-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QGB2NycDUCVB4r2W28/HuMZZKEqH1KZ2Mj2CpEI02QfVODSxFOl3dfGESUR66jKr c3z5iH1HKrciqZz3Ozbq9g== 0000729218-98-000009.txt : 19980226 0000729218-98-000009.hdr.sgml : 19980226 ACCESSION NUMBER: 0000729218-98-000009 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980225 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY HASTINGS STREET TRUST CENTRAL INDEX KEY: 0000035348 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046026953 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-00215 FILM NUMBER: 98548874 BUSINESS ADDRESS: STREET 1: 82 DEVONSHIRE ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6173300814 MAIL ADDRESS: STREET 1: 82 DEVONSHIRE STREET STREET 2: MAIL ZONE ZH-1 CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY FUND INC DATE OF NAME CHANGE: 19851205 N-30D 1 (2_FIDELITY_LOGOS) FIDELITY FIFTY SEMIANNUAL REPORT DECEMBER 31, 1997 CONTENTS PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES. PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME. FUND TALK 6 THE MANAGER'S REVIEW OF FUND PERFORMANCE, STRATEGY AND OUTLOOK. INVESTMENT CHANGES 9 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S INVESTMENTS OVER THE PAST SIX MONTHS. INVESTMENTS 10 A COMPLETE LIST OF THE FUND'S INVESTMENTS WITH THEIR MARKET VALUES. FINANCIAL STATEMENTS 16 STATEMENTS OF ASSETS AND LIABILITIES, OPERATIONS, AND CHANGES IN NET ASSETS, AS WELL AS FINANCIAL HIGHLIGHTS. NOTES 20 NOTES TO THE FINANCIAL STATEMENTS. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. To reduce expenses and demonstrate respect for our environment, we have initiated a project through which we will begin eliminating duplicate copies of most financial reports and prospectuses to most households, even if they have more than one account in the fund. If additional copies of financial reports, prospectuses or historical account information are needed, please call 1-800-544-6666. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: Although financial turmoil in Pacific Basin countries was a catalyst for significant volatility in U.S. markets throughout the fourth quarter, the Standard & Poor's 500 Index rose more than 33% in 1997, about three times its historical annual average. Meanwhile, bond markets - primarily influenced by a relatively steady flow of positive news on the inflation front - continued to post solid returns as the year drew to a close. While it's impossible to predict the future direction of the markets with any degree of certainty, there are certain basic principles that can help investors plan for their future needs. First, investors are encouraged to take a long-term view of their portfolios. If you can afford to leave your money invested through the inevitable up and down cycles of the financial markets, you will greatly reduce your vulnerability to any single decline. We know from experience, for example, that stock prices have gone up over longer periods of time, have significantly outperformed other types of investments and have stayed ahead of inflation. Second, you can further manage your investing risk through diversification. A stock mutual fund, for instance, is already diversified, because it invests in many different companies. You can increase your diversification further by investing in a number of different stock funds, or in such other investment categories as bonds. If you have a short investment time horizon, you might want to consider moving some of your investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. Of course, it's important to remember that there is no assurance that a money market fund will achieve its goal of maintaining a stable net asset value of $1.00 per share, and that these types of funds are neither insured nor guaranteed by any agency of the U.S. government. Finally, no matter what your time horizon or portfolio diversity, it makes good sense to follow a regular investment plan, investing a certain amount of money in a fund at the same time each month or quarter and periodically reviewing your overall portfolio. By doing so, you won't get caught up in the excitement of a rapidly rising market, nor will you buy all your shares at market highs. While this strategy - known as dollar cost averaging - won't assure a profit or protect you from a loss in a declining market, it should help you lower the average cost of your purchases. If you have questions, please call us at 1-800-544-8888. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). Fidelity Fifty has a 3% sales charge, which was waived beginning January 1, 1995 through December 31, 1998. CUMULATIVE TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1997 PAST 6 PAST 1 LIFE OF MONTHS YEAR FUND FIDELITY FIFTY 5.93% 23.06% 107.58% FIDELITY FIFTY (INCL. 3% SALES CHARGE) 2.75% 19.36% 101.35% S&P 500 (REGISTERED TRADEMARK) 10.58% 33.36% 134.17% CAPITAL APPRECIATION FUNDS AVERAGE 8.97% 20.36% N/A CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year or since the fund started on September 17, 1993. For example, if you had invested $1,000 in a fund that had a 5% return, over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Standard & Poor's 500 Index - a widely recognized, unmanaged index of common stocks. To measure how the fund's performance stacked up against its peers, you can compare it to the capital appreciation funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Analytical Services, Inc. The past six months average represents a peer group of 238 mutual funds. These benchmarks reflect reinvestment of dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1997 PAST 1 LIFE OF YEAR FUND FIDELITY FIFTY 23.06% 18.56% FIDELITY FIFTY (INCL. 3% SALES CHARGE) 19.36% 17.72% S&P 500 33.36% 21.94% CAPITAL APPRECIATION FUNDS AVERAGE 20.36% N/A AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. (Note: Lipper calculates average annual total returns by annualizing each fund's total return, then taking an arithmetic average. This may produce a slightly different figure than that obtained by averaging the cumulative total returns and annualizing the result.) $10,000 OVER LIFE OF FUND IMAHDR PRASUN SHR__CHT 19971231 19980120 175630 S00000000000001 Fidelity Fifty S&P 500 00500 SP001 1993/09/17 9700.00 10000.00 1993/09/30 9971.60 10012.20 1993/10/31 10369.30 10219.45 1993/11/30 10204.40 10122.36 1993/12/31 10272.24 10244.84 1994/01/31 10660.60 10593.17 1994/02/28 10505.25 10306.09 1994/03/31 9990.67 9856.75 1994/04/30 10116.89 9982.91 1994/05/31 10126.60 10146.63 1994/06/30 9874.16 9898.04 1994/07/31 10262.53 10222.70 1994/08/31 10796.53 10641.83 1994/09/30 10767.40 10381.10 1994/10/31 10990.71 10614.68 1994/11/30 10495.55 10228.09 1994/12/31 10682.65 10379.77 1995/01/31 10623.74 10648.92 1995/02/28 11065.57 11063.91 1995/03/31 11536.87 11390.41 1995/04/30 11860.88 11725.85 1995/05/31 12302.72 12194.54 1995/06/30 12862.38 12477.82 1995/07/31 13520.22 12891.58 1995/08/31 13547.85 12923.94 1995/09/30 13994.60 13469.33 1995/10/31 13610.19 13421.24 1995/11/30 14181.61 14010.43 1995/12/31 14115.33 14280.28 1996/01/31 14474.47 14766.38 1996/02/29 14866.26 14903.26 1996/03/31 14909.79 15046.78 1996/04/30 15225.40 15268.57 1996/05/31 15508.36 15662.35 1996/06/30 15236.28 15722.02 1996/07/31 14126.21 15027.42 1996/08/31 14412.90 15344.35 1996/09/30 15039.55 16207.93 1996/10/31 15358.57 16654.94 1996/11/30 16497.93 17913.89 1996/12/31 16362.51 17559.02 1997/01/31 17201.62 18656.10 1997/02/28 17026.80 18802.37 1997/03/31 16001.23 18029.78 1997/04/30 16817.03 19106.16 1997/05/31 18157.26 20269.34 1997/06/30 19008.02 21177.40 1997/07/31 20534.72 22862.49 1997/08/31 19821.88 21581.73 1997/09/30 20974.46 22763.77 1997/10/31 19467.24 22003.46 1997/11/30 19707.88 23022.00 1997/12/31 20134.90 23417.28 IMATRL PRASUN SHR__CHT 19971231 19980120 175633 R00000000000055 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Fifty on September 17, 1993, when the fund started, and the current 3% sales charge was paid. As the chart shows, by December 31, 1997, the value of the investment would have grown to $20,135 - a 101.35% increase on the initial investment. For comparison, look at how the S&P 500 did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 investment would have grown to $23,417 - a 134.17% increase. