc. returned 29.28%. Q. WHY DID THE FUND OUTPACE ITS BENCHMARK YET TRAIL ITS PEER GROUP DURING THE 12-MONTH PERIOD? A. Strong stock picking and timely trading had a lot to do with the fund's success compared to the S&P 500(registered trademark). Although underweighted in technology during the period, the fund's healthy exposure to some of the group's brightest stars, such as Softbank - a tech-focused Japanese venture capital firm - helped give us a nice lead over the index. The fund's overweighting in health - especially drug stock Eli Lilly and red-hot biotechnology names such as Celera Genomics and Genentech - also helped quite a bit. We no longer held Softbank or Genentech at the close of the period. Additionally, our underexposure to financial stocks proved particularly beneficial, as much of the group struggled with rising interest rates. On the flip side, some poor picks among utilities - most notably AT&T, Vodafone AirTouch and PG&E - limited our advances. I sold off both Vodafone and PG&E during the period. Having considerably less technology than the Lipper group would be the short answer to why we lagged our peers. Q. DID YOUR INVESTMENT APPROACH CHANGE AT ALL AMID THE VOLATILITY IN THE SPRING? A. Yes, it did. I became cautious, increasing the concentration of the portfolio in the names in which I had conviction. I grew increasingly concerned about the high level of valuations for tech stocks and the general euphoria that characterized sentiment for the sector. On top of that, earnings prospects weakened in the face of a possible economic slowdown resulting from higher rates. So, I chose to take profits in technology, bringing the position down to about zero in May. Becoming more defensive, I looked for safer havens elsewhere in the market, such as precious metals, industrials and basic industries - areas that I believed would benefit from the migration away from tech. Gold stocks, in particular, worked well as a hedge against volatility in tech during the sharp down days of April and May. This strategy, however, turned against us in June, with tech issues muscling their way back into the driver's seat. Q. WHAT OTHER MOVES PLAYED A ROLE IN FUND PERFORMANCE? A. We were able to salvage a generally poor period for consumer nondurables with exposure to Nabisco, an extremely undervalued stock that rallied late in the period on higher earnings and takeover speculation. Selected holdings in energy services, such as Schlumberger, added meaningfully to returns, benefiting from a sharp increase in oil prices. I added significantly to the fund's stake in oil and natural gas stocks as the period progressed based on a favorable supply/demand outlook. Q. WHAT OTHER STOCKS BOOSTED RETURNS? WHICH DETRACTED? A. PE Biosystems, a supplier of biotechnology instrument systems and parent company of Celera Genomics, soared behind investors' enthusiasm for companies engaged in gene research. I sold off both stocks prior to their collapse in the spring to lock in substantial gains. The fund's focus on providers of communications equipment, such as Nokia, Nortel and Texas Instruments, paid dividends while these stocks climbed to stratospheric levels during the period. Along the way, I chose to take profits in Texas Instruments. On the downside, Waste Management suffered from a series of problems including multiple earnings shortfalls, a management shakeout and allegations of insider trading. I held onto the stock and even bought some more toward its bottom as signs of a reversal looked promising. Freddie Mac and Fannie Mae were grounded by steadily rising interest rates and fears of losing their implicit government guarantee on agency-issued securities. Increased competition and pricing pressure in AT&T's long-distance business kept a dark cloud over its stock during the period. Q. WHAT'S YOUR OUTLOOK? A. The defensive posture of the fund reflects my serious concerns about the outlook for earnings and interest rates. Valuation levels in certain areas of the market, particularly technology, will keep me on the sidelines of these sectors until I think they've come down to reasonable levels. Until then, I'll continue to take a long-term perspective, looking for companies trading at attractive price-to-earnings, or P/E, multiples that I feel have the potential to emerge as dominant players in the marketplace. I'll also be on the lookout for extremely undervalued companies that are poised for dramatic turnarounds. 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 capital appreciation 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 June 30, 2000, more than $536 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 RUNNING A CONCENTRATED PORTFOLIO: "Since the fund is nondiversified and highly concentrated in 50 to 60 stocks, I can make very large sector or stock bets. Additionally, I may choose to move in and out of particular positions rather quickly if I feel the timing is right. Over the past six months, for example, the fund's weighting in technology fell from 27% in January to close to zero by the end of the period. This was a big bet versus the index, and even a bigger one relative to the peer group. It's not that I've become anti-tech by any means, or that I'm in love with any particular sector on a permanent basis. Rather, my focus remains on investing in stocks that I believe offer the highest capital appreciation potential relative to their downside risks, wherever they may be. I make big positive bets when I see compelling stories that, to me, are under-valued. The fund's heightened interest in energy is a good example of this. Conversely, if I see overvalued stocks or sectors, I won't hesitate to go to zero exposure despite the large weightings in the index or among the peers. As a result of these sizable bets, fund performance could be extremely volatile on a short-term basis - not only in absolute terms, but also relative to its index and peers - thus making the fund appear riskier than most other stock funds." INVESTMENT CHANGES
TOP TEN STOCKS AS OF JUNE 30, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Burlington Resources, Inc. 7.8 1.5 Barrick Gold Corp. 7.6 0.0 Exxon Mobil Corp. 6.9 3.9 Newmont Mining Corp. 6.8 1.5 Schlumberger Ltd. (NY Shares) 5.7 2.3 Eli Lilly & Co. 5.3 1.0 Waste Management, Inc. 4.7 1.6 Republic Services, Inc. Class A 3.8 0.0 Philip Morris Companies, Inc. 3.7 1.1 Ace Ltd. 3.3 0.0 55.6 12.9 TOP FIVE MARKET SECTORS AS OF JUNE 30, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Energy 23.4 7.7 Precious Metals 15.5 1.5 Health 14.4 15.0 Industrial Machinery & 10.2 4.6 Equipment Nondurables 9.4 2.6
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF JUNE 30, 2000 * AS OF DECEMBER 31, 1999 ** Stocks 97.4% Stocks 93.8% Short-Term Investments and Short-Term Investments and Net Other Assets 2.6% Net Other Assets 6.2% * FOREIGN INVESTMENTS 18.4% ** FOREIGN INVESTMENTS 10.6% Row: 1, Col: 1, Value: 97.40000000000001 Row: 1, Col: 1, Value: 93.8 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: 2.6 Row: 1, Col: 8, Value: 6.2
INVESTMENTS JUNE 30, 2000 Showing Percentage of Net Assets COMMON STOCKS - 97.4% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 0.4% Boeing Co. 54,400 $ 2,274,600 BASIC INDUSTRIES - 7.6% CHEMICALS & PLASTICS - 5.2% Dow Chemical Co. 120,000 3,622,500 Lyondell Chemical Co. 600,000 10,050,000 Pharmacia Corp. 77,729 4,017,618 Union Carbide Corp. 200,000 9,900,000 27,590,118 METALS & MINING - 2.4% Phelps Dodge Corp. 352,100 13,093,719 TOTAL BASIC INDUSTRIES 40,683,837 CONSTRUCTION & REAL ESTATE - 0.2% CONSTRUCTION - 0.2% D.R. Horton, Inc. 69,800 946,663 DURABLES - 2.3% AUTOS, TIRES, & ACCESSORIES - 1.7% AutoNation, Inc. 600,000 4,237,500 General Motors Corp. 81,537 4,734,242 8,971,742 CONSUMER ELECTRONICS - 0.6% General Motors Corp. Class H 39,152 3,435,588 (a) TOTAL DURABLES 12,407,330 ENERGY - 23.4% ENERGY SERVICES - 6.0% Halliburton Co. 30,000 1,415,625 Schlumberger Ltd. (NY Shares) 410,500 30,633,563 32,049,188 OIL & GAS - 17.4% Apache Corp. 150,000 8,821,875 Burlington Resources, Inc. 1,097,000 41,960,246 Chevron Corp. 50,000 4,240,625 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) ENERGY - CONTINUED OIL & GAS - CONTINUED Exxon Mobil Corp. 467,900 $ 36,730,150 Royal Dutch Petroleum Co. (NY 30,000 1,846,875 Shares) 93,599,771 TOTAL ENERGY 125,648,959 FINANCE - 4.1% FEDERAL SPONSORED CREDIT - 0.8% Fannie Mae 54,000 2,818,125 Freddie Mac 29,300 1,186,650 4,004,775 INSURANCE - 3.3% Ace Ltd. 623,400 17,455,200 Brown & Brown, Inc. 4,800 249,600 17,704,800 TOTAL FINANCE 21,709,575 HEALTH - 14.4% DRUGS & PHARMACEUTICALS - 13.9% Bristol-Myers Squibb Co. 184,400 10,741,300 Eli Lilly & Co. 285,800 28,544,275 Human Genome Sciences, Inc. 1,000 133,375 (a) Immunex Corp. (a) 50,000 2,471,875 Merck & Co., Inc. 69,100 5,294,788 Millennium Pharmaceuticals, 1,000 111,875 Inc. (a) Pfizer, Inc. 311,125 14,934,000 Schering-Plough Corp. 201,500 10,175,750 SmithKline Beecham PLC 30,000 1,955,625 sponsored ADR 74,362,863 MEDICAL EQUIPMENT & SUPPLIES - 0.5% Abbott Laboratories 20,000 891,250 Guidant Corp. (a) 42,000 2,079,000 2,970,250 TOTAL HEALTH 77,333,113 INDUSTRIAL MACHINERY & EQUIPMENT - 10.2% ELECTRICAL EQUIPMENT - 1.1% Emerson Electric Co. 100,000 6,037,500 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED POLLUTION CONTROL - 9.1% Allied Waste Industries, Inc. 300,000 $ 3,000,000 (a) Republic Services, Inc. Class 1,267,800 20,284,800 A (a) Waste Management, Inc. 1,326,700 25,207,300 48,492,100 TOTAL INDUSTRIAL MACHINERY & 54,529,600 EQUIPMENT MEDIA & LEISURE - 1.9% ENTERTAINMENT - 1.9% Walt Disney Co. 260,700 10,118,419 NONDURABLES - 9.4% BEVERAGES - 2.5% The Coca-Cola Co. 230,000 13,210,625 FOODS - 1.1% Nabisco Group Holdings Corp. 233,900 6,066,781 HOUSEHOLD PRODUCTS - 2.1% Avon Products, Inc. 180,200 8,018,900 Procter & Gamble Co. 55,000 3,148,750 11,167,650 TOBACCO - 3.7% Philip Morris Companies, Inc. 757,400 20,118,438 TOTAL NONDURABLES 50,563,494 PRECIOUS METALS - 15.5% Barrick Gold Corp. 2,261,400 40,859,473 Newmont Mining Corp. 1,697,100 36,699,788 Placer Dome, Inc. 600,000 5,633,232 83,192,493 RETAIL & WHOLESALE - 2.0% GENERAL MERCHANDISE STORES - 2.0% Wal-Mart Stores, Inc. 182,400 10,510,800 TECHNOLOGY - 0.2% COMMUNICATIONS EQUIPMENT - 0.0% Nokia AB sponsored ADR 2,000 99,875 Nortel Networks Corp. 2,000 138,737 238,612 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TECHNOLOGY - CONTINUED ELECTRONICS - 0.2% JDS Uniphase Corp. (a) 2,000 $ 239,750 SDL, Inc. (a) 2,000 570,375 810,125 TOTAL TECHNOLOGY 1,048,737 TRANSPORTATION - 0.6% RAILROADS - 0.6% CSX Corp. 150,000 3,178,125 UTILITIES - 5.2% CELLULAR - 0.0% Nextel Communications, Inc. 1,000 61,188 Class A (a) Sprint Corp. - PCS Group 1,000 59,500 Series 1 (a) VoiceStream Wireless Corp. (a) 1,000 116,297 236,985 TELEPHONE SERVICES - 5.2% AT&T Corp. 153,300 4,848,113 BellSouth Corp. 150,000 6,393,750 SBC Communications, Inc. 378,123 16,353,820 27,595,683 TOTAL UTILITIES 27,832,668 TOTAL COMMON STOCKS 521,978,413 (Cost $505,076,378) CASH EQUIVALENTS - 4.9% Taxable Central Cash Fund, 26,448,878 26,448,878 6.59% (b) (Cost $26,448,878) TOTAL INVESTMENT PORTFOLIO - 548,427,291 102.3% (Cost $531,525,256) NET OTHER ASSETS - (2.3)% (12,342,227) NET ASSETS - 100% $ 536,085,064 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 total net assets, is as follows: United States of America 81.6% Canada 8.7 Netherlands Antilles 5.7 Bermuda 3.3 Others (individually less 0.7 than 1%) 100.0% INCOME TAX INFORMATION At June 30, 2000, the aggregate cost of investment securities for income tax purposes was $544,452,421. Net unrealized appreciation aggregated $3,974,870, of which $40,196,095 related to appreciated investment securities and $36,221,225 related to depreciated investment securities. The fund hereby designates approximately $10,061,000 as a capital gain dividend for the purpose of the dividend paid deduction. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2000 ASSETS Investment in securities, at $ 548,427,291 value (cost $531,525,256) - See accompanying schedule Foreign currency held at 2,501,024 value (cost $2,500,825) Receivable for investments 5,246,800 sold Receivable for fund shares 920,501 sold Dividends receivable 806,451 Interest receivable 166,310 Redemption fees receivable 154 Other receivables 91,689 TOTAL ASSETS 558,160,220 LIABILITIES Payable for investments $ 20,345,617 purchased Payable for fund shares 1,436,555 redeemed Accrued management fee 253,544 Other payables and accrued 39,440 expenses TOTAL LIABILITIES 22,075,156 NET ASSETS $ 536,085,064 Net Assets consist of: Paid in capital $ 459,795,729 Undistributed net investment 3,891,798 income Accumulated undistributed net 55,492,089 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 16,905,448 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 24,726,219 $ 536,085,064 shares outstanding NET ASSET VALUE, offering $21.68 price and redemption price per share ($536,085,064 (divided by) 24,726,219 shares) STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 2000 INVESTMENT INCOME $ 5,814,529 Dividends Interest 2,511,137 Security lending 59,998 TOTAL INCOME 8,385,664 EXPENSES Management fee Basic fee $ 3,224,910 Performance adjustment 4,556 Transfer agent fees 1,336,520 Accounting and security 215,788 lending fees Non-interested trustees' 1,650 compensation Custodian fees and expenses 33,531 Registration fees 67,080 Audit 26,731 Legal 5,215 Miscellaneous 1,238 Total expenses before 4,917,219 reductions Expense reductions (440,713) 4,476,506 NET INVESTMENT INCOME 3,909,158 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 60,848,202 Foreign currency transactions 28,735 60,876,937 Change in net unrealized appreciation (depreciation) on: Investment securities (14,787,818) Assets and liabilities in 4,701 (14,783,117) foreign currencies NET GAIN (LOSS) 46,093,820 NET INCREASE (DECREASE) IN $ 50,002,978 NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 3,909,158 $ 1,012,415 income Net realized gain (loss) 60,876,937 53,806,045 Change in net unrealized (14,783,117) (1,923,062) appreciation (depreciation) NET INCREASE (DECREASE) IN 50,002,978 52,895,398 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (720,994) (220,177) From net investment income From net realized gain (34,339,987) (7,371,283) TOTAL DISTRIBUTIONS (35,060,981) (7,591,460) Share transactions Net 469,461,940 861,346,449 proceeds from sales of shares Reinvestment of distributions 34,464,635 7,510,494 Cost of shares redeemed (504,865,793) (584,704,549) NET INCREASE (DECREASE) IN (939,218) 284,152,394 NET ASSETS RESULTING FROM SHARE TRANSACTIONS Redemption fees 5,316 - TOTAL INCREASE (DECREASE) 14,008,095 329,456,332 IN NET ASSETS NET ASSETS Beginning of period 522,076,969 192,620,637 End of period (including $ 536,085,064 $ 522,076,969 undistributed net investment income of $3,891,798 and $1,125,208, respectively) OTHER INFORMATION Shares Sold 21,993,616 42,455,516 Issued in reinvestment of 1,832,249 472,062 distributions Redeemed (23,503,288) (29,688,090) Net increase (decrease) 322,577 13,239,488
FINANCIAL HIGHLIGHTS YEARS ENDED JUNE 30, 2000 1999 1998 1997 1996 SELECTED PER-SHARE DATA Net asset value, beginning $ 21.39 $ 17.25 $ 16.31 $ 14.00 $ 13.10 of period Income from Investment Operations Net investment income .15 C .07 C .04 C .07 C .15 Net realized and unrealized 1.60 4.76 2.95 3.16 2.12 gain (loss) Total from investment 1.75 4.83 2.99 3.23 2.27 operations Less Distributions From net investment income (.03) (.02) (.05) (.09) (.13) From net realized gain (1.43) (.67) (2.00) (.83) (1.24) Total distributions (1.46) (.69) (2.05) (.92) (1.37) Net asset value, end of period $ 21.68 $ 21.39 $ 17.25 $ 16.31 $ 14.00 TOTAL RETURN A, B 9.22% 29.38% 20.06% 24.75% 18.46% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 536,085 $ 522,077 $ 192,621 $ 156,136 $ 180,983 (000 omitted) Ratio of expenses to average .88% .83% .80% .88% 1.03% net assets Ratio of expenses to average .80% D .79% D .77% D .84% D .99% D net assets after expense reductions Ratio of net investment .70% .37% .27% .53% 1.20% income to average net assets Portfolio turnover rate 295% 316% 121% 131% 152%
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE. C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. NOTES TO FINANCIAL STATEMENTS For the period ended June 30, 2000 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 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INCOME TAXES - CONTINUED 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 litigation proceeds, foreign currency transactions 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. SHORT-TERM TRADING (REDEMPTION) FEES. Shares purchased on or after April 28, 2000 and held in the fund less than 30 days are subject to a short-term trading fee equal to 0.75% of the proceeds of the redeemed shares. The fee, which is retained by the fund, is accounted for as an addition to paid in capital. 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 2. OPERATING POLICIES - CONTINUED JOINT TRADING ACCOUNT - CONTINUED (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, Federal Agency, or other obligations found to be satisfactory by FMR 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. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $1,525,399,078 and $1,534,693,585, 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 annual rate of .58% of average net assets after the performance adjustment. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an affiliate of FMR and the general distributor of the fund, received sales charges of $605,873 on sales of shares of the fund of which $605,782 was retained. Effective January 31, 2000, through December 31, 2000, FDC has voluntarily waived the sales charge (3% of the offering price on the sales of shares). TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .24% of average net assets. ACCOUNTING AND SECURITY LENDING FEES. FSC, an affiliate of FMR, 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 $139,098 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 security 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 $416,988 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 $3,719 and $20,006, respectively, under these arrangements. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Hastings Street Trust and the Shareholders of Fidelity Fifty: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Fifty (a fund of Fidelity Hastings Street Trust) at June 30, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Fifty's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts August 8, 2000 DISTRIBUTIONS The Board of Trustees of Fidelity Fifty voted to pay on August 7, 2000, to shareholders of record at the opening of business on August 4, 2000, a distribution of $2.90 per share derived from capital gains realized from sales of portfolio securities and a dividend of $.16 per share from net investment income. A total of 12% of the dividends distributed during the fiscal year qualifies for the dividends-received deduction for corporate shareholders. The fund hereby designates 100% of the long-term capital gain dividends distributed during the fiscal year as 20%-rate capital gain dividends. The fund will notify shareholders in January 2001 of amounts for use in preparing 2000 income tax returns. 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 (FAST(registered trademark)) 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 8 Montgomery 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 Three Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD One W. Pennsylvania Ave. Towson, MD MASSACHUSETTS 801 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 Old N. 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 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 72nd Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA RHODE ISLAND 47 Providence Place Providence, RI TENNESSEE 6150 Poplar Avenue 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 Las Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VIRGINIA 1861 International 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 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 Las 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 Las Colinas Blvd. Irving, TX 75039-5587 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research Company (U.K.) Inc. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Limited OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Abigail P. Johnson, Vice President John M. Muresianu, Vice President Eric D. Roiter, Secretary Robert A. Dwight, Treasurer Maria F. Dwyer, Deputy Treasurer John H. Costello, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Richard M. Gates * Edward C. Johnson 3d Donald J. Kirk * Ned C. Lautenbach * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Michael Cook Marie L. Knowles GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA * INDEPENDENT TRUSTEES FIF-ANN-0800 108655 1.705709.102 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 Fifty (registered trademark) 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 (FAST(registered trademark)) 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) CONTRAFUND(REGISTERED TRADEMARK) II ANNUAL REPORT JUNE 30, 2000 (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. REPORT OF INDEPENDENT 25 The auditors' opinion. ACCOUNTANTS DISTRIBUTIONS 26 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 (photograph of Edward C. Johnson 3d) DEAR SHAREHOLDER: In stark contrast to the final six months of 1999, most major equity market indexes posted negative returns for the first half of 2000, due mainly to a correction in the technology sector during the second quarter. The majority of bond markets - with the notable exception of high yield - fared better, as Treasuries and non-Treasuries alike benefited as a haven from the volatility of stocks and riskier investment alternatives. 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 JUNE 30, 2000 PAST 1 YEAR LIFE OF FUND FIDELITY CONTRAFUND II 33.87% 68.67% FIDELITY CONTRAFUND II (INCL. 29.85% 63.61% 3.00% SALES CHARGE) S&P 500 (registered trademark) 7.25% 36.00% Growth Funds Average 19.61% n/a * CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year or since the fund started on 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 one year average represents a peer group of 1,476 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 JUNE 30, 2000 PAST 1 YEAR LIFE OF FUND FIDELITY CONTRAFUND II 33.87% 26.16% FIDELITY CONTRAFUND II (INCL. 29.85% 24.46% 3.00% SALES CHARGE) S&P 500 7.25% 14.65% Growth Funds Average 19.61% 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.) * NOT AVAILABLE $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 2000/01/31 14812.06 12972.13 2000/02/29 15659.05 12726.57 2000/03/31 16568.02 13971.61 2000/04/30 15648.72 13551.20 2000/05/31 14956.67 13273.13 2000/06/30 16361.44 13600.32 IMATRL PRASUN SHR__CHT 20000630 20000721 110548 R00000000000030 $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 June 30, 2000, the value of the investment would have grown to $16,361 - a 63.61% 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 $13,600 - a 36.00% 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 JUNE 30, 2000, THE ONE YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURN FOR THE MULTI-CAP GROWTH FUNDS AVERAGE WAS 45.82%. THE ONE YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURN FOR THE MULTI-CAP SUPERGROUP AVERAGE WAS 16.67%. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP If ever there was a one-year period that investors could point to in support of the merits of diversification, the 12 months ending June 30, 2000, wouldn't be a bad place to start. New economy technology stocks, the performance darlings of six months ago, were being trounced by less-glamorous, old economy natural resources and real estate issues by the end of the period. The health sector, which looked anything but healthy in 1999, was the top-performing sector through the first half of 2000. And large-cap growth stocks, which dominated Wall Street a year ago, were looking up - way up - at their small-cap brethren. Yes, the past 12 months were remarkably volatile. Investors enjoyed record-setting highs in all major U.S. stock market indexes, and endured gut-wrenching declines, including a 10-week, 33% freefall in the NASDAQ Composite Index. But still, when the dust settled and the numbers tallied, most indexes were in positive territory. The tech-heavy NASDAQ index, despite its travails in the spring, finished the 12-month period up 47.99%. The broader-based Standard & Poor's 500SM Index returned 7.25%, and the Russell 2000(registered trademark) Index - a popular measure of small-cap stock performance - gained 14.32%. The Dow Jones Industrial Average - an index of 30 blue-chip stocks - was not as fortunate, declining 3.30% for the one-year period ending June 30, 2000. (photograph of Adam Hetnarski) NOTE TO SHAREHOLDERS: Adam Hetnarski became Portfolio Manager of Fidelity Contrafund II on February 14, 2000. Q. HOW DID THE FUND PERFORM, ADAM? A. Very well. For the 12 months that ended June 30, 2000, the fund returned 33.87%, far outperforming the Standard & Poor's 500 Index and the growth funds average tracked by Lipper Inc., which returned 7.25% and 19.61%, respectively. Q. WHAT ENABLED THE FUND TO BEAT THE INDEX BY SUCH A WIDE MARGIN? A. In the first half of the period, an overweighting in technology stocks, together with strong stock selection in that sector, accounted for most of the fund's outperformance compared to the index. The fund's investments in fiber-optic and network equipment manufacturers did extremely well during the strong rally at the end of 1999, as did its wireless holdings in the utilities sector and its biotechnology holdings in the health sector. Following a sharp correction in the spring, investors began to embrace the technology sector again but in a more selective way. As a result, the stocks that rebounded most tended to be higher-quality names, a number of which the fund