-----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, NiMG6XgkhNUfc1xCKVnEgUD25FcnyETZCD/AXl20HdOK5KKB4krhV9hKc4HzUYJz wb08lO0/+ADtj+MgbQCFLg== 0000744822-00-000010.txt : 20000323 0000744822-00-000010.hdr.sgml : 20000323 ACCESSION NUMBER: 0000744822-00-000010 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000131 FILED AS OF DATE: 20000322 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY SECURITIES FUND CENTRAL INDEX KEY: 0000754510 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04118 FILM NUMBER: 575235 BUSINESS ADDRESS: STREET 1: 82 DEVONSHIRE ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6174391706 MAIL ADDRESS: STREET 1: 82 DEVONSHIRE STREET STREET 2: MAILZONE ZH-2 CITY: BOSTON STATE: MA ZIP: 02109 N-30D 1 FIDELITY(REGISTERED TRADEMARK) BLUE CHIP GROWTH FUND SEMIANNUAL REPORT JANUARY 31, 2000 (2_FIDELITY_LOGOS)(registered trademark) CONTENTS PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. PERFORMANCE 4 How the fund has done over time. FUND TALK 6 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 9 A summary of major shifts in the fund's investments over the past six months. INVESTMENTS 10 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 20 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 24 Notes to the financial statements. Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Other third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: While no major Y2K glitches disrupted the financial markets to start the new year, inflation worries re-emerged to hinder stock performance throughout January. The S&P 500(Registered trademark) and Dow Jones Industrial Average each fell approximately 5%, while the technology-oriented NASDAQ Index dropped more than 3% for the month. In bond markets, the potential for further rate hikes as a pre-emptive move against inflation continued to be an obstacle to fixed-income performance. While it's impossible to predict the future direction of the markets with any degree of certainty, there are certain basic principles that can help investors plan for their future needs. First, investors are encouraged to take a long-term view of their portfolios. If you can afford to leave your money invested through the inevitable up and down cycles of the financial markets, you will greatly reduce your vulnerability to any single decline. We know from experience, for example, that stock prices have gone up over longer periods of time, have significantly outperformed other types of investments and have stayed ahead of inflation. Second, you can further manage your investing risk through diversification. A stock mutual fund, for instance, is already diversified, because it invests in many different companies. You can increase your diversification further by investing in a number of different stock funds, or in such other investment categories as bonds. If you have a short investment time horizon, you might want to consider moving some of your investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. Of course, it's important to remember that an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these types of funds. Finally, no matter what your time horizon or portfolio diversity, it makes good sense to follow a regular investment plan, investing a certain amount of money in a fund at the same time each month or quarter and periodically reviewing your overall portfolio. By doing so, you won't get caught up in the excitement of a rapidly rising market, nor will you buy all your shares at market highs. While this strategy - known as dollar cost averaging - won't assure a profit or protect you from a loss in a declining market, it should help you lower the average cost of your purchases. Of course, you should consider your financial ability to continue your purchases through periods of low price levels before undertaking such a strategy. If you have questions, please call us at 1-800-544-6666, or visit our web site at www.fidelity.com. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value). Total returns do not include the effect of the 3.00% sales load which was eliminated as of September 30, 1998.
CUMULATIVE TOTAL RETURNS PERIODS ENDED JANUARY 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY BLUE CHIP GROWTH 13.33% 13.82% 211.15% 670.31% S&P 500 5.59% 10.35% 225.05% 442.52% Growth Funds Average 14.39% 18.90% 199.36% 395.44%
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 500SM Index - a market capitalization-weighted index of common stocks. To measure how the fund's performance stacked up against its peers, you can compare it to the growth funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past six months average represents a peer group of 1,291 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. Lipper has created new comparison categories that group funds according to portfolio characteristics and capitalization, as well as by capitalization only. These averages are listed on page 5 of this report.* AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY BLUE CHIP GROWTH 13.82% 25.49% 22.65% S&P 500 10.35% 26.59% 18.42% Growth Funds Average 18.90% 23.84% 16.85% AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. (Note: Lipper calculates average annual total returns by annualizing each fund's total return, then taking an arithmetic average. This may produce a different figure than that obtained by averaging the cumulative total returns and annualizing the result.) $10,000 OVER 10 YEARS Blue Chip Growth S&P 500 00312 SP001 1990/01/31 10000.00 10000.00 1990/02/28 10271.11 10129.00 1990/03/31 10782.34 10397.42 1990/04/30 10681.64 10137.48 1990/05/31 11890.01 11125.89 1990/06/30 12161.12 11050.23 1990/07/31 11874.52 11014.87 1990/08/31 10852.05 10019.13 1990/09/30 10339.42 9531.20 1990/10/31 10277.28 9490.21 1990/11/30 10929.80 10103.28 1990/12/31 11296.17 10385.16 1991/01/31 12180.76 10837.95 1991/02/28 13120.15 11612.87 1991/03/31 13777.72 11893.90 1991/04/30 13628.99 11922.44 1991/05/31 14349.18 12437.49 1991/06/30 13628.99 11867.86 1991/07/31 14826.71 12420.90 1991/08/31 15476.45 12715.27 1991/09/30 15233.94 12502.93 1991/10/31 15539.56 12670.47 1991/11/30 15210.43 12159.85 1991/12/31 17487.47 13550.93 1992/01/31 16937.31 13298.89 1992/02/29 17015.90 13471.77 1992/03/31 16552.19 13209.07 1992/04/30 16772.26 13597.42 1992/05/31 17118.08 13664.05 1992/06/30 16622.92 13460.45 1992/07/31 17306.70 14010.98 1992/08/31 17125.94 13723.76 1992/09/30 17353.35 13885.70 1992/10/31 17594.26 13934.30 1992/11/30 18517.73 14409.46 1992/12/31 18566.74 14586.70 1993/01/31 18607.40 14709.22 1993/02/28 18485.41 14909.27 1993/03/31 19380.00 15223.86 1993/04/30 19689.03 14855.44 1993/05/31 20721.88 15253.56 1993/06/30 20917.06 15297.80 1993/07/31 20917.06 15236.61 1993/08/31 22218.27 15814.08 1993/09/30 22680.63 15692.31 1993/10/31 22934.15 16017.14 1993/11/30 22236.98 15864.97 1993/12/31 23116.11 16056.94 1994/01/31 24034.25 16602.88 1994/02/28 24053.38 16152.94 1994/03/31 23297.83 15448.67 1994/04/30 23986.43 15646.41 1994/05/31 24292.48 15903.02 1994/06/30 23450.85 15513.39 1994/07/31 24043.82 16022.23 1994/08/31 25344.52 16679.14 1994/09/30 25269.24 16270.50 1994/10/31 26435.81 16636.59 1994/11/30 25057.13 16030.68 1994/12/31 25393.04 16268.42 1995/01/31 24756.99 16690.26 1995/02/28 25578.96 17340.68 1995/03/31 26655.35 17852.40 1995/04/30 27643.67 18378.16 1995/05/31 28260.15 19112.73 1995/06/30 29825.81 19556.72 1995/07/31 31890.53 20205.22 1995/08/31 32223.23 20255.94 1995/09/30 32578.06 21110.74 1995/10/31 31757.72 21035.37 1995/11/30 32854.93 21958.82 1995/12/31 32598.63 22381.75 1996/01/31 33043.59 23143.63 1996/02/29 32778.73 23358.17 1996/03/31 33181.31 23583.11 1996/04/30 33361.42 23930.72 1996/05/31 34039.45 24547.89 1996/06/30 34145.39 24641.42 1996/07/31 32588.03 23552.76 1996/08/31 33435.58 24049.49 1996/09/30 35433.41 25403.00 1996/10/31 35961.06 26103.61 1996/11/30 38564.94 28076.78 1996/12/31 37611.96 27520.58 1997/01/31 39798.03 29240.07 1997/02/28 39556.41 29469.31 1997/03/31 37611.96 28258.42 1997/04/30 39901.58 29945.44 1997/05/31 42237.23 31768.52 1997/06/30 43905.55 33191.75 1997/07/31 47414.77 35832.82 1997/08/31 45044.61 33825.47 1997/09/30 47287.92 35678.09 1997/10/31 45719.18 34486.44 1997/11/30 47121.54 36082.82 1997/12/31 47775.03 36702.36 1998/01/31 48670.97 37108.29 1998/02/28 52145.73 39784.53 1998/03/31 54458.21 41821.90 1998/04/30 54918.28 42242.63 1998/05/31 53828.63 41516.48 1998/06/30 56758.58 43202.88 1998/07/31 56976.51 42742.77 1998/08/31 48549.89 36563.02 1998/09/30 52192.23 38905.24 1998/10/31 55718.56 42069.80 1998/11/30 59513.20 44619.65 1998/12/31 64381.07 47190.63 1999/01/31 67677.42 49164.14 1999/02/28 64981.57 47636.12 1999/03/31 68060.72 49542.04 1999/04/30 68009.61 51460.81 1999/05/31 65850.37 50245.82 1999/06/30 69811.11 53034.46 1999/07/31 67971.28 51378.72 1999/08/31 68341.80 51124.40 1999/09/30 66650.54 49723.08 1999/10/31 71162.22 52869.56 1999/11/30 73890.53 53944.39 1999/12/31 79999.27 57121.72 2000/01/31 77031.41 54251.92 IMATRL PRASUN SHR__CHT 20000131 20000211 093102 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Blue Chip Growth Fund on January 31, 1990. As the chart shows, by January 31, 2000, the value of the investment would have grown to $77,031 - a 670.31% increase on the initial investment. For comparison, look at how the Standard & Poor's 500 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $54,252 - a 442.52% increase. (checkmark)UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of long-term growth and short-term volatility. In turn, the share price and return of a fund that invests in stocks will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. * THE LIPPER LARGE-CAP GROWTH FUNDS AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO CHARACTERISTICS AND CAPITALIZATION. THE LIPPER LARGE-CAP SUPERGROUP AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR CAPITALIZATION. AS OF JANUARY 31, 2000, THE SIX MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR THE LARGE-CAP GROWTH FUNDS AVERAGE WERE 20.83%, 23.73%, 255.39% AND 505.07%, RESPECTIVELY. THE ONE YEAR, FIVE YEAR AND 10 YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 23.73%, 28.43%, AND 19.41%, RESPECTIVELY. THE SIX MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR THE LARGE-CAP SUPERGROUP AVERAGE WERE 10.61%, 14.76%, 208.98%, AND 407.99%, RESPECTIVELY. THE ONE YEAR, FIVE YEAR AND 10 YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 14.76%, 24.87%, AND 17.31%, RESPECTIVELY. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP What goes up must come down. Or must it? Technology stocks seemed united in their quest to prove this age-old theory wrong during the six months that ended January 31, 2000. Driven in large part by investors' ongoing fancy with the Internet and dot.com stocks, the technology sector - - as measured by the NASDAQ Index - returned 49.52% during the six-month period. In contrast, the Standard & Poor's 500 Index, which serves as a general barometer of overall U.S. stock performance, returned 5.59%. It wasn't only the industry leaders that got into the act, either, as the technology rally included scores of smaller and medium-sized stocks. The Russell 2000(Registered trademark) Index - a popular gauge of small-cap stock performance - returned a respectable 12.25% during the period. The NASDAQ, however, continued to be the index du jour during the period - the index was at around 2700 points when the period began, crossed 4000 before New Year's and ended January just under that threshold. Since many tech stocks rose despite a lack of discernible earnings, these gains perplexed some money managers, especially those that feel a company's stock price follows its earnings growth. Sensing that the Federal Reserve Board would raise interest rates in early February, tech stocks sold off some throughout January. Time will tell, though, if it's only a speed bump. (photograph of John McDowell) An interview with John McDowell, Portfolio Manager of Fidelity Blue Chip Growth Fund Q. HOW DID THE FUND PERFORM, JOHN? A. For the six months that ended January 31, 2000, the fund returned 13.33%, outpacing the 5.59% return delivered by the Standard & Poor's 500 Index. The growth funds average tracked by Lipper Inc. returned 14.39% during this time frame. For the 12 months that ended January 31, 2000, the fund returned 13.82%, compared to the 10.35% for the S&P 500 and 18.90% for the Lipper growth funds average. Q. WHAT FACTORS HELPED THE FUND OUTPERFORM THE S&P 500, YET SLIGHTLY LAG ITS LIPPER PEER GROUP DURING THE PAST SIX MONTHS? A. The market had a distinctive growth bias over the past six months, and my predisposition to invest mainly in growth stocks was a big factor in the fund's success. Over the past six months, the technology sector was, by far, the strongest performing sector. Our overweighting in tech relative to the index fueled the fund's outperformance during the period. The typical growth fund, however, had an even higher weighting in technology stocks than we did, which detracted from performance versus our Lipper peers. While the earnings of technology stocks grew fairly rapidly, the prices for these stocks were generally high. We took a more balanced investment approach by not making highly concentrated bets in large tech stocks and instead made a variety of smaller investments in good growth stories outside of tech. This less-concentrated approach did not pay off over the past six months relative to the fund's peers. Q. HOW DID THE EXTREME NARROWNESS OF THE MARKET INFLUENCE YOUR INVESTMENT STRATEGY? A. Every day, I talk to Fidelity analysts with compelling investment ideas. This free flow of ideas enables me to comfortably hold more stocks than the typical non-Fidelity fund manager. The benefit is better diversification. The downside to better diversification is more difficulty generating strong relative returns in those unusual times when market performance is coming from relatively few stocks. We refer to this condition as weak market breadth. To illustrate this point, in 1999, the S&P 500 index returned 21%, largely driven by technology. The median stock in the index, however, was down 3%. Fortunately, we were able to stay a few steps ahead of the game with the help of good stock picking. Q. WHAT STOCKS WERE KEY CONTRIBUTORS TO PERFORMANCE? A. I was able to add value through security selection in almost every market sector. In technology, Cisco Systems was a big contributor to fund performance; in health care, Amgen; in retail, Home Depot; and in the capital goods sector, Corning, Inc. As a group, though, technology stocks helped the most. Over the course of the period, as it became clear to us that Y2K concerns were overblown, we added selectively to rapidly growing technology stocks, which significantly helped performance. The names included Veritas, JDS Uniphase, Conexant, Network Appliance, Siebel Systems and Intuit. Q. WHICH STOCKS DRAGGED ON FUND RETURNS? A. Three technology stocks were among the biggest detractors from relative performance - Nortel, Qualcomm and Oracle Systems. Oracle was a strong performer for the S&P, but we were hurt for underweighting the stock. Having no exposure to high-flying benchmark issues Nortel and Qualcomm also dampened performance. Philip Morris was the biggest absolute detractor, suffering from further tobacco-related litigation. Selected financial stocks, such as Fannie Mae and AIG, although relatively attractive from earnings growth and valuation perspectives, trended lower in light of a rising interest-rate environment. Q. WHAT'S YOUR OUTLOOK? A. I remain concerned with valuations, particularly those of technology stocks. Interest rates have risen steadily for over a year now, and usually this is negative for stock prices. In fact, the majority of stocks in the S&P were actually flat to down during the period. Conversely, technology stocks advanced at a record pace. The prices of most tech stocks have run up much faster than underlying earnings. Valuations, therefore, have become stretched. We continue to remain underweighted in tech stocks versus the typical Lipper growth manager and are focused on what we believe are the companies with the best prospects. Unfortunately, it is impossible to predict if and when technology stock valuations will fall to more normal levels compared with the broader market. There are many blue-chip growth stocks now trading at attractive valuations outside of tech, and we have selectively bought those attractively priced stocks with good near-term earnings growth prospects. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. (checkmark)FUND FACTS GOAL: seeks growth of capital over the long term by investing mainly in common stocks of well-known and established companies FUND NUMBER: 312 TRADING SYMBOL: FBGRX START DATE: December 31, 1987 SIZE: as of January 31, 2000, more than $27.2 billion MANAGER: John McDowell, since 1996; leader, Fidelity Growth Funds Group; manager, Fidelity Large-Cap Stock Fund, 1995-1996; joined Fidelity in 1985 JOHN MCDOWELL ADDRESSES THE CHALLENGES OF MANAGING A BLUE-CHIP FUND IN A TECHNOLOGY-LED MARKET: "Each different market environment presents its own sets of challenges, and this environment is no different. Today, we are faced with a `new paradigm' and a `new economy' driven by improved communications technologies in general, and the Internet in particular. Today, many of the market's top performers - the blue chips of the future - are companies with large market capitalizations, constantly shifting business models, and, most importantly, no earnings. Historically, year-in and year-out, there has been one constant to the stock market: Companies with the best earnings growth generate the best stock price performances. The promise of high growth potential Internet companies has combined with investor willingness to fund extremely risky ventures. The stock market's appetite for these companies has encouraged a mass proliferation of Internet companies which, in turn, use most of the billions of dollars raised in the public stock market to fund ambitious advertising programs. In the past year, Internet-related stocks with deepening losses have provided the best performance in the market, counter to history. Some of these companies will probably be very successful, but in the end most will probably not be able to justify their billion or multi-billion dollar valuations. I am focused on finding the ultimate winners in the Internet sector and am not blindly owning stocks just because they go up every day." INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Microsoft Corp. 4.4 4.0 General Electric Co. 4.3 4.1 Cisco Systems, Inc. 4.1 2.6 Intel Corp. 3.1 2.2 Merck & Co., Inc. 2.0 1.9 Procter & Gamble Co. 1.9 2.1 Bristol-Myers Squibb Co. 1.9 1.9 Home Depot, Inc. 1.8 1.3 Wal-Mart Stores, Inc. 1.7 1.4 Lucent Technologies, Inc. 1.7 2.3 26.9 23.8 TOP FIVE MARKET SECTORS AS OF JANUARY 31, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 37.7 26.1 HEALTH 12.3 16.0 FINANCE 8.6 9.3 RETAIL & WHOLESALE 7.7 8.3 MEDIA & LEISURE 6.6 6.7
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF JANUARY 31, 2000 * AS OF JULY 31, 1999 ** Stocks 97.1% Stocks 96.4% Short-Term Investments and Short-Term Investments and Net Other Assets 2.9% Net Other Assets 3.6% * FOREIGN INVESTMENTS 3.1% ** FOREIGN INVESTMENTS 3.3% Row: 1, Col: 1, Value: 97.09999999999999 Row: 1, Col: 1, Value: 96.40000000000001 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 8, Value: 2.9 Row: 1, Col: 8, Value: 3.6
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS. INVESTMENTS JANUARY 31, 2000 (UNAUDITED) Showing Percentage of Net Assets
COMMON STOCKS - 97.1% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 1.3% AEROSPACE & DEFENSE - 1.1% Boeing Co. 2,236,100 $ 99,087 Honeywell International, Inc. 1,481,437 71,109 Textron, Inc. 1,118,420 66,756 United Technologies Corp. 1,151,600 60,963 297,915 SHIP BUILDING & REPAIR - 0.2% General Dynamics Corp. 1,386,600 65,344 TOTAL AEROSPACE & DEFENSE 363,259 BASIC INDUSTRIES - 1.6% CHEMICALS & PLASTICS - 0.2% Monsanto Co. 1,465,500 51,750 PACKAGING & CONTAINERS - 1.0% Corning, Inc. 1,549,900 239,072 Owens-Illinois, Inc. (a) 2,089,000 38,255 277,327 PAPER & FOREST PRODUCTS - 0.4% Kimberly-Clark Corp. 1,587,400 98,320 TOTAL BASIC INDUSTRIES 427,397 DURABLES - 1.0% CONSUMER DURABLES - 0.4% Minnesota Mining & 1,186,400 111,077 Manufacturing Co. CONSUMER ELECTRONICS - 0.5% Gemstar International Group 973,800 64,636 Ltd. (a) Sony Corp. 253,600 64,399 129,035 HOME FURNISHINGS - 0.1% Leggett & Platt, Inc. 1,549,400 27,889 TOTAL DURABLES 268,001 ENERGY - 3.1% ENERGY SERVICES - 1.2% Baker Hughes, Inc. 1,542,100 37,974 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) ENERGY - CONTINUED ENERGY SERVICES - CONTINUED Halliburton Co. 3,778,000 $ 136,008 Noble Drilling Corp. (a) 1,299,300 38,086 Schlumberger Ltd. 1,848,000 112,844 324,912 OIL & GAS - 1.9% Anadarko Petroleum Corp. 1,561,700 51,243 Exxon Mobil Corp. 2,569,900 214,587 Texaco, Inc. 1,595,700 84,373 Total Fina SA Class B 766,400 95,417 USX - Marathon Group 3,197,500 82,136 527,756 TOTAL ENERGY 852,668 FINANCE - 8.6% BANKS - 1.6% Bank of New York Co., Inc. 2,180,300 88,575 FleetBoston Financial Corp. 3,259,600 102,474 Mellon Financial Corp. 2,728,800 93,632 Northern Trust Corp. 1,839,200 111,042 State Street Corp. 398,700 31,971 427,694 CREDIT & OTHER FINANCE - 1.9% American Express Co. 1,371,943 226,113 Associates First Capital 3,149,800 62,996 Corp. Class A Citigroup, Inc. 4,045,300 232,352 521,461 FEDERAL SPONSORED CREDIT - 2.0% Fannie Mae 5,206,200 312,047 Freddie Mac 4,524,100 227,053 539,100 INSURANCE - 2.1% AFLAC, Inc. 1,235,000 53,645 Ambac Financial Group, Inc. 1,981,900 96,989 American International Group, 2,889,237 300,842 Inc. COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED INSURANCE - CONTINUED CIGNA Corp. 1,136,400 $ 81,537 MBIA, Inc. 775,400 38,818 571,831 SECURITIES INDUSTRY - 1.0% Charles Schwab Corp. 2,389,400 86,168 Daiwa Securities Co. Ltd. 2,051,000 33,319 Morgan Stanley Dean Witter & 936,600 62,050 Co. Nikko Securities Co. Ltd. 3,420,000 47,440 Nomura Securities Co. Ltd. 2,524,000 57,334 286,311 TOTAL FINANCE 2,346,397 HEALTH - 12.3% DRUGS & PHARMACEUTICALS - 10.1% American Home Products Corp. 1,945,800 91,574 Amgen, Inc. (a) 5,051,000 321,686 Bristol-Myers Squibb Co. 7,863,300 518,978 Eli Lilly & Co. 5,012,900 335,238 Genentech, Inc. 637,500 89,569 Merck & Co., Inc. 6,861,600 540,780 Pfizer, Inc. 7,016,000 255,207 Schering-Plough Corp. 4,626,400 203,562 Warner-Lambert Co. 4,246,000 403,105 2,759,699 MEDICAL EQUIPMENT & SUPPLIES - - 2.2% Abbott Laboratories 2,644,000 86,261 Cardinal Health, Inc. 1,326,950 63,445 Guidant Corp. (a) 1,237,700 65,134 Johnson & Johnson 3,297,500 283,791 Medtronic, Inc. 2,101,300 96,134 594,765 TOTAL HEALTH 3,354,464 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) INDUSTRIAL MACHINERY & EQUIPMENT - 5.1% ELECTRICAL EQUIPMENT - 4.5% General Electric Co. 8,839,900 $ 1,179,022 Omron Corp. 1,310,000 37,807 1,216,829 INDUSTRIAL MACHINERY & EQUIPMENT - 0.6% Illinois Tool Works, Inc. 751,500 43,963 Ingersoll-Rand Co. 1,603,450 75,462 Parker-Hannifin Corp. 1,147,200 49,616 169,041 TOTAL INDUSTRIAL MACHINERY & 1,385,870 EQUIPMENT MEDIA & LEISURE - 6.6% BROADCASTING - 4.5% AT&T Corp. - Liberty Media 3,226,400 164,950 Group Class A (a) Cablevision Systems Corp. 827,000 63,162 Class A (a) CBS Corp. (a) 3,254,100 189,755 Clear Channel Communications, 1,080,700 93,345 Inc. (a) Comcast Corp. Class A 3,964,700 182,376 (special) Cox Communications, Inc. 2,236,600 109,174 Class A (a) MediaOne Group, Inc. (a) 684,600 54,426 Time Warner, Inc. 4,646,188 371,405 1,228,593 ENTERTAINMENT - 0.6% Viacom, Inc. Class B 1,489,100 82,459 (non-vtg.) (a) Walt Disney Co. 2,597,600 94,325 176,784 PUBLISHING - 0.3% McGraw-Hill Companies, Inc. 1,125,600 63,104 Tribune Co. 187,000 7,889 70,993 RESTAURANTS - 1.2% Brinker International, Inc. 1,690,500 42,685 (a) COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) MEDIA & LEISURE - CONTINUED RESTAURANTS - CONTINUED McDonald's Corp. 6,306,100 $ 234,508 Tricon Global Restaurants, 1,475,600 42,239 Inc. (a) 319,432 TOTAL MEDIA & LEISURE 1,795,802 NONDURABLES - 6.1% BEVERAGES - 1.6% Anheuser-Busch Companies, 1,817,000 122,648 Inc. PepsiCo, Inc. 1,708,190 58,292 The Coca-Cola Co. 4,529,400 260,157 441,097 FOODS - 0.7% Bestfoods 1,048,400 45,605 H. J. Heinz Co. 884,300 32,885 Nabisco Group Holdings Corp. 3,096,600 26,708 Quaker Oats Co. 1,403,000 83,303 188,501 HOUSEHOLD PRODUCTS - 3.0% Clorox Co. 1,419,500 67,781 Colgate-Palmolive Co. 1,537,400 91,091 Gillette Co. 3,311,500 124,595 Procter & Gamble Co. 5,198,800 524,429 807,896 TOBACCO - 0.8% Philip Morris Companies, Inc. 11,020,500 230,742 TOTAL NONDURABLES 1,668,236 RETAIL & WHOLESALE - 7.7% APPAREL STORES - 0.6% Gap, Inc. 1,933,600 86,408 The Limited, Inc. 1,679,300 51,534 TJX Companies, Inc. 2,328,300 37,980 175,922 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) RETAIL & WHOLESALE - CONTINUED DRUG STORES - 0.6% CVS Corp. 1,421,700 $ 49,671 Walgreen Co. 4,144,500 114,492 164,163 GENERAL MERCHANDISE STORES - 3.0% Costco Wholesale Corp. (a) 2,976,800 145,677 Kohls Corp. (a) 354,300 24,845 Target Corp. 2,691,200 177,787 Wal-Mart Stores, Inc. 8,577,700 469,629 817,938 GROCERY STORES - 0.8% Kroger Co. (a) 5,248,000 91,184 Safeway, Inc. (a) 3,457,700 132,041 223,225 RETAIL & WHOLESALE, MISCELLANEOUS - 2.7% Best Buy Co., Inc. (a) 1,436,400 68,588 Home Depot, Inc. 8,622,000 488,221 Lowe's Companies, Inc. 1,595,700 71,208 Staples, Inc. (a) 3,936,875 93,747 721,764 TOTAL RETAIL & WHOLESALE 2,103,012 SERVICES - 1.1% ADVERTISING - 0.8% DoubleClick, Inc. (a) 120,100 11,867 Omnicom Group, Inc. 2,135,300 200,051 211,918 EDUCATIONAL SERVICES - 0.0% SkillSoft Corp. 8,900 125 SERVICES - 0.3% Ecolab, Inc. 1,362,800 47,954 H&R Block, Inc. 767,000 33,077 81,031 TOTAL SERVICES 293,074 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - 37.7% COMMUNICATIONS EQUIPMENT - 6.1% Cisco Systems, Inc. (a) 10,186,350 $ 1,115,405 Lucent Technologies, Inc. 8,460,614 467,449 Nokia AB sponsored ADR 445,900 81,600 Sycamore Networks, Inc. 7,700 2,456 Turnstone Systems, Inc. 5,100 148 1,667,058 COMPUTER SERVICES & SOFTWARE - - 13.8% Akamai Technologies, Inc. 8,600 2,142 Amazon.com, Inc. (a) 381,600 24,637 America Online, Inc. (a) 3,517,600 200,283 At Home Corp. Series A (a) 892,752 32,181 Automatic Data Processing, 4,726,280 224,203 Inc. BEA Systems, Inc. (a) 1,082,000 81,556 BMC Software, Inc. (a) 795,600 30,133 Citrix Systems, Inc. (a) 1,112,800 152,732 Computer Associates 1,723,500 118,383 International, Inc. Computer Sciences Corp. (a) 1,337,900 122,920 DST Systems, Inc. (a) 1,051,500 65,324 Electronic Data Systems Corp. 1,663,300 112,481 First Data Corp. 2,139,900 104,989 Healtheon/Web Maryland Corp. 1,276,600 82,979 IMS Health, Inc. 2,307,200 51,768 Inktomi Corp. (a) 591,900 58,857 Intuit, Inc. (a) 2,260,300 136,324 Lycos, Inc. (a) 1,227,400 90,137 Mercury Interactive Corp. (a) 351,800 38,478 Microsoft Corp. (a) 12,317,800 1,205,602 Oracle Corp. (a) 3,343,600 167,023 Rational Software Corp. (a) 416,800 21,674 Shared Medical Systems Corp. 923,300 40,856 Siebel Systems, Inc. (a) 1,037,898 95,162 Software.com, Inc. 470,300 31,922 Synopsys, Inc. (a) 333,300 15,394 VeriSign, Inc. (a) 506,700 81,769 VERITAS Software Corp. (a) 1,065,810 155,475 Vignette Corp. 642,300 125,249 Yahoo!, Inc. (a) 317,100 102,126 3,772,759 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMPUTERS & OFFICE EQUIPMENT - - 6.8% Comverse Technology, Inc. (a) 618,800 $ 88,720 Dell Computer Corp. (a) 6,589,100 253,269 EMC Corp. (a) 3,187,900 339,511 Gateway, Inc. (a) 825,000 50,480 Hewlett-Packard Co. 1,498,500 162,213 International Business 2,230,300 250,212 Machines Corp. Juniper Networks, Inc. 368,100 49,809 Network Appliance, Inc. (a) 1,298,400 130,327 Pitney Bowes, Inc. 3,174,700 155,560 Ricoh Co. Ltd. 1,789,000 31,361 Sun Microsystems, Inc. (a) 4,068,800 319,655 Symbol Technologies, Inc. 408,100 24,358 1,855,475 ELECTRONIC INSTRUMENTS - 1.5% Agilent Technologies, Inc. 1,885,300 124,783 Applied Materials, Inc. (a) 561,500 77,066 Novellus Systems, Inc. (a) 1,491,600 73,275 PE Corp. - Biosystems Group 798,400 119,560 Sequenom, Inc. 9,100 237 394,921 ELECTRONICS - 9.5% Altera Corp. (a) 2,186,300 143,749 Chartered Semiconduct 768,800 63,138 Manufacturing Ltd. ADR Conexant Systems, Inc. (a) 1,218,000 102,921 Fairchild Semiconduct 100,000 3,400 International, Inc. Class A Flextronics International 1,758,800 87,390 Ltd. (a) Integrated Device Technology, 1,186,800 33,824 Inc. (a) Intel Corp. 8,456,120 836,627 JDS Uniphase Corp. (a) 645,600 131,662 Linear Technology Corp. 2,233,980 211,530 Micron Technology, Inc. (a) 1,030,100 64,059 Motorola, Inc. 2,253,400 308,152 PMC-Sierra, Inc. (a) 360,700 65,106 Quantum Effect Devices, Inc. 6,500 104 Sanmina Corp. (a) 799,400 84,936 Texas Instruments, Inc. 2,637,200 284,488 Tyco International Ltd. 1,571,900 67,199 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED ELECTRONICS - CONTINUED Vitesse Semiconductor Corp. 1,530,400 $ 66,572 (a) Xilinx, Inc. (a) 719,700 32,926 2,587,783 TOTAL TECHNOLOGY 10,277,996 TRANSPORTATION - 0.1% AIR TRANSPORTATION - 0.1% AMR Corp. (a) 403,400 21,708 TRUCKING & FREIGHT - 0.0% United Parcel Service, Inc. 23,900 1,422 Class B TOTAL TRANSPORTATION 23,130 UTILITIES - 4.8% CELLULAR - 1.7% ALLTEL Corp. 513,400 34,269 Nextel Communications, Inc. 1,232,900 131,150 Class A (a) Sprint Corp. - PCS Group 1,036,800 114,113 Series 1 (a) Vodafone AirTouch PLC 2,975,850 166,648 sponsored ADR VoiceStream Wireless Corp. (a) 216,600 25,423 471,603 ELECTRIC UTILITY - 0.9% AES Corp. (a) 1,553,400 124,466 Calpine Corp. (a) 859,500 62,851 CMS Energy Corp. 1,315,900 39,477 226,794 TELEPHONE SERVICES - 2.2% AT&T Corp. 3,569,994 188,317 MCI WorldCom, Inc. (a) 4,758,399 218,589 SBC Communications, Inc. 2,809,400 121,155 Sprint Corp. - FON Group 1,055,700 68,291 596,352 TOTAL UTILITIES 1,294,749 TOTAL COMMON STOCKS 26,454,055 (Cost $16,092,912) CASH EQUIVALENTS - 3.1% SHARES VALUE (NOTE 1) (000S) Central Cash Collateral Fund, 15,701,000 $ 15,701 5.56% (b) Taxable Central Cash Fund, 826,437,289 826,437 5.45% (b) TOTAL CASH EQUIVALENTS 842,138 (Cost $842,138) TOTAL INVESTMENT PORTFOLIO - 27,296,193 100.2% (Cost $16,935,050) NET OTHER ASSETS - (0.2)% (49,129) NET ASSETS - 100% $ 27,247,064
LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. INCOME TAX INFORMATION At January 31, 2000, the aggregate cost of investment securities for income tax purposes was $16,947,345,000. Net unrealized appreciation aggre- gated $10,348,848,000, of which $11,271,679,000 related to appreciated investment securities and $922,831,000 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JANUARY 31, 2000 (UNAUDITED) ASSETS Investment in securities, at $ 27,296,193 value (cost $16,935,050) - See accompanying schedule Receivable for investments 127,391 sold Receivable for fund shares 59,743 sold Dividends receivable 11,364 Interest receivable 3,737 Other receivables 1,040 TOTAL ASSETS 27,499,468 LIABILITIES Payable for investments $ 144,971 purchased Payable for fund shares 70,464 redeemed Accrued management fee 16,191 Other payables and accrued 5,077 expenses Collateral on securities 15,701 loaned, at value TOTAL LIABILITIES 252,404 NET ASSETS $ 27,247,064 Net Assets consist of: Paid in capital $ 16,592,126 Undistributed net investment 9,881 income Accumulated undistributed net 283,947 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 10,361,110 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 470,789 $ 27,247,064 shares outstanding NET ASSET VALUE, offering $57.88 price and redemption price per share ($27,247,064 (divided by) 470,789 shares) STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 2000 (UNAUDITED) INVESTMENT INCOME $ 93,351 Dividends Interest 19,552 Security lending 35 TOTAL INCOME 112,938 EXPENSES Management fee Basic fee $ 73,041 Performance adjustment (609) Transfer agent fees 27,625 Accounting and security 608 lending fees Non-interested trustees' 51 compensation Custodian fees and expenses 286 Registration fees 778 Audit 60 Legal 82 Miscellaneous 52 Total expenses before 101,974 reductions Expense reductions (1,699) 100,275 NET INVESTMENT INCOME 12,663 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 298,701 Foreign currency transactions (237) 298,464 Change in net unrealized appreciation (depreciation) on: Investment securities 2,853,957 Assets and liabilities in (61) 2,853,896 foreign currencies NET GAIN (LOSS) 3,152,360 NET INCREASE (DECREASE) IN $ 3,165,023 NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1999 2000 (UNAUDITED) INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 12,663 $ 64,596 income Net realized gain (loss) 298,464 994,671 Change in net unrealized 2,853,896 2,337,286 appreciation (depreciation) NET INCREASE (DECREASE) IN 3,165,023 3,396,553 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (62,506) (36,306) From net investment income From net realized gain (924,053) (747,879) TOTAL DISTRIBUTIONS (986,559) (784,185) Share transactions Net 3,903,095 8,609,208 proceeds from sales of shares Reinvestment of distributions 966,617 766,939 Cost of shares redeemed (3,485,316) (5,310,552) NET INCREASE (DECREASE) IN 1,384,396 4,065,595 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 3,562,860 6,677,963 IN NET ASSETS NET ASSETS Beginning of period 23,684,204 17,006,241 End of period (including $ 27,247,064 $ 23,684,204 undistributed net investment income of $9,881 and $64,832, respectively) OTHER INFORMATION Shares Sold 70,443 172,671 Issued in reinvestment of 18,221 19,630 distributions Redeemed (63,094) (108,433) Net increase (decrease) 25,570 83,868