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of long-term growth and short-term volatility. In turn, the share price and return of a fund that invests in stocks will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. (checkmark) FUND TALK: THE MANAGER'S OVERVIEW An interview with Scott Stewart, Portfolio Manager of Fidelity Fifty Q. HOW DID THE FUND PERFORM, SCOTT? A. It was a difficult period over the past six months, but the fund was ahead of its peers for the year. For the six months that ended December 31, 1997, the fund returned 5.93%. This trailed the capital appreciation funds average, which returned 8.97% according to Lipper Analytical Services. The Standard & Poor's 500 Index returned 10.58%. For the 12 months that ended December 31, 1997, the fund returned 23.06%, while the Lipper group and S&P 500 returned 20.36% and 33.36%, respectively. Q. WHAT FACTORS AFFECTED PERFORMANCE? A. Market dynamics played a key role. Through the end of September, stocks of small- and medium-sized companies - which Fidelity Fifty tends to emphasize to a greater extent than the S&P 500 - performed nicely relative to the large-capitalization stocks that heavily weight the S&P 500. In fact, the Russell 2000 Index - which measures the performance of small-cap stocks - outgained the S&P 500 by a healthy margin during the months of August and September. Beginning in October, however, the fortunes of small-cap stocks took a downturn as global volatility - specifically caused by currency turmoil in Southeast Asia - came into play. When markets experience the type of turmoil we saw during that time, investors tend to favor larger, more steady stocks over smaller, aggressive-growth stocks. Since Asia accounts for a significant portion of world semiconductor production, most of the fund's semiconductor equipment stocks - such as KLA Tencor, which the fund no longer held at the end of the period, and ASM Lithography - declined during this turmoil. In addition, some of the fund's positions with considerable Asian business exposure were hurt. Citicorp, the fund's largest holding at the end of the period, was a prime example. Citicorp remained a top holding at the end of the period because I felt the impact of this Asian volatility - over the long-term - would be small. The company also has good risk controls in place. Q. IN TERMS OF PORTFOLIO VOLATILITY, HOW DOES A FUND SUCH AS FIDELITY FIFTY - WHICH IS COMPRISED OF BETWEEN 50 TO 60 STOCKS - FARE RELATIVE TO A MORE DIVERSIFIED STOCK FUND WHEN EVENTS OCCUR SUCH AS WE HAD IN ASIA? A. Because of the concentration of this fund, it will most likely experience a stronger jolt than a diversified stock fund will in times of volatility. A diversified stock fund invests in hundreds of different stocks in all sorts of industries. With Fidelity Fifty, I try to maintain a good degree of diversity among those 50 to 60 stocks. Q. WHEN THE MARKET CHANGES TO REWARD STOCKS OF DIFFERENT SIZES, DO YOU CHANGE YOUR INVESTING PHILOSOPHY? A. Over the long term, individual stock selection will provide the primary source of active performance. However, market dynamics, such as the significant outperformance of large-cap stocks during the past few years, may dominate stock selection over shorter periods of time. The bottom-up process I follow - choosing stocks based more on a company's business prospects than on industry or economic trends - leads to the selection of large-cap names as well as small- and medium-cap stocks. However, I don't try to actively switch between large- and small-caps in anticipation of the outperformance of one category over the other. This would be market timing and - similar to trying to predict the direction of interest rates - is usually an exercise in futility. Many unpredictable factors, such as the economic climate and interest rates, determine the performance of large stocks versus small stocks. Q. SIX MONTHS AGO YOU EXPLAINED WHY HOLDING FUTURES CAN BE AN EFFECTIVE PART OF YOUR STRATEGY. DID YOU CONTINUE TO USE THESE INSTRUMENTS DURING THE PERIOD? A. I did. Futures - which made up around 9% of the fund's assets at the end of the period - have been a part of my strategy since the fund began in 1993. Investing in futures - either of the S&P 500 or Russell 2000 variety - allows the fund to stay fully invested while shareholders move money into and out of it. The way I think of it is that returns from futures plus the fund's cash position equals the approximate return of stocks. That is, the profits from futures, plus the fund's base of cash added together can perform very much like a stock index does. During the period, the fund's Russell 2000 futures performed well when small-caps surged, and the S&P 500 futures contributed positively as large-cap stocks regained momentum in the fourth quarter. Q. YOU INCREASED THE FUND'S MEDIA-RELATED STOCKS DURING THE PERIOD. WHAT WAS THE DRAW? A. Two of the fund's larger media stock positions - Viacom and CBS Corp. - performed well for different reasons. Viacom realized strong performance from both its movie production and Blockbuster video rental businesses. After a period of sluggish growth, investors finally started to recognize the value of Blockbuster. CBS benefited after a string of acquisitions and proactive restructuring efforts began to show signs of taking hold. Q. WHICH STOCKS PERFORMED WELL? WERE THERE ANY DISAPPOINTMENTS? A. Positions that contributed positively included thrift stock Dime Bancorp - which benefited from improved balance-sheet management, loan growth and takeovers in the finance industry; Falcon Drilling, which specializes in deep-water oil exploration; and retail stock TJX Companies. Among the disappointments were business-service stock Sitel and disk-drive manufacturer Quantum. Q. WHAT'S YOUR OUTLOOK? A. Not to sound like a broken record, but I'm a firm believer that earnings and interest rates are the two main factors behind stock performance. With the currency and potential economic crises in Asia - and the expected slowing of global growth as a result - earnings growth for multinational companies may be at risk. In the short term, at least, deflation in some overseas markets - a scenario in which goods and products become cheaper for U.S. consumers - appears to indicate that interest rates will remain relatively stable. If interest rates rise, large-cap stocks could suffer. That being said, my goal continues to be to find attractive stocks one at a time and not try to time the markets. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. SCOTT STEWART DISCUSSES THE FINANCE AND ENERGY SERVICE SECTORS: "As interest-rate levels continued to decline during the period, and banks reduced their expenses, FINANCE stocks became more attractive. Several large banks - including BankAmerica and NationsBank - successfully integrated recent acquisitions. The fund also realized positive contributions from Dime Bancorp, a thrift-related position that experienced increased profitability. There was a slew of positive consolidation activity in the finance industry, and I think there's more to come. "The fund also realized solid contributions from its ENERGY SERVICE and drilling stocks, including Falcon Drilling and BJ Services. While oil prices have dropped recently, a company like Falcon Drilling might continue to perform well. The company is involved more in deep-water oil exploration, where the oil reserves are more plentiful. Deep-water exploration is expensive, but the rewards can be fruitful." FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in equity securities, normally 50 to 60 stocks FUND NUMBER: 500 TRADING SYMBOL: FFTYX START DATE: September 17, 1993 SIZE: as of December 31, 1997, more than $174 million MANAGER: Scott Stewart, since 1993; founder and head of Fidelity's Structured Equity Group, since 1987; joined Fidelity in 1987 (checkmark) INVESTMENT CHANGES TOP TEN STOCKS AS OF DECEMBER 31, 1997 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE STOCKS 6 MONTHS AGO CITICORP 2.9 0.0 TJX COMPANIES, INC. 2.8 2.2 VIACOM, INC. CLASS B (NON-VTG.) 2.8 1.1 FALCON DRILLING, INC. 2.7 1.3 ENRON OIL & GAS CO. 2.5 0.0 MCI COMMUNICATIONS CORP. 2.4 0.0 CBS CORP. 2.4 0.0 COLUMBIA/HCA HEALTHCARE CORP. 2.4 0.0 MICROSOFT CORP. 2.3 1.8 CENDANT CORP. 2.3 0.0 TOP FIVE MARKET SECTORS AS OF DECEMBER 31, 1997 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE MARKET SECTORS 6 MONTHS AGO TECHNOLOGY 18.1 11.6 HEALTH 8.4 7.3 FINANCE 8.2 12.6 MEDIA & LEISURE 7.6 4.8 RETAIL & WHOLESALE 7.6 7.1 ASSET ALLOCATION (% OF FUND'S INVESTMENTS) AS OF DECEMBER 31, 1997 * AS OF JUNE 30, 1997 ** ROW: 1, COL: 1, VALUE: 97.2 ROW: 1, COL: 2, VALUE: 2.8 STOCKS AND EQUITY FUTURES 97.4% SHORT-TERM INVESTMENTS 2.6% FOREIGN INVESTMENTS 4.7% STOCKS AND EQUITY FUTURES 97.2% SHORT-TERM INVESTMENTS 2.8% FOREIGN INVESTMENTS 5.6% ROW: 1, COL: 1, VALUE: 97.40000000000001 ROW: 1, COL: 2, VALUE: 2.6 * ** INVESTMENTS DECEMBER 31, 1997 (UNAUDITED) SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES COMMON STOCKS - 88.2% SHARES VALUE (NOTE 1) AEROSPACE & DEFENSE - 2.0% Gulfstream Aerospace Corp. (a) 118,100 $ 3,454,417 BASIC INDUSTRIES - 1.5% CHEMICALS & PLASTICS - 1.5% Witco Corp. 65,800 2,685,463 CONSTRUCTION & REAL ESTATE - 1.3% BUILDING MATERIALS - 1.3% American Standard Companies, Inc. (a) 60,100 2,302,581 DURABLES - 1.4% AUTOS, TIRES, & ACCESSORIES - 1.4% Tower Automotive, Inc. (a) 57,000 2,397,563 ENERGY - 6.5% ENERGY SERVICES - 2.7% Falcon Drilling, Inc. (a) 137,500 4,821,094 OIL & GAS - 3.8% Cooper Cameron Corp. (a) 36,300 2,214,300 Enron Oil & Gas Co. 207,000 4,385,813 6,600,113 TOTAL ENERGY 11,421,207 FINANCE - 8.2% BANKS - 2.9% Citicorp 40,600 5,133,363 CREDIT & OTHER FINANCE - 0.6% FIRSTPLUS Financial Group, Inc. (a) 25,000 959,375 INSURANCE - 2.6% AFLAC, Inc. 63,100 3,225,988 AMBAC, Inc. 30,000 1,380,000 4,605,988 SAVINGS & LOANS - 2.1% Dime Bancorp., Inc. 123,700 3,741,925 TOTAL FINANCE 14,440,651 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) HEALTH - 8.4% DRUGS & PHARMACEUTICALS - 3.4% American Home Products Corp. 50,800 $ 3,886,200 Aviron (a) 43,900 1,190,788 ViroPharma, Inc. 50,000 881,250 5,958,238 MEDICAL FACILITIES MANAGEMENT - 5.0% Columbia/HCA Healthcare Corp. 140,000 4,147,500 HEALTHSOUTH Corp. (a) 84,000 2,331,000 United HealthCare Corp. 46,400 2,305,500 8,784,000 TOTAL HEALTH 14,742,238 INDUSTRIAL MACHINERY & EQUIPMENT - 7.5% ELECTRICAL EQUIPMENT - 3.4% Alcatel Alsthom Compagnie Generale d'Electricite SA sponsored ADR 136,700 3,460,219 Loral Space & Communications Ltd. (a) 120,200 2,576,788 6,037,007 INDUSTRIAL MACHINERY & EQUIPMENT - 2.2% ASM Lithography Holding NV (a) 14,400 972,000 United States Filter Corp. (a) 99,000 2,963,813 3,935,813 POLLUTION CONTROL - 1.9% USA Waste Services, Inc. (a) 84,100 3,300,925 TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 13,273,745 MEDIA & LEISURE - 7.6% BROADCASTING - 2.4% CBS Corp. 142,476 4,194,137 ENTERTAINMENT - 