held. Stock selection in the health sector also helped performance in the latter part of the period, when biotechnology and large-capitalization drug stocks did well. Q. DRUG STOCKS WERE LACKLUSTER PERFORMERS FOR QUITE A WHILE. WHY DID THEY REVIVE? A. Drugs stocks are considered defensive holdings, which means that they tend to outperform the overall market when the economy is weak. When economic growth is strong, as it was during the period, investors usually find other industries more interesting. However, the sharp rise in short-term interest rates led many investors to expect a slowing economy, so they began to position themselves in the defensive sectors of the market. In addition, there was some harsh rhetoric about the drug industry from some of the presidential candidates around the beginning of the year. While typical of campaign season, the comments scared investors and created some good values in pharmaceutical stocks. Finally, late in the period there was some merger and acquisition activity in the group, which typically results in higher share prices across the sector. Q. WHICH STOCKS HELPED PERFORMANCE? A. Cisco Systems was a top performer. A leading provider of network and routing equipment for the Internet, Cisco has been a prime beneficiary of the build-out of the Internet's infrastructure. Pharmaceutical holding Eli Lilly exemplified the recent improvement in that industry's share prices. While Lilly benefited from more favorable sentiment toward the industry generally, it also was helped by an extremely successful trial of a new drug, Zovant, used to treat sepsis, or blood poisoning. Another Internet company, Vignette, saw strong growth in sales of its customer relationship and content software. Q. WHICH STOCKS WERE DETRIMENTAL TO PERFORMANCE? A. One of the worst performers was Healtheon/WebMD, an online medical processing firm and the operator of a consumer-oriented Web portal. The stock was one of many that suffered in the recent correction because the company was not sufficiently far along in its development to have a significant earnings stream. There also were fears of greater competition as a result of a recent agreement by six large HMOs to form an online exchange for processing medical claims. Microsoft was another detractor, beset by problems stemming from the antitrust suit filed against the company by the U.S. Justice Department. As a result of the June 7, 2000, ruling in the case, the company may be split up. Q. WHAT'S YOUR OUTLOOK, ADAM? A. The rest of the year looks to have several favorable influences on technology stocks. There should be an uptick in technology spending triggered by the rollout of Microsoft's updated version of its Windows NT operating system for corporate environments. Moreover, I expect to see the introduction of data communications capabilities for wireless phones, which should keep demand for wireless products and services healthy. On the down side, the rise in interest rates is expected to slow the economy and consequently may crimp earnings growth in some areas. At this point, though, a soft landing - that is, a moderate slowing but no recession - looks like the most likely scenario. In that environment, there should still be plenty of attractive investment opportunities. 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 June 30, 2000, more than $1.5 billion MANAGER: Adam Hetnarski, since February 2000; manager, Fidelity Export and Multinational Fund, 1998-2000; Fidelity Select Technology Portfolio and Fidelity Advisor Technology Fund, 1996- 1998; joined Fidelity in 1991 ADAM HETNARSKI ON RADIO STOCKS: "This spring's damage to dot-com stocks has been cited as one cause of the recent correction in radio shares. Investors reasoned that spending for radio advertising would slow when technology stock prices crashed and dot-com companies no longer had as much cash sloshing around in their coffers. However, I see a lot of opportunity in radio stocks. "There are several likely drivers of radio ad sales. For one thing, the recent relaxation of the rules for advertising drugs has prompted a surge of radio ads that should continue. These rules have resulted in the proliferation of so-called `ask your doctor' ads, in which a benefit for a drug is touted and the listener is then urged to consult a physician for further details. "Furthermore, there are two possible short-term catalysts for ad revenues - the November elections and the Olympic summer games in Sydney. Therefore, despite a drop in dot-com ad spending, I see lots of other sources to pick up the slack. Moreover, dot-coms have not gone away. I believe they will continue to be an important and growing source of radio ad revenues in the years to come." INVESTMENT CHANGES
TOP TEN STOCKS AS OF JUNE 30, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Cisco Systems, Inc. 4.3 3.3 Eli Lilly & Co. 4.0 0.5 Microsoft Corp. 3.3 5.3 General Electric Co. 3.0 2.6 Bristol-Myers Squibb Co. 2.9 0.8 Nokia AB sponsored ADR 2.9 0.8 EMC Corp. 2.8 0.7 Exxon Mobil Corp. 2.3 2.2 VERITAS Software Corp. 2.1 0.0 Ariba, Inc. 2.0 0.0 29.6 16.2 TOP FIVE MARKET SECTORS AS OF JUNE 30, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Technology 38.1 30.5 Health 12.2 8.0 Media & Leisure 9.6 7.1 Energy 9.1 7.2 Utilities 8.5 10.4
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF JUNE 30, 2000 * AS OF DECEMBER 31, 1999 ** Stocks 94.9% Stocks 93.8% Short-Term Investments and Short-Term Investments and Net Other Assets 5.1% Net Other Assets 6.2% * FOREIGN INVESTMENTS 6.3% ** FOREIGN INVESTMENTS 8.2% Row: 1, Col: 1, Value: 94.90000000000001 Row: 1, Col: 1, Value: 93.8 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: 5.1 Row: 1, Col: 8, Value: 6.2
INVESTMENTS JUNE 30, 2000 Showing Percentage of Net Assets
COMMON STOCKS - 94.9% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 0.4% Boeing Co. 150,000 $ 6,272 BASIC INDUSTRIES - 0.3% METALS & MINING - 0.3% Martin Marietta Materials, 100,000 4,044 Inc. CONSTRUCTION & REAL ESTATE - 1.8% BUILDING MATERIALS - 0.2% Florida Rock Industries, Inc. 75,000 2,672 CONSTRUCTION - 0.6% Lennar Corp. 500,000 10,125 REAL ESTATE INVESTMENT TRUSTS - 1.0% Pinnacle Holdings, Inc. (a) 305,200 16,481 TOTAL CONSTRUCTION & REAL 29,278 ESTATE ENERGY - 9.1% ENERGY SERVICES - 4.4% Baker Hughes, Inc. 210,000 6,720 BJ Services Co. (a) 65,000 4,063 Halliburton Co. 160,000 7,550 Nabors Industries, Inc. (a) 243,200 10,108 Noble Drilling Corp. 375,000 15,445 Smith International, Inc. (a) 197,550 14,384 Weatherford International, 300,000 11,944 Inc. 70,214 OIL & GAS - 4.7% Burlington Resources, Inc. 200,300 7,661 Cabot Oil & Gas Corp. Class A 535,000 11,335 Cooper Cameron Corp. (a) 175,500 11,583 Exxon Mobil Corp. 455,000 35,718 Grant Prideco, Inc. (a) 295,000 7,375 73,672 TOTAL ENERGY 143,886 FINANCE - 6.0% CREDIT & OTHER FINANCE - 0.3% Citigroup, Inc. 90,000 5,423 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED FEDERAL SPONSORED CREDIT - 2.9% Fannie Mae 605,900 $ 31,620 Freddie Mac 354,300 14,349 45,969 INSURANCE - 2.8% AMBAC Financial Group, Inc. 280,000 15,348 American International Group, 150,000 17,625 Inc. Everest Re Group Ltd. 318,600 10,474 43,447 TOTAL FINANCE 94,839 HEALTH - 12.2% DRUGS & PHARMACEUTICALS - 12.2% Bristol-Myers Squibb Co. 800,000 46,600 Eli Lilly & Co. 628,000 62,722 Exelixis, Inc. 84,500 2,820 Genentech, Inc. 153,000 26,316 Human Genome Sciences, Inc. 146,900 19,593 (a) Immunex Corp. (a) 387,700 19,167 PRAECIS Pharmaceuticals, Inc. 207,500 5,784 Schering-Plough Corp. 185,000 9,343 192,345 INDUSTRIAL MACHINERY & EQUIPMENT - 3.9% ELECTRICAL EQUIPMENT - 3.0% General Electric Co. 900,900 47,748 INDUSTRIAL MACHINERY & EQUIPMENT - 0.9% Ingersoll-Rand Co. 200,000 8,050 MSC Industrial Direct, Inc. 250,000 5,234 (a) 13,284 TOTAL INDUSTRIAL MACHINERY & 61,032 EQUIPMENT MEDIA & LEISURE - 9.6% BROADCASTING - 6.4% AMFM, Inc. (a) 410,000 28,290 AT&T Corp. - Liberty Media 740,400 17,955 Group Class A (a) Grupo Televisa SA de CV 225,000 15,511 sponsored GDR (a) COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) MEDIA & LEISURE - CONTINUED BROADCASTING - CONTINUED Infinity Broadcasting Corp. 850,000 $ 30,972 Class A (a) Westwood One, Inc. 230,000 7,849 100,577 ENTERTAINMENT - 2.4% Viacom, Inc. Class B 350,020 23,867 (non-vtg.) (a) Walt Disney Co. 355,000 13,778 37,645 LODGING & GAMING - 0.8% Starwood Hotels & Resorts 390,000 12,699 Worldwide, Inc. unit TOTAL MEDIA & LEISURE 150,921 NONDURABLES - 4.3% BEVERAGES - 1.2% Anheuser-Busch Companies, 265,000 19,792 Inc. FOODS - 1.7% Keebler Foods Co. 350,000 12,994 Quaker Oats Co. 180,000 13,523 26,517 TOBACCO - 1.4% Philip Morris Companies, Inc. 825,000 21,914 TOTAL NONDURABLES 68,223 RETAIL & WHOLESALE - 0.5% APPAREL STORES - 0.3% Abercrombie & Fitch Co. Class 400,000 4,875 A (a) RETAIL & WHOLESALE, MISCELLANEOUS - 0.2% Ventro Corp. 158,200 2,986 TOTAL RETAIL & WHOLESALE 7,861 SERVICES - 0.2% ADVERTISING - 0.2% DoubleClick, Inc. (a) 50,000 1,906 Omnicom Group, Inc. 20,000 1,781 3,687 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - 38.1% COMMUNICATIONS EQUIPMENT - 10.2% Chromatis Networks, Inc. (c) 7,400 $ 624 Ciena Corp. (a) 85,000 14,168 Cisco Systems, Inc. (a) 1,065,000 67,692 Comverse Technology, Inc. (a) 29,800 2,771 Lucent Technologies, Inc. 60,000 3,555 Nokia AB sponsored ADR 910,000 45,443 Nortel Networks Corp. 300,000 20,811 Telefonaktiebolaget LM 300,000 6,000 Ericsson sponsored ADR 161,064 COMPUTER SERVICES & SOFTWARE - 17.3% Aether Systems, Inc. 51,600 10,578 Affymetrix, Inc. (a) 45,000 7,431 Amazon.com, Inc. (a) 80,000 2,905 Ariba, Inc. 324,000 31,767 BEA Systems, Inc. (a) 139,800 6,911 CMGI, Inc. (a) 110,000 5,039 Covad Communications Group, 370,000 5,966 Inc. (a) Healtheon/WebMD (a) 200,000 2,963 i2 Technologies, Inc. (a) 190,000 19,810 Internap Network Services 486,200 20,185 Corp. Intuit, Inc. (a) 255,000 10,551 Kana Communications, Inc. 120,000 7,425 Legato Systems, Inc. (a) 445,000 6,731 Microsoft Corp. (a) 650,000 52,000 NaviSite, Inc. 200,000 8,363 OnDisplay, Inc. 100,000 8,144 Priceline.com, Inc. (a) 100,000 3,798 Software.com, Inc. 69,000 8,961 VERITAS Software Corp. (a) 294,493 33,282 Vignette Corp. (a) 246,900 12,843 webMethods, Inc. 18,600 2,924 Yahoo!, Inc. (a) 30,000 3,716 272,293 COMPUTERS & OFFICE EQUIPMENT - 8.5% Dell Computer Corp. (a) 525,000 25,889 EMC Corp. (a) 580,000 44,624 Ingram Micro, Inc. Class A (a) 750,000 13,078 Juniper Networks, Inc. 210,000 30,568 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMPUTERS & OFFICE EQUIPMENT - CONTINUED Lexmark International Group, 215,300 $ 14,479 Inc. Class A (a) Network Appliance, Inc. (a) 70,000 5,635 134,273 ELECTRONIC INSTRUMENTS - 0.2% KLA-Tencor Corp. (a) 50,000 2,928 ELECTRONICS - 1.9% Texas Instruments, Inc. 440,000 30,223 TOTAL TECHNOLOGY 600,781 UTILITIES - 8.5% CELLULAR - 3.8% SBA Communications Corp. 400,000 20,775 Class A Sprint Corp. - PCS Group 442,400 26,323 Series 1 (a) Tritel, Inc. Class A 200,100 5,940 VoiceStream Wireless Corp. (a) 59,955 6,973 60,011 ELECTRIC UTILITY - 1.3% AES Corp. (a) 125,000 5,703 Calpine Corp. (a) 229,982 15,121 20,824 TELEPHONE SERVICES - 3.4% AT&T Corp. 450,000 14,231 BellSouth Corp. 397,600 16,948 Metromedia Fiber Network, 550,000 21,828 Inc. Class A (a) TeraBeam Networks (c) 4,800 18 53,025 TOTAL UTILITIES 133,860 TOTAL COMMON STOCKS 1,497,029 (Cost $1,285,495) CASH EQUIVALENTS - 8.5% SHARES VALUE (NOTE 1) (000S) Central Cash Collateral Fund, 36,269,600 $ 36,270 6.71% (b) Taxable Central Cash Fund, 94,744,645 94,745 6.59% (b) MATURITY AMOUNT (000S) Investments in repurchase $ 3,063 3,061 agreements (U.S. Treasury Obligations), in a joint trading account at 6%, dated 6/30/00 due 7/3/00 TOTAL CASH EQUIVALENTS 134,076 (Cost $134,076) TOTAL INVESTMENT PORTFOLIO - 1,631,105 103.4% (Cost $1,419,571) NET OTHER ASSETS - (3.4)% (53,900) NET ASSETS - 100% $ 1,577,205
LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Restricted securities - Investment in securities not registered under the Securities Act of 1933. Additional information on each holding is as follows: SECURITY ACQUISITION DATE ACQUISITION COST (000S) Chromatis Networks, Inc. 5/19/00 $ 130 TeraBeam Networks 4/7/00 $ 18 INCOME TAX INFORMATION At June 30, 2000, the aggregate cost of investment securities for income tax purposes was $1,438,067,000. Net unrealized appreciation aggregated $193,038,000, of which $294,143,000 related to appreciated investment securities and $101,105,000 related to depreciated investment securities. The fund hereby designates approximately $15,772,000 as a capital gain dividend for the purpose of the dividend paid deduction. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JUNE 30, 2000 ASSETS Investment in securities, at $ 1,631,105 value (including repurchase agreements of $3,061) (cost $1,419,571) - See accompanying schedule Receivable for investments 17,561 sold Receivable for fund shares 1,682 sold Dividends receivable 702 Interest receivable 231 Other receivables 338 TOTAL ASSETS 1,651,619 LIABILITIES Payable for investments $ 34,053 purchased Payable for fund shares 2,910 redeemed Accrued management fee 874 Other payables and accrued 307 expenses Collateral on securities 36,270 loaned, at value TOTAL LIABILITIES 74,414 NET ASSETS $ 1,577,205 Net Assets consist of: Paid in capital $ 1,134,864 Accumulated undistributed net 230,807 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 211,534 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 99,565 shares $ 1,577,205 outstanding NET ASSET VALUE and $15.84 redemption price per share ($1,577,205 (divided by) 99,565 shares) Maximum offering price per $16.33 share (100/97.00 of $15.84) STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS YEAR ENDED JUNE 30, 2000 INVESTMENT INCOME $ 6,614 Dividends Interest 2,658 Security lending 231 TOTAL INCOME 9,503 EXPENSES Management fee Basic fee $ 7,069 Performance adjustment 915 Transfer agent fees 2,442 Accounting and security 346 lending fees Non-interested trustees' 4 compensation Custodian fees and expenses 70 Registration fees 219 Audit 27 Legal 9 Interest 6 Miscellaneous 3 Total expenses before 11,110 reductions Expense reductions (638) 10,472 NET INVESTMENT INCOME (LOSS) (969) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 241,920 Foreign currency transactions 44 241,964 Change in net unrealized appreciation (depreciation) on: Investment securities 115,865 Assets and liabilities in (1) 115,864 foreign currencies NET GAIN (LOSS) 357,828 NET INCREASE (DECREASE) IN $ 356,859 NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ (969) $ (29) income (loss) Net realized gain (loss) 241,964 51,202 Change in net unrealized 115,864 79,239 appreciation (depreciation) NET INCREASE (DECREASE) IN 356,859 130,412 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (51,448) - from net realized gains Share transactions Net 956,767 800,818 proceeds from sales of shares Reinvestment of distributions 50,104 - Cost of shares redeemed (636,011) (349,422) NET INCREASE (DECREASE) IN 370,860 451,396 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 676,271 581,808 IN NET ASSETS NET ASSETS Beginning of period 900,934 319,126 End of period (including $ 1,577,205 $ 900,934 undistributed net investment income of $0 and $8, respectively) OTHER INFORMATION Shares Sold 68,610 73,180 Issued in reinvestment of 4,514 - distributions Redeemed (45,057) (32,501) Net increase (decrease) 28,067 40,679
FINANCIAL HIGHLIGHTS YEARS ENDED JUNE 30, 2000 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 3.97 2.25 .36 gain (loss) Total from investment 3.96 2.25 .35 operations Less Distributions From net realized gain (.72) - - Net asset value, end of period $ 15.84 $ 12.60 $ 10.35 TOTAL RETURN B, C 33.87% 21.74% 3.50% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in $ 1,577 $ 901 $ 319 millions) Ratio of expenses to average .91% .93% 1.28% A net assets Ratio of expenses to average .86% F .86% F 1.23% A, F net assets after expense reductions Ratio of net investment (.08)% (.01)% (.28)% A income (loss) to average net assets Portfolio turnover rate 291% 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 June 30, 2000 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 (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 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, net operating losses 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. 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, Federal Agency, or other obligations found to be satisfactory by FMR 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. 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, restricted securities (excluding 144A issues) amounted to $642,000 or .04% of net assets. 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 $3,691,714,000 and $3,443,210,000, 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 same or a lower management fee. The basic fee is subject to a 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED MANAGEMENT FEE - CONTINUED performance adjustment (up to a maximum of (plus/minus).20% of the fund's average net assets over the performance period) based on the fund's investment performance as compared to the appropriate index over a specified period of time. For the period, the management fee was equivalent to an annual rate of .65% 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 $3,113,000 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 annual rate of .20% 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 $156,000 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 value of the securities loaned amounted to $35,747,000. The fund received cash collateral of $36,270,000 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 $624,000 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 $8,000 and $6,000, respectively, under these arrangements. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Hastings Street Trust and the Shareholders of Fidelity Contrafund II: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Contrafund II (a fund of Fidelity Hastings Street Trust) at June 30, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Contrafund II 's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts August 8, 2000 DISTRIBUTIONS The Board of Trustees of Fidelity Contrafund II voted to pay on August 7, 2000, to shareholders of record at the opening of business on August 4, 2000, a distribution of $2.18 per share derived from capital gains realized from sales of portfolio securities. A total of 10% of the dividends distributed during the fiscal year qualifies for the dividends-received deduction for corporate shareholders. The fund hereby designates 100% of the long-term capital gain dividends distributed during the fiscal year as 20%-rate capital gain dividends. 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 (FAST(registered trademark)) 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 8 Montgomery 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 Three Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD One W. Pennsylvania Ave. Towson, MD MASSACHUSETTS 801 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 Old N. 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 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 72nd Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA RHODE ISLAND 47 Providence Place Providence, RI TENNESSEE 6150 Poplar Avenue 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 Las Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VIRGINIA 1861 International 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 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 Las 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 Las Colinas Blvd. Irving, TX 75039-5587 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Limited OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Abigail P. Johnson, Vice President Eric D. Roiter, Secretary Robert A. Dwight, Treasurer Maria F. Dwyer, Deputy Treasurer John H. Costello, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d Donald J. Kirk * Ned C. Lautenbach * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Michael Cook Marie L. Knowles GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA * INDEPENDENT TRUSTEES CII-ANN-0800 108584 1.705796.102 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 Fifty(registered trademark) 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 (FAST(registered trademark)) 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 ANNUAL REPORT JUNE 30, 2000 (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. REPORT OF INDEPENDENT 29 The auditors' opinion. ACCOUNTANTS DISTRIBUTIONS 30 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 (photograph of Edward C. Johnson 3d) DEAR SHAREHOLDER: In stark contrast to the final six months of 1999, most major equity market indexes posted negative returns for the first half of 2000, due mainly to a correction in the technology sector during the second quarter. The majority of bond markets - with the notable exception of high yield - fared better, as Treasuries and non-Treasuries alike benefited as a haven from the volatility of stocks and riskier investment alternatives. 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 JUNE 30, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY FUND 10.47% 192.38% 409.02% S&P 500(registered trademark) 7.25% 190.84% 414.73% Growth & Income Funds Average 2.15% 127.55% 284.77% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, 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 one year average represents a peer group of 960 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 JUNE 30, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY FUND 10.47% 23.93% 17.67% S&P 500 7.25% 23.80% 17.80% Growth & Income Funds Average 2.15% 17.45% 14.14% 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 1990/06/30 10000.00 10000.00 1990/07/31 9906.23 9968.00 1990/08/31 9194.70 9066.89 1990/09/30 8783.16 8625.34 1990/10/31 8688.72 8588.25 1990/11/30 9072.05 9143.05 1990/12/31 9260.55 9398.14 1991/01/31 9857.45 9807.90 1991/02/28 10505.52 10509.16 1991/03/31 10745.31 10763.48 1991/04/30 10756.75 10789.32 1991/05/31 11300.31 11255.41 1991/06/30 10674.36 10739.92 1991/07/31 11152.23 11240.40 1991/08/31 11336.47 11506.79 1991/09/30 11238.63 11314.63 1991/10/31 11348.70 11466.25 1991/11/30 10665.11 11004.16 1991/12/31 11496.60 12263.03 1992/01/31 11677.21 12034.94 1992/02/29 12007.28 12191.39 1992/03/31 11643.88 11953.66 1992/04/30 11725.35 12305.10 1992/05/31 11831.89 12365.39 1992/06/30 11669.41 12181.15 1992/07/31 11921.31 12679.36 1992/08/31 11675.71 12419.43 1992/09/30 11794.94 12565.98 1992/10/31 11940.48 12609.96 1992/11/30 12206.24 13039.96 1992/12/31 12469.26 13200.35 1993/01/31 12798.44 13311.24 1993/02/28 12909.69 13492.27 1993/03/31 13293.13 13776.96 1993/04/30 13293.13 13443.55 1993/05/31 13618.65 13803.84 1993/06/30 13639.53 13843.87 1993/07/31 13652.88 13788.50 1993/08/31 14288.32 14311.08 1993/09/30 14418.96 14200.89 1993/10/31 14657.35 14494.84 1993/11/30 14267.26 14357.14 1993/12/31 14758.83 14530.86 1994/01/31 15386.86 15024.91 1994/02/28 15080.50 14617.74 1994/03/31 14394.67 13980.40 1994/04/30 14733.18 14159.35 1994/05/31 14717.80 14391.57 1994/06/30 14377.64 14038.97 1994/07/31 14848.91 14499.45 1994/08/31 15494.81 15093.93 1994/09/30 15169.29 14724.13 1994/10/31 15495.16 15055.42 1994/11/30 14949.32 14507.10 1994/12/31 15139.72 14722.24 1995/01/31 15115.14 15103.99 1995/02/28 15631.27 15692.59 1995/03/31 16197.90 16155.68 1995/04/30 16593.17 16631.47 1995/05/31 16873.16 17296.23 1995/06/30 17409.65 17698.02 1995/07/31 18204.01 18284.88 1995/08/31 18501.23 18330.78 1995/09/30 19044.61 19104.34 1995/10/31 18822.66 19036.14 1995/11/30 19616.54 19871.82 1995/12/31 20112.81 20254.55 1996/01/31 20602.07 20944.02 1996/02/29 20860.04 21138.17 1996/03/31 21252.04 21341.73 1996/04/30 21591.51 21656.31 1996/05/31 22011.36 22214.82 1996/06/30 22109.52 22299.46 1996/07/31 21149.80 21314.27 1996/08/31 21739.93 21763.79 1996/09/30 22852.53 22988.66 1996/10/31 23227.64 23622.68 1996/11/30 24622.26 25408.32 1996/12/31 24099.93 24904.98 1997/01/31 25114.67 26461.05 1997/02/28 25358.59 26668.50 1997/03/31 24105.27 25572.69 1997/04/30 25504.80 27099.38 1997/05/31 26904.33 28749.19 1997/06/30 28293.89 30037.16 1997/07/31 30678.70 32427.21 1997/08/31 29097.26 30610.64 1997/09/30 30648.20 32287.18 1997/10/31 29795.45 31208.79 1997/11/30 31115.18 32653.45 1997/12/31 31826.27 33214.11 1998/01/31 31986.42 33581.45 1998/02/28 34196.43 36003.35 1998/03/31 35982.84 37847.08 1998/04/30 36250.41 38227.82 1998/05/31 36025.65 37570.69 1998/06/30 37783.55 39096.81 1998/07/31 37944.46 38680.43 1998/08/31 32252.39 33088.01 1998/09/30 33686.04 35207.63 1998/10/31 36167.58 38071.42 1998/11/30 38424.55 40378.93 1998/12/31 41693.40 42705.56 1999/01/31 43159.31 44491.51 1999/02/28 42261.58 43108.71 1999/03/31 44102.26 44833.49 1999/04/30 45047.14 46569.89 1999/05/31 43646.89 45470.38 1999/06/30 46076.56 47993.98 1999/07/31 44639.16 46495.61 1999/08/31 43996.29 46265.46 1999/09/30 43059.48 44997.32 1999/10/31 44928.47 47844.75 1999/11/30 46773.18 48817.43 1999/12/31 51789.44 51692.78 2000/01/31 49565.21 49095.74 2000/02/29 51254.65 48166.35 2000/03/31 53491.94 52878.47 2000/04/30 50378.27 51287.35 2000/05/31 48103.83 50234.94 2000/06/30 50901.98 51473.23 IMATRL PRASUN SHR__CHT 20000630 20000714 082222 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Fund on June 30, 1990. As the chart shows, by June 30, 2000, the value of the investment would have grown to $50,902 - a 409.02% 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 $51,473 - a 414.73% 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 JUNE 30, 2000, THE ONE YEAR, FIVE YEAR AND 10 YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP CORE FUNDS AVERAGE WERE, 11.37%, 169.56%, 354.92%, AND 11.37%, 21.79%,16.17%, RESPECTIVELY; AND THE ONE YEAR, FIVE YEAR, AND 10 YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP SUPERGROUP AVERAGES WERE, 13.48%, 176.32%, 374.41%, AND 13.48%, 22.13%, 16.55%, RESPECTIVELY. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP If ever there was a one-year period that investors could point to in support of the merits of diversification, the 12 months ending June 30, 2000, wouldn't be a bad place to start. New economy technology stocks, the performance darlings of six months ago, were being trounced by less-glamorous, old economy natural resources and real estate issues by the end of the period. The health sector, which looked anything but healthy in 1999, was the top-performing sector through the first half of 2000. And large-cap growth stocks, which dominated Wall Street a year ago, were looking up - way up - at their small-cap brethren. Yes, the past 12 months were remarkably volatile. Investors enjoyed record-setting highs in all major U.S. stock market indexes, and endured gut-wrenching declines, including a 10-week, 33% freefall in the NASDAQ Composite Index. But still, when the dust settled and the numbers tallied, most indexes were in positive territory. The tech-heavy NASDAQ index, despite its travails in the spring, finished the 12-month period up 47.99%. The broader-based Standard & Poor's 500SM Index returned 7.25%, and the Russell 2000(registered trademark) Index - a popular measure of small-cap stock performance - gained 14.32%. The Dow Jones Industrial Average - an index of 30 blue-chip stocks - was not as fortunate, declining 3.30% for the one-year period ending June 30, 2000. (photograph of Nick Thakore) NOTE TO SHAREHOLDERS: Nick Thakore became Portfolio Manager of Fidelity Fund on June 1, 2000. Q. HOW DID THE FUND PERFORM, NICK? A. The fund performed well, especially relative to its benchmarks. For the 12 months that ended June 30, 2000, the fund returned 10.47%, bettering the 7.25% and 2.15% returns of the Standard & Poor's 500 Index and the growth and income funds average monitored by Lipper Inc., respectively. Q. WHAT ENABLED THE FUND TO OUTPERFORM THE INDEX AND THE LIPPER AVERAGE? A. In the first half of the period, avoiding many of the laggards in the finance sector helped the fund beat many of its peers and the index, as did underweighting the weak consumer nondurables sector. In the second half of the period, stock selection in utilities - primarily wireless communications stocks - and investments in biotechnology and large-capitalization pharmaceutical stocks in the health sector helped relative performance. Q. YOU TOOK OVER THE FUND ON JUNE 1, 2000. DID YOU MAKE ANY SIGNIFICANT CHANGES TO ITS HOLDINGS? A. My philosophy is to rely primarily on stock selection to drive performance. Unless I've got overwhelming conviction about a sector, I'd rather avoid big positive or negative sector bets relative to the S&P 500. That's certainly not the only way to manage a fund; it's more a matter of what I'm comfortable with and what I feel I can do well. I increased weightings in some sectors, such as energy, finance, consumer nondurables and health. In addition, I brought down weightings in Japanese stocks and wireless investments, although the fund was still modestly overweighted in those areas compared to the index at the end of the period. Q. WHY DID YOU INCREASE WEIGHTINGS IN THE SECTORS YOU MENTIONED? A. In the case of energy and finance, the fund had been significantly underweighted compared to the S&P 500, a situation that was inconsistent with how I wanted to run the fund. I increased the weightings of the consumer nondurables and health sectors primarily because of the stable earnings growth of many companies in those sectors - a factor that could become important if a slowing economy causes a reduction in overall corporate earnings growth later in the year. People tend to buy items such as razor blades, toothpaste and drugs in a somewhat predictable fashion unless the economy is absolutely terrible. Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE? A. Nokia, a wireless handset manufacturer, was helped by surging demand for wireless telephone service, as was China Telecom. Two core technology holdings, Cisco Systems and Texas Instruments, also did well. Cisco benefited from healthy demand in the Internet router market and saw one of its competitors in the network computing market exit the business. Texas Instruments is a key supplier of semiconductors for the wireless phone industry, which boomed during the period. Q. WHAT HOLDINGS HAD THE MOST NEGATIVE INFLUENCE ON THE FUND'S RETURNS? A. Microsoft was one of the biggest detractors. The company was beset by legal problems in the form of an antitrust suit brought by the federal government's Department of Justice. The resulting ruling may, despite the company's appeals, lead to splitting Microsoft into two separate companies. In addition, the company's Windows 2000 operating software encountered slower-than-expected sales. Another major detractor was AT&T. Although my research showed that the stock was cheap relative to the value of its separate divisions, deteriorating prospects for the company's long-distance business caused investors to avoid the stock. Q. WHAT'S YOUR OUTLOOK, NICK? A. The focus of the fund remains finding stocks that are attractively valued relative to their earnings growth rates. The challenge in the coming months is likely to be a slowing economy, with the slower earnings growth that implies. I plan to keep the fund solidly positioned in the long-term growth areas of the economy, including technology, the wireless telecommunications segment of the utilities sector and health. At the same time, increased exposure to the defensive stocks that provide greater earnings stability should help the fund in an environment of slower economic growth. 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 June 30, 2000, more than $17 billion MANAGER: Nick Thakore, since June 2000; manager, Fidelity Trend Fund, 1998-2000; Fidelity Utilities Fund and Fidelity Advisor Utilities Growth Fund, 1997-1998; several Fidelity Select Portfolios, 1996-1998; joined Fidelity in 1993 NICK THAKORE ON ADDING VALUE THROUGH STOCK SELECTION: "I like to keep the sector weightings of my funds close to those of my benchmark. One benefit of this strategy, I believe, is that you get more consistent performance. It's less likely that you'll completely miss a rally in a particular sector because you mistakenly underweighted it. This point is especially important given the volatile market environment we've had in the past few years. Rallies have often occurred so quickly that those who were not already positioned to take advantage of them were left behind. The cyclical rally that occurred in the spring of 1999 was a good example of this phenomenon. "Within each sector, I try to add value by selecting the best stocks from the strongest subsectors. In technology, for example, one area I've emphasized is Internet infrastructure stocks. In utilities, I've favored wireless telecommunications and companies poised to benefit from the trend toward upgrading and expanding telecommunications networks. In health, I've emphasized biotechnology and, more recently, large-cap pharmaceutical stocks. Even in out-of-favor sectors, there are always some subsectors that do better than others. That's where I try to be." INVESTMENT CHANGES
TOP TEN STOCKS AS OF JUNE 30, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO General Electric Co. 4.8 4.2 Cisco Systems, Inc. 3.2 1.9 Intel Corp. 3.1 0.1 Eli Lilly & Co. 2.7 1.0 Bristol-Myers Squibb Co. 2.5 1.1 Exxon Mobil Corp. 2.2 1.3 Philip Morris Companies, Inc. 1.9 0.4 Pfizer, Inc. 1.9 0.9 Schering-Plough Corp. 1.8 1.2 Wal-Mart Stores, Inc. 1.8 1.1 25.9 13.2 TOP FIVE MARKET SECTORS AS OF JUNE 30, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Technology 30.1 28.2 Finance 13.5 10.2 Health 12.5 9.8 Utilities 9.1 10.4 Industrial Machinery & 6.6 7.4 Equipment
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF JUNE 30, 2000 * AS OF DECEMBER 31, 1999 ** Stocks 96.1% Stocks 93.7% Convertible Securities 1.1% Convertible Securities 1.3% Short-Term Investments and Short-Term Investments and Net Other Assets 2.8% Net Other Assets 5.0% * FOREIGN INVESTMENTS 7.6% ** FOREIGN INVESTMENTS 15.2% Row: 1, Col: 1, Value: 96.09999999999999 Row: 1, Col: 1, Value: 93.7 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: 1.0 Row: 1, Col: 5, Value: 1.3 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: 2.8 Row: 1, Col: 8, Value: 5.0
INVESTMENTS JUNE 30, 2000 Showing Percentage of Net Assets
COMMON STOCKS - 96.1% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 1.4% AEROSPACE & DEFENSE - 1.1% Boeing Co. 2,132,800 $ 89,178 Textron, Inc. 1,212,600 65,859 United Technologies Corp. 612,400 36,055 191,092 SHIP BUILDING & REPAIR - 0.3% General Dynamics Corp. 936,200 48,916 TOTAL AEROSPACE & DEFENSE 240,008 BASIC INDUSTRIES - 1.3% CHEMICALS & PLASTICS - 1.1% Avery Dennison Corp. 242,100 16,251 Dow Chemical Co. 840,900 25,385 E.I. du Pont de Nemours and 1,632,100 71,404 Co. Lyondell Chemical Co. 993,300 16,638 Pharmacia Corp. 395,500 20,442 Praxair, Inc. 373,700 13,990 Union Carbide Corp. 543,800 26,918 191,028 METALS & MINING - 0.2% Alcoa, Inc. 1,120,800 32,503 TOTAL BASIC INDUSTRIES 223,531 CONSTRUCTION & REAL ESTATE - 0.3% BUILDING MATERIALS - 0.2% American Standard Companies, 897,000 36,777 Inc. (a) Masco Corp. 560,400 10,122 46,899 ENGINEERING - 0.1% Fluor Corp. 487,400 15,414 TOTAL CONSTRUCTION & REAL 62,313 ESTATE DURABLES - 0.8% AUTOS, TIRES, & ACCESSORIES - 0.1% General Motors Corp. 224,803 13,053 Navistar International Corp. 250,000 7,766 (a) 20,819 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) DURABLES - CONTINUED CONSUMER ELECTRONICS - 0.1% Black & Decker Corp. 436,600 $ 17,164 General Motors Corp. Class H 78,913 6,925 (a) 24,089 HOME FURNISHINGS - 0.4% Leggett & Platt, Inc. 3,712,300 61,253 TEXTILES & APPAREL - 0.2% Mohawk Industries, Inc. (a) 720,400 15,669 Shaw Industries, Inc. 934,000 11,675 27,344 TOTAL DURABLES 133,505 ENERGY - 5.9% ENERGY SERVICES - 1.3% Diamond Offshore Drilling, 736,000 25,852 Inc. Halliburton Co. 1,113,900 52,562 Schlumberger Ltd. (NY Shares) 1,293,900 96,557 Transocean Sedco Forex, Inc. 984,400 52,604 227,575 OIL & GAS - 4.6% Alberta Energy Co. Ltd. 1,058,100 42,739 BP Amoco PLC sponsored ADR 793,200 44,865 Burlington Resources, Inc. 1,277,600 48,868 Canadian Natural Resources 479,700 13,933 Ltd. (a) Chevron Corp. 374,900 31,796 Conoco, Inc. Class B 1,541,700 37,868 Devon Energy Corp. 187,300 10,524 Exxon Mobil Corp. 4,934,556 387,363 Royal Dutch Petroleum Co. (NY 1,918,200 118,089 Shares) Santa Fe Snyder Corp. (a) 2,604,000 29,621 Talisman Energy, Inc. (a) 254,700 8,438 Union Pacific Resources 1,412,300 31,071 Group, Inc. 805,175 TOTAL ENERGY 1,032,750 FINANCE - 13.5% BANKS - 1.9% Bank of New York Co., Inc. 2,063,860 95,969 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED BANKS - CONTINUED Chase Manhattan Corp. 4,645,950 $ 214,004 PNC Financial Services Group, 312,500 14,648 Inc. 324,621 CREDIT & OTHER FINANCE - 3.8% American Express Co. 5,324,892 277,560 Associates First Capital 4,406,400 98,318 Corp. Class A Citigroup, Inc. 3,901,225 235,049 Household International, Inc. 1,160,600 48,237 659,164 FEDERAL SPONSORED CREDIT - 2.5% Fannie Mae 5,249,200 273,943 Freddie Mac 4,180,700 169,318 443,261 INSURANCE - 3.6% Ace Ltd. 1,920,900 53,785 AFLAC, Inc. 335,200 15,398 AMBAC Financial Group, Inc. 295,700 16,208 American International Group, 2,279,000 267,783 Inc. CIGNA Corp. 444,200 41,533 Hartford Financial Services 944,300 52,822 Group, Inc. MBIA, Inc. 262,400 12,644 MetLife, Inc. 4,367,400 91,988 The Chubb Corp. 837,700 51,519 XL Capital Ltd. Class A 346,700 18,765 622,445 SECURITIES INDUSTRY - 1.7% Daiwa Securities Group, Inc. 4,949,000 65,352 Merrill Lynch & Co., Inc. 339,700 39,066 Morgan Stanley Dean Witter & 1,660,100 138,203 Co. Nikko Securities Co. Ltd. 6,487,000 64,246 306,867 TOTAL FINANCE 2,356,358 HEALTH - 12.5% DRUGS & PHARMACEUTICALS - 10.7% Abgenix, Inc. (a) 40,400 4,842 American Home Products Corp. 1,315,800 77,303 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) HEALTH - CONTINUED DRUGS & PHARMACEUTICALS - CONTINUED Amgen, Inc. 386,700 $ 27,166 Bristol-Myers Squibb Co. 7,605,800 443,038 Celgene Corp. (a) 1,479,300 87,094 Cephalon, Inc. (a) 280,000 16,765 COR Therapeutics, Inc. (a) 156,800 13,377 Eli Lilly & Co. 4,633,600 462,781 Merck & Co., Inc. 879,400 67,384 Millennium Pharmaceuticals, 213,600 23,897 Inc. (a) Pfizer, Inc. 6,698,350 321,521 Schering-Plough Corp. 6,153,000 310,727 1,855,895 MEDICAL EQUIPMENT & SUPPLIES - 1.7% Abbott Laboratories 2,814,500 125,421 Cardinal Health, Inc. 1,706,582 126,287 Johnson & Johnson 438,900 44,713 296,421 MEDICAL FACILITIES MANAGEMENT - 0.1% Wellpoint Health Networks, 206,400 14,951 Inc. (a) TOTAL HEALTH 2,167,267 INDUSTRIAL MACHINERY & EQUIPMENT - 6.6% ELECTRICAL EQUIPMENT - 5.1% Furukawa Electric Co. Ltd. 2,579,000 53,881 General Electric Co. 15,540,000 823,614 877,495 INDUSTRIAL MACHINERY & EQUIPMENT - 1.5% Caterpillar, Inc. 500,100 16,941 Ingersoll-Rand Co. 992,400 39,944 Parker-Hannifin Corp. 484,400 16,591 Tyco International Ltd. 3,670,600 173,895 Veeco Instruments, Inc. (a) 