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31, 2000 (UNAUDITED) 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 53.20 $ 47.06 $ 41.21 $ 30.76 $ 32.59 $ 25.14 period Income from Invest- ment Operations Net investment income .03 D .16 D .22 D .28 D .34 .07 D Net realized and unrealized 6.86 8.14 7.64 12.70 .42 7.96 gain (loss) Total from investment 6.89 8.30 7.86 12.98 .76 8.03 operations Less Distributions From net investment income (.14) (.10) (.26) (.28) (.12) - From net realized gain (2.07) (2.06) (1.75) (2.25) (2.47) (.58) Total distributions (2.21) (2.16) (2.01) (2.53) (2.59) (.58) Net asset value, end of period $ 57.88 $ 53.20 $ 47.06 $ 41.21 $ 30.76 $ 32.59 TOTAL RETURN B, C 13.33% 19.30% 20.17% 45.50% 2.19% 32.64% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in $ 27,247 $ 23,684 $ 17,006 $ 12,877 $ 8,179 $ 6,421 millions) Ratio of expenses to average .81% A .71% .72% .80% .98% 1.05% net assets Ratio of expenses to average .79% A, E .70% E .70% E .78% E .95% E 1.02% E net assets after expense reductions Ratio of net invest- ment .10% A .32% .52% .81% 1.10% .25% income to average net assets Portfolio turnover rate 38% A 38% 49% 51% 206% 182%
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. C TOTAL RETURNS DO NOT INCLUDE THE FORMER ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. NOTES TO FINANCIAL STATEMENTS For the period ended January 31, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Blue Chip Growth Fund (the fund) is a fund of Fidelity Securities Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company organized as a Massachusetts business trust. The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund: SECURITY VALUATION. Securities for which exchange quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of the business of the fund, are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Securities for which exchange quotations are not readily available (and in certain cases debt securities which trade on an exchange) are valued primarily using dealer-supplied valuations or at their fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to income taxes to the extent 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INCOME TAXES - CONTINUED that it distributes substantially all of its taxable income for its fiscal year. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust. DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the Plan) non-interested Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the fund or are invested in a cross-section of other Fidelity funds. Deferred amounts remain in the fund until distributed in accordance with the Plan. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for litigation proceeds, foreign currency transactions and losses deferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses 2. OPERATING POLICIES - CONTINUED FOREIGN CURRENCY CONTRACTS - CONTINUED may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury, Federal Agency, and other obligations found satisfactory by FMR are transferred to an account of the fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC, the fund may invest in the Taxable Central Cash Fund and the Central Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments Money Management, Inc., an affiliate of FMR. The Cash Funds are open-end money market funds available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Funds seek preservation of capital, liquidity, and current income. Income distributions from the Cash Funds are declared daily and paid monthly from net interest income. Income distributions earned by the fund are recorded as either interest income or security lending income in the accompanying financial statements. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $5,080,152,000 and $4,615,947,000, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly basic fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED MANAGEMENT FEE - CONTINUED assets of all the mutual funds advised by FMR. The rates ranged from .2167% to .5200% for the period. The annual individual fund fee rate is .30%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The basic fee is subject to a performance adjustment (up to a maximum of (plus/minus).20% of the fund's average net assets over the performance period) based on the fund's investment performance as compared to the appropriate index over a specified period of time. For the period, the management fee was equivalent to an annualized rate of .57% of average net assets after the performance adjustment. SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR, is the general distributor of the fund. Shares purchased before October 12, 1990 are subject to a 1% deferred sales charge upon redemption. For the period, FDC received deferred sales charges of $14,000 on redemption of shares of the fund. 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 .22% of average net assets. ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting records and administers the security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses. BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $270,000 for the period. 5. SECURITY LENDING. The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral in the form of U.S. Treasury obligations, letters of credit, and/or cash against the loaned securities, and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. 5. SECURITY LENDING - CONTINUED At period end, the value of the securities loaned amounted to $16,049,000. The fund received cash collateral of $15,701,000 which was invested in cash equivalents. 6. EXPENSE REDUCTIONS. FMR has directed certain portfolio trades to brokers who paid a portion of the fund's expenses. For the period, the fund's expenses were reduced by $1,008,000 under this arrangement. In addition, through arrangements with the fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce a portion of the fund's expenses. During the period, the fund's custodian and transfer agent fees were reduced by $3,000 and $688,000, respectively, under these arrangements. 7. CHANGE IN INDEPENDENT AUDITOR. Based on the recommendation of the Audit Committee of the fund, the Board of Trustees has determined not to retain PricewaterhouseCoopers LLP as the fund's independent auditor and voted to appoint Deloitte & Touche LLP for the fiscal year ended July 31, 2000. During the two most recent fiscal years and through January 20, 2000, PricewaterhouseCoopers LLP's audit reports contained no adverse opinion or disclaimer of opinion; nor were their reports qualified as to uncertainty, audit scope, or accounting principles. Further, there were no disagreements between the fund and PricewaterhouseCoopers LLP on accounting principles, financial statements disclosure or audit scope, which if not resolved to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make reference to the disagreement in their report. MANAGING YOUR INVESTMENTS Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day. BY PHONE Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security. (PHONE_GRAPHIC)FIDELITY AUTOMATED SERVICE TELEPHONE (FASTSM) 1-800-544-5555 PRESS 1 For mutual fund and brokerage trading. 2 For quotes.* 3 For account balances and holdings. 4 To review orders and mutual fund activity. 5 To change your PIN. *0 To speak to a Fidelity representative. BY PC Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services. (COMPUTER_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call EarthLink Sprint at 1-800-288-2967, and be sure to ask for registration number SMD004 to receive a special Fidelity package that includes 30 days of free Internet access. EarthLink is North America's #1 independent Internet access provider. (COMPUTER_GRAPHIC) FIDELITY ON-LINE XPRESS+(registered trademark) Fidelity On-line Xpress+ software for Windows combines comprehensive portfolio management capabilities, securities trading and access to research and analysis tools . . . all on your desktop. Call Fidelity at 1-800-544-0240 or visit our Web site for more information on how to manage your investments via your PC. * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. Scottsdale Road Scottsdale, AZ CALIFORNIA 815 East Birch Street Brea, CA 851 East Hamilton Avenue Campbell, CA 527 North Brand Boulevard Glendale, CA 19200 Von Karman Avenue Irvine, CA 10100 Santa Monica Blvd. Los Angeles, CA 251 University Avenue Palo Alto, CA 1760 Challenge Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 455 Market Street San Francisco, CA 950 Northgate Drive San Rafael, CA 1400 Civic Drive Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA COLORADO 1625 Broadway Denver, CO CONNECTICUT 48 West Putnam Avenue Greenwich, CT 265 Church Street New Haven, CT 300 Atlantic Street Stamford, CT 29 South Main Street West Hartford, CT DELAWARE 222 Delaware Avenue Wilmington, DE FLORIDA 4400 N. Federal Highway Boca Raton, FL 90 Alhambra Plaza Coral Gables, FL 4090 N. Ocean Boulevard Ft. Lauderdale, FL 1907 West State Road 434 Longwood, FL 8880 Tamiami Trail, North Naples, FL 2401 PGA Boulevard Palm Beach Gardens, FL 8065 Beneva Road Sarasota, FL 1502 N. Westshore Blvd. Tampa, FL GEORGIA 3445 Peachtree Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA ILLINOIS One North Franklin Street Chicago, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL 3232 Lake Avenue Wilmette, IL INDIANA 4729 East 82nd Street Indianapolis, IN MAINE 3 Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD 1 West Pennsylvania Ave. Towson, MD MASSACHUSETTS 470 Boylston Street Boston, MA 155 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 29155 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 501 Route 17, South Paramus, NJ NEW YORK 1055 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH OREGON 16850 SW 72 Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 6150 Poplar Road Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 4017 Northwest Parkway Dallas, TX 1155 Dairy Ashford Street Houston, TX 2701 Drexel Drive Houston, TX 400 East Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 511 Pine Street Seattle, WA WASHINGTON, DC 1900 K Street, N.W. Washington, DC WISCONSIN 595 North Barker Road Brookfield, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Ltd. OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Abigail P. Johnson, Vice President John McDowell, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer Matthew N. Karstetter, Deputy Treasurer Maria F. Dwyer, Deputy Treasurer John H. Costello, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d Donald J. Kirk * Ned C. Lautenbach * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA * INDEPENDENT TRUSTEES BCF-SANN-0300 95606 1.700126.102 CUSTODIAN Brown Brothers Harriman & Co. Boston, MA FIDELITY'S GROWTH FUNDS Aggressive Growth Fund Blue Chip Growth Fund Capital Appreciation Fund Contrafund (registered trademark) Contrafund(registered trademark)II Disciplined Equity Fund Dividend Growth Fund Export and Multinational Fund Fidelity FiftySM Growth Company Fund Large Cap Stock Fund Low-Priced Stock Fund Magellan(registered trademark) Fund Mid-Cap Stock Fund New Millennium Fund(registered trademark) OTC Portfolio Retirement Growth Fund Small Cap Selector Small Cap Stock Fund Stock Selector Tax Managed Stock Fund TechnoQuant(registered trademark) Growth Fund Trend Fund Value Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions and Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) Fidelity Automated Service Telephone (FASTSM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)(registered trademark) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 www.fidelity.com FIDELITY(REGISTERED TRADEMARK) DIVIDEND GROWTH FUND SEMIANNUAL REPORT JANUARY 31, 2000 (2_FIDELITY_LOGOS)(registered trademark) CONTENTS PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. PERFORMANCE 4 How the fund has done over time. FUND TALK 6 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 9 A summary of major shifts in the fund's investments over the past six months. INVESTMENTS 10 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 18 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 22 Notes to the financial statements. Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Other third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: While no major Y2K glitches disrupted the financial markets to start the new year, inflation worries re-emerged to hinder stock performance throughout January. The S&P 500(Registered trademark) and Dow Jones Industrial Average each fell approximately 5%, while the technology-oriented NASDAQ Index dropped more than 3% for the month. In bond markets, the potential for further rate hikes as a pre-emptive move against inflation continued to be an obstacle to fixed-income performance. While it's impossible to predict the future direction of the markets with any degree of certainty, there are certain basic principles that can help investors plan for their future needs. First, investors are encouraged to take a long-term view of their portfolios. If you can afford to leave your money invested through the inevitable up and down cycles of the financial markets, you will greatly reduce your vulnerability to any single decline. We know from experience, for example, that stock prices have gone up over longer periods of time, have significantly outperformed other types of investments and have stayed ahead of inflation. Second, you can further manage your investing risk through diversification. A stock mutual fund, for instance, is already diversified, because it invests in many different companies. You can increase your diversification further by investing in a number of different stock funds, or in such other investment categories as bonds. If you have a short investment time horizon, you might want to consider moving some of your investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. Of course, it's important to remember that an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these types of funds. Finally, no matter what your time horizon or portfolio diversity, it makes good sense to follow a regular investment plan, investing a certain amount of money in a fund at the same time each month or quarter and periodically reviewing your overall portfolio. By doing so, you won't get caught up in the excitement of a rapidly rising market, nor will you buy all your shares at market highs. While this strategy - known as dollar cost averaging - won't assure a profit or protect you from a loss in a declining market, it should help you lower the average cost of your purchases. Of course, you should consider your financial ability to continue your purchases through periods of low price levels before undertaking such a strategy. If you have questions, please call us at 1-800-544-6666, or visit our web site at www.fidelity.com. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS PERIODS ENDED JANUARY 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY DIVIDEND GROWTH -4.67% 1.91% 220.32% 307.84% S&P 500 5.59% 10.35% 225.05% 267.06% Growth Funds Average 14.39% 18.90% 199.36% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, five years or since the fund started on April 27, 1993. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. You can compare the fund's returns to the performance of the Standard & Poor's 500SM Index - - a market capitalization-weighted index of common stocks. To measure how the fund's performance stacked up against its peers, you can compare it to the growth funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past six months average represents a peer group of 1,291 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. Lipper has created new comparison categories that group funds according to portfolio characteristics and capitalization, as well as by capitalization only. These averages are listed on page 5 of this report.* AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND FIDELITY DIVIDEND GROWTH 1.91% 26.22% 23.09% S&P 500 10.35% 26.59% 21.19% Growth Funds Average 18.90% 23.84% 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 different figure than that obtained by averaging the cumulative total returns and annualizing the result.) $10,000 OVER LIFE OF FUND Dividend Growth S&P 500 00330 SP001 1993/04/27 10000.00 10000.00 1993/04/30 10150.00 10051.03 1993/05/31 10480.00 10320.39 1993/06/30 10700.00 10350.32 1993/07/31 10800.00 10308.92 1993/08/31 11550.00 10699.63 1993/09/30 11820.00 10617.24 1993/10/31 12080.00 10837.02 1993/11/30 11680.00 10734.07 1993/12/31 12171.52 10863.95 1994/01/31 12493.15 11233.32 1994/02/28 12302.18 10928.90 1994/03/31 11715.49 10452.40 1994/04/30 11786.37 10586.19 1994/05/31 11604.11 10759.80 1994/06/30 11310.46 10496.19 1994/07/31 11826.87 10840.46 1994/08/31 12616.68 11284.92 1994/09/30 12485.05 11008.44 1994/10/31 13041.96 11256.13 1994/11/30 12474.92 10846.18 1994/12/31 12691.18 11007.03 1995/01/31 12732.22 11292.45 1995/02/28 13142.60 11732.51 1995/03/31 13768.44 12078.74 1995/04/30 14404.54 12434.46 1995/05/31 14907.26 12931.46 1995/06/30 15728.03 13231.86 1995/07/31 16456.47 13670.63 1995/08/31 16528.28 13704.94 1995/09/30 16956.49 14283.29 1995/10/31 16359.88 14232.30 1995/11/30 17176.30 14857.10 1995/12/31 17454.52 15143.25 1996/01/31 17928.35 15658.72 1996/02/29 18479.31 15803.88 1996/03/31 18964.16 15956.07 1996/04/30 19845.70 16191.26 1996/05/31 20484.81 16608.83 1996/06/30 19933.85 16672.11 1996/07/31 18997.21 15935.54 1996/08/31 19614.29 16271.62 1996/09/30 20604.68 17187.39 1996/10/31 21100.90 17661.42 1996/11/30 22533.19 18996.44 1996/12/31 22715.29 18620.12 1997/01/31 23405.00 19783.51 1997/02/28 23472.84 19938.61 1997/03/31 22443.92 19119.33 1997/04/30 23631.13 20260.76 1997/05/31 24987.95 21494.23 1997/06/30 26141.23 22457.17 1997/07/31 28346.05 24244.09 1997/08/31 27091.00 22885.94 1997/09/30 28589.46 24139.40 1997/10/31 27906.19 23333.14 1997/11/30 28757.28 24413.23 1997/12/31 29052.83 24832.41 1998/01/31 29926.78 25107.06 1998/02/28 32286.47 26917.78 1998/03/31 33784.68 28296.24 1998/04/30 34321.54 28580.90 1998/05/31 34021.90 28089.59 1998/06/30 35183.01 29230.59 1998/07/31 35095.62 28919.28 1998/08/31 30488.61 24738.13 1998/09/30 33019.39 26322.86 1998/10/31 35516.54 28463.96 1998/11/30 37158.69 30189.16 1998/12/31 39469.17 31928.66 1999/01/31 40018.69 33263.92 1999/02/28 39455.43 32230.07 1999/03/31 41502.39 33519.60 1999/04/30 43013.56 34817.81 1999/05/31 41955.74 33995.77 1999/06/30 44181.29 35882.53 1999/07/31 42780.02 34762.28 1999/08/31 42065.64 34590.20 1999/09/30 39957.74 33642.09 1999/10/31 41821.05 35770.96 1999/11/30 42102.03 36498.18 1999/12/31 42946.49 38647.92 2000/01/31 40783.61 36706.25 IMATRL PRASUN SHR__CHT 20000131 20000210 162611 R00000000000085 $10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was invested in Fidelity Dividend Growth Fund on April 27, 1993, when the fund started. As the chart shows, by January 31, 2000, the value of the investment would have grown to $40,784 - a 307.84% increase on the initial investment. For comparison, look at how the Standard & Poor's 500 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $36,706 - a 267.06% increase. (checkmark)UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of long-term growth and short-term volatility. In turn, the share price and return of a fund that invests in stocks will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. * THE LIPPER LARGE-CAP VALUE FUNDS AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO CHARACTERISTICS AND CAPITALIZATION. THE LIPPER LARGE-CAP SUPERGROUP AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR CAPITALIZATION. AS OF JANUARY 31, 2000, THE SIX MONTH, ONE YEAR, AND FIVE YEAR CUMULATIVE TOTAL RETURNS FOR THE LARGE-CAP VALUE FUNDS AVERAGE WERE -0.90%, 4.72% AND 158.62%, RESPECTIVELY. THE ONE YEAR AND FIVE YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 4.72% AND 20.77%, RESPECTIVELY. THE SIX MONTH, ONE YEAR AND FIVE YEAR CUMULATIVE TOTAL RETURNS FOR THE LARGE-CAP SUPERGROUP AVERAGE WERE 10.61%, 14.76% AND 208.98%, RESPECTIVELY. THE ONE YEAR AND FIVE YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 14.76% AND 24.87%, RESPECTIVELY. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP What goes up must come down. Or must it? Technology stocks seemed united in their quest to prove this age-old theory wrong during the six months that ended January 31, 2000. Driven in large part by investors' ongoing fancy with the Internet and dot.com stocks, the technology sector - - as measured by the NASDAQ Index - returned 49.52% during the six-month period. In contrast, the Standard & Poor's 500 SM Index, which serves as a general barometer of overall U.S. stock performance, returned 5.59%. It wasn't only the industry leaders that got into the act, either, as the technology rally included scores of smaller and medium-sized stocks. The Russell 2000(Registered trademark) Index - a popular gauge of small-cap stock performance - returned a respectable 12.25% during the period. The NASDAQ, however, continued to be the index du jour during the period - the index was at around 2700 points when the period began, crossed 4000 before New Year's and ended January just under that threshold. Since many tech stocks rose despite a lack of discernible earnings, these gains perplexed some money managers, especially those that feel a company's stock price follows its earnings growth. Sensing that the Federal Reserve Board would raise interest rates in early February, tech stocks sold off some throughout January. Time will tell, though, if it's only a speed bump. (photograph of Charles Mangum) An interview with Charles Mangum, Portfolio Manager of Fidelity Dividend Growth Fund Q. HOW DID THE FUND PERFORM, CHARLES? A. It was a challenging period for the fund. For the six months that ended January 31, 2000, the fund returned -4.67%. This trailed both the Standard & Poor's 500 Index - which returned 5.59% during that time - and the growth funds average, which returned 14.39%, according to Lipper Inc. For the 12 months that ended January 31, 2000, the fund returned 1.91%, while the S&P 500 and Lipper group returned 10.35% and 18.90%, respectively. Q. WHAT FACTORS HELD THE FUND BACK? A. Mostly the investing climate. Investors continued to be drawn to the higher-growth segments of the market, particularly technology. More specifically, investors favored smaller, rapid-growth names, especially those with an Internet theme. Many of these stocks rose quickly during the period, despite lacking a solid earnings growth foundation. Since my strategy is to look for stable-growth names - with an emphasis on dividends and earnings growth - this momentum environment took its toll. The market seemed to punish those companies within the S&P 500 that paid dividends the quickest, and rewarded companies that paid dividends at a slower pace or not at all. Q. GIVEN THE DIFFICULT SCENARIO, HOW DID YOU PLAY THE TECHNOLOGY GROUP? A. I tried to build positions in market leaders with good earnings growth track records. The fund continued to hold a fairly significant stake in Microsoft, and I added to its investments in networking giant Cisco Systems, as well as Intel. Performance-wise, each of these stocks was among the fund's top-five individual contributors during the period. Q. FINANCE STOCKS ACCOUNTED FOR APPROXIMATELY 15% OF THE FUND'S INVESTMENTS DURING THE PERIOD. HOW DID THIS GROUP PERFORM? A. Finance stocks were hit very hard by rising interest rates, as well as by the fact that several banks in the sector missed their earnings targets by wide margins. What proved even more frustrating, though, was that even when banks did reach their earnings targets, many still declined in value. The fund's positions in Fannie Mae and Associates First Capital were two notable finance detractors, as was Midwest regional bank Comerica. Shareholders may notice that both Fannie Mae and Comerica remain solid positions in the portfolio, despite their lackluster performance. I've been patient with these stocks, simply because I believe in each company's ability to grow their earnings over time. Q. HEALTH STOCKS REPRESENTED FOUR OF THE FUND'S TOP-10 HOLDINGS AT THE END OF THE PERIOD. HOW DID THESE STOCKS PERFORM? A. This group had a tough time, but they began to bounce back toward the end of the period. Some of the fund's larger drug-stock names - including Schering-Plough and Eli Lilly - met or beat their earnings expectations during the period but were still down. Drug stocks in general fell as concerns over government intervention grew. Also, the earnings growth of the group relative to the S&P 500 was disappointing. All that aside, though, I have seen some encouraging signs lately. Valuations finally reached more reasonable levels during the period, and increased consolidation activity - sparked by an eventual resolution of the takeover battle involving Warner Lambert, Pfizer and American Home Products - could provide a lift for drug stocks as we get deeper into 2000. Q. WHICH OTHER STOCKS PERFORMED WELL DURING THE PERIOD? A. The fund's investment in retailer Home Depot performed well, as did its position in Omnicom, a leading advertising firm that benefited from dot.com advertising demand. Another strong performer was Texas Instruments, which makes a digital processing chip that goes into most handheld, wireless devices. Q. WHAT'S YOUR OUTLOOK, CHARLES? A. I'm going to keep plugging away at what I do best: finding good companies with attractive valuations and the ability to grow their earnings over time. The market hasn't rewarded this approach for some time, but I'll remain patient. A price correction of some sort - barring any negative news on company fundamentals - could present more opportunities within the technology sector. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. (checkmark)FUND FACTS GOAL: to increase the value of the fund's shares by investing mainly in equity securities of companies that have the potential to increase their current dividend or begin paying a dividend FUND NUMBER: 330 TRADING SYMBOL: FDGFX START DATE: April 27, 1993 SIZE: as of January 31, 2000, more than $10.8 billion MANAGER: Charles Mangum, since 1997; manager, Fidelity OTC Portfolio, 1996-1997; Fidelity Convertible Securities Fund, 1995-1996; Fidelity Select Health Care Portfolio, 1992-1995; joined Fidelity in 1990 CHARLES MANGUM DISCUSSES RECENT MARKET TRENDS AND THEIR IMPACT ON THE FUND: "I've been in this business for a long time, and I've never seen such a technology-driven market as we witnessed in 1999. When it was all said and done, in fact, technology stocks accounted for approximately 70% of the S&P 500's advance. What's more, 10 large-cap stocks - - six of which resided in the tech sector - were responsible for 60% of the S&P's gain. We've seen this type of narrowness before, but it's never been so concentrated within one sector. In fact, 49.2% of the companies in the S&P 500 saw their stocks decline in value in 1999. "What does all this mean for the fund and its investment philosophy? It's obviously not conducive to strong returns. Investors threw caution to the wind in 1999, emphasizing revenues and paying little attention to earnings. As a result, companies that didn't exist two years ago quickly ascended to multi-billion dollar market capitalizations without established earnings platforms. "I can't say whether we're seeing a fundamental shift in the way stocks are valued. Historically, share prices have followed earnings and that wasn't the case in 1999. I do know, however, that a little dose of uncertainty - be it economic or market-related - will go a long way towards making investors a bit more cautious and conservative. If we do see some form of uncertainty in 2000, more of the stocks that Dividend Growth emphasizes could come back into favor." INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO Schering-Plough Corp. 5.6 5.0 Cardinal Health, Inc. 4.7 3.7 Fannie Mae 4.3 5.3 Microsoft Corp. 3.5 3.3 SBC Communications, Inc. 3.4 1.7 Eli Lilly & Co. 3.1 2.4 Abbott Laboratories 2.9 3.4 General Electric Co. 2.8 3.2 Exxon Mobil Corp. 2.8 2.8 Cisco Systems, Inc. 2.4 1.2 35.5 32.0 TOP FIVE MARKET SECTORS AS OF JANUARY 31, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 19.3 12.2 HEALTH 18.0 19.1 FINANCE 15.5 17.7 UTILITIES 10.7 8.0 RETAIL & WHOLESALE 7.9 7.8
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF JANUARY 31, 2000 * AS OF JULY 31, 1999 ** Stocks 96.1% Stocks 96.5% Convertible Securities 0.6% Convertible Securities 0.0% Short-Term Investments and Short-Term Investments and Net Other Assets 3.3% Net Other Assets 3.5% * FOREIGN INVESTMENTS 2.6% ** FOREIGN INVESTMENTS 0.5% Row: 1, Col: 1, Value: 96.09999999999999 Row: 1, Col: 1, Value: 96.5 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 4, Value: 0.6000000000000001 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 8, Value: 3.3 Row: 1, Col: 8, Value: 3.5
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS. INVESTMENTS JANUARY 31, 2000 (UNAUDITED) Showing Percentage of Net Assets