3.7% King World Productions, Inc. 28,000 1,617,000 Viacom, Inc. Class B (non-vtg.) (a) 118,400 4,906,200 6,523,200 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) MEDIA & LEISURE - CONTINUED PUBLISHING - 1.5% Harcourt General, Inc. 48,000 $ 2,628,000 TOTAL MEDIA & LEISURE 13,345,337 NONDURABLES - 5.4% BEVERAGES - 1.5% Coca-Cola Co. (The) 40,000 2,665,000 FOODS - 1.4% General Mills, Inc. 34,000 2,435,250 HOUSEHOLD PRODUCTS - 2.5% Avon Products, Inc. 38,000 2,332,250 Procter & Gamble Co. 26,200 2,091,088 4,423,338 TOTAL NONDURABLES 9,523,588 PRECIOUS METALS - 0.8% Newmont Gold Co. 47,300 1,410,131 RETAIL & WHOLESALE - 7.6% APPAREL STORES - 4.6% Payless ShoeSource, Inc. (a) 46,900 3,148,163 TJX Companies, Inc. 145,600 5,005,000 8,153,163 GENERAL MERCHANDISE STORES - 1.8% Consolidated Stores Corp. (a) 70,875 3,114,070 RETAIL & WHOLESALE, MISCELLANEOUS - 1.2% Corporate Express, Inc. (a) 157,000 2,021,375 TOTAL RETAIL & WHOLESALE 13,288,608 SERVICES - 6.3% ADVERTISING - 1.7% Omnicom Group, Inc. 70,000 2,966,250 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) SERVICES - CONTINUED SERVICES - 4.6% AccuStaff, Inc. (a) 87,500 $ 2,012,500 Cendant Corp. (a) 118,962 4,089,319 Computer Horizons Corp. (a) 27,000 1,228,500 Sitel Corp. (a) 94,300 860,488 8,190,807 TOTAL SERVICES 11,157,057 TECHNOLOGY - 18.1% COMMUNICATIONS EQUIPMENT - 1.6% Newbridge Networks Corp. (a) 81,000 2,824,875 COMPUTER SERVICES & SOFTWARE - 10.7% First Data Corp. 45,000 1,316,250 Keane, Inc. (a) 63,000 2,559,375 Manugistics Group, Inc. (a) 51,000 2,275,875 Microsoft Corp. (a) 32,000 4,136,000 Remedy Corp. (a) 29,000 609,000 Siebel Systems, Inc. (a) 57,000 2,383,313 SunGard Data Systems, Inc. (a) 93,200 2,889,200 Synopsys, Inc. (a) 58,000 2,073,500 Systems Software Associates, Inc. (a) 70,000 612,500 18,855,013 COMPUTERS & OFFICE EQUIPMENT - 2.4% EMC Corp. (a) 96,000 2,634,000 Quantum Corp. (a) 58,000 1,163,625 SanDisk Corp. (a) 25,000 507,813 4,305,438 ELECTRONIC INSTRUMENTS - 1.6% Aeroflex, Inc. (a) 159,700 1,397,375 Tech-Sym Corp. (a) 57,000 1,449,938 2,847,313 ELECTRONICS - 1.8% Solectron Corp. (a) 74,000 3,075,625 TOTAL TECHNOLOGY 31,908,264 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) TRANSPORTATION - 3.2% AIR TRANSPORTATION - 1.6% Alaska Air Group, Inc. (a) 74,400 $ 2,883,000 TRUCKING & FREIGHT - 1.6% USFreightways Corp. 84,300 2,739,750 TOTAL TRANSPORTATION 5,622,750 UTILITIES - 2.4% TELEPHONE SERVICES - 2.4% MCI Communications Corp. 100,000 4,281,250 TOTAL COMMON STOCKS (Cost $139,893,610) 155,254,850 U.S. TREASURY OBLIGATIONS - 0.4% PRINCIPAL AMOUNT U.S. Treasury Bill, yields at date of purchase 5.24% - 5.28%, 1/8/98 (c) $ 550,000 549,593 U.S. Treasury Bill, yield at date of purchase 5.20%, 3/5/98 (c) 200,000 198,223 TOTAL U.S. TREASURY OBLIGATIONS (Cost $747,173) 747,816 CASH EQUIVALENTS - 11.4% AMOUNT SH SHARES Taxable Central Cash Fund (b) (Cost $20,133,864) 20,133,864 20,133,864 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $160,774,647) $ 176,136,530 FUTURES CONTRACTS EXPIRATION UNDERLYING FACE UNREALIZED DATE AMOUNT AT VALUE GAIN/(LOSS) PURCHASED 14 Midcap 400 Stock Index Futures Contract Mar. 1998 $ 2,346,050 $ 60,147 20 Russell 2000 Stock Index Futures Contract Mar. 1998 4,413,500 125,375 37 S&P 500 Stock Index Futures Contract Mar. 1998 9,056,675 34,669 $ 220,191 THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 9.0% LEGEND 1. Non-income producing 2. At period end, the seven-day yield of the Taxable Central Cash Fund was 5.69%. The yield refers to the income earned by investing in the fund over the seven-day period, expressed as an annual percentage. 3. Security was pledged to cover margin requirements for futures contracts. At the period end the value of securities pledged amounted to $648,705. INCOME TAX INFORMATION At December 31, 1997, the aggregate cost of investment securities for income tax purposes was $160,779,785. Net unrealized appreciation aggregated $15,356,745, of which $22,472,994 related to appreciated investment securities and $7,116,249 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997 (UNAUDITED) 4.ASSETS 5. 6. 7.INVESTMENT IN SECURITIES, AT VALUE (COST $160,774,647) - 8. $ 176,136,530 SEE ACCOMPANYING SCHEDULE 9.RECEIVABLE FOR INVESTMENTS SOLD 10. 1,156,879 11.RECEIVABLE FOR FUND SHARES SOLD 12. 1,612,364 13.DIVIDENDS RECEIVABLE 14. 64,487 15.INTEREST RECEIVABLE 16. 90,101 17.RECEIVABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 18. 28,768 19.OTHER RECEIVABLES 20. 11,224 21. 22.TOTAL ASSETS 23. 179,100,353 24.LIABILITIES 25. 26. 27.PAYABLE FOR INVESTMENTS PURCHASED $ 2,850,195 28. 29.PAYABLE FOR FUND SHARES REDEEMED 1,156,664 30. 31.ACCRUED MANAGEMENT FEE 59,951 32. 33.OTHER PAYABLES AND ACCRUED EXPENSES 67,291 34. 35. 36.TOTAL LIABILITIES 37. 4,134,101 38.39.NET ASSETS 40. $ 174,966,252 41.NET ASSETS CONSIST OF: 42. 43. 44.PAID IN CAPITAL 45. $ 149,317,567 46.UNDISTRIBUTED NET INVESTMENT INCOME 47. 85,378 48.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) 49. 9,981,233 ON INVESTMENTS 50.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 51. 15,582,074 INVESTMENTS 52.53.NET ASSETS, FOR 11,498,074 SHARES OUTSTANDING 54. $ 174,966,252 55.56.NET ASSET VALUE, OFFERING PRICE AND REDEMPTION 57. $15.22 PRICE PER SHARE ($174,966,252 (DIVIDED BY) 11,498,074 SHARES)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1997 (UNAUDITED) 58.INVESTMENT INCOME 60. $ 450,560 59.DIVIDENDS 61.INTEREST 62. 490,545 63. 64.TOTAL INCOME 65. 941,105 66.EXPENSES 67. 68. 69.MANAGEMENT FEE $ 510,362 70. BASIC FEE 71. PERFORMANCE ADJUSTMENT (138,676) 72. 73.TRANSFER AGENT FEES 228,200 74. 75.ACCOUNTING FEES AND EXPENSES 51,725 76. 77.NON-INTERESTED TRUSTEES' COMPENSATION 871 78. 79.CUSTODIAN FEES AND EXPENSES 5,738 80. 81.REGISTRATION FEES 35,296 82. 83.AUDIT 14,115 84. 85.LEGAL 881 86. 87.MISCELLANEOUS 10,020 88. 89. TOTAL EXPENSES BEFORE REDUCTIONS 718,532 90. 91. EXPENSE REDUCTIONS (23,417) 695,115 92.93.NET INVESTMENT INCOME 94. 245,990 95.REALIZED AND UNREALIZED GAIN (LOSS) 97. 98. 96.NET REALIZED GAIN (LOSS) ON: 99. INVESTMENT SECURITIES 16,561,715 100. 101. FUTURES CONTRACTS 510,362 17,072,077 102.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 103. 104. ON: 105. INVESTMENT SECURITIES (8,475,986) 106. 107. FUTURES CONTRACTS 145,733 (8,330,253) 108.109.NET GAIN (LOSS) 110. 8,741,824 111.112.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 113. $ 8,987,814 FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 1997 JUNE 30, (UNAUDITED) 1997 114.INCREASE (DECREASE) IN NET ASSETS 115.OPERATIONS $ 245,990 $ 802,830 NET INVESTMENT INCOME 116. NET REALIZED GAIN (LOSS) 17,072,077 22,806,133 117. CHANGE IN NET UNREALIZED APPRECIATION (8,330,253) 7,857,885 (DEPRECIATION) 118. 8,987,814 31,466,848 119.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 120.DISTRIBUTIONS TO SHAREHOLDERS (495,563) (1,070,638) FROM NET INVESTMENT INCOME 121. FROM NET REALIZED GAIN (20,129,243) (9,845,020) 122. 123.TOTAL DISTRIBUTIONS (20,624,806) (10,915,658) 124.SHARE TRANSACTIONS 100,186,660 143,303,825 NET PROCEEDS FROM SALES OF SHARES 125. REINVESTMENT OF DISTRIBUTIONS 20,420,246 10,824,055 126. COST OF SHARES REDEEMED (90,139,996) (199,525,490) 127.128. 30,466,910 (45,397,610) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 129. 18,829,918 (24,846,420) 130.TOTAL INCREASE (DECREASE) IN NET ASSETS 131.NET ASSETS 132. 133. 134. BEGINNING OF PERIOD 156,136,334 180,982,754 135. $ 174,966,252 $ 156,136,334 END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $85,378 AND $505,676, RESPECTIVELY) 136.OTHER INFORMATION 138. 139. 137.SHARES 140. SOLD 6,182,525 9,988,553 141. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 1,311,379 823,934 142. REDEEMED (5,570,572) (14,161,512) 143. NET INCREASE (DECREASE) 1,923,332 (3,349,025)
FINANCIAL HIGHLIGHTS
144. SIX MONTHS ENDED YEARS ENDED JUNE 30, SEPTEMBER 17, 1993 DECEMBER 31, 1997 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 145. (UNAUDITED) 1997 1996 1995 1994
146.SELECTED PER-SHARE DATA 147.NET ASSET VALUE, $ 16.31 $ 14.00 $ 13.10 $ 10.17 $ 10.00 BEGINNING OF PERIOD 148.INCOME FROM INVESTMENT OPERATIONS 149. NET INVESTMENT .02 D .07 D .15 .08 .02 INCOME 150. NET REALIZED AND .94 3.16 2.12 2.97 .16 UNREALIZED GAIN (LOSS) 151. TOTAL FROM INVESTMENT .96 3.23 2.27 3.05 .18 OPERATIONS 152. 153.LESS DISTRIBUTIONS 154. FROM NET INVESTMENT (.05) (.09) (.13) (.02) (.01) INCOME 155. FROM NET REALIZED (2.00) (.83) (1.24) (.10) - GAIN 156. TOTAL DISTRIBUTIONS (2.05) (.92) (1.37) (.12) (.01) 157.NET ASSET VALUE, END $ 15.22 $ 16.31 $ 14.00 $ 13.10 $ 10.17 OF PERIOD 158.TOTAL RETURN B, C 5.93% 24.75% 18.46% 30.26% 1.80% 159.RATIOS AND SUPPLEMENTAL DATA 160.NET ASSETS, END OF $ 174,966 $ 156,136 $ 180,983 $ 128,572 $ 48,359 PERIOD (000 OMITTED) 161.RATIO OF EXPENSES TO .82% A .88% 1.03% 1.22% 1.58% A AVERAGE NET ASSETS 162.RATIO OF EXPENSES TO .80% A, E .84% E .99% E 1.19% E 1.58% A AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 163.RATIO OF NET .28% A .53% 1.20% 1.15% .23% A INVESTMENT INCOME TO AVERAGE NET ASSETS 164.PORTFOLIO TURNOVER RATE 163% A 131% 152% 180% 320% A 165.AVERAGE COMMISSION $ .0434 $ .0439 RATE F