241,000 17,653 265,024 TOTAL INDUSTRIAL MACHINERY & 1,142,519 EQUIPMENT MEDIA & LEISURE - 4.3% BROADCASTING - 2.0% AT&T Corp. - Liberty Media 9,168,576 222,338 Group Class A (a) COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) MEDIA & LEISURE - CONTINUED BROADCASTING - CONTINUED Comcast Corp. Class A 1,085,527 $ 43,964 (special) (a) Time Warner, Inc. 1,174,340 89,250 355,552 ENTERTAINMENT - 1.4% Mandalay Resort Group (a) 849,400 16,988 MGM Grand, Inc. 307,400 9,875 Viacom, Inc. Class B 2,003,313 136,601 (non-vtg.) (a) Walt Disney Co. 1,886,300 73,212 236,676 LODGING & GAMING - 0.2% Harrah's Entertainment, Inc. 1,340,000 28,056 (a) PUBLISHING - 0.3% McGraw-Hill Companies, Inc. 961,200 51,905 RESTAURANTS - 0.4% McDonald's Corp. 2,132,800 70,249 Outback Steakhouse, Inc. (a) 243,000 7,108 77,357 TOTAL MEDIA & LEISURE 749,546 NONDURABLES - 4.4% BEVERAGES - 1.9% Anheuser-Busch Companies, 1,257,700 93,934 Inc. Pepsi Bottling Group, Inc. 897,500 26,196 The Coca-Cola Co. 3,630,300 208,515 328,645 HOUSEHOLD PRODUCTS - 0.6% Avon Products, Inc. 1,261,000 56,115 Procter & Gamble Co. 696,000 39,846 95,961 TOBACCO - 1.9% Philip Morris Companies, Inc. 12,736,700 338,319 TOTAL NONDURABLES 762,925 PRECIOUS METALS - 0.1% Barrick Gold Corp. 1,219,200 22,029 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) RETAIL & WHOLESALE - 5.3% APPAREL STORES - 0.4% Gap, Inc. 1,435,600 $ 44,863 The Limited, Inc. 1,334,400 28,856 73,719 DRUG STORES - 0.5% Walgreen Co. 2,812,800 90,537 GENERAL MERCHANDISE STORES - 2.4% Kohls Corp. (a) 860,200 47,849 Target Corp. 936,800 54,334 Wal-Mart Stores, Inc. 5,372,600 309,596 411,779 GROCERY STORES - 0.5% Safeway, Inc. (a) 2,016,800 91,008 RETAIL & WHOLESALE, MISCELLANEOUS - 1.5% Best Buy Co., Inc. (a) 362,800 22,947 Home Depot, Inc. 4,551,096 227,270 250,217 TOTAL RETAIL & WHOLESALE 917,260 SERVICES - 0.4% ADVERTISING - 0.4% Omnicom Group, Inc. 233,100 20,760 TMP Worldwide, Inc. (a) 560,500 41,372 62,132 SERVICES - 0.0% Gartner Group, Inc. Class B 19,989 197 (a) Storagenetworks, Inc. 9,300 839 1,036 TOTAL SERVICES 63,168 TECHNOLOGY - 30.1% COMMUNICATIONS EQUIPMENT - 7.6% 3Com Corp. 361,800 20,849 Cabletron Systems, Inc. (a) 1,038,100 26,212 Centillium Communications, 24,900 1,718 Inc. (a) Chromatis Networks, Inc. (e) 80,200 6,767 Cisco Systems, Inc. (a) 8,819,700 560,602 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMMUNICATIONS EQUIPMENT - CONTINUED Comverse Technology, Inc. (a) 250,900 $ 23,334 Corning, Inc. 215,400 58,131 Ditech Communications Corp. 971,100 91,830 Efficient Networks, Inc. 372,500 27,402 Lucent Technologies, Inc. 1,736,520 102,889 Nokia AB sponsored ADR 3,250,900 162,342 Nortel Networks Corp. 3,214,800 223,006 Terayon Communication 203,900 13,097 Systems, Inc. (a) 1,318,179 COMPUTER SERVICES & SOFTWARE - 4.9% America Online, Inc. (a) 2,186,500 115,338 Ariba, Inc. 669,500 65,642 BEA Systems, Inc. (a) 3,275,300 161,923 Cadence Design Systems, Inc. 596,300 12,150 (a) Ceridian Corp. (a) 625,700 15,056 Computer Sciences Corp. (a) 176,400 13,175 IMS Health, Inc. 1,011,800 18,212 InfoSpace.com, Inc. (a) 201,500 11,133 Microsoft Corp. (a) 1,414,200 113,136 Netegrity, Inc. 276,700 20,839 Oracle Corp. (a) 1,422,700 119,596 Polycom, Inc. (a) 165,200 15,544 Priceline.com, Inc. (a) 319,300 12,128 Software.com, Inc. 219,700 28,534 Unisys Corp. (a) 1,196,509 17,424 VeriSign, Inc. (a) 105,925 18,696 Vignette Corp. (a) 366,900 19,085 Yahoo!, Inc. (a) 606,400 75,118 852,729 COMPUTERS & OFFICE EQUIPMENT - 6.1% Accelerated Networks, Inc. (a) 6,800 287 Copper Mountain Networks, 515,600 45,437 Inc. Dell Computer Corp. (a) 5,412,600 266,909 EMC Corp. (a) 2,818,632 216,858 Gateway, Inc. (a) 1,271,500 72,158 International Business 1,853,600 203,085 Machines Corp. Lexmark International Group, 701,400 47,169 Inc. Class A (a) MRV Communications, Inc. (a) 400,400 26,927 Pitney Bowes, Inc. 1,026,530 41,061 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMPUTERS & OFFICE EQUIPMENT - CONTINUED SCI Systems, Inc. (a) 400,700 $ 15,702 Sun Microsystems, Inc. (a) 1,486,700 135,197 1,070,790 ELECTRONIC INSTRUMENTS - 1.2% Agilent Technologies, Inc. 2,905,600 214,288 ELECTRONICS - 10.3% Advanced Micro Devices, Inc. 1,853,200 143,160 (a) Celeritek, Inc. (a) 152,000 6,204 Cree, Inc. (a) 79,600 10,627 E Tek Dynamics, Inc. (a) 301,400 79,513 Fairchild Semiconduct 1,032,700 41,824 International, Inc. Class A Intel Corp. 3,956,900 528,988 JDS Uniphase Corp. (a) 305,900 36,670 LSI Logic Corp. (a) 1,062,900 57,529 Marvell Technology Group Ltd. 6,700 382 (a) Micron Technology, Inc. (a) 2,186,500 192,549 Motorola, Inc. 4,923,600 143,092 National Semiconductor Corp. 416,400 23,631 (a) NVIDIA Corp. (a) 926,700 58,903 Power-One, Inc. (a) 242,500 27,630 Samsung Electronics Co. Ltd. 448,260 148,345 Texas Instruments, Inc. 3,563,500 244,768 Virata Corp. 679,100 40,491 1,784,306 TOTAL TECHNOLOGY 5,240,292 TRANSPORTATION - 0.3% RAILROADS - 0.3% Burlington Northern Santa Fe 1,379,100 31,633 Corp. Union Pacific Corp. 674,900 25,098 56,731 UTILITIES - 8.9% CELLULAR - 2.1% China Telecom (Hong Kong) 13,822,600 122,892 Ltd. (a) Nextel Communications, Inc. 1,224,000 74,894 Class A (a) QUALCOMM, Inc. (a) 344,000 20,640 Sprint Corp. - PCS Group 1,304,500 77,618 Series 1 (a) COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) UTILITIES - CONTINUED CELLULAR - CONTINUED Vodafone AirTouch PLC 297,700 $ 12,336 sponsored ADR VoiceStream Wireless Corp. (a) 446,227 51,895 360,275 ELECTRIC UTILITY - 0.7% AES Corp. (a) 2,596,000 118,443 NRG Energy, Inc. 398,000 7,264 125,707 GAS - 1.2% Dynegy, Inc. Class A 1,092,802 74,652 Kinder Morgan, Inc. 2,668,300 92,223 Williams Companies, Inc. 977,400 40,745 207,620 TELEPHONE SERVICES - 4.9% AT&T Corp. 5,354,700 169,342 BellSouth Corp. 4,631,700 197,426 Global Crossing Ltd. (a) 1,204,000 31,680 Qwest Communications 753,500 37,440 International, Inc. (a) SBC Communications, Inc. 855,800 37,013 Sprint Corp. - FON Group 611,800 31,202 Telefonos de Mexico SA de CV 705,000 40,273 Series L sponsored ADR TeraBeam Networks (e) 50,800 191 U.S. WEST, Inc. 1,989,100 170,565 WorldCom, Inc. (a) 2,859,000 131,157 846,289 TOTAL UTILITIES 1,539,891 TOTAL COMMON STOCKS 16,710,093 (Cost $12,828,259) CONVERTIBLE PREFERRED STOCKS - 0.4% MEDIA & LEISURE - 0.4% BROADCASTING - 0.4% MediaOne Group, Inc. 702,700 63,243 (Vodafone AirTouch PLC) $3.63 PIES (Cost $55,300)
CONVERTIBLE BONDS - 0.7% MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) MEDIA & LEISURE - 0.5% BROADCASTING - 0.5% Liberty Media Corp.: 3.75% 2/15/30 (d) Baa3 $ 41,700 $ 45,245 4% 11/15/29 (d) Baa3 10,870 15,612 4% 11/15/29 Baa3 16,180 23,239 84,096 UTILITIES - 0.2% CELLULAR - 0.2% Nextel Communications, Inc. B1 30,180 31,236 5.25% 1/15/10 (d) TOTAL CONVERTIBLE BONDS 115,332 (Cost $101,078)
CASH EQUIVALENTS - 5.0% SHARES Central Cash Collateral Fund, 45,704,300 45,704 6.71% (c) Taxable Central Cash Fund, 824,094,619 824,095 6.59% (c) TOTAL CASH EQUIVALENTS 869,799 (Cost $869,799) TOTAL INVESTMENT PORTFOLIO - 17,758,467 102.2% (Cost $13,854,436) NET OTHER ASSETS - (2.2)% (379,231) NET ASSETS - 100% $ 17,379,236 SECURITY TYPE ABBREVIATIONS PIES - Premium Income Equity Securities LEGEND (a) Non-income producing (b) S&P credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. (c) The rate quoted is the annualized seven-day yield of the fund at period end. (d) 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 $92,093,000 or 0.5% of net assets. (e) Restricted securities - Investment in securities not registered under the Securities Act of 1933. Additional information on each holding is as follows: SECURITY ACQUISITION DATE ACQUISITION COST (000S) Chromatis Networks, Inc. 5/19/00 $ 1,410 TeraBeam Networks 4/7/00 $ 191 INCOME TAX INFORMATION At June 30, 2000, the aggregate cost of investment securities for income tax purposes was $13,918,181,000. Net unrealized appreciation aggregated $3,840,286,000, of which $4,303,609,000 related to appreciated investment securities and $463,323,000 related to depreciated investment securities. The fund hereby designates approximately $665,295,000 as a capital gain dividend for the purpose of the dividend paid deduction. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JUNE 30, 2000 ASSETS Investment in securities, at $ 17,758,467 value (cost $13,854,436) - See accompanying schedule Cash 870 Foreign currency held at 17,425 value (cost $17,425) Receivable for investments 150,458 sold Receivable for fund shares 74,323 sold Dividends receivable 12,620 Interest receivable 6,466 Other receivables 519 TOTAL ASSETS 18,021,148 LIABILITIES Payable for investments $ 416,116 purchased Payable for fund shares 173,035 redeemed Accrued management fee 5,259 Other payables and accrued 1,798 expenses Collateral on securities 45,704 loaned, at value TOTAL LIABILITIES 641,912 NET ASSETS $ 17,379,236 Net Assets consist of: Paid in capital $ 12,180,725 Undistributed net investment 7,954 income Accumulated undistributed net 1,286,511 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 3,904,046 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 415,647 $ 17,379,236 shares outstanding NET ASSET VALUE, offering $41.81 price and redemption price per share ($17,379,236 (divided by) 415,647 shares) STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS YEAR ENDED JUNE 30, 2000 INVESTMENT INCOME $ 112,604 Dividends Interest 52,792 Security lending 928 TOTAL INCOME 166,324 EXPENSES Management fee $ 55,605 Transfer agent fees 25,686 Accounting and security 1,092 lending fees Non-interested trustees' 66 compensation Custodian fees and expenses 605 Registration fees 1,060 Audit 88 Legal 78 Miscellaneous 38 Total expenses before 84,318 reductions Expense reductions (4,322) 79,996 NET INVESTMENT INCOME 86,328 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 1,325,005 Foreign currency transactions (656) 1,324,349 Change in net unrealized appreciation (depreciation) on: Investment securities 132,296 Assets and liabilities in 11 132,307 foreign currencies NET GAIN (LOSS) 1,456,656 NET INCREASE (DECREASE) IN $ 1,542,984 NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 86,328 $ 93,003 income Net realized gain (loss) 1,324,349 919,878 Change in net unrealized 132,307 1,192,377 appreciation (depreciation) NET INCREASE (DECREASE) IN 1,542,984 2,205,258 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (80,678) (88,023) From net investment income From net realized gain (778,623) (476,294) TOTAL DISTRIBUTIONS (859,301) (564,317) Share transactions Net 6,879,759 6,719,777 proceeds from sales of shares Reinvestment of distributions 805,722 528,255 Cost of shares redeemed (4,832,004) (3,772,952) NET INCREASE (DECREASE) IN 2,853,477 3,475,080 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 3,537,160 5,116,021 IN NET ASSETS NET ASSETS Beginning of period 13,842,076 8,726,055 End of period (including $ 17,379,236 $ 13,842,076 undistributed net investment income of $7,954 and $5,224, respectively) OTHER INFORMATION Shares Sold 171,650 186,703 Issued in reinvestment of 22,248 15,678 distributions Redeemed (120,989) (107,375) Net increase (decrease) 72,909 95,006
FINANCIAL HIGHLIGHTS YEARS ENDED JUNE 30, 2000 1999 1998 1997 1996 SELECTED PER-SHARE DATA Net asset value, beginning $ 40.39 $ 35.22 $ 28.83 $ 24.65 $ 21.04 of period Income from Investment Operations Net investment income .23 B .31 B .32 B .34 B .39 Net realized and unrealized 3.61 6.96 8.74 5.99 5.04 gain (loss) Total from investment 3.84 7.27 9.06 6.33 5.43 operations Less Distributions From net investment income (.21) (.29) (.31) (.33) (.41) From net realized gain (2.21) (1.81) (2.36) (1.82) (1.41) Total distributions (2.42) (2.10) (2.67) (2.15) (1.82) Net asset value, end of period $ 41.81 $ 40.39 $ 35.22 $ 28.83 $ 24.65 TOTAL RETURN A 10.47% 21.95% 33.54% 27.97% 27.00% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 17,379 $ 13,842 $ 8,726 $ 5,509 $ 3,947 (in millions) Ratio of expenses to average .56% .57% .58% .62% .63% net assets Ratio of expenses to average .53% C .55% C .56% C .59% C .60% C net assets after expense reductions Ratio of net investment .57% .87% 1.01% 1.34% 1.71% income to average net assets Portfolio turnover rate 113% 71% 65% 107% 150%