COMMON STOCKS - 96.1% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 2.7% AEROSPACE & DEFENSE - 1.4% Cordant Technologies, Inc. 3,320,410 $ 109,781 (c) Honeywell International, Inc. 827,187 39,705 149,486 SHIP BUILDING & REPAIR - 1.3% General Dynamics Corp. 3,146,450 148,276 TOTAL AEROSPACE & DEFENSE 297,762 BASIC INDUSTRIES - 0.2% METALS & MINING - 0.2% Alcoa, Inc. 288,200 20,084 CONSTRUCTION & REAL ESTATE - 0.4% BUILDING MATERIALS - 0.2% Masco Corp. 1,263,400 25,189 REAL ESTATE INVESTMENT TRUSTS - - 0.2% Glenborough Realty Trust, 1,633,200 22,252 Inc. (c) TOTAL CONSTRUCTION & REAL 47,441 ESTATE DURABLES - 0.9% CONSUMER ELECTRONICS - 0.2% Black & Decker Corp. 400,000 16,025 HOME FURNISHINGS - 0.6% Newell Rubbermaid, Inc. 2,329,272 69,878 TEXTILES & APPAREL - 0.1% Jones Apparel Group, Inc. (a) 500,000 11,000 TOTAL DURABLES 96,903 ENERGY - 7.0% ENERGY SERVICES - 1.4% ENSCO International, Inc. 3,183,320 72,818 Smith International, Inc. (a) 1,485,500 76,225 149,043 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) ENERGY - CONTINUED OIL & GAS - 5.6% Chevron Corp. 311,200 $ 26,005 Conoco, Inc. Class B 4,920,452 115,938 Cooper Cameron Corp. (a) 1,609,960 79,693 Exxon Mobil Corp. 3,601,245 300,704 Santa Fe Snyder Corp. (a)(c) 12,272,315 89,741 612,081 TOTAL ENERGY 761,124 FINANCE - 15.5% BANKS - 4.3% Bank of America Corp. 150,000 7,266 Chase Manhattan Corp. 454,500 36,559 Comerica, Inc. 5,319,945 235,075 FleetBoston Financial Corp. 1,084,600 34,097 Mellon Financial Corp. 1,310,300 44,960 PNC Financial Corp. 350,300 16,814 Synovus Finanical Corp. 1,104,500 20,986 Wells Fargo & Co. 1,761,100 70,444 466,201 CREDIT & OTHER FINANCE - 0.9% Associates First Capital 2,633,774 52,675 Corp. Class A Household International, Inc. 1,226,900 43,248 95,923 FEDERAL SPONSORED CREDIT - 4.3% Fannie Mae 7,852,500 470,659 INSURANCE - 4.8% ACE Ltd. 1,250,000 22,109 AFLAC, Inc. 1,534,000 66,633 Allmerica Financial Corp. 1,077,200 50,359 American International Group, 1,086,146 113,095 Inc. CIGNA Corp. 600,000 43,050 Everest Reinsurance Holdings, 830,300 20,913 Inc. Hartford Life, Inc. Class A 1,297,500 52,792 Marsh & McLennan Companies, 200,000 18,800 Inc. RenaissanceRe Holdings Ltd. 222,800 8,675 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED INSURANCE - CONTINUED Travelers Property Casualty 2,844,300 $ 103,106 Corp. Class A Xl Capital Ltd. 474,500 21,412 520,944 SECURITIES INDUSTRY - 1.2% Charles Schwab Corp. 1,400,000 50,488 Morgan Stanley Dean Witter & 1,205,600 79,871 Co. 130,359 TOTAL FINANCE 1,684,086 HEALTH - 18.0% DRUGS & PHARMACEUTICALS - 10.4% American Home Products Corp. 1,241,800 58,442 Biogen, Inc. (a) 150,000 12,938 Bristol-Myers Squibb Co. 1,740,000 114,840 Eli Lilly & Co. 5,071,000 339,123 Schering-Plough Corp. 13,710,000 603,239 1,128,582 MEDICAL EQUIPMENT & SUPPLIES - - 7.6% Abbott Laboratories 9,611,200 313,565 Cardinal Health, Inc. 10,806,480 516,685 830,250 TOTAL HEALTH 1,958,832 HOLDING COMPANIES - 0.1% PartnerRe Ltd. 304,000 8,816 INDUSTRIAL MACHINERY & EQUIPMENT - 3.6% ELECTRICAL EQUIPMENT - 3.5% General Electric Co. 2,324,400 310,017 Koninklijke Philips 511,028 75,504 Electronics NV (NY Shares) 385,521 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED INDUSTRIAL MACHINERY & EQUIPMENT - 0.1% Ingersoll-Rand Co. 218,800 $ 10,297 The Stanley Works 54,400 1,367 11,664 TOTAL INDUSTRIAL MACHINERY & 397,185 EQUIPMENT MEDIA & LEISURE - 4.6% BROADCASTING - 3.0% CBS Corp. (a) 1,880,000 109,628 Clear Channel Communications, 750,000 64,781 Inc. (a) Time Warner, Inc. 1,906,988 152,440 326,849 PUBLISHING - 0.4% McGraw-Hill Companies, Inc. 820,000 45,971 RESTAURANTS - 1.2% McDonald's Corp. 1,425,500 53,011 Tricon Global Restaurants, 2,501,100 71,594 Inc. (a) 124,605 TOTAL MEDIA & LEISURE 497,425 NONDURABLES - 3.9% BEVERAGES - 0.5% Coca-Cola Enterprises, Inc. 502,600 12,691 PepsiCo, Inc. 1,275,000 43,509 56,200 FOODS - 1.3% Quaker Oats Co. 2,449,900 145,463 HOUSEHOLD PRODUCTS - 1.6% Clorox Co. 602,826 28,785 Gillette Co. 812,100 30,555 Procter & Gamble Co. 1,070,800 108,017 167,357 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) NONDURABLES - CONTINUED TOBACCO - 0.5% Philip Morris Companies, Inc. 2,662,500 $ 55,746 TOTAL NONDURABLES 424,766 RETAIL & WHOLESALE - 7.9% APPAREL STORES - 0.1% Gap, Inc. 210,637 9,413 GENERAL MERCHANDISE STORES - 3.7% Federated Department Stores, 1,241,000 51,657 Inc. (a) Kohls Corp. (a) 37,100 2,602 Saks, Inc. (a) 4,357,154 60,456 Target Corp. 2,257,500 149,136 Wal-Mart Stores, Inc. 2,470,400 135,254 399,105 GROCERY STORES - 1.2% Safeway, Inc. (a) 3,495,500 133,484 RETAIL & WHOLESALE, MISCELLANEOUS - 2.9% Alberto-Culver Co. Class A (c) 4,336,500 92,693 Home Depot, Inc. 1,836,450 103,989 Lowe's Companies, Inc. 1,858,800 82,949 Staples, Inc. (a) 1,585,400 37,752 317,383 TOTAL RETAIL & WHOLESALE 859,385 SERVICES - 0.6% ADVERTISING - 0.6% Interpublic Group of 248,500 11,431 Companies, Inc. Omnicom Group, Inc. 600,000 56,213 67,644 EDUCATIONAL SERVICES - 0.0% SkillSoft Corp. 3,500 49 TOTAL SERVICES 67,693 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - 19.3% COMMUNICATIONS EQUIPMENT - 4.2% Cisco Systems, Inc. (a) 2,346,600 $ 256,953 Lucent Technologies, Inc. 1,451,200 80,179 Nokia AB sponsored ADR 300,000 54,900 Nortel Networks Corp. 689,200 65,375 Turnstone Systems, Inc. 2,000 58 457,465 COMPUTER SERVICES & SOFTWARE - - 6.4% America Online, Inc. (a) 550,000 31,316 Automatic Data Processing, 1,224,600 58,092 Inc. Computer Associates 400,000 27,475 International, Inc. Computer Sciences Corp. (a) 509,000 46,764 DST Systems, Inc. (a) 1,215,600 75,519 Intuit, Inc. (a) 520,300 31,381 Legato Systems, Inc. (a) 100,000 2,519 Microsoft Corp. (a) 3,874,200 379,187 NCR Corp. (a) 980,000 37,730 Networks Associates, Inc. (a) 400,000 10,375 700,358 COMPUTERS & OFFICE EQUIPMENT - - 3.5% Dell Computer Corp. (a) 1,900,000 73,031 EMC Corp. (a) 1,050,000 111,825 Hewlett-Packard Co. 911,700 98,692 International Business 900,000 100,969 Machines Corp. 384,517 ELECTRONIC INSTRUMENTS - 0.2% DBT Online, Inc. (a) 794,400 14,895 Sequenom, Inc. 3,500 91 14,986 ELECTRONICS - 5.0% Altera Corp. (a) 161,500 10,619 Conexant Systems, Inc. (a) 200,000 16,900 Intel Corp. 1,926,800 190,633 JDS Uniphase Corp. (a) 187,000 38,136 Linear Technology Corp. 1,120,700 106,116 Motorola, Inc. 348,700 47,685 Quantum Effect Devices, Inc. 2,600 42 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED ELECTRONICS - CONTINUED Solectron Corp. (a) 150,000 $ 10,894 Texas Instruments, Inc. 1,162,600 125,415 546,440 TOTAL TECHNOLOGY 2,103,766 TRANSPORTATION - 0.7% RAILROADS - 0.7% Burlington Northern Santa Fe 3,078,100 74,067 Corp. UTILITIES - 10.7% CELLULAR - 0.6% ALLTEL Corp. 132,700 8,858 QUALCOMM, Inc. (a) 230,000 29,210 Vodafone AirTouch PLC 400,000 22,400 sponsored ADR 60,468 ELECTRIC UTILITY - 1.2% AES Corp. (a) 531,600 42,594 CMS Energy Corp. 150,700 4,521 Entergy Corp. 1,529,200 38,134 Illinova Corp. 352,400 15,418 IPALCO Enterprises, Inc. 1,416,200 27,527 PG&E Corp. 8,500 186 128,380 TELEPHONE SERVICES - 8.9% AT&T Corp. 3,331,781 175,751 Bell Atlantic Corp. 1,098,200 68,020 BellSouth Corp. 2,808,000 132,152 MCI WorldCom, Inc. (a) 2,342,113 107,591 SBC Communications, Inc. 8,581,791 370,090 Sprint Corp. - FON Group 1,305,000 84,417 U.S. WEST, Inc. 500,000 33,250 971,271 TOTAL UTILITIES 1,160,119 TOTAL COMMON STOCKS 10,459,454 (Cost $9,148,773) CONVERTIBLE PREFERRED STOCKS - - 0.6% SHARES VALUE (NOTE 1) (000S) MEDIA & LEISURE - 0.6% BROADCASTING - 0.6% Comcast Corp.: $1.44 ZONES 164,200 $ 17,436 $1.63 ZONES 392,000 41,552 (Cost $43,770) 58,988 CASH EQUIVALENTS - 4.2% Central Cash Collateral Fund, 2,621,600 2,622 5.56% (b) Taxable Central Cash Fund, 454,853,405 454,853 5.45% (b) TOTAL CASH EQUIVALENTS 457,475 (Cost $457,475) TOTAL INVESTMENT PORTFOLIO - 10,975,917 100.9% (Cost $9,650,018) NET OTHER ASSETS - (0.9)% (96,034) NET ASSETS - 100% $ 10,879,883
SECURITY TYPE ABBREVIATIONS ZONES - Zero Premium Option Exchangeable Securities LEGEND (a) Non-income producing (b) The rate quoted is the annualized seven-day yield of the fund at period end. (c) Affiliated company INCOME TAX INFORMATION At January 31, 2000, the aggregate cost of investment securities for income tax purposes was $9,691,935,000. Net unrealized appreciation aggre- gated $1,283,982,000, of which $2,116,616,000 related to appreciated investment securities and $832,634,000 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JANUARY 31, 2000 (UNAUDITED) ASSETS Investment in securities, at $ 10,975,917 value (cost $9,650,018) - See accompanying schedule Receivable for investments 174,472 sold Receivable for fund shares 14,160 sold Dividends receivable 10,594 Interest receivable 1,447 Other receivables 354 TOTAL ASSETS 11,176,944 LIABILITIES Payable for investments $ 199,623 purchased Payable for fund shares 89,095 redeemed Accrued management fee 4,281 Other payables and accrued 1,440 expenses Collateral on securities 2,622 loaned, at value TOTAL LIABILITIES 297,061 NET ASSETS $ 10,879,883 Net Assets consist of: Paid in capital $ 9,547,042 Undistributed net investment 10,056 income Accumulated undistributed net (3,114) realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 1,325,899 (depreciation) on investments NET ASSETS, for 395,213 $ 10,879,883 shares outstanding NET ASSET VALUE, offering $27.53 price and redemption price per share ($10,879,883 (divided by) 395,213 shares) STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 2000 (UNAUDITED) INVESTMENT INCOME $ 72,308 Dividends (including $2,343 received from affiliated issuers) Interest 9,239 Security lending 22 TOTAL INCOME 81,569 EXPENSES Management fee Basic fee $ 38,298 Performance adjustment (3,702) Transfer agent fees 13,650 Accounting and security 505 lending fees Non-interested trustees' 19 compensation Custodian fees and expenses 128 Registration fees 56 Audit 36 Legal 46 Miscellaneous 34 Total expenses before 49,070 reductions Expense reductions (1,525) 47,545 NET INVESTMENT INCOME 34,024 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 30,514 (including realized gain (loss) of $(5,683) on sales of investments in affiliated issuers) Foreign currency transactions (173) 30,341 Change in net unrealized (655,631) appreciation (depreciation) on investment securities NET GAIN (LOSS) (625,290) NET INCREASE (DECREASE) IN $ (591,266) NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1999 2000 (UNAUDITED) INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 34,024 $ 62,989 income Net realized gain (loss) 30,341 1,195,042 Change in net unrealized (655,631) 801,977 appreciation (depreciation) NET INCREASE (DECREASE) IN (591,266) 2,060,008 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (64,189) (38,407) From net investment income From net realized gain (983,904) (597,854) TOTAL DISTRIBUTIONS (1,048,093) (636,261) Share transactions Net 2,203,829 9,445,534 proceeds from sales of shares Reinvestment of distributions 1,017,523 617,315 Cost of shares redeemed (4,985,608) (4,574,330) NET INCREASE (DECREASE) IN (1,764,256) 5,488,519 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) (3,403,615) 6,912,266 IN NET ASSETS NET ASSETS Beginning of period 14,283,498 7,371,232 End of period (including $ 10,879,883 $ 14,283,498 undistributed net investment income of $10,056 and $45,206, respectively) OTHER INFORMATION Shares Sold 77,033 331,300 Issued in reinvestment of 34,903 26,258 distributions Redeemed (175,378) (161,099) Net increase (decrease) (63,442) 196,459
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31, 2000 (UNAUDITED) 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 31.14 $ 28.11 $ 25.07 $ 17.24 $ 16.04 $ 11.68 period Income from Invest- ment Operations Net investment income .07 D .17 D .17 D .20 D .11 .05 Net realized and unrealized (1.40) 5.18 5.21 8.09 2.25 4.47 gain (loss) Total from investment (1.33) 5.35 5.38 8.29 2.36 4.52 operations Less Distributions From net investment income (.14) (.13) (.15) (.09) (.09) (.01) From net realized gain (2.14) (2.19) (2.19) (.37) (1.07) (.15) Total distributions (2.28) (2.32) (2.34) (.46) (1.16) (.16) Net asset value, end of period $ 27.53 $ 31.14 $ 28.11 $ 25.07 $ 17.24 $ 16.04 TOTAL RETURN B, C (4.67)% 21.90% 23.81% 49.21% 15.44% 39.14% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 10,880 $ 14,283 $ 7,371 $ 4,368 $ 1,220 $ 465 (in millions) Ratio of expenses to average .74% A .87% .89% .95% 1.02% 1.21% net assets Ratio of expenses to average .71% A, E .84% E .86% E .92% E .99% E 1.19% E net assets after expense reductions Ratio of net invest- ment .51% A .58% .64% .99% .86% .78% income to average net assets Portfolio turnover rate 84% A 104% 109% 141% 129% 162%
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. NOTES TO FINANCIAL STATEMENTS For the period ended January 31, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Dividend Growth Fund (the fund) is a fund of Fidelity Securities Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company organized as a Massachusetts business trust. The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund: SECURITY VALUATION. Securities for which exchange quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of the business of the fund, are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Securities for which exchange quotations are not readily available (and in certain cases debt securities which trade on an exchange) are valued primarily using dealer-supplied valuations or at their fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to income taxes to the extent 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INCOME TAXES - CONTINUED that it distributes substantially all of its taxable income for its fiscal year. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for litigation proceeds, foreign currency transactions, non-taxable dividends and losses deferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the fund, along with other affiliated entities of Fidelity Management & 2. OPERATING POLICIES - CONTINUED JOINT TRADING ACCOUNT - CONTINUED Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury, Federal Agency, and other obligations found satisfactory by FMR are transferred to an account of the fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC, the funds may invest in the Taxable Central Cash Fund and the Central Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments Money Management, Inc., an affiliate of FMR. The Cash Funds are open-end money market funds available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Funds seek preservation of capital, liquidity, and current income. Income distributions from the Cash Funds are declared daily and paid monthly from net interest income. Income distributions earned by the funds are recorded as either interest income or security lending income in the accompanying financial statements. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $5,364,708,000 and $8,004,329,000, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly basic fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .2167% to .5200% for the period. The annual individual fund fee rate is .30%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The basic fee is subject to a 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 .52% of average net assets after the performance adjustment. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .21% of average net assets. ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting records and administers the security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses. BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of FMR. The commissions paid to these affiliated firms were $353,000 for the period. 5. SECURITY LENDING. The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral in the form of U.S. Treasury obligations, letters of credit, and/or cash against the loaned securities, and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. At period end, the value of the securities loaned amounted to $2,684,000. The fund received cash collateral of $2,622,000 which was invested in cash equivalents. 6. EXPENSE REDUCTIONS. FMR has directed certain portfolio trades to brokers who paid a portion of the fund's expenses. For the period, the fund's expenses were reduced by $1,282,000 under this arrangement. In addition, through arrangements with the fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce a portion of the fund's expenses. During the period, the fund's custodian and transfer agent fees were reduced by $1,000 and $242,000 respectively, under these arrangements. 7. TRANSACTIONS WITH AFFILIATED COMPANIES. An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Transactions during the period with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE Alberto-Culver Co. Class A $ - $ - $ 282 $ 92,693 Cordant Technologies, Inc. 12,775 542 599 109,781 Forrester Research, Inc. - 2,347 - - Glenborough Realty Trust, Inc. - 3,058 1,462 22,252 Santa Fe Snyder Corp. 20,912 15,627 - 89,741 TOTALS $ 33,687 $ 21,574 $ 2,343 $ 314,467
MANAGING YOUR INVESTMENTS Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day. BY PHONE Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security. (PHONE_GRAPHIC)FIDELITY AUTOMATED SERVICE TELEPHONE (FASTSM) 1-800-544-5555 PRESS 1 For mutual fund and brokerage trading. 2 For quotes.* 3 For account balances and holdings. 4 To review orders and mutual fund activity. 5 To change your PIN. *0 To speak to a Fidelity representative. BY PC Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services. (COMPUTER_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call EarthLink Sprint at 1-800-288-2967, and be sure to ask for registration number SMD004 to receive a special Fidelity package that includes 30 days of free Internet access. EarthLink is North America's #1 independent Internet access provider. (COMPUTER_GRAPHIC) FIDELITY ON-LINE XPRESS+(registered trademark) Fidelity On-line Xpress+ software for Windows combines comprehensive portfolio management capabilities, securities trading and access to research and analysis tools . . . all on your desktop. Call Fidelity at 1-800-544-0240 or visit our Web site for more information on how to manage your investments via your PC. * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. 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Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 501 Route 17, South Paramus, NJ NEW YORK 1055 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH OREGON 16850 SW 72 Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 6150 Poplar Road Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 4017 Northwest Parkway Dallas, TX 1155 Dairy Ashford Street Houston, TX 2701 Drexel Drive Houston, TX 400 East Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 511 Pine Street Seattle, WA WASHINGTON, DC 1900 K Street, N.W. Washington, DC WISCONSIN 595 North Barker Road Brookfield, WI TO WRITE FIDELITY If more than one address is listed, please locate the address that is closest to you. We'll give your correspondence immediate attention and send you written confirmation upon completion of your request. (LETTER_GRAPHIC)MAKING CHANGES TO YOUR ACCOUNT (such as changing name, address, bank, etc.) Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0002 (LETTER_GRAPHIC)FOR NON-RETIREMENT ACCOUNTS BUYING SHARES Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 OVERNIGHT EXPRESS Fidelity Investments 2300 Litton Lane - KH1A Hebron, KY 41048 SELLING SHARES Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 OVERNIGHT EXPRESS Fidelity Investments Attn: Redemptions - CP6I 400 East Las Colinas Blvd. Irving, TX 75039-5587 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 (LETTER_GRAPHIC)FOR RETIREMENT ACCOUNTS BUYING SHARES Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 SELLING SHARES Fidelity Investments P.O. Box 660602 Dallas, TX 75266-0602 OVERNIGHT EXPRESS Fidelity Investments Attn: Redemptions - CP6R 400 East Las Colinas Blvd. Irving, TX 75039-5587 GENERAL CORRESPONDENCE Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB ADVISERS Fidelity Management & Research (U.K.) Inc. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Ltd. OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Abigail P. Johnson, Vice President Charles A. Mangum, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer Matthew N. Karstetter, Deputy Treasurer Maria F. Dwyer, Deputy Treasurer John H. Costello, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d Donald J. Kirk * Ned C. Lautenbach * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA * INDEPENDENT TRUSTEES DGF-SANN-0300 95069 1.470802.102 CUSTODIAN Brown Brothers Harriman & Co. Boston, MA FIDELITY'S GROWTH FUNDS Aggressive Growth Fund Blue Chip Growth Fund Capital Appreciation Fund Contrafund(registered trademark) Contrafund(registered trademark)II Disciplined Equity Fund Dividend Growth Fund Export and Multinational Fund Fidelity FiftySM Growth Company Fund Large Cap Stock Fund Low-Priced Stock Fund Magellan(registered trademark) Fund Mid-Cap Stock Fund New Millennium Fund(registered trademark) OTC Portfolio Retirement Growth Fund Small Cap Selector Small Cap Stock Fund Stock Selector Tax Managed Stock Fund TechnoQuant (registered trademark) Growth Fund Trend Fund Value Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions and Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) Fidelity Automated Service Telephone (FASTSM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)(registered trademark) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 www.fidelity.com FIDELITY(REGISTERED TRADEMARK) GROWTH & INCOME PORTFOLIO SEMIANNUAL REPORT JANUARY 31, 2000 (2_FIDELITY_LOGOS)(registered trademark) CONTENTS PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. PERFORMANCE 4 How the fund has done over time. FUND TALK 6 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 9 A summary of major shifts in the fund's investments over the past six months. INVESTMENTS 10 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 22 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 26 Notes to the financial statements. Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Other third party marks appearing herein are the property of their respective owners. All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company. This report is printed on recycled paper using soy-based inks. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: While no major Y2K glitches disrupted the financial markets to start the new year, inflation worries re-emerged to hinder stock performance throughout January. The S&P 500(Registered trademark) and Dow Jones Industrial Average each fell approximately 5%, while the technology-oriented NASDAQ Index dropped more than 3% for the month. In bond markets, the potential for further rate hikes as a pre-emptive move against inflation continued to be an obstacle to fixed-income performance. While it's impossible to predict the future direction of the markets with any degree of certainty, there are certain basic principles that can help investors plan for their future needs. First, investors are encouraged to take a long-term view of their portfolios. If you can afford to leave your money invested through the inevitable up and down cycles of the financial markets, you will greatly reduce your vulnerability to any single decline. We know from experience, for example, that stock prices have gone up over longer periods of time, have significantly outperformed other types of investments and have stayed ahead of inflation. Second, you can further manage your investing risk through diversification. A stock mutual fund, for instance, is already diversified, because it invests in many different companies. You can increase your diversification further by investing in a number of different stock funds, or in such other investment categories as bonds. If you have a short investment time horizon, you might want to consider moving some of your investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. Of course, it's important to remember that an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these types of funds. Finally, no matter what your time horizon or portfolio diversity, it makes good sense to follow a regular investment plan, investing a certain amount of money in a fund at the same time each month or quarter and periodically reviewing your overall portfolio. By doing so, you won't get caught up in the excitement of a rapidly rising market, nor will you buy all your shares at market highs. While this strategy - known as dollar cost averaging - won't assure a profit or protect you from a loss in a declining market, it should help you lower the average cost of your purchases. Of course, you should consider your financial ability to continue your purchases through periods of low price levels before undertaking such a strategy. If you have questions, please call us at 1-800-544-6666, or visit our web site at www.fidelity.com. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change or the growth of a hypothetical $10,000 investment. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS PERIODS ENDED JANUARY 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY GROWTH & INCOME 1.89% 4.16% 182.97% 444.63% S&P 500 5.59% 10.35% 225.05% 442.52% Growth & Income Funds Average 1.02% 6.97% 152.24% 300.81%
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 500SM Index - a market capitalization-weighted index of common stocks. To measure how the fund's performance stacked up against its peers, you can compare it to the growth and income funds average, which reflects the performance of mutual funds with similar objectives tracked by Lipper Inc. The past six months average represents a peer group of 978 mutual funds. These benchmarks include reinvested dividends and capital gains, if any, and exclude the effect of sales charges. Lipper has created new comparison categories that group funds according to portfolio characteristics and capitalization, as well as by capitalization only. These averages are listed on page 5 of this report.* AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY GROWTH & INCOME 4.16% 23.13% 18.47% S&P 500 10.35% 26.59% 18.42% Growth & Income Funds Average 6.97% 19.94% 14.62% AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you what would have happened if the fund had performed at a constant rate each year. (Note: Lipper calculates average annual total returns by annualizing each fund's total return, then taking an arithmetic average. This may produce a different figure than that obtained by averaging the cumulative total returns and annualizing the result.) $10,000 OVER 10 YEARS Growth & Income S&P 500 00027 SP001 1990/01/31 10000.00 10000.00 1990/02/28 10153.66 10129.00 1990/03/31 10332.00 10397.42 1990/04/30 10065.49 10137.48 1990/05/31 10809.25 11125.89 1990/06/30 10759.01 11050.23 1990/07/31 10684.04 11014.87 1990/08/31 9771.83 10019.13 1990/09/30 9208.36 9531.20 1990/10/31 9189.18 9490.21 1990/11/30 9643.20 10103.28 1990/12/31 9835.93 10385.16 1991/01/31 10734.21 10837.95 1991/02/28 11638.96 11612.87 1991/03/31 12280.09 11893.90 1991/04/30 12449.20 11922.44 1991/05/31 13164.67 12437.49 1991/06/30 12270.55 11867.86 1991/07/31 13022.34 12420.90 1991/08/31 13401.50 12715.27 1991/09/30 13283.30 12502.93 1991/10/31 13520.86 12670.47 1991/11/30 12814.96 12159.85 1991/12/31 13951.45 13550.93 1992/01/31 14285.08 13298.89 1992/02/29 14598.29 13471.77 1992/03/31 14298.44 13209.07 1992/04/30 14619.98 13597.42 1992/05/31 14674.72 13664.05 1992/06/30 14386.33 13460.45 1992/07/31 14682.18 14010.98 1992/08/31 14530.81 13723.76 1992/09/30 14679.65 13885.70 1992/10/31 14795.91 13934.30 1992/11/30 15253.19 14409.46 1992/12/31 15560.95 14586.70 1993/01/31 15995.18 14709.22 1993/02/28 16176.76 14909.27 1993/03/31 16770.48 15223.86 1993/04/30 16746.66 14855.44 1993/05/31 17096.04 15253.56 1993/06/30 17359.28 15297.80 1993/07/31 17487.04 15236.61 1993/08/31 18173.74 15814.08 1993/09/30 18272.67 15692.31 1993/10/31 18477.16 16017.14 1993/11/30 18060.01 15864.97 1993/12/31 18599.90 16056.94 1994/01/31 19303.04 16602.88 1994/02/28 18934.73 16152.94 1994/03/31 18101.78 15448.67 1994/04/30 18463.31 15646.41 1994/05/31 18522.16 15903.02 1994/06/30 18200.69 15513.39 1994/07/31 18724.33 16022.23 1994/08/31 19442.22 16679.14 1994/09/30 19216.49 16270.50 1994/10/31 19445.47 16636.59 1994/11/30 18723.31 16030.68 1994/12/31 19021.58 16268.42 1995/01/31 19247.06 16690.26 1995/02/28 19815.28 17340.68 1995/03/31 20438.86 17852.40 1995/04/30 21009.63 18378.16 1995/05/31 21607.57 19112.73 1995/06/30 21997.56 19556.72 1995/07/31 22834.52 20205.22 1995/08/31 23007.37 20255.94 1995/09/30 23932.48 21110.74 1995/10/31 23820.38 21035.37 1995/11/30 24941.34 21958.82 1995/12/31 25751.85 22381.75 1996/01/31 26608.65 23143.63 1996/02/29 26903.78 23358.17 1996/03/31 27132.66 23583.11 1996/04/30 27409.72 23930.72 1996/05/31 27935.18 24547.89 1996/06/30 28107.60 24641.42 1996/07/31 27033.92 23552.76 1996/08/31 27455.72 24049.49 1996/09/30 28904.96 25403.00 1996/10/31 29363.77 26103.61 1996/11/30 31218.96 28076.78 1996/12/31 30908.50 27520.58 1997/01/31 32226.11 29240.07 1997/02/28 32588.20 29469.31 1997/03/31 31255.98 28258.42 1997/04/30 32920.68 29945.44 1997/05/31 34696.35 31768.52 1997/06/30 36492.04 33191.75 1997/07/31 38972.09 35832.82 1997/08/31 36856.46 33825.47 1997/09/30 38835.06 35678.09 1997/10/31 37800.44 34486.44 1997/11/30 39294.90 36082.82 1997/12/31 40234.76 36702.36 1998/01/31 40857.82 37108.29 1998/02/28 43392.30 39784.53 1998/03/31 45338.70 41821.90 1998/04/30 45412.78 42242.63 1998/05/31 44883.62 41516.48 1998/06/30 46696.20 43202.88 1998/07/31 46399.11 42742.77 1998/08/31 40085.95 36563.02 1998/09/30 42833.75 38905.24 1998/10/31 46005.80 42069.80 1998/11/30 48689.84 44619.65 1998/12/31 51624.58 47190.63 1999/01/31 52289.03 49164.14 1999/02/28 51309.24 47636.12 1999/03/31 52625.53 49542.04 1999/04/30 53934.40 51460.81 1999/05/31 52557.83 50245.82 1999/06/30 55113.82 53034.46 1999/07/31 53451.58 51378.72 1999/08/31 52716.58 51124.40 1999/09/30 51476.66 49723.08 1999/10/31 54091.69 52869.56 1999/11/30 54605.14 53944.39 1999/12/31 57001.51 57121.72 2000/01/31 54463.28 54251.92 IMATRL PRASUN SHR__CHT 20000131 20000306 105135 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Growth & Income Portfolio on January 31, 1990. As the chart shows, by January 31, 2000, the value of the investment would have grown to $54,463 - a 444.63% increase on the initial investment. For comparison, look at how the Standard & Poor's 500 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $54,252 - a 442.52% increase. (checkmark)UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. The stock market, for example, has a history of long-term growth and short-term volatility. In turn, the share price and return of a fund that invests in stocks will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. * THE LIPPER LARGE-CAP CORE FUNDS AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO CHARACTERISTICS AND CAPITALIZATION. THE LIPPER LARGE-CAP SUPERGROUP AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR CAPITALIZATION. AS OF JANUARY 31, 2000, THE SIX MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR THE LARGE-CAP CORE FUNDS AVERAGE WERE 8.28%, 12.75%, 194.35%, AND 372.24%, RESPECTIVELY. THE ONE YEAR, FIVE YEAR AND 10 YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 12.75%, 23.99%, AND 16.63%, RESPECTIVELY. THE SIX MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR THE LARGE-CAP SUPERGROUP AVERAGE WERE 10.61%, 14.76%, 208.98% AND 407.99%, RESPECTIVELY. THE ONE YEAR, FIVE YEAR AND 10 YEAR AVERAGE ANNUAL TOTAL RETURNS WERE 14.76%, 24.87%, AND 17.31%, RESPECTIVELY. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP What goes up must come down. Or must it? Technology stocks seemed united in their quest to prove this age-old theory wrong during the six months that ended January 31, 2000. Driven in large part by investors' ongoing fancy with the Internet and dot.com stocks, the technology sector - - as measured by the NASDAQ Index - returned 49.52% during the six-month period. In contrast, the Standard & Poor's 500 Index, which serves as a general barometer of overall U.S. stock performance, returned 5.59%. It wasn't only the industry leaders that got into the act, either, as the technology rally included scores of smaller and medium-sized stocks. The Russell 2000(Registered trademark) Index - a popular gauge of small-cap stock performance - returned a respectable 12.25% during the period. The NASDAQ, however, continued to be the index du jour during the period - the index was at around 2700 points when the period began, crossed 4000 before New Year's and ended January just under that threshold. Since many tech stocks rose despite a lack of discernible earnings, these gains perplexed some money managers, especially those that feel a company's stock price follows its earnings growth. Sensing that the Federal Reserve Board would raise interest rates in early February, tech stocks sold off some throughout January. Time will tell, though, if it's only a speed bump. (photograph of Steven Kaye) An interview with Steven Kaye, Portfolio Manager of Fidelity Growth & Income Portfolio Q. HOW DID THE FUND PERFORM, STEVE? A. For the six-month period ending January 31, 2000, the fund returned 1.89%. This outpaced the growth and income funds average tracked by Lipper Inc., which returned 1.02% during that time frame. However, the fund's performance trailed the Standard & Poor's 500 Index, which returned 5.59% over the past six months. For the 12 months ending January 31, 2000, the fund returned 4.16%, while the S&P 500 and the Lipper average were up 10.35% and 6.97%, respectively. Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? A. Much of the period - particularly the fourth quarter of 1999 - was, in my opinion, unprecedented for its speculative, momentum-driven run in technology and wireless telecommunications, leaving the rest of the market well behind. Given our underweighting in these sectors relative to the S&P 500, it's clear why the fund underperformed its benchmark. Wireless data standout Qualcomm, for example - which the fund didn't own - was up 272% in the fourth quarter alone, and tech names Oracle and Yahoo! were each up over 140%. Q. STILL, TECHNOLOGY WAS THE FUND'S LARGEST SECTOR WEIGHTING AT THE END OF THE PERIOD. WHAT OPPORTUNITIES DID YOU SEEK IN THAT INDUSTRY? A. I focused on the industry's more stable, predictable growers - names such as Cisco, Microsoft and Intel, three of the fund's top-five performers for the period. While I did increase the fund's tech weighting from 16% six months ago to approximately 25% at the close of the period, which helped the fund beat its peers, it didn't seem wise in the long run to equal the S&P's nearly 30% weighting in the sector. Q. WHY NOT? A. Well, for one thing, speculative bubbles at some point do end. For another, some of the tech sector's meteoric rise came at the expense of common-sense, fundamental investment principles. More than a few technology stocks experienced double- and even triple-digit gains, yet did so by discounting heavily onto the future. That's not the kind of investment that this fund is in the habit of chasing. Q. WHAT OTHER STRATEGIES DID YOU EMPLOY TO LIFT THE FUND'S PERFORMANCE? A. I bumped up its health care weighting. After subpar performance throughout much of 1999, health stocks rallied late in the period as investors began to recognize the industry's steady growth rates, reasonable valuations, and a lessening of fears concerning governmental price controls. Also, this sector traditionally does well regardless of economic conditions, and that proved true once again. Q. WHAT STOCKS WERE PARTICULARLY STRONG PERFORMERS DURING THE PERIOD? A. Several of the fund's health care picks, including Warner-Lambert and Amgen, were among the fund's best contributors. GE, the fund's largest holding, also was its best performer. Several of its subsidiary enterprises in addition to the stalwart GE Capital were particularly strong. Its power systems businesses - gas turbine engines, for one example - were great earnings growth stories, benefiting from increased demand around the world. American Express, which topped an otherwise lackluster finance sector, was a big beneficiary of the Internet; online transactions are made entirely by credit card, versus the costlier bricks and mortar world where checks and cash are also accepted. Also, AMEX's launch of its new "Blue" Internet-friendly credit card was very successful. Q. WHAT STOCKS DID NOT LIVE UP TO YOUR EXPECTATIONS? A. MCI WorldCom disappointed. A slowdown in its voice long-distance business led to a slowdown in revenue growth. Ongoing tobacco litigation drove Philip Morris' stock down to its lowest price since 1994. I cut back appreciably on this holding. Finance stocks Associates First Capital and Fannie Mae struggled against rising interest rates, although Associates did compound its problems by missing its earnings expectations. Q. WHAT'S YOUR OUTLOOK, STEVE? A. It does not appear at this point that the Federal Reserve Board's interest-rate hikes have slowed the U.S. economy, so my guess is that we still have a few rate hikes to go. Once the rate hikes come to an end, I think steady growers such as large-cap pharmaceuticals stocks have a brighter outlook than the more speculative issues. I will, however, keep my eyes open for bargains within the technology and wireless sectors, particularly Internet infrastructure plays that I believe have real business models and several years of strong growth ahead of them. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FIDELITY FUND. (checkmark)FUND FACTS GOAL: to seek a high total return through a combination of current income and capital appreciation FUND NUMBER: 027 TRADING SYMBOL: FGRIX START DATE: December 30, 1985 SIZE: as of January 31, 2000, more than $44.8 billion MANAGER: Steven Kaye, since 1993; manager, Fidelity Blue Chip Growth Fund, 1990- 1992; Fidelity Select Energy Services, Biotechnology and Health Care Portfolios, 1986- 1990; joined Fidelity in 1985 STEVEN KAYE ON THE PROSPECTS FOR HEALTH CARE STOCKS: "While it's no secret that the health care sector experienced a less-than-stellar 1999, I think its prospects are fairly bright in 2000, and it could emerge as one of the market's best-performing sectors during the year. "There are several reasons why I'm bullish about the sector's potential. First, many of the issues surrounding the industry's decline in 1999 have subsided, including the threat of onerous government pricing regulation and Medicare reform. Any Medicare reform at this point shouldn't be so toxic to the health care industry that price controls become necessary. Second, many drug stocks maintained good growth rates in 1999 but were hurt by the overhang of fading product pipelines. Today, however, I see plenty of new products in the pipeline, and with swift FDA approval rates, there is always the possibility for a new blockbuster drug right around the corner. "Also, as I mentioned earlier in the report, the health care sector historically has stood up well in a down economy. If the Fed's actions succeed in slowing the economy, traditionally stable, steady growers such as health care should outperform the overall market. We've already seen that in January. Technology finally experienced a dip, and health care was the month's best performing sector. Of course, its only one month out of 12, but so far, the conditions are in place for health care to enjoy a very prosperous new year." INVESTMENT CHANGES
TOP TEN STOCKS AS OF JANUARY 31, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO General Electric Co. 4.8 4.3 Microsoft Corp. 4.8 3.2 Exxon Mobil Corp. 3.7 3.0 Cisco Systems, Inc. 2.9 1.3 Merck & Co., Inc. 2.7 2.5 American Express Co. 2.3 2.1 Intel Corp. 2.2 1.0 Fannie Mae 2.1 2.2 Wal-Mart Stores, Inc. 2.1 1.3 Procter & Gamble Co. 1.8 1.4 29.4 22.3 TOP FIVE MARKET SECTORS AS OF JANUARY 31, 2000 % OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6 MONTHS AGO TECHNOLOGY 25.5 16.1 FINANCE 14.4 15.9 HEALTH 13.8 13.0 UTILITIES 7.2 8.4 ENERGY 5.9 5.8
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF JANUARY 31, 2000 * AS OF JULY 31, 1999 ** Stocks and equity futures 95.7% Stocks 93.2% Convertible Securities 0.5% Bonds 0.4% Short-Term Investments and Convertible Securities 0.6% Net Other Assets 3.8% Short-Term Investments and Net Other Assets 5.8% * FOREIGN INVESTMENTS 3.8% ** FOREIGN INVESTMENTS 3.3.% Row: 1, Col: 1, Value: 95.59999999999999 Row: 1, Col: 1, Value: 93.2 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.4 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 5, Value: 0.5 Row: 1, Col: 5, Value: 0.6000000000000001 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 8, Value: 3.9 Row: 1, Col: 8, Value: 5.8
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS. INVESTMENTS JANUARY 31, 2000 (UNAUDITED) Showing Percentage of Net Assets
COMMON STOCKS - 94.9% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 1.8% AEROSPACE & DEFENSE - 1.4% Boeing Co. 4,627,600 $ 205,061 Honeywell International, Inc. 4,726,113 226,853 Northrop Grumman Corp. 748,400 37,607 Textron, Inc. 1,111,400 66,337 United Technologies Corp. 1,312,100 69,459 605,317 SHIP BUILDING & REPAIR - 0.4% General Dynamics Corp. 3,892,800 183,448 TOTAL AEROSPACE & DEFENSE 788,765 BASIC INDUSTRIES - 1.9% CHEMICALS & PLASTICS - 1.1% E. I. du Pont de Nemours and 2,292,200 135,240 Co. IMC Global, Inc. 4,661,000 76,324 Monsanto Co. 5,435,800 191,952 Union Carbide Corp. 1,544,400 86,486 490,002 IRON & STEEL - 0.1% Nucor Corp. 341,400 16,985 METALS & MINING - 0.2% Alcoa, Inc. 1,362,000 94,914 PACKAGING & CONTAINERS - 0.5% Corning, Inc. 1,496,300 230,804 PAPER & FOREST PRODUCTS - 0.0% International Paper Co. 100,000 4,763 TOTAL BASIC INDUSTRIES 837,468 CONSTRUCTION & REAL ESTATE - 1.2% BUILDING MATERIALS - 0.1% Fortune Brands, Inc. 1,506,400 43,686 REAL ESTATE INVESTMENT TRUSTS - - 1.1% CBL & Associates Properties, 2,151,900 45,324 Inc. (d) Equity Office Properties Trust 6,446,590 164,791 Equity Residential Properties 3,577,365 148,461 Trust (SBI) Manufactured Home 921,400 22,114 Communities, Inc. COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) CONSTRUCTION & REAL ESTATE - CONTINUED REAL ESTATE INVESTMENT TRUSTS - - CONTINUED Public Storage, Inc. 3,540,100 $ 80,316 The Rouse Co. 71,400 1,589 Urban Shopping Centers, Inc. 716,400 19,970 482,565 TOTAL CONSTRUCTION & REAL 526,251 ESTATE DURABLES - 1.3% AUTOS, TIRES, & ACCESSORIES - 0.8% Ford Motor Co. 4,000,000 199,000 General Motors Corp. 1,557,438 125,276 TRW, Inc. 1,013,800 44,417 368,693 CONSUMER DURABLES - 0.4% Minnesota Mining & 1,753,700 164,190 Manufacturing Co. CONSUMER ELECTRONICS - 0.0% General Motors Corp. Class H 219,800 24,728 (a) TEXTILES & APPAREL - 0.1% Unifi, Inc. (a)(d) 3,831,300 42,384 TOTAL DURABLES 599,995 ENERGY - 5.9% ENERGY SERVICES - 0.2% Schlumberger Ltd. 1,700,800 103,855 OIL & GAS - 5.7% BP Amoco PLC sponsored ADR 7,362,220 395,719 Chevron Corp. 1,730,900 144,638 Exxon Mobil Corp. 19,801,947 1,653,463 Royal Dutch Petroleum Co. (NY 6,333,200 348,722 Shares) 2,542,542 TOTAL ENERGY 2,646,397 FINANCE - 14.3% BANKS - 2.8% Bank of America Corp. 1,182,906 57,297 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED BANKS - CONTINUED Bank of New York Co., Inc. 10,826,508 $ 439,827 Bank One Corp. 2,306,900 68,774 Chase Manhattan Corp. 1,965,600 158,108 FleetBoston Financial Corp. 2,369,998 74,507 Mellon Financial Corp. 3,324,000 114,055 Wachovia Corp. 2,929,800 187,690 Wells Fargo & Co. 4,568,900 182,756 1,283,014 CREDIT & OTHER FINANCE - 4.0% American Express Co. 6,107,730 1,006,630 Associates First Capital 15,315,038 306,301 Corp. Class A Capital Trust, Inc. (a)(d) 1,635,782 6,748 Citigroup, Inc. 7,291,295 418,794 Household International, Inc. 1,176,540 41,473 1,779,946 FEDERAL SPONSORED CREDIT - 4.2% Fannie Mae 15,450,800 926,082 Freddie Mac 9,882,800 495,993 SLM Holding Corp. (d) 12,058,450 469,526 1,891,601 INSURANCE - 2.6% Allmerica Financial Corp. 1,216,100 56,853 American International Group, 7,179,500 747,565 Inc. Hartford Financial Services 4,563,700 173,991 Group, Inc. Marsh & McLennan Companies, 27,600 2,594 Inc. MBIA, Inc. 3,362,700 168,345 The Chubb Corp. 50,800 2,858 1,152,206 SECURITIES INDUSTRY - 0.7% Charles Schwab Corp. 891,100 32,135 Daiwa Securities Co. Ltd. 1,784,000 28,982 Morgan Stanley Dean Witter & 3,892,600 257,885 Co. 319,002 TOTAL FINANCE 6,425,769 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) HEALTH - 13.8% DRUGS & PHARMACEUTICALS - 11.2% Allergan, Inc. 3,432,000 $ 195,624 American Home Products Corp. 7,944,000 373,865 Amgen, Inc. (a) 7,970,100 507,596 Bausch & Lomb, Inc. 791,600 49,079 Bristol-Myers Squibb Co. 9,891,600 652,846 Eli Lilly & Co. 9,066,332 606,311 Forest Laboratories, Inc. (a) 648,500 43,774 Merck & Co., Inc. 15,540,300 1,224,770 Pfizer, Inc. 3,917,404 142,496 QLT PhotoTherapeutics, Inc. 796,200 53,985 (a) Schering-Plough Corp. 6,540,400 287,778 Teva Pharmaceutical 1,800,000 117,788 Industries Ltd. ADR Warner-Lambert Co. 7,969,580 756,612 5,012,524 MEDICAL EQUIPMENT & SUPPLIES - - 2.2% Abbott Laboratories 463,500 15,122 Baxter International, Inc. 3,147,900 201,072 Becton, Dickinson & Co. 6,831,600 178,903 C. R. Bard, Inc. (d) 4,381,200 196,059 Cardinal Health, Inc. 1,194,400 57,107 Guidant Corp. (a) 515,200 27,112 Johnson & Johnson 1,052,500 90,581 Medtronic, Inc. 2,243,790 102,653 Stryker Corp. 1,597,200 100,624 969,233 MEDICAL FACILITIES MANAGEMENT - - 0.4% United HealthCare Corp. 672,800 35,658 Wellpoint Health Networks, 2,206,200 150,022 Inc. (a) 185,680 TOTAL HEALTH 6,167,437 INDUSTRIAL MACHINERY & EQUIPMENT - 5.1% ELECTRICAL EQUIPMENT - 5.0% Emerson Electric Co. 1,224,000 67,397 General Electric Co. 16,220,400 2,163,391 2,230,788 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED INDUSTRIAL MACHINERY & EQUIPMENT - 0.1% Caterpillar, Inc. 491,400 $ 20,854 Ingersoll-Rand Co. 846,100 39,820 60,674 TOTAL INDUSTRIAL MACHINERY & 2,291,462 EQUIPMENT MEDIA & LEISURE - 3.7% BROADCASTING - 1.9% CBS Corp. (a) 2,457,234 143,287 Clear Channel Communications, 400,000 34,550 Inc. (a) Comcast Corp. Class A 3,042,200 139,941 (special) Infinity Broadcasting Corp. 1,196,000 38,870 Class A MediaOne Group, Inc. (a) 2,087,000 165,917 Time Warner, Inc. 4,055,364 324,176 846,741 ENTERTAINMENT - 0.7% Viacom, Inc. Class B 2,851,200 157,885 (non-vtg.) (a) Walt Disney Co. 4,879,400 177,183 335,068 LODGING & GAMING - 0.3% Mirage Resorts, Inc. (a) 990,300 12,379 Starwood Hotels & Resorts 5,672,543 136,141 Worldwide, Inc. unit 148,520 PUBLISHING - 0.2% Times Mirror Co. Class A 1,251,100 74,049 RESTAURANTS - 0.6% McDonald's Corp. 2,131,500 79,265 Starbucks Corp. (a) 1,900,700 60,822 Tricon Global Restaurants, 4,339,410 124,216 Inc. (a) 264,303 TOTAL MEDIA & LEISURE 1,668,681 NONDURABLES - 5.7% BEVERAGES - 1.6% Anheuser-Busch Companies, 2,856,100 192,787 Inc. PepsiCo, Inc. 6,607,400 225,478 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) NONDURABLES - CONTINUED BEVERAGES - CONTINUED The Coca-Cola Co. 3,755,200 $ 215,689 Whitman Corp. 5,930,400 74,501 708,455 FOODS - 1.4% Bestfoods 2,530,200 110,064 H. J. Heinz Co. 360,000 13,388 Nabisco Group Holdings Corp. 1,439,100 12,412 Nestle SA (Reg.) 38,500 62,888 Quaker Oats Co. 1,986,090 117,924 Ralston Purina Co. 945,321 26,528 Sara Lee Corp. 4,380,700 80,769 Sysco Corp. 5,681,700 202,055 626,028 HOUSEHOLD PRODUCTS - 2.2% Avon Products, Inc. 1,363,600 43,380 Colgate-Palmolive Co. 964,300 57,135 Gillette Co. 2,699,000 101,550 Procter & Gamble Co. 7,867,900 793,674 995,739 TOBACCO - 0.5% Philip Morris Companies, Inc. 10,653,200 223,051 TOTAL NONDURABLES 2,553,273 RETAIL & WHOLESALE - 5.5% APPAREL STORES - 0.2% The Limited, Inc. 2,797,800 85,857 DRUG STORES - 0.9% CVS Corp. 5,641,468 197,099 Walgreen Co. 8,247,800 227,845 424,944 GENERAL MERCHANDISE STORES - 2.3% Kohls Corp. (a) 423,100 29,670 Target Corp. 937,600 61,940 Wal-Mart Stores, Inc. 16,817,100 920,736 1,012,346 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) RETAIL & WHOLESALE - CONTINUED GROCERY STORES - 0.3% Kroger Co. (a) 2,423,324 $ 42,105 Safeway, Inc. (a) 2,132,900 81,450 123,555 RETAIL & WHOLESALE, MISCELLANEOUS - 1.8% Home Depot, Inc. 13,753,050 778,766 Staples, Inc. (a) 1,658,700 39,498 818,264 TOTAL RETAIL & WHOLESALE 2,464,966 SERVICES - 1.7% ADVERTISING - 0.6% Interpublic Group of 2,634,334 121,179 Companies, Inc. Omnicom Group, Inc. 1,581,400 148,157 269,336 EDUCATIONAL SERVICES - 0.0% SkillSoft Corp. 14,700 206 LEASING & RENTAL - 0.1% Marubeni Corp. 12,737,000 50,040 SERVICES - 1.0% ACNielsen Corp. (a) 841,332 17,247 Ecolab, Inc. 1,458,900 51,335 Gartner Group, Inc. Class B 3,232,338 44,041 (a) H&R Block, Inc. (d) 5,231,500 225,608 Viad Corp. 3,377,700 88,876 427,107 TOTAL SERVICES 746,689 TECHNOLOGY - 25.3% COMMUNICATIONS EQUIPMENT - 4.8% 3Com Corp. (a) 350,000 17,763 ADC Telecommunications, Inc. 2,221,700 146,493 (a) Cisco Systems, Inc. (a) 11,659,600 1,276,726 Lucent Technologies, Inc. 4,480,029 247,522 Nokia AB sponsored ADR 894,100 163,620 Nortel Networks Corp. 983,300 93,272 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMMUNICATIONS EQUIPMENT - CONTINUED Telefonaktiebolaget LM 1,769,900 $ 131,968 Ericsson sponsored ADR Tellabs, Inc. (a) 1,197,000 64,638 Turnstone Systems, Inc. 8,500 247 2,142,249 COMPUTER SERVICES & SOFTWARE - - 9.6% America Online, Inc. (a) 1,800,000 102,488 At Home Corp. Series A (a) 253,900 9,152 Automatic Data Processing, 7,063,000 335,051 Inc. BEA Systems, Inc. (a) 237,600 17,909 Ceridian Corp. (a)(d) 7,815,900 125,054 Citrix Systems, Inc. (a) 340,000 46,665 Computer Associates 1,564,200 107,441 International, Inc. Compuware Corp. (a) 1,029,600 21,815 DST Systems, Inc. (a) 1,214,100 75,426 Electronic Data Systems Corp. 3,149,900 213,012 First Data Corp. 1,673,400 82,101 Healtheon/Web Maryland Corp. 942,730 61,277 IMS Health, Inc. (d) 17,493,400 392,508 Intuit, Inc. (a) 617,500 37,243 Litton Industries, Inc. (a)(d) 3,066,800 130,147 Lycos, Inc. (a) 659,900 48,461 Microsoft Corp. (a) 21,961,700 2,149,501 Oracle Corp. (a) 6,344,120 316,909 Siebel Systems, Inc. (a) 100,000 9,169 Yahoo!, Inc. (a) 94,400 30,403 4,311,732 COMPUTERS & OFFICE EQUIPMENT - - 5.2% Compaq Computer Corp. 3,550,000 97,181 Dell Computer Corp. (a) 4,589,200 176,397 EMC Corp. (a) 3,426,900 364,965 Gateway, Inc. (a) 250,900 15,352 Hewlett-Packard Co. 2,505,900 271,264 International Business 4,392,600 492,795 Machines Corp. Juniper Networks, Inc. 593,100 80,254 Pitney Bowes, Inc. 8,900,300 436,115 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMPUTERS & OFFICE EQUIPMENT - - CONTINUED Seagate Technology, Inc. (a) 1,550,000 $ 62,097 Sun Microsystems, Inc. (a) 3,898,200 306,252 2,302,672 ELECTRONIC INSTRUMENTS - 0.2% Applied Materials, Inc. (a) 644,500 88,458 DBT Online, Inc. (a) 500,000 9,375 Sequenom, Inc. 14,800 385 98,218 ELECTRONICS - 5.5% Analog Devices, Inc. (a) 807,200 75,473 Intel Corp. 9,947,100 984,141 JDS Uniphase Corp. (a) 175,000 35,689 Linear Technology Corp. 555,900 52,637 Motorola, Inc. 2,767,700 378,483 Quantum Effect Devices, Inc. 10,700 171 Texas Instruments, Inc. 2,823,300 304,563 Tyco International Ltd. 14,776,400 631,691 2,462,848 TOTAL TECHNOLOGY 11,317,719 TRANSPORTATION - 0.6% AIR TRANSPORTATION - 0.4% AMR Corp. (a) 907,600 48,840 Southwest Airlines Co. 8,639,663 137,695 186,535 RAILROADS - 0.2% Burlington Northern Santa Fe 4,033,200 97,049 Corp. TOTAL TRANSPORTATION 283,584 UTILITIES - 7.1% CELLULAR - 1.4% ALLTEL Corp. 1,515,400 101,153 Nextel Communications, Inc. 1,583,000 168,392 Class A (a) COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) UTILITIES - CONTINUED CELLULAR - CONTINUED Sprint Corp. - PCS Group 1,550,000 $ 170,597 Series 1 (a) Vodafone AirTouch PLC 3,575,450 200,225 sponsored ADR 640,367 ELECTRIC UTILITY - 0.1% Duke Energy Corp. 259,900 15,009 FPL Group, Inc. 241,900 10,205 PG&E Corp. 151,500 3,324 28,538 GAS - 0.4% Enron Corp. 2,440,000 164,548 Williams Companies, Inc. 751,500 29,121 193,669 TELEPHONE SERVICES - 5.2% AT&T Corp. 8,592,950 453,278 Bell Atlantic Corp. 3,443,186 213,262 BellSouth Corp. 7,584,400 356,941 GTE Corp. 3,262,400 239,175 MCI WorldCom, Inc. (a) 8,452,914 388,306 SBC Communications, Inc. 15,595,800 672,569 2,323,531 TOTAL UTILITIES 3,186,105 TOTAL COMMON STOCKS 42,504,561 (Cost $24,547,135) CONVERTIBLE PREFERRED STOCKS - - 0.2% BASIC INDUSTRIES - 0.1% CHEMICALS & PLASTICS - 0.1% Sealed Air Corp. Series A, 1,054,927 56,175 $2.00 FINANCE - 0.1% CREDIT & OTHER FINANCE - 0.1% Union Pacific Capital Trust 1,377,000 55,080 $3.125 TIDES (e) TOTAL CONVERTIBLE PREFERRED 111,255 STOCKS (Cost $110,600)
CONVERTIBLE BONDS - 0.3% MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) TECHNOLOGY - 0.2% ELECTRONICS - 0.2% Micron Technology, Inc. 7% B2 $ 86,500 $ 98,772 7/1/04 UTILITIES - 0.1% CELLULAR - 0.1% Nextel Communications, Inc. B1 30,000 28,575 5.25% 1/15/10 (e) TOTAL CONVERTIBLE BONDS 127,347 (Cost $112,305) U.S. TREASURY OBLIGATIONS - 0.1% U.S. Treasury Bills, yield at - 20,000 19,963 date of purchase 5.11% to 5.31% 2/3/00 to 4/13/00 (f) U.S. Treasury Bonds 8.125% Aaa 10,000 11,517 8/15/19 TOTAL U.S. TREASURY OBLIGATIONS 31,480 (Cost $30,220)
CASH EQUIVALENTS - 4.0% SHARES Central Cash Collateral Fund, 821,300 821 5.56% (c) Taxable Central Cash Fund, 1,791,931,277 1,791,931 5.45% (c) TOTAL CASH EQUIVALENTS 1,792,752 (Cost $1,792,752) TOTAL INVESTMENT PORTFOLIO - 44,567,395 99.5% (Cost $26,593,012) NET OTHER ASSETS - 0.5% 243,783 NET ASSETS - 100% $ 44,811,178
FUTURES CONTRACTS EXPIRATION DATE UNDERLYING FACE AMOUNT AT UNREALIZED GAIN/LOSS (000S) VALUE (000S) PURCHASED 979 S&P 500 Stock Index March 2000 $ 342,895 $ (9,051) Contracts THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF NET ASSETS - 0.8%
SECURITY TYPE ABBREVIATIONS TIDES - Term Income Deferred Equity Securities LEGEND (a) Non-income producing (b) S&P credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. (c) The rate quoted is the annualized seven-day yield of the fund at period end. (d) Affiliated company (e) 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 $83,655,000 or 0.2% of net assets. (f) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $19,963,000. INCOME TAX INFORMATION At January 31, 2000, the aggregate cost of investment securities for income tax purposes was $26,627,911,000. Net unrealized appreciation aggre- gated $17,939,484,000, of which $19,115,896,000 related to appreciated investment securities and $1,176,412,000 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JANUARY 31, 2000 (UNAUDITED) ASSETS Investment in securities, at $ 44,567,395 value (cost $26,593,012) - See accompanying schedule Cash 2 Receivable for investments 520,453 sold Receivable for fund shares 35,352 sold Dividends receivable 30,026 Interest receivable 10,550 Receivable for daily 8,444 variation on futures contracts Other receivables 1,684 TOTAL ASSETS 45,173,906 LIABILITIES Payable for investments $ 156,372 purchased Payable for fund shares 180,161 redeemed Accrued management fee 18,478 Other payables and accrued 6,896 expenses Collateral on securities 821 loaned, at value TOTAL LIABILITIES 362,728 NET ASSETS $ 44,811,178 Net Assets consist of: Paid in capital $ 25,653,386 Undistributed net investment 36,296 income Accumulated undistributed net 1,156,190 realized gain (loss) on investments and foreign currency transactions Net unrealized appreciation 17,965,306 (depreciation) on investments and assets and liabilities in foreign currencies NET ASSETS, for 994,463 $ 44,811,178 shares outstanding NET ASSET VALUE, offering $45.06 price and redemption price per share ($44,811,178 (divided by) 994,463 shares) STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 2000 (UNAUDITED) INVESTMENT INCOME $ 262,676 Dividends (including $10,973 received from affiliated issuers) Interest 88,000 Security lending 89 TOTAL INCOME 350,765 EXPENSES Management fee $ 113,415 Transfer agent fees 44,396 Accounting and security 741 lending fees Non-interested trustees' 102 compensation Custodian fees and expenses 289 Registration fees 165 Audit 129 Legal 164 Miscellaneous 100 Total expenses before 159,501 reductions Expense reductions (3,425) 156,076 NET INVESTMENT INCOME 194,689 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investment securities 1,645,653 (including realized loss of $12,358 on sales of investments in affiliated issuers) Foreign currency transactions (164) Futures contracts 336 1,645,825 Change in net unrealized appreciation (depreciation) on: Investment securities (893,754) Assets and liabilities in (71) foreign currencies Futures contracts (9,051) (902,876) NET GAIN (LOSS) 742,949 NET INCREASE (DECREASE) IN $ 937,638 NET ASSETS RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1999 2000 (UNAUDITED) INCREASE (DECREASE) IN NET ASSETS Operations Net investment $ 194,689 $ 410,496 income Net realized gain (loss) 1,645,825 3,291,211 Change in net unrealized (902,876) 2,872,590 appreciation (depreciation) NET INCREASE (DECREASE) IN 937,638 6,574,297 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (204,861) (393,528) From net investment income From net realized gain (2,962,672) (2,186,858) TOTAL DISTRIBUTIONS (3,167,533) (2,580,386) Share transactions Net 2,696,142 8,258,120 proceeds from sales of shares Reinvestment of distributions 3,073,632 2,512,407 Cost of shares redeemed (7,323,896) (10,529,866) NET INCREASE (DECREASE) IN (1,554,122) 240,661 NET ASSETS RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) (3,784,017) 4,234,572 IN NET ASSETS NET ASSETS Beginning of period 48,595,195 44,360,623 End of period (including $ 44,811,178 $ 48,595,195 undistributed net investment income of $36,296 and $46,468, respectively) OTHER INFORMATION Shares Sold 59,227 186,270 Issued in reinvestment of 67,635 63,951 distributions Redeemed (160,473) (236,535) Net increase (decrease) (33,611) 13,686
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31, 2000 (UNAUDITED) 1999 1998 1997 1996 1995 SELECTED PER-SHARE DATA Net asset value, beginning of $ 47.27 $ 43.73 $ 38.50 $ 28.20 $ 25.10 $ 22.17 period Income from Investment Operations Net investment income .19 D .39 D .41 D .46 D .49 .43 Net realized and unrealized .70 5.69 6.59 11.44 3.99 4.14 gain (loss) Total from investment .89 6.08 7.00 11.90 4.48 4.57 operations Less Distributions From net investment income (.20) (.38) (.41) (.48) (.48) (.40) From net realized gain (2.90) (2.16) (1.36) (1.12) (.90) (1.24) Total distributions (3.10) (2.54) (1.77) (1.60) (1.38) (1.64) Net asset value, end of period $ 45.06 $ 47.27 $ 43.73 $ 38.50 $ 28.20 $ 25.10 TOTAL RETURN B, C 1.89% 15.20% 19.06% 44.16% 18.39% 21.95% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 44,811 $ 48,595 $ 44,361 $ 34,284 $ 19,206 $ 12,106 (in millions) Ratio of expenses to average .67% A .68% .69% .73% .75% .78% net assets Ratio of expenses to average .66% A, E .66% E .68% E .71% E .74% E .77% E net assets after expense reductions Ratio of net investment .82% A .88% 1.02% 1.43% 1.82% 2.21% income to average net assets Portfolio turnover rate 38% A 35% 32% 38% 41% 67%
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES. NOTES TO FINANCIAL STATEMENTS For the period ended January 31, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Growth & Income Portfolio (the fund) is a fund of Fidelity Securities Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company organized as a Massachusetts business trust. Effective the close of business on April 3, 1998, the fund was closed to new accounts. The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund: SECURITY VALUATION. Securities for which exchange quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of the business of the fund, are expected to materially affect the value of those securities, then they are valued at their fair value taking this trading or these events into account. Fair value is determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Securities (including restricted securities) for which exchange quotations are not readily available (and in certain cases debt securities which trade on an exchange) are valued primarily using dealer-supplied valuations or at their fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost or original cost plus accrued interest, both of which approximate current value. FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing rates of exchange at period end. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, the difference between the amount of net investment income accrued and the U.S. dollar amount actually received, and gains and losses between trade and settlement date on purchases and sales of securities. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to income taxes to the extent 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INCOME TAXES - CONTINUED that it distributes substantially all of its taxable income for its fiscal year. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust. DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the Plan) non-interested Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the fund or are invested in a cross-section of other Fidelity funds. Deferred amounts remain in the fund until distributed in accordance with the Plan. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for litigation proceeds, foreign currency transactions, non-taxable dividends and losses deferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Undistributed net investment income and accumulated undistributed net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury, Federal Agency, and other obligations found satisfactory by FMR are transferred to an account of the fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC, the fund may invest in the Taxable Central Cash Fund and the Central Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments Money Management, Inc., an affiliate of FMR. The Cash Funds are open-end money market funds available only to investment companies and other accounts managed by FMR and its affiliates. The Cash Funds seek preservation of capital, liquidity, and current income. Income distributions from the Cash Funds are declared daily and paid monthly from net interest income. Income distributions earned by the fund are recorded as either interest income or security lending income in the accompanying financial statements. FUTURES CONTRACTS. The fund may use futures contracts to manage its exposure to the stock 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 2. OPERATING POLICIES - CONTINUED FUTURES CONTRACTS - CONTINUED the counterparties do not perform under the contracts' terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. RESTRICTED SECURITIES. The fund is permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, the fund had no investments in restricted securities (excluding 144A issues). 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $8,441,280,000 and $12,188,598,000, respectively, of which U.S. government and government agency obligations aggregated $0 and $155,951,000, respectively. The market value of futures contracts opened and closed during the period amounted to $763,221,000 and $411,611,000, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .2167% to .5200% for the period. The annual individual fund fee rate is .20%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. For the period, the management fee was equivalent to an annualized rate of .48% of average net assets. TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .19% of average net assets. ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting records and administers the security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED ACCOUNTING AND SECURITY LENDING FEES - CONTINUED 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 $656,000. for the period. 5. SECURITY LENDING. The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral in the form of U.S. Treasury obligations, letters of credit, and/or cash against the loaned securities, and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. At period end, the value of the securities loaned amounted to $776,000. The fund received cash collateral of $821,000 which was invested in cash equivalents. 6. EXPENSE REDUCTIONS. FMR has directed certain portfolio trades to brokers who paid a portion of the fund's expenses. For the period, the fund's expenses were reduced by $2,257,000 under this arrangement. In addition, through an arrangement with the fund's transfer agent, credits realized as a result of uninvested cash balances were used to reduce a portion of the fund's expenses. During the period, the fund's transfer agent fees were reduced by $1,168,000 under this arrangement. 7. TRANSACTIONS WITH AFFILIATED COMPANIES. An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Transactions during the period with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE C.R. Bard, Inc. $ 6,461 $ - $ 1,753 $ 196,059 H&R Block, Inc. - 20,976 2,877 225,608 CBL & Associates Properties, - - 2,098 45,324 Inc. Capital Trust, Inc. - - - 6,748 Ceridian Corp. 11,351 - - 125,054 IMS Health, Inc. 23,435 18,765 359 392,508 Litton Industries, Inc. 1,412 17,822 - 130,147 SLM Holding Corp. 42,530 49,302 3,886 469,526 Unifi, Inc. - - - 42,384 TOTALS $ 85,189 $ 106,865 $ 10,973 $ 1,633,358
INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISERS Fidelity Management & Research (U.K.) Inc. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Ltd. OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Richard A. Spillane Jr., Vice President Steven Kaye, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer Matthew N. Karstetter, Deputy Treasurer Maria F. Dwyer, Deputy Treasurer John H. Costello, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d Donald J. Kirk * Ned C. Lautenbach * Peter S. Lynch Marvin L. Mann * William O. McCoy * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead * INDEPENDENT TRUSTEES GAI-SANN-0300 95618 1.700483.102 GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA CUSTODIAN The Chase Manhattan Bank New York, NY FIDELITY'S GROWTH AND INCOME FUNDS Balanced Fund Convertible Securities Fund Equity-Income Fund Equity-Income II Fund Fidelity (registered trademark) Fund Global Balanced Fund Growth & Income Portfolio Growth & Income II Portfolio Puritan (registered trademark) Fund Real Estate Investment Portfolio Utilities Fund THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Exchanges/Redemptions and Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) Fidelity Automated Service Telephone (FASTSM) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)