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER. NOTES TO FINANCIAL STATEMENTS For the period ended December 31, 1997 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Fifty (the fund) is a fund of Fidelity Hastings Street Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The financial statements have been prepared in conformity with generally accepted accounting principles which permit management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund: SECURITY VALUATION. Securities for which exchange quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price. Securities for which exchange quotations are not readily available (and in certain cases debt securities which trade on an exchange) are valued primarily using dealer-supplied valuations or at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Purchases and sales of securities are translated into U.S. dollars at the contractual currency exchange rates established at the time of each trade. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The schedule of investments includes infor-mation regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INVESTMENT INCOME - CONTINUED 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. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for futures and options transactions, market discount and losses defferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income and accumulated undistributed net realized gain (loss) on investments may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. The cost of the foreign currency contracts is included in the cost basis of the associated investment. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements that mature in 60 days or less from the date of purchase for U.S. Treasury or Federal Agency obligations. 2. OPERATING POLICIES - CONTINUED REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund) managed by Fidelity Investments Money Management, Inc. (formerly FMR Texas Inc.), an affiliate of FMR. The Cash Fund is an open-end money market fund available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Fund seeks preservation of capital, liquidity, and current income by investing in U.S. Treasury securities and repurchase agreements for these securities. Income distributions from the Cash Fund are declared daily and paid monthly from net interest income. Income distributions earned by the fund are recorded as interest income in the accompanying financial statements. FUTURES CONTRACTS. The fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase the fund's exposure to the underlying instrument, while selling futures tends to decrease the fund's exposure to the underlying instrument or hedge other fund investments. Futures contracts involve, to varying degrees, risk of loss in excess of the futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the schedule of investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contracts' terms. Gains and losses are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $137,501,552 and $126,128,872, respectively. The market value of futures contracts opened and closed during the period amounted to $79,544,776 and $77,982,247, 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 .2500% to .5200% for the period. The annual individual fund fee rate is .30%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The basic fee is subject to a performance adjustment (up to a maximum of (plus/minus).20% of the fund's average net assets over the performance period) based on the fund's investment performance as compared to the appropriate index over a specified period of time. For the period, the management fee was equivalent to an annualized rate of .43% of average net assets after the performance adjustment. SALES LOAD. For the period January 1, 1995 through December 31, 1998, Fidelity Distributors Corporation (FDC), an affiliate of FMR and the general distributor of the fund, will voluntarily waive the sales charge (3% of the offering price) on the sales of shares. TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .26% of average net assets. ACCOUNTING FEES. FSC, an affiliate of FMR, maintains the fund's accounting records. The fee is based on the level of average net assets for the month plus out-of-pocket expenses. BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $28,548 for the period. 5. EXPENSE REDUCTIONS. FMR has directed certain portfolio trades to brokers who paid a portion of the fund's expenses. For the period, the fund's expenses were reduced by $22,221 under this arrangement. In addition, the fund has entered into arrangements with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances were used to reduce a portion of expenses. During the period, the fund's custodian and transfer agent fees were reduced by $203 and $993, respectively, under these arrangement. INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research Company (U.K.) Inc., London, England Fidelity Management & Research (Far East) Inc., Tokyo, Japan OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Robert A. Lawrence, Vice President Scott D. Stewart, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Richard M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA * INDEPENDENT TRUSTEES CUSTODIAN Brown Brothers Harriman & Co. Boston, MA FIDELITY'S GROWTH FUNDS Blue Chip Growth Fund Capital Appreciation Fund Contrafund Disciplined Equity Fund Dividend Growth Fund Emerging Growth Fund Export and Multinational Fund Fidelity Fifty Growth Company Fund Large Cap Stock Fund Low-Priced Stock Fund Magellan(registered trademark) Fund Mid-Cap Stock Fund New Millennium (registered trademark) Fund OTC Portfolio Retirement Growth Fund Small Cap Selector Stock Selector TechnoQuant Growth Fund SM Trend Fund Value Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions 1-800-544-7777 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) (registered trademark) TouchTone Xpress 1-800-544-5555 SM AUTOMATED LINE FOR QUICKEST SERVICE (2_FIDELITY_LOGOS) FIDELITY FUND SEMIANNUAL REPORT DECEMBER 31, 1997 CONTENTS PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES. PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME. FUND TALK 6 THE MANAGER'S REVIEW OF FUND PERFORMANCE, STRATEGY AND OUTLOOK. INVESTMENT CHANGES 9 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S INVESTMENTS OVER THE PAST SIX MONTHS. INVESTMENTS 10 A COMPLETE LIST OF THE FUND'S INVESTMENTS WITH THEIR MARKET VALUES. FINANCIAL STATEMENTS 20 STATEMENTS OF ASSETS AND LIABILITIES, OPERATIONS, AND CHANGES IN NET ASSETS, AS WELL AS FINANCIAL HIGHLIGHTS. NOTES 24 NOTES TO THE FINANCIAL STATEMENTS. To reduce expenses and demonstrate respect for our environment, we have initiated a project through which we will begin eliminating duplicate copies of most financial reports and prospectuses to most households, even if they have more than one account in the fund. If additional copies of financial reports, prospectuses or historical account information are needed, please call 1-800-544-6666. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: Although financial turmoil in Pacific Basin countries was a catalyst for significant volatility in U.S. markets throughout the fourth quarter, the Standard & Poor's 500 Index rose more than 33% in 1997, about three times its historical annual average. Meanwhile, bond markets - primarily influenced by a relatively steady flow of positive news on the inflation front - continued to post solid returns as the year drew to a close. While it's impossible to predict the future direction of the markets with any degree of certainty, there are certain basic principles that can help investors plan for their future needs. First, investors are encouraged to take a long-term view of their portfolios. If you can afford to leave your money invested through the inevitable up and down cycles of the financial markets, you will greatly reduce your vulnerability to any single decline. We know from experience, for example, that stock prices have gone up over longer periods of time, have significantly outperformed other types of investments and have stayed ahead of inflation. Second, you can further manage your investing risk through diversification. A stock mutual fund, for instance, is already diversified, because it invests in many different companies. You can increase your diversification further by investing in a number of different stock funds, or in such other investment categories as bonds. If you have a short investment time horizon, you might want to consider moving some of your investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. Of course, it's important to remember that there is no assurance that a money market fund will achieve its goal of maintaining a stable net asset value of $1.00 per share, and that these types of funds are neither insured nor guaranteed by any agency of the U.S. government. Finally, no matter what your time horizon or portfolio diversity, it makes good sense to follow a regular investment plan, investing a certain amount of money in a fund at the same time each month or quarter and periodically reviewing your overall portfolio. By doing so, you won't get caught up in the excitement of a rapidly rising market, nor will you buy all your shares at market highs. While this strategy - known as dollar cost averaging - won't assure a profit or protect you from a loss in a declining market, it should help you lower the average cost of your purchases. If you have questions, please call us at 1-800-544-8888. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). CUMULATIVE TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10 MONTHS YEAR YEARS YEARS FIDELITY FUND 12.48% 32.06% 155.24% 395.08% S&P 500 (REGISTERED TRADEMARK) 10.58% 33.36% 151.62% 425.77% GROWTH & INCOME FUNDS AVERAGE 9.93% 27.14% 125.21% 335.80% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, five years or 10 years. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Standard & Poor's 500 Index - a widely recognized, unmanaged index of common stocks. To measure how the fund's performance stacked up against its peers, you can compare it to the growth & income funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Analytical Services, Inc. The past six months average represents a peer group of 657 mutual funds. These benchmarks reflect reinvestment of dividends and capital gains, if any, and exclude the effect of sales charges. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED DECEMBER 31, 1997 PAST 1 PAST 5 PAST 10 YEAR YEARS YEARS FIDELITY FUND 32.06% 20.61% 17.35% S&P 500 33.36% 20.27% 18.05% GROWTH & INCOME FUNDS AVERAGE 27.14% 17.53% 15.71% AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. (Note: Lipper calculates average annual total returns by annualizing each fund's total return, then taking an arithmetic average. This may produce a slightly different figure than that obtained by averaging the cumulative total returns and annualizing the result.) $10,000 OVER 10 YEARS IMAHDR PRASUN SHR__CHT 19971231 19980109 160153 S00000000000001 Fidelity S&P 500 00003 SP001 1987/12/31 10000.00 10000.00 1988/01/31 10250.37 10421.00 1988/02/29 10913.11 10906.62 1988/03/31 10712.78 10569.60 1988/04/30 10876.11 10686.93 1988/05/31 10928.08 10779.90 1988/06/30 11547.87 11274.70 1988/07/31 11435.61 11231.86 1988/08/31 11121.28 10849.97 1988/09/30 11505.01 11312.18 1988/10/31 11746.43 11626.66 1988/11/30 11595.54 11460.40 1988/12/31 11784.84 11660.96 1989/01/31 12434.46 12514.54 1989/02/28 12189.90 12202.93 1989/03/31 12488.64 12487.26 1989/04/30 13150.80 13135.34 1989/05/31 13797.56 13667.32 1989/06/30 13750.18 13589.42 1989/07/31 14819.81 14816.55 1989/08/31 15184.10 15106.95 1989/09/30 15161.97 15045.01 1989/10/31 14655.01 14695.97 1989/11/30 14865.59 14995.77 1989/12/31 15179.02 15355.66 1990/01/31 14366.31 14325.30 1990/02/28 14662.61 14510.09 1990/03/31 14951.14 14894.61 1990/04/30 14567.56 14522.25 1990/05/31 15650.11 15938.17 1990/06/30 15555.62 15829.79 1990/07/31 15409.76 15779.13 1990/08/31 14302.93 14352.70 1990/09/30 13662.76 13653.72 1990/10/31 13515.85 13595.01 1990/11/30 14112.13 14473.25 1990/12/31 14405.35 14877.05 1991/01/31 15333.87 15525.69 1991/02/28 16341.98 16635.78 1991/03/31 16715.00 17038.36 1991/04/30 16732.80 17079.26 1991/05/31 17578.34 17817.08 1991/06/30 16604.63 17001.06 1991/07/31 17347.99 17793.31 1991/08/31 17634.58 18215.01 1991/09/30 17482.38 17910.82 1991/10/31 17653.60 18150.82 1991/11/30 16590.24 17419.34 1991/12/31 17883.67 19412.12 1992/01/31 18164.62 19051.05 1992/02/29 18678.07 19298.72 1992/03/31 18112.78 18922.39 1992/04/30 18239.51 19478.71 1992/05/31 18405.23 19574.15 1992/06/30 18152.49 19282.50 1992/07/31 18544.34 20071.15 1992/08/31 18162.29 19659.70 1992/09/30 18347.76 19891.68 1992/10/31 18574.15 19961.30 1992/11/30 18987.57 20641.98 1992/12/31 19396.71 20895.88 1993/01/31 19908.77 21071.40 1993/02/28 20081.82 21357.97 1993/03/31 20678.30 21808.63 1993/04/30 20678.30 21280.86 1993/05/31 21184.66 21851.19 1993/06/30 21217.13 21914.55 1993/07/31 21237.91 21826.90 1993/08/31 22226.37 22654.14 1993/09/30 22429.58 22479.70 1993/10/31 22800.41 22945.03 1993/11/30 22193.60 22727.05 1993/12/31 22958.27 23002.05 1994/01/31 23935.22 23784.12 1994/02/28 23458.66 23139.57 1994/03/31 22391.80 22130.68 1994/04/30 22918.38 22413.96 1994/05/31 22894.45 22781.54 1994/06/30 22365.31 22223.40 1994/07/31 23098.40 22952.32 1994/08/31 24103.14 23893.37 1994/09/30 23596.77 23307.98 1994/10/31 24103.68 23832.41 1994/11/30 23254.60 22964.43 1994/12/31 23550.77 23305.00 1995/01/31 23512.54 23909.30 1995/02/28 24315.40 24841.04 1995/03/31 25196.84 25574.10 1995/04/30 25811.71 26327.26 1995/05/31 26247.24 27379.56 1995/06/30 27081.80 28015.58 1995/07/31 28317.47 28944.58 1995/08/31 28779.82 29017.23 1995/09/30 29625.07 30241.76 1995/10/31 29279.82 30133.80 1995/11/30 30514.75 31456.67 1995/12/31 31286.73 32062.53 1996/01/31 32047.79 33153.93 1996/02/29 32449.08 33461.27 1996/03/31 33058.87 33783.50 1996/04/30 33586.93 34281.47 1996/05/31 34240.04 35165.59 1996/06/30 34392.73 35299.57 1996/07/31 32899.82 33740.04 1996/08/31 33817.81 34451.61 1996/09/30 35548.53 36390.55 1996/10/31 36132.03 37394.20 1996/11/30 38301.45 40220.83 1996/12/31 37488.94 39424.06 1997/01/31 39067.42 41887.27 1997/02/28 39446.87 42215.67 1997/03/31 37497.24 40481.03 1997/04/30 39674.30 42897.74 1997/05/31 41851.36 45509.36 1997/06/30 44012.91 47548.18 1997/07/31 47722.63 51331.58 1997/08/31 45262.59 48455.99 1997/09/30 47675.17 51109.92 1997/10/31 46348.67 49402.85 1997/11/30 48401.59 51689.71 1997/12/31 49507.74 52577.22 IMATRL PRASUN SHR__CHT 19971231 19980109 160200 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Fund on December 31, 1987. As the chart shows, by December 31, 1997, the value of the investment would have grown to $49,508 - a 395.08% increase on the initial investment. For comparison, look at how the S&P 500 did over the same period. With dividends and capital gain, if any, reinvested, the same $10,000 investment would have grown to $52,577 - a 425.77% increase. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of long-term growth and short-term volatility. In turn, the share price and return of a fund that invests in stocks will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. (checkmark) FUND TALK: THE MANAGER'S OVERVIEW An interview with Beth Terrana, Portfolio Manager of Fidelity Fund Q. HOW DID THE FUND PERFORM, BETH? A. Quite well. For the six months that ended December 31, 1997, the fund returned 12.48%. This topped the Standard & Poor's 500 Index, which returned 10.58% during the same period. The fund also outperformed the growth and income funds average, which returned 9.93%, according to Lipper Analytical Services. For the 12 months that ended December 31, 1997, the fund returned 32.06%. The index and the Lipper peer group returned 33.36% and 27.14%, respectively, during that time. Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG SHOWING? A. The main driver behind the fund's solid performance - and the area where I focus most of my attention - was stock selection. Foremost, I'd point to retail store investments, where both stock picking and an industry overweighting - more than double that of the S&P 500 - were positive contributors. During the period, in fact, retailing stocks were among the strongest industry groups in the S&P 500. Specifically, good individual contributors included Consolidated Stores - which owns Kay-Bee Toy stores - and Gap, Inc., which operates several leading-edge apparel chains. The fund also benefited from stock selection within the finance, health care and technology sectors. Strong performers in these industries included BankAmerica, drug-maker Bristol-Myers Squibb and personal computer-maker Compaq. Q. CONTINUING WITH THE RETAIL STORY, THE FUND'S EXPOSURE TO THIS SECTOR CLIMBED TO AROUND 10% OF ASSETS AS OF DECEMBER 31. WHY WERE THESE STOCKS APPEALING? A. I detected several positive industry trends that I felt provided a favorable backdrop. Among these trends were a reduction in store overcapacity - or less overall floor space - that had hurt the industry for some time; a keener focus on the bottom line, or earnings, by company managements; and new-found attention to returns on invested capital. While it would be a stretch to say that all retailers recently have mended their ways, it was clear to me that there were a number of attractive stocks with the potential for upward revaluations of their price-to-earnings (P/E) multiples. The story behind big discounter Wal-Mart - the fund's largest retail investment at the end of the period - illustrates my theory. Following the company's rapid growth during the 1980s - which resulted in very strong stock appreciation - Wal-Mart's returns deteriorated and its stock dramatically underperformed the market from 1993 through 1996. Recognizing that it had a problem, Wal-Mart committed itself to a new financial discipline, emphasizing returns on its capital base, and earnings growth began to accelerate. Based on these positive developments, the stock recently began to perform well. Q. WHAT CHARACTERISTICS DO YOU LOOK FOR WHEN DECIDING WHETHER TO BUY A STOCK? A. I've always been a bottom-up investor who believes that superior investment performance emanates from owning stocks of companies with improving financial returns. Improvements in financial returns drive both sustainable improvements in a company's secular growth rate, and its earnings power. When I'm analyzing the pros and cons of a stock, the important factors I look for include restructuring potential, rising returns on invested capital, good balance sheet management, strong free cash flow and shareholder-friendly management. More recently, global franchises and strong brands have also increasingly become important factors. I've generally found that companies exhibiting some or all of these attributes tend to generate improving financial returns - including expanding profit margins and accelerating earnings growth rates - through time. Further, as a firm's financial returns improve, its stock is likely to be rewarded with a higher valuation once the market catches on. Q. TIME WARNER IS A RELATIVELY NEW TOP 10 HOLDING. WHAT MADE THIS STOCK ATTRACTIVE DURING THE PERIOD? A. Fundamentally, the company has a number of media franchises - including Warner Brothers, Time Warner Cable, CNN and Time magazine - with wide global reach. Also, the company has been focusing intently on improving its financial returns. For example, previously high levels of capital spending - largely related to its cable television operations - were expected to peak and then decline, a development that I felt could enhance the company's free-cash-flow dynamics. The potential for this to occur - and for Time Warner to continue expanding and enhancing its worldwide franchises as a result - made this stock attractive. Q. WHICH OTHER STOCKS PERFORMED WELL DURING THE PERIOD? WHICH WERE DISAPPOINTMENTS? A. Other strong performers included General Electric, diversified- industrial Tyco International and IBM. There weren't any major setbacks, but several smaller positions - including Columbia/HCA Healthcare and Waste Management - lagged the market. The fund no longer held Waste Management at the close of the period. Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS? A. Given the economic difficulties we saw in Southeast Asia during the last quarter of 1997, global economic growth may be sluggish. If there is such a slowdown, stocks with predictable, sustainable earnings growth likely will outperform economically sensitive cyclical stocks and commodities-based stocks. Of course, those companies with significant revenue exposure to the Asian region could be particularly affected, so I'll continue to try to limit the fund's investments to companies whose earnings are susceptible to such a slowdown. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. BETH TERRANA DISCUSSES CORPORATE RESTRUCTURING: "During the past decade, we've witnessed enormous improvements in the competitiveness of U.S. companies. These improvements have been achieved mostly through productivity-enhancing measures, such as cutting costs and improving technology. Given this backdrop, I'm often asked whether U.S. companies can continue to derive gains from these efforts. I believe the answer is `yes,' but that we are entering a new and somewhat different phase. "While undoubtedly there will always be ways to reduce costs and increase productivity, the majority of the basic income-related improvements have been accomplished. Instead, companies are now more focused on their balance sheets. Under this new balance-sheet-driven approach, managements are zeroed in on deploying capital to maximize shareholder returns on capital. In keeping with this philosophy, businesses that generate robust returns on capital are grown, while underperformers are either fixed or perhaps sold to other companies that may have synergies or scale economies that could lead to enhanced returns." FUND FACTS GOAL: to increase the value of the fund's shares over the long term by investing mainly in equity securities with good prospects for growth and current income FUND NUMBER: 003 TRADING SYMBOL: FFIDX START DATE: April 30, 1930 SIZE: as of December 31, 1997, more than $6.5 billion MANAGER: Beth Terrana, since 1993; joined Fidelity in 1983 (checkmark) INVESTMENT CHANGES TOP TEN STOCKS AS OF DECEMBER 31, 1997 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE STOCKS 6 MONTHS AGO GENERAL ELECTRIC CO. 3.4 3.6 TYCO INTERNATIONAL LTD. 3.4 2.3 BRISTOL-MYERS SQUIBB CO. 2.5 1.8 BANKAMERICA CORP. 2.3 2.4 PHILIP MORRIS COMPANIES, INC. 2.3 2.5 WAL-MART STORES, INC. 2.1 0.6 TIME WARNER, INC. 2.0 0.6 CONSOLIDATED STORES CORP. 1.7 1.8 CITICORP 1.7 1.9 AMERICAN HOME PRODUCTS CORP. 1.5 1.2 TOP FIVE MARKET SECTORS AS OF DECEMBER 31, 1997 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE MARKET SECTORS 6 MONTHS AGO FINANCE 20.0 15.0 HEALTH 13.4 12.6 RETAIL & WHOLESALE 10.6 9.7 INDUSTRIAL MACHINERY & EQUIPMENT 9.6 9.6 NONDURABLES 9.6 9.2 ASSET ALLOCATION (% OF FUND'S INVESTMENTS) AS OF DECEMBER 31, 1997 * AS OF JUNE 30, 1997** ROW: 1, COL: 1, VALUE: 5.3 ROW: 1, COL: 2, VALUE: 1.4 ROW: 1, COL: 3, VALUE: 93.3 STOCKS 96.3% BONDS 0.8% SHORT-TERM INVESTMENTS 2.9% FOREIGN INVESTMENTS 7.4% STOCKS 93.3% BONDS 1.4% SHORT-TERM INVESTMENTS 5.3% FOREIGN INVESTMENTS 6.1% ROW: 1, COL: 1, VALUE: 2.9 ROW: 1, COL: 2, VALUE: 1.5 ROW: 1, COL: 3, VALUE: 95.5 * ** INVESTMENTS DECEMBER 31, 1997 (UNAUDITED) SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES COMMON STOCKS - 92.3% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 1.8% AEROSPACE & DEFENSE - 1.4% AlliedSignal, Inc. 1,211,500 $ 47,173 Textron, Inc. 709,200 44,325 91,498 DEFENSE ELECTRONICS - 0.4% Litton Industries, Inc. (a) 92,600 5,324 Raytheon Co. Class B 387,800 19,584 24,908 TOTAL AEROSPACE & DEFENSE 116,406 BASIC INDUSTRIES - 1.2% CHEMICALS & PLASTICS - 1.2% Air Products & Chemicals, Inc. 201,300 16,557 Cytec Industries, Inc. (a) 135,300 6,351 Monsanto Co. 490,300 20,593 Praxair, Inc. 134,160 6,037 Sealed Air Corp. (a) 449,300 27,744 77,282 CONSTRUCTION & REAL ESTATE - 2.3% BUILDING MATERIALS - 1.3% Masco Corp. 1,465,200 74,542 Sherwin-Williams Co. 235,200 6,527 81,069 REAL ESTATE INVESTMENT TRUSTS - 1.0% Captec Net Lease Realty, Inc. 190,000 3,266 Duke Realty Investors, Inc. 787,066 19,086 Equity Residential Properties Trust (SBI) 405,100 20,483 Public Storage, Inc. 664,000 19,505 Storage USA, Inc. 136,400 5,447 67,787 TOTAL CONSTRUCTION & REAL ESTATE 148,856 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) DURABLES - 2.0% AUTOS, TIRES, & ACCESSORIES - 0.3% Eaton Corp. 124,700 $ 11,129 Navistar International Corp. (a) 340,400 8,446 19,575 CONSUMER DURABLES - 0.6% Minnesota Mining & Manufacturing Co. 472,700 38,791 CONSUMER ELECTRONICS - 0.5% Newell Co. 661,300 28,105 Philips Electronics NV 66,900 4,048 32,153 TEXTILES & APPAREL - 0.6% Liz Claiborne, Inc. 346,700 14,496 VF Corp. 538,900 24,756 39,252 TOTAL DURABLES 129,771 ENERGY - 6.1% ENERGY SERVICES - 0.4% Halliburton Co. 202,000 10,491 Schlumberger Ltd. 87,400 7,036 Weatherford Enterra, Inc. (a) 180,000 7,875 25,402 OIL & GAS - 5.7% British Petroleum PLC ADR 1,064,863 84,856 Burlington Resources, Inc. 154,400 6,919 Chevron Corp. 342,500 26,373 Exxon Corp. 358,000 21,905 Mobil Corp. 459,900 33,199 Royal Dutch Petroleum Co. 1,070,700 58,019 Texaco, Inc. 1,120,500 60,927 Tosco Corp. 512,700 19,386 Total SA sponsored ADR 468,700 26,013 USX-Marathon Group 1,163,300 39,261 376,858 TOTAL ENERGY 402,260 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - 20.0% BANKS - 9.7% Bank of New York Co., Inc. 1,383,000 $ 79,955 BankAmerica Corp. 2,105,500 153,701 Chase Manhattan Corp. 646,500 70,792 Citicorp 857,800 108,458 Comerica, Inc. 281,500 25,405 Mellon Bank Corp. 321,200 19,473 National City Corp. 665,196 43,736 NationsBank Corp. 441,400 26,843 North Fork Bancorp., Inc. 110,500 3,709 U.S. Bancorp 660,600 73,946 Wells Fargo & Co. 94,200 31,975 637,993 CREDIT & OTHER FINANCE - 2.8% American Express Co. 1,038,864 92,719 Associates First Capital Corp. 259,200 18,435 Household International, Inc. 389,911 49,738 Transamerica Corp. 192,600 20,512 181,404 FEDERAL SPONSORED CREDIT - 2.2% Federal Home Loan Mortgage Corporation 1,710,200 71,722 Federal National Mortgage Association 1,263,900 72,121 143,843 INSURANCE - 3.8% AFLAC, Inc. 445,900 22,797 Allstate Corp. 752,500 68,383 American International Group, Inc. 376,000 40,890 MGIC Investment Corp. 107,000 7,115 Progressive Corp. 118,400 14,193 Travelers Property Casualty Corp. Class A 799,000 35,156 Travelers Group, Inc. (The) 931,150 50,166 UNUM Corp. 206,100 11,207 249,907 SAVINGS & LOANS - 1.2% Charter One Financial Corp. 184,590 11,652 Dime Bancorp., Inc. 887,800 26,856 Washington Mutual, Inc. 628,460 40,104 78,612 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED SECURITIES INDUSTRY - 0.3% Morgan Stanley, Dean Witter, Discover and Co. 406,300 $ 24,022 TOTAL FINANCE 1,315,781 HEALTH - 12.7% DRUGS & PHARMACEUTICALS - 8.4% American Home Products Corp. 1,329,600 101,715 Bristol-Myers Squibb Co. 1,760,000 166,540 Cytyc Corp. (a) 322,100 8,012 Merck & Co., Inc. 954,200 101,384 Pfizer, Inc. 673,800 50,240 Schering-Plough Corp. 1,308,800 81,309 SmithKline Beecham PLC ADR 879,200 45,224 554,424 MEDICAL EQUIPMENT & SUPPLIES - 3.3% Baxter International, Inc. 765,000 38,584 Cardinal Health, Inc. 592,200 44,489 Johnson & Johnson 1,066,700 70,269 McKesson Corp. 257,200 27,826 Medtronic, Inc. 438,800 22,955 St. Jude Medical, Inc. (a) 171,900 5,243 Sofamor/Danek Group, Inc. (a) 103,000 6,701 216,067 MEDICAL FACILITIES MANAGEMENT - 1.0% Columbia/HCA Healthcare Corp. 2,167,900 64,224 TOTAL HEALTH 834,715 INDUSTRIAL MACHINERY & EQUIPMENT - 9.1% ELECTRICAL EQUIPMENT - 4.5% Alcatel Alsthom Compagnie Generale d'Electricite SA sponsored ADR 184,000 4,657 Alcatel Alsthom Compagnie Generale d'Electricite SA 241,900 30,722 Emerson Electric Co. 724,400 40,883 General Electric Co. 3,004,300 220,441 296,703 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED INDUSTRIAL MACHINERY & EQUIPMENT - 4.6% Illinois Tool Works, Inc. 124,200 $ 7,468 Ingersoll-Rand Co. 486,100 19,687 Stanley Works 1,117,600 52,737 Tyco International Ltd. 4,889,300 220,324 300,216 TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 596,919 MEDIA & LEISURE - 7.1% BROADCASTING - 2.6% Comcast Corp. Class A special 414,300 13,077 Tele-Communications, Inc. (TCI Group), Series A 1,033,100 28,862 Time Warner, Inc. 2,092,166 129,714 171,653 ENTERTAINMENT - 1.6% Carnival Cruise Lines, Inc. Class A 298,800 16,546 Disney (Walt) Co. 566,900 56,159 Viacom, Inc. Class B (non-vtg.) (a) 672,300 27,858 100,563 LEISURE DURABLES & TOYS - 0.2% Mattel, Inc. 409,200 15,243 PUBLISHING - 2.7% Cognizant Corp. 731,800 32,611 Harcourt General, Inc. 445,700 24,402 McGraw-Hill, Inc. 338,400 25,042 Pearson PLC 1,118,400 14,575 Times Mirror Co. Class A 589,700 36,266 Tribune Co. 327,500 20,387 US WEST Media Group (a) 866,300 25,014 178,297 TOTAL MEDIA & LEISURE 465,756 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) NONDURABLES - 9.6% BEVERAGES - 0.2% Coca-Cola Co. (The) 237,700 $ 15,837 FOODS - 2.7% Campbell Soup Co. 583,600 33,922 Dole Food, Inc. 289,900 13,263 General Mills, Inc. 361,500 25,892 Heinz (H.J.) Co. 1,019,600 51,808 Kellogg Co. 313,400 15,553 Sara Lee Corp. 650,800 36,648 177,086 HOUSEHOLD PRODUCTS - 4.0% Clorox Co. 260,400 20,588 Gillette Co. 373,000 37,463 Procter & Gamble Co. 1,226,300 97,874 Unilever PLC Ord. 3,902,400 33,496 Unilever NV ADR 1,170,400 73,077 262,498 TOBACCO - 2.7% Philip Morris Companies, Inc. 3,263,100 147,859 RJR Nabisco Holdings Corp. 689,800 25,868 173,727 TOTAL NONDURABLES 629,148 PRECIOUS METALS - 0.0% Getchell Gold Corp. (a) 119,087 2,858 RETAIL & WHOLESALE - 10.3% APPAREL STORES - 1.6% Gap, Inc. 293,750 10,409 Payless ShoeSource, Inc. (a) 977,100 65,588 TJX Companies, Inc. 823,800 28,318 104,315 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) RETAIL & WHOLESALE - CONTINUED DRUG STORES - 1.2% CVS Corp. 1,236,913 $ 79,240 GENERAL MERCHANDISE STORES - 6.9% Carson Pirie Scott & Co. (a) 405,600 20,331 Consolidated Stores Corp. (a) 2,530,893 111,201 Dayton Hudson Corp. 732,200 49,423 Federated Department Stores, Inc. (a) 2,224,900 95,810 Meyer (Fred), Inc. (a) 336,900 12,255 Penney (J.C.) Co., Inc. 378,200 22,810 Proffitts, Inc. (a) 274,500 7,806 Wal-Mart Stores, Inc. 3,461,800 136,525 456,161 RETAIL & WHOLESALE, MISCELLANEOUS - 0.6% Home Depot, Inc. (The) 673,100 39,629 TOTAL RETAIL & WHOLESALE 679,345 SERVICES - 2.8% ADVERTISING - 1.1% Omnicom Group, Inc. 1,754,600 74,351 LEASING & RENTAL - 0.3% Ryder Systems, Inc. 531,500 17,407 PRINTING - 0.5% Donnelley (R.R.) & Sons Co. 583,000 21,717 Reynolds & Reynolds Co. Class A 473,400 8,728 30,445 SERVICES - 0.9% Ecolab, Inc. 593,000 32,875 Service Corp. International 756,609 27,947 60,822 TOTAL SERVICES 183,025 TECHNOLOGY - 5.5% COMMUNICATIONS EQUIPMENT - 0.2% Cisco Systems, Inc. (a) 59,550 3,320 Lucent Technologies, Inc. 158,900 12,692 16,012 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMPUTER SERVICES & SOFTWARE - 1.2% Microsoft Corp. (a) 505,800 $ 65,375 Oracle Corp. (a) 488,700 10,904 76,279 COMPUTERS & OFFICE EQUIPMENT - 3.3% Compaq Computer Corp. 479,450 27,059 Diebold, Inc. 431,050 21,822 EMC Corp. (a) 510,700 14,012 International Business Machines Corp. 439,900 45,997 Pitney Bowes, Inc. 703,100 63,235 Unisys Corp. (a) 118,382 1,643 Xerox Corp. 582,800 43,018 216,786 ELECTRONICS - 0.7% Altera Corp. (a) 429,100 14,214 Intel Corp. 336,400 23,632 Texas Instruments, Inc. 255,400 11,493 49,339 PHOTOGRAPHIC EQUIPMENT - 0.1% Polaroid Corp. 70,400 3,427 TOTAL TECHNOLOGY 361,843 UTILITIES - 1.8% ELECTRIC UTILITY - 0.1% Edison International 327,700 8,909 TELEPHONE SERVICES - 1.7% AT&T Corp. 666,300 40,811 Brooks Fiber Properties, Inc. (a) 169,300 9,312 Frontier Corp. 201,700 4,853 MCI Communications Corp. 1,223,400 52,377 Telefonos de Mexico SA sponsored ADR representing Ord. Class L shares 38,900 2,181 109,534 TOTAL UTILITIES 118,443 TOTAL COMMON STOCKS (Cost $4,486,981) 6,062,408 CONVERTIBLE PREFERRED STOCKS - 1.0% SHARES VALUE (NOTE 1) (000S) DURABLES - 0.0% AUTOS, TIRES, & ACCESSORIES - 0.0% Republic Industries, Inc. $1.55 77,900 $ 1,831 ENERGY - 0.3% OIL & GAS - 0.3% Tosco Financing Trust $2.875 TOPRS (c) 258,200 16,703 Tosco Financing Trust $2.875 67,600 4,377 21,080 HEALTH - 0.7% MEDICAL EQUIPMENT & SUPPLIES - 0.7% McKesson Financing Trust $2.50 TOPRS (c) 297,400 22,714 McKesson Financing Trust $2.50 258,400 19,735 42,449 TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $53,151) 65,360 CONVERTIBLE BONDS - 1.4% MOODY'S PRINCIPAL RATINGS AMOUNT (000S) INDUSTRIAL MACHINERY & EQUIPMENT - 0.5% POLLUTION CONTROL - 0.5% USA Waste Services, Inc. 4%, 2/1/02 Ba2 $ 23,550 26,023 United Waste Systems, Inc. 4 1/2%, 6/1/01 Ba3 6,250 8,531 34,554 RETAIL & WHOLESALE - 0.3% GENERAL MERCHANDISE STORES - 0.1% Federated Department Stores, Inc. 5%, 10/1/03 Baa3 6,940 9,334 RETAIL & WHOLESALE, MISCELLANEOUS - 0.2% Home Depot, Inc. 3 1/4%, 10/1/01 A1 8,020 10,707 TOTAL RETAIL & WHOLESALE 20,041 CONVERTIBLE BONDS - CONTINUED MOODY'S PRINCIPAL VALUE (NOTE 1) RATINGS AMOUNT (000S) (000S) TECHNOLOGY - 0.6% COMPUTERS & OFFICE EQUIPMENT - 0.4% EMC Corp. 3 1/4%, 3/15/02 Ba3 $ 9,630 $ 12,904 Unisys Corp. 8 1/4%, 3/15/06 B3 7,110 15,047 27,951 ELECTRONIC INSTRUMENTS - 0.2% Thermo Electron Corp. 4 1/8%, 1/1/03 (c) Ba2 7,210 9,021 TOTAL TECHNOLOGY 36,972 TOTAL CONVERTIBLE BONDS (Cost $89,263) 91,567 CASH EQUIVALENTS - 5.3% SHARES Taxable Central Cash Fund (b) (Cost $350,376) 350,376,380 350,376 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $4,979,771) $ 6,569,711 SECURITY TYPE ABBREVIATIONS TOPRS - Trust Originated Preferred Securities LEGEND 1. Non-income producing 2. At period end, the seven-day yield of the Taxable Central Cash Fund was 5.69%. The yield refers to the income earned by investing in the fund over the seven-day period, expressed as an annual percentage. 3. Security 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 $48,438,000 or 0.7% of net assets. INCOME TAX INFORMATION At December 31, 1997, the aggregate cost of investment securities for income tax purposes was $4,983,090,000. Net unrealized appreciation aggregated $1,586,621,000, of which $1,628,614,000 related to appreciated investment securities and $41,993,000 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
(EXCEPT PER-SHARE AMOUNT) DECEMBER 31, 1997 (UNAUDITED) 4.ASSETS 5. 6. 7.INVESTMENT IN SECURITIES, AT VALUE (COST $4,979,771) - 9. $ 6,569,711 8. SEE ACCOMPANYING SCHEDULE 10.CASH 11. 96 12.RECEIVABLE FOR INVESTMENTS SOLD 13. 50,740 14.RECEIVABLE FOR FUND SHARES SOLD 15. 43,069 16.DIVIDENDS RECEIVABLE 17. 8,058 18.INTEREST RECEIVABLE 19. 2,734 20.OTHER RECEIVABLES 21. 389 22. 23.TOTAL ASSETS 24. 6,674,797 25.LIABILITIES 26. 27. 28.PAYABLE FOR INVESTMENTS PURCHASED $ 69,720 29. 30.PAYABLE FOR FUND SHARES REDEEMED 34,762 31. 32.DISTRIBUTIONS PAYABLE 15,275 33. 34.ACCRUED MANAGEMENT FEE 2,059 35. 36.OTHER PAYABLES AND ACCRUED EXPENSES 1,170 37. 38.COLLATERAL ON SECURITIES LOANED, AT VALUE 34,199 39. 40. 41.TOTAL LIABILITIES 42. 157,185 43.44.NET ASSETS 45. $ 6,517,612 46.NET ASSETS CONSIST OF: 47. 48. 49.PAID IN CAPITAL 50. $ 4,751,272 51.UNDISTRIBUTED NET INVESTMENT INCOME 52. 1,086 53.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 54. 175,319 INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 55.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 56. 1,589,935 INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 57.58.NET ASSETS, FOR 218,622 SHARES OUTSTANDING 59. $ 6,517,612 60.61.NET ASSET VALUE, OFFERING PRICE AND REDEMPTION 63. $29.81 PRICE 62. PER SHARE ($6,517,612 (DIVIDED BY) 218,622 SHARES)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1997 (UNAUDITED) 64.INVESTMENT INCOME 66. $ 43,005 65.DIVIDENDS 67.INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $175) 68. 7,374 69. 70.TOTAL INCOME 71. 50,379 72.EXPENSES 73. 74. 75.MANAGEMENT FEE $ 11,681 76. 77.TRANSFER AGENT FEES 5,113 78. 79.ACCOUNTING FEES AND SECURITY LENDING FEES 409 80. 81.NON-INTERESTED TRUSTEES' COMPENSATION 11 82. 83.CUSTODIAN FEES AND EXPENSES 18 84. 85.REGISTRATION FEES 370 86. 87.AUDIT 34 88. 89.LEGAL 30 90. 91.MISCELLANEOUS 155 92. 93. TOTAL EXPENSES BEFORE REDUCTIONS 17,821 94. 95. EXPENSE REDUCTIONS (717) 17,104 96.97.NET INVESTMENT INCOME 98. 33,275 99.REALIZED AND UNREALIZED GAIN (LOSS) 101. 102. 100.NET REALIZED GAIN (LOSS) ON: 103. INVESTMENT SECURITIES 470,996 104. 105. FOREIGN CURRENCY TRANSACTIONS (2) 470,994 106.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 107. 108. ON: 109. INVESTMENT SECURITIES 193,262 110. 111. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (3) 193,259 112.113.NET GAIN (LOSS) 114. 664,253 115.116.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 119. $ 697,528 117.118. FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 1997 JUNE 30, (UNAUDITED) 1997 120.INCREASE (DECREASE) IN NET ASSETS 121.OPERATIONS $ 33,275 $ 60,326 NET INVESTMENT INCOME 122. NET REALIZED GAIN (LOSS) 470,994 254,991 123. CHANGE IN NET UNREALIZED APPRECIATION 193,259 835,122 (DEPRECIATION) 124. 697,528 1,150,439 125.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 126. 127.FROM OPERATIONS 128.DISTRIBUTIONS TO SHAREHOLDERS (32,681) (59,829) FROM NET INVESTMENT INCOME 129. FROM NET REALIZED GAIN (474,961) (294,229) 130. 131.TOTAL DISTRIBUTIONS (507,642) (354,058) 132.SHARE TRANSACTIONS 1,509,217 2,094,284 NET PROCEEDS FROM SALES OF SHARES 133. REINVESTMENT OF DISTRIBUTIONS 472,772 325,419 134. COST OF SHARES REDEEMED (1,162,946) (1,654,747) 135.136. 819,043 764,956 NET INCREASE (DECREASE) IN NET ASSETS RESULTING 137. 138.FROM SHARE TRANSACTIONS 139. 1,008,929 1,561,337 140.TOTAL INCREASE (DECREASE) IN NET ASSETS 141.NET ASSETS 142. 143. 144. BEGINNING OF PERIOD 5,508,683 3,947,346 145. $ 6,517,612 $ 5,508,683 END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $1,086 AND $492, RESPECTIVELY) 146.OTHER INFORMATION 148. 149. 147.SHARES 150. SOLD 50,022 82,904 151. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 16,211 13,949 152. REDEEMED (38,717) (65,855) 153. NET INCREASE (DECREASE) 27,516 30,998
154. SIX MONTHS ENDED YEARS ENDED JUNE 30, SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, DECEMBER 31, 1997 155. (UNAUDITED) 1997 1996 1995 1994 1993 1992 156.157.SELECTED PER-SHARE DATA 158.NET ASSET VALUE, BEGINNING OF PERIOD $ 28.83 $ 24.65 $ 21.04 $ 18.61 $ 20.42 $ 18.94 $ 18.46 159.INCOME FROM INVESTMENT OPERATIONS 160. 161. NET INVESTMENT INCOME .16 D .34 D .39 .38 .27 .29 E .45 162. NET REALIZED AND UNREALIZED GAIN (LOSS) 3.33 5.99 5.04 3.35 .79 1.48 1.09 163. TOTAL FROM INVESTMENT OPERATIONS 3.49 6.33 5.43 3.73 1.06 1.77 1.54 164. 165.LESS DISTRIBUTIONS 166. FROM NET INVESTMENT INCOME (.16) (.33) (.41) (.36) (.31) (.22) (.48) 167. FROM NET REALIZED GAIN (2.35) (1.82) (1.41) (.94) (2.56) (.07) (.58) 168. TOTAL DISTRIBUTIONS (2.51) (2.15) (1.82) (1.30) (2.87) (.29) (1.06) 169.NET ASSET VALUE, END OF PERIOD $ 29.81 $ 28.83 $ 24.65 $ 21.04 $ 18.61 $ 20.42 $ 18.94 170.171.TOTAL RETURN B, C 12.48% 27.97% 27.00% 21.09% 5.41% 9.39% 8.46% 172.173.RATIOS AND SUPPLEMENTAL DATA 174. 175.NET ASSETS, END OF PERIOD (IN MILLIONS) $ 6,518 $ 5,509 $ 3,947 $ 2,404 $ 1,592 $ 1,439 $ 1,354 176.RATIO OF EXPENSES TO AVERAGE NET ASSETS .58% A .62% .63% .66% .68% .66% A .67% 177.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .55% A, F .59% F .60% F .64% F .65% F .66% A .67% REDUCTIONS 178.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.08% A 1.34% 1.71% 2.18% 1.85% 2.94% A, E 2.37% 179.PORTFOLIO TURNOVER RATE 87% A 107% 150% 157% 207% 261% A 151% 180.AVERAGE COMMISSION RATE G $ .0416 $ .0420
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.06 PER SHARE. F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS). G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS For the period ended December 31, 1997 (Unaudited) 6. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Fund (the fund) is a fund of Fidelity Hastings Street Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The financial statements have been prepared in conformity with generally accepted accounting principles which permit management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund: SECURITY VALUATION. Securities for which exchange quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price. Securities (including restricted securities) for which exchange quotations are not readily available (and in certain cases debt securities which trade on an exchange) are valued primarily using dealer-supplied valuations or at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Purchases and sales of securities are translated into U.S. dollars at the contractual currency exchange rates established at the time of each trade. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. The schedule of investments includes 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 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INVESTMENT INCOME - CONTINUED 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, market discount, partnerships, non-taxable dividends and losses deferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 7. OPERATING POLICIES. FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. The cost of the foreign currency contracts is included in the cost basis of the associated investment. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the 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 that mature in 60 days or less from the date of purchase for U.S. Treasury or Federal Agency obligations. 2. OPERATING POLICIES - CONTINUED REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund) managed by Fidelity Investments Money Management, Inc. (formerly FMR Texas Inc.), an affiliate of FMR. The Cash Fund is an open-end money market fund available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Fund seeks preservation of capital, liquidity, and current income by investing in U.S. Treasury securities and repurchase agreements for these securities. Income distributions from the Cash Fund are declared daily and paid monthly from net interest income. Income distributions earned by the fund are recorded as interest income in the accompanying financial statements. RESTRICTED SECURITIES. The fund is permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, the fund had no investments in restricted securities (excluding 144A issues). 8. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $2,761,450,000 and $2,564,464,000, respectively. 9. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser,FMR receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .2500% to .5200% for the period. The annual individual fund fee rate is .09%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. For the period, the management fee was equivalent to an annualized rate of .38% 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 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED TRANSFER AGENT FEES - CONTINUED receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .17% of average net assets. ACCOUNTING AND SECURITY LENDING FEES. FSC maintains each 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 $810,000 for the period. 10. SECURITY LENDING. The fund loaned securities to certain brokers who paid the fund negotiated lenders' fees. These fees are included in interest income. The fund receives U.S. Treasury obligations and/or cash as collateral against the loaned securities, in an amount at least equal to 102% of the market value of the loaned securities at the inception of each loan. This collateral must be maintained at not less than 100% of the market value of the loaned securities during the period of the loan. At period end, the value of the securities loaned and the value of collateral amounted to $33,080,000 and $34,199,000, respectively. 11. 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 $594,000 under this arrangement. In addition, the fund has entered into arrangements with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances were used to reduce a portion of expenses. During the period, the fund's custodian and transfer agent fees were reduced by $3,000 and $120,000, respectively, under these arrangements. MANAGING YOUR INVESTMENTS Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day. BY PHONE Fidelity TouchTone Xpressprovides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security. SM (PHONE_GRAPHIC)TOUCHTONE XPRESS 1-800-544-5555 PRESS For mutual fund and brokerage trading. For quotes.* For account balances and holdings. To review orders and mutual fund activity. To change your PIN. To speak to a Fidelity representative. 0 * BY PC Fidelity's Web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services. (PHONE_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call Fidelity at 1-800-544-7272 for significant savings on Web access from internetMCI. SM (PHONE_GRAPHIC) FIDELITY ON-LINE XPRESS+ TM Fidelity On-line Xpress+ software for Windows combines comprehensive portfolio management capabilities, securities trading and access to research and analysis tools . . . all on your desktop. Call Fidelity at 1-800-544-7272 or visit our Web site for more information on how to manage your investments via your PC. * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. TO 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 75309-5517 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 75309-5517 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. Scottsdale Road Scottsdale, AZ CALIFORNIA 815 East Birch Street Brea, CA 851 East Hamilton Avenue Campbell, CA 527 North Brand Boulevard Glendale, CA 19100 Von Karman Avenue Irvine, CA 10100 Santa Monica Blvd. Los Angeles, CA 251 University Avenue Palo Alto, CA 1760 Challenge Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 455 Market Street San Francisco, CA 950 Northgate Drive San Rafael, CA 1400 Civic Drive Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA COLORADO 1625 Broadway Denver, CO CONNECTICUT 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 4001 Tamiami Trail, North Naples, FL 2401 PGA Boulevard Palm Beach Gardens, FL 8065 Beneva Road Sarasota, FL 1502 N. Westshore Blvd. Tampa, FL GEORGIA 3445 Peachtree Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA HAWAII 700 Bishop Street Honolulu, HI 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 LOUISIANA 201 St. Charles Avenue New Orleans, LA MAINE 3 Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD 1 West Pennsylvania Ave. Towson, MD MASSACHUSETTS 470 Boylston Street Boston, MA 155 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 29155 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 501 Route 17, South Paramus, NJ NEW YORK 1055 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC 2200 West Main Street Durham, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH OREGON 16850 SW 72 Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 6150 Poplar Road Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 4017 Northwest Parkway Dallas, TX 1155 Dairy Ashford Street Houston, TX 2701 Drexel Drive Houston, TX 400 East 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 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 511 Pine Street Seattle, WA WASHINGTON, DC 1900 K Street, N.W. Washington, DC WISCONSIN 595 North Barker Road Brookfield, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc., London, England Fidelity Management & Research (Far East) Inc., Tokyo, Japan OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Richard A. Spillane, Jr., Vice President Beth Terrana, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead * INDEPENDENT TRUSTEES GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA CUSTODIAN The Chase Manhattan Bank New York, NY FIDELITY'S GROWTH AND INCOME FUNDS Balanced Fund Convertible Securities Fund Equity-Income Fund Equity-Income II Fund Fidelity Fund Global Balanced Fund Growth & Income Portfolio Puritan(registered trademark) Fund Real Estate Investment Portfolio Utilities Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions 1-800-544-7777 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) (registered trademark) TouchTone Xpress 1-800-544-5555 SM AUTOMATED LINE FOR QUICKEST SERVICE -----END PRIVACY-ENHANCED MESSAGE-----