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. C 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 June 30, 2000 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, market discount, 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. 2. OPERATING POLICIES - CONTINUED 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, Federal Agency, or other obligations found to be satisfactory by FMR 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, restricted securities (excluding 144A issues) amounted to $6,958,000 or 0.0% of net assets. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $18,606,644,000 and $16,188,118,000, 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%. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED MANAGEMENT FEE - CONTINUED In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. For the period, the management fee was equivalent to an annual rate of .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 annual 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 $619,000 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 $46,213,000. The fund received cash collateral of $45,704,000 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 $3,773,000 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 $546,000, respectively, under these arrangements. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Hastings Street Trust and the Shareholders of Fidelity Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Fund (a fund of Fidelity Hastings Street Trust) at June 30, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts August 8, 2000 DISTRIBUTIONS The Board of Trustees of Fidelity Fund voted to pay on August 7, 2000, to shareholders of record at the opening of business on August 4, 2000, a distribution of $3.09 per share derived from capital gains realized from sales of portfolio securities. A total of 37% of the dividends distributed during the fiscal year qualifies for the dividends-received deduction for corporate shareholders. The fund hereby designates 100% of the long-term capital gain dividends distributed during the fiscal year as 20%-rate capital gain dividends. The fund will notify shareholders in January 2001 of amounts for use in preparing 2000 income tax returns. 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 (FAST(registered trademark)) 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 (U.K.) Inc. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Limited OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Richard A. Spillane, Jr., Vice President Eric D. Roiter, Secretary Robert A. Dwight, Treasurer Maria F. Dwyer, Deputy Treasurer John H. Costello, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d Donald J. Kirk * Ned C. Lautenbach * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Michael Cook Marie L. Knowles * INDEPENDENT TRUSTEES FID-ANN-0800 108522 1.705632.103 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 (FAST(registered trademark)) 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 ANNUAL REPORT JUNE 30, 2000 (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. REPORT OF INDEPENDENT 25 The auditors' opinion. ACCOUNTANTS 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 (photograph of Edward C. Johnson 3d) DEAR SHAREHOLDER: In stark contrast to the final six months of 1999, most major equity market indexes posted negative returns for the first half of 2000, due mainly to a correction in the technology sector during the second quarter. The majority of bond markets - with the notable exception of high yield - fared better, as Treasuries and non-Treasuries alike benefited as a haven from the volatility of stocks and riskier investment alternatives. 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 JUNE 30, 2000 PAST 1 YEAR LIFE OF FUND FIDELITY GROWTH & INCOME II -1.17% 6.55% S&P 500 7.25% 20.91% Growth & Income Funds Average 2.15% n/a* CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one year, or since the fund started on 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 one year average represents a peer group of 1,007 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 JUNE 30, 2000 PAST 1 YEAR LIFE OF FUND FIDELITY GROWTH & INCOME II -1.17% 4.30% S&P 500 7.25% 13.43% Growth & Income Funds Average 2.15% 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. * NOT AVAILABLE $10,000 OVER 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 2000/01/31 10492.15 11532.73 2000/02/29 10117.79 11314.42 2000/03/31 10867.86 12421.31 2000/04/30 10523.17 12047.55 2000/05/31 10320.41 11800.34 2000/06/30 10655.02 12091.21 IMATRL PRASUN SHR__CHT 20000630 20000720 122533 R00000000000022 $10,000 OVER 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 June 30, 2000, the value of the investment would have grown to $10,655 - a 6.55% 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 $12,091 - a 20.91% 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 JUNE 30, 2000, THE ONE YEAR CUMULATIVE AND AVERAGE ANNUAL RETURNS FOR THE LIPPER LARGE-CAP VALUE FUNDS AVERAGE WERE -0.93% AND -0.93%, RESPECTIVELY; AND THE ONE YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS FOR THE LIPPER LARGE-CAP SUPERGROUP AVERAGE WERE 13.48% AND 13.48%, RESPECTIVELY. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP If ever there was a one-year period that investors could point to in support of the merits of diversification, the 12 months ending June 30, 2000, wouldn't be a bad place to start. New economy technology stocks, the performance darlings of six months ago, were being trounced by less-glamorous, old economy natural resources and real estate issues by the end of the period. The health sector, which looked anything but healthy in 1999, was the top-performing sector through the first half of 2000. And large-cap growth stocks, which dominated Wall Street a year ago, were looking up - way up - at their small-cap brethren. Yes, the past 12 months were remarkably volatile. Investors enjoyed record-setting highs in all major U.S. stock market indexes, and endured gut-wrenching declines, including a 10-week, 33% freefall in the NASDAQ Composite Index. But still, when the dust settled and the numbers tallied, most indexes were in positive territory. The tech-heavy NASDAQ index, despite its travails in the spring, finished the 12-month period up 47.99%. The broader-based Standard & Poor's 500SM Index returned 7.25%, and the Russell 2000(registered trademark) Index - a popular measure of small-cap stock performance - gained 14.32%. The Dow Jones Industrial Average - an index of 30 blue-chip stocks - was not as fortunate, declining 3.30% for the one-year period ending June 30, 2000. (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. Absolute and relative performance both were disappointing. For the 12 months that ended June 30, 2000, the fund returned -1.17%, compared to 7.25% for the Standard & Poor's 500 Index and 2.15% for the growth and income funds average tracked by Lipper Inc. Q. WHY DID THE FUND UNDERPERFORM THE S&P 500? A. Toward the end of 1999 and beginning of 2000, one of the primary difficulties was an underweighting in the technology sector. This time period witnessed a speculative bubble in technology shares that finally burst in the spring of 2000, flattening many formerly high-flying technology stocks that had little or no earnings. The fund's emphasis on growth at a reasonable price prevented it from owning many of the best-performing stocks during the tech run-up. On the other hand, an overweighting in the finance sector, which faced a stiff headwind in the form of higher interest rates, also undermined performance. Stock selection in the finance sector hurt as well, as a number of the fund's finance holdings detracted significantly from performance. Q. THE FEDERAL RESERVE BOARD RAISED SHORT-TERM INTEREST RATES FIVE TIMES DURING THE PERIOD. WHY DID YOU CONTINUE TO OVERWEIGHT FINANCE STOCKS, WHICH TEND TO DO POORLY WHEN RATES RISE? A. Most of the overweighting was accounted for by two mortgage loan providers: Fannie Mae and Freddie Mac. These government-sponsored enterprises (GSEs) normally tend to be less sensitive to rising interest rates than banks, which I underweighted. Although the share prices of these two holdings did poorly during the period, they did not accurately reflect the earnings outlook, which remained excellent. Unfortunately, the herd instinct took over, and investors appeared to lump Fannie and Freddie in with the rate-sensitive segments of the finance sector. Since the spring correction, investors have seemed more willing to evaluate stocks on the basis of earnings and other fundamental factors, so I am hopeful that Fannie's and Freddie's merits will become more widely appreciated. Q. WHAT STOCKS DID WELL FOR THE FUND? A. Intel was one of the better performers. The stock firmed because of a shortage of microprocessors and expectations of improving personal computer demand in the second half of 2000. Intel also manufactures memory components for the cellular phone market, which experienced robust growth during the period. Cisco Systems was another technology standout, based on its dominant share of the market for routers used in the Internet build-out. Drug giant Eli Lilly also performed well. The company had a very successful test of Zovant, a new drug for testing sepsis, or blood poisoning. In addition, Lilly benefited from greater investor interest in drug stocks, which are thought to offer relatively stable earnings streams in a slowing economy. Q. IN ADDITION TO FANNIE MAE AND FREDDIE MAC, WHAT OTHER STOCKS WERE DISAPPOINTING? A. Associates First, mentioned as a disappointment six months ago, was the biggest detractor during this period. Although the fundamental outlook for the stock changed only marginally for the worse, investors punished it because of the unfriendly climate created by rising interest rates. Q. WHAT'S YOUR OUTLOOK, LOUIS? A. Higher interest rates have begun to slow the economy, and I believe that more slowing can be expected over the next six to 12 months, as the Federal Reserve Board's series of interest-rate hikes percolates through the economy. While a slowing economy should alleviate concerns about inflation, it might also create a lot more earnings risk. With valuations relatively high, we will probably continue to see stocks punished severely when a company fails to meet earnings estimates. Investing in stocks with attractive growth prospects at reasonable prices is the fund's overall strategy, but finding companies that can deliver stable earnings growth under a variety of economic conditions also will be important in the period just ahead. 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 June 30, 2000, more than $174 million MANAGER: Louis Salemy, since inception; manager, Fidelity VIP III: Growth & Income Portfolio, since 1998; several Fidelity Select Portfolios, 1992-1998; joined Fidelity in 1992 LOUIS SALEMY ON DEFENSIVE MARKET SECTORS: "Choosing defensive sectors - that is, sectors of the market that tend to outperform the overall market during unfavorable economic periods - used to be more straightforward than it is now. For example, consumer nondurables was considered a fairly reliable defensive sector. But a lot of companies in that sector have recently run into difficulty in maintaining top-line, or revenue, growth. Although many of them had sluggish U.S. sales, they could usually count on robust growth abroad. That's not been the case lately. Many overseas markets appear to be saturated, leaving consumer nondurables companies with fewer options for jump-starting sales. "Another traditional defensive sector is health, especially the large-capitalization drug stocks. And although it's true that demand for drugs tends to be relatively stable, a lot of a drug company's future growth depends on a healthy pipeline of new drugs. At the moment, though, there are relatively few companies with attractive pipelines. Overall, then, there are fewer sectors in which to put `defensive' money." INVESTMENT CHANGES
TOP TEN STOCKS AS OF JUNE 30, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Microsoft Corp. 4.3 6.5 Exxon Mobil Corp. 4.2 4.6 Fannie Mae 3.9 4.1 Intel Corp. 3.8 1.7 Cisco Systems, Inc. 3.7 2.6 Freddie Mac 3.4 3.4 Eli Lilly & Co. 3.1 1.9 General Electric Co. 2.6 2.5 SBC Communications, Inc. 2.6 2.5 Wal-Mart Stores, Inc. 2.5 2.1 34.1 31.9 TOP FIVE MARKET SECTORS AS OF JUNE 30, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Technology 23.2 20.9 Finance 18.2 18.1 Utilities 10.0 8.5 Health 7.0 12.3 Energy 6.1 7.0
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF JUNE 30, 2000 * AS OF DECEMBER 31, 1999 ** Stocks and Equity Futures 90.2% Stocks 93.2% Short-Term Investments and Short-Term Investments and Net Other Assets 9.8% Net Other Assets 6.8% * FOREIGN INVESTMENTS 6.2% ** FOREIGN INVESTMENTS 4.5% Row: 1, Col: 1, Value: 90.2 Row: 1, Col: 1, Value: 93.2 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: 9.800000000000001 Row: 1, Col: 8, Value: 6.8
INVESTMENTS JUNE 30, 2000 Showing Percentage of Net Assets COMMON STOCKS - 88.1% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 0.6% Boeing Co. 25,800 $ 1,078,762 BASIC INDUSTRIES - 0.5% PACKAGING & CONTAINERS - 0.5% Ball Corp. 24,749 796,608 CONSTRUCTION & REAL ESTATE - 1.2% REAL ESTATE INVESTMENT TRUSTS - 1.2% Equity Office Properties Trust 37,510 1,033,869 Equity Residential Properties 22,630 1,040,980 Trust (SBI) 2,074,849 DURABLES - 1.8% CONSUMER DURABLES - 0.8% Minnesota Mining & 16,900 1,394,250 Manufacturing Co. CONSUMER ELECTRONICS - 1.0% General Motors Corp. Class H 19,900 1,746,225 (a) TOTAL DURABLES 3,140,475 ENERGY - 6.1% ENERGY SERVICES - 0.8% Schlumberger Ltd. (NY Shares) 17,600 1,313,400 OIL & GAS - 5.3% BP Amoco PLC sponsored ADR 33,058 1,869,843 Exxon Mobil Corp. 94,146 7,390,461 9,260,304 TOTAL ENERGY 10,573,704 FINANCE - 18.2% BANKS - 4.2% Bank of New York Co., Inc. 76,390 3,552,135 Mellon Financial Corp. 45,100 1,643,331 Wachovia Corp. 38,600 2,094,050 7,289,516 CREDIT & OTHER FINANCE - 3.7% American Express Co. 42,500 2,215,313 Associates First Capital 193,990 4,328,402 Corp. Class A 6,543,715 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) FINANCE - CONTINUED FEDERAL SPONSORED CREDIT - 7.3% Fannie Mae 130,690 $ 6,820,384 Freddie Mac 145,330 5,885,865 12,706,249 INSURANCE - 0.9% American International Group, 10,887 1,279,223 Inc. PMI Group, Inc. 6,800 323,000 1,602,223 SECURITIES INDUSTRY - 2.1% Charles Schwab Corp. 31,050 1,044,056 Merrill Lynch & Co., Inc. 9,700 1,115,500 Morgan Stanley Dean Witter & 18,100 1,506,825 Co. 3,666,381 TOTAL FINANCE 31,808,084 HEALTH - 7.0% DRUGS & PHARMACEUTICALS - 6.4% Allergan, Inc. 12,900 961,050 Bristol-Myers Squibb Co. 63,640 3,707,030 Eli Lilly & Co. 55,000 5,493,125 Merck & Co., Inc. 12,960 993,060 11,154,265 MEDICAL EQUIPMENT & SUPPLIES - 0.6% Baxter International, Inc. 15,580 1,095,469 TOTAL HEALTH 12,249,734 INDUSTRIAL MACHINERY & EQUIPMENT - 4.5% ELECTRICAL EQUIPMENT - 2.6% General Electric Co. 85,320 4,521,960 INDUSTRIAL MACHINERY & EQUIPMENT - 1.9% Caterpillar, Inc. 20,600 697,825 Ingersoll-Rand Co. 18,840 758,310 Tyco International Ltd. 37,960 1,798,355 3,254,490 TOTAL INDUSTRIAL MACHINERY & 7,776,450 EQUIPMENT COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MEDIA & LEISURE - 5.8% BROADCASTING - 4.0% Comcast Corp. Class A 32,800 $ 1,328,400 (special) (a) EchoStar Communications Corp. 46,700 1,546,208 Class A (a) Infinity Broadcasting Corp. 58,187 2,120,189 Class A (a) Pegasus Communications Corp. 40,700 1,996,844 (a) 6,991,641 ENTERTAINMENT - 0.7% Walt Disney Co. 31,000 1,203,188 PUBLISHING - 1.1% McGraw-Hill Companies, Inc. 36,500 1,971,000 TOTAL MEDIA & LEISURE 10,165,829 NONDURABLES - 3.4% FOODS - 1.1% Bestfoods 23,730 1,643,303 Nabisco Holdings Corp. Class A 6,200 325,500 1,968,803 HOUSEHOLD PRODUCTS - 0.2% Procter & Gamble Co. 5,740 328,615 TOBACCO - 2.1% Philip Morris Companies, Inc. 134,030 3,560,172 TOTAL NONDURABLES 5,857,590 RETAIL & WHOLESALE - 5.6% DRUG STORES - 0.9% Walgreen Co. 45,900 1,477,406 GENERAL MERCHANDISE STORES - 2.5% Wal-Mart Stores, Inc. 76,820 4,426,753 RETAIL & WHOLESALE, MISCELLANEOUS - 2.2% Bed Bath & Beyond, Inc. (a) 33,290 1,206,763 Home Depot, Inc. 53,235 2,658,423 3,865,186 TOTAL RETAIL & WHOLESALE 9,769,345 SERVICES - 0.2% ADVERTISING - 0.2% Omnicom Group, Inc. 5,000 445,313 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TECHNOLOGY - 23.2% COMMUNICATIONS EQUIPMENT - 6.5% Cisco Systems, Inc. (a) 101,800 $ 6,470,663 Lucent Technologies, Inc. 10,300 610,275 Nokia AB sponsored ADR 37,100 1,852,681 Nortel Networks Corp. 35,100 2,434,833 11,368,452 COMPUTER SERVICES & SOFTWARE - 6.8% Adobe Systems, Inc. 7,600 988,000 IMS Health, Inc. 84,680 1,524,240 Intuit, Inc. (a) 14,200 587,525 Microsoft Corp. (a) 93,800 7,503,994 VERITAS Software Corp. (a) 10,500 1,186,664 11,790,423 COMPUTERS & OFFICE EQUIPMENT - 3.9% Compaq Computer Corp. 89,800 2,295,513 EMC Corp. (a) 35,480 2,729,743 Pitney Bowes, Inc. 42,900 1,716,000 6,741,256 ELECTRONICS - 6.0% Intel Corp. 49,180 6,574,751 LSI Logic Corp. (a) 12,900 698,213 Micron Technology, Inc. (a) 11,600 1,021,525 Texas Instruments, Inc. 32,200 2,211,738 10,506,227 TOTAL TECHNOLOGY 40,406,358 UTILITIES - 10.0% CELLULAR - 3.6% Nextel Communications, Inc. 53,300 3,261,294 Class A (a) Vodafone AirTouch PLC 74,700 3,095,381 sponsored ADR 6,356,675 ELECTRIC UTILITY - 0.5% IPALCO Enterprises, Inc. 43,100 867,388 TELEPHONE SERVICES - 5.9% Allegiance Telecom, Inc. (a) 17,000 1,088,000 AT&T Corp. 33,510 1,059,754 BellSouth Corp. 35,330 1,505,941 NEXTLINK Communications, Inc. 29,000 1,100,188 Class A COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) UTILITIES - CONTINUED TELEPHONE SERVICES - CONTINUED Qwest Communications 19,600 $ 973,875 International, Inc. (a) SBC Communications, Inc. 103,690 4,484,593 10,212,351 TOTAL UTILITIES 17,436,414 TOTAL COMMON STOCKS 153,579,515 (Cost $149,770,001) U.S. TREASURY OBLIGATIONS - 0.1% PRINCIPAL AMOUNT U.S. Treasury Bills, yield at $ 200,000 198,595 date of purchase 5.59% 8/17/00 (c) (Cost $198,520) CASH EQUIVALENTS - 12.1% SHARES Central Cash Collateral Fund, 837,900 837,900 6.71% (b) Taxable Central Cash Fund, 20,339,641 20,339,641 6.59% (b) TOTAL CASH EQUIVALENTS 21,177,541 (Cost $21,177,541) TOTAL INVESTMENT PORTFOLIO - 174,955,651 100.3% (Cost $171,146,062) NET OTHER ASSETS - (0.3)% (584,136) NET ASSETS - 100% $ 174,371,515
FUTURES CONTRACTS EXPIRATION DATE UNDERLYING FACE AMOUNT AT VALUE UNREALIZED GAIN/LOSS PURCHASED 10 S&P 500 Stock Index Sept. 2000 $ 3,670,250 $ 29,515 Contracts THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF NET ASSETS - 2.1%
LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $198,595. INCOME TAX INFORMATION At June 30, 2000, the aggregate cost of investment securities for income tax purposes was $171,437,968. Net unrealized appreciation aggregated $3,517,683, of which $22,233,938 related to appreciated investment securities and $18,716,255 related to depreciated investment securities. At June 30, 2000, the fund had a capital loss carryforward of approximately $213,000 all of which will expire on June 30, 2008. A total of 5.79% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax. The fund will notify shareholders in January 2001 of amounts for use in preparing 2000 income tax returns (unaudited). FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2000 ASSETS Investment in securities, at $ 174,955,651 value (cost $171,146,062) - See accompanying schedule Receivable for investments 1,379,008 sold Receivable for fund shares 71,296 sold Dividends receivable 143,022 Interest receivable 93,464 Receivable for daily 25,250 variation on futures contracts TOTAL ASSETS 176,667,691 LIABILITIES Payable for investments $ 847,440 purchased Payable for fund shares 474,742 redeemed Accrued management fee 69,845 Other payables and accrued 66,249 expenses Collateral on securities 837,900 loaned, at value TOTAL LIABILITIES 2,296,176 NET ASSETS $ 174,371,515 Net Assets consist of: Paid in capital $ 171,002,723 Undistributed net investment 64,491 income Accumulated undistributed net (534,803) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 3,839,104 (depreciation) on investments NET ASSETS, for 16,627,643 $ 174,371,515 shares outstanding NET ASSET VALUE, offering $10.49 price and redemption price per share ($174,371,515 (divided by) 16,627,643 shares) STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 2000 INVESTMENT INCOME $ 2,356,161 Dividends Interest 1,045,132 Security lending 14,993 TOTAL INCOME 3,416,286 EXPENSES Management fee $ 976,762 Transfer agent fees 597,750 Accounting and security 84,510 lending fees Non-interested trustees' 611 compensation Custodian fees and expenses 14,248 Registration fees 44,099 Audit 24,381 Legal 1,853 Miscellaneous 448 Total expenses before 1,744,662 reductions Expense reductions (24,062) 1,720,600 NET INVESTMENT INCOME 1,695,686 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities (495,385) Foreign currency transactions 1,755 Futures contracts 189,465 (304,165) Change in net unrealized appreciation (depreciation) on: Investment securities (4,375,034) Futures contracts 29,515 (4,345,519) NET GAIN (LOSS) (4,649,684) NET INCREASE (DECREASE) IN $ (2,953,998) NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED JUNE 30, 2000 DECEMBER 28, 1998 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1999 INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 1,695,686 $ 403,866 income Net realized gain (loss) (304,165) 943,152 Change in net unrealized (4,345,519) 8,184,623 appreciation (depreciation) NET INCREASE (DECREASE) IN (2,953,998) 9,531,641 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (1,538,118) (403,866) From net investment income In excess of net investment - (184,623) income From net realized gain (758,529) - In excess of net realized (270,180) - gain TOTAL DISTRIBUTIONS (2,566,827) (588,489) Share transactions Net 128,959,113 234,891,043 proceeds from sales of shares Reinvestment of distributions 2,446,237 561,168 Cost of shares redeemed (167,802,239) (28,106,134) NET INCREASE (DECREASE) IN (36,396,889) 207,346,077 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) (41,917,714) 216,289,229 IN NET ASSETS NET ASSETS Beginning of period 216,289,229 - End of period (including $ 174,371,515 $ 216,289,229 undistributed net investment income of $64,491 and $0, respectively) OTHER INFORMATION Shares Sold 12,421,135 22,753,650 Issued in reinvestment of 239,174 54,748 distributions Redeemed (16,146,640) (2,694,424) Net increase (decrease) (3,486,331) 20,113,974
FINANCIAL HIGHLIGHTS YEARS ENDED JUNE 30, 2000 1999 E SELECTED PER-SHARE DATA Net asset value, beginning of $ 10.75 $ 10.00 period Income from Investment Operations Net investment income D .09 .03 Net realized and unrealized (.22) .75 gain (loss) Total from investment (.13) .78 operations Less Distributions From net investment income (.08) (.02) In excess of net investment - (.01) income From net realized gain (.04) - In excess of net realized gain (.01) - Total distributions (.13) (.03) Net asset value, end of period $ 10.49 $ 10.75 TOTAL RETURN B, C (1.17)% 7.81% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 174,372 $ 216,289 (000 omitted) Ratio of expenses to average .85% 1.14% A net assets Ratio of expenses to average .84% F 1.12% A, F net assets after expense reductions Ratio of net investment .83% .62% A income to average net assets Portfolio turnover rate 59% 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 June 30, 2000 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. 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income 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 futures transactions, foreign currency transactions, non-taxable dividends, capital loss carryforwards 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. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. 2. OPERATING POLICIES - CONTINUED REPURCHASE AGREEMENTS. The underlying U.S. Treasury, Federal Agency, or other obligations found to be satisfactory by FMR 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. FUTURES CONTRACTS. The fund may use futures contracts to manage its exposure to the stock and bond markets and to fluctuations in interest rates and currency values. Buying futures tends to increase the fund's exposure to the underlying instrument, while selling futures tends to decrease the fund's exposure to the underlying instrument or hedge other fund investments. Futures contracts involve, to varying degrees, risk of loss in excess of the futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the schedule of investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contracts' terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $109,418,332 and $146,972,206, respectively, of which U.S. government and government agency obligations aggregated $494,244 and $300,000, respectively. The market value of futures contracts opened and closed during the period amounted to $12,176,701 and $8,725,431, 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 annual 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 annual 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 $9,693 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 $849,665. The fund received cash collateral of $837,900 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 $24,036 under this arrangement. In addition, through an arrangement with the fund's custodian, 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 fees were reduced by $26 under this arrangement. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Hastings Street Trust and the Shareholders of Fidelity Growth & Income II Portfolio: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Growth & Income II Portfolio (a fund of Fidelity Hastings Street Trust) at June 30, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Growth & Income II Portfolio's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts August 8, 2000 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 (FAST(registered trademark)) 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 Las 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. 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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. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Limited OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Richard A. Spillane Jr., Vice President Eric D. Roiter, Secretary Robert A. Dwight, Treasurer Maria F. Dwyer, Deputy Treasurer John H. Costello, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d Donald J. Kirk * Ned C. Lautenbach * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Michael Cook Marie L. Knowles * INDEPENDENT TRUSTEES GII-ANN-0800 108524 1.723705.101 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 (FAST(registered trademark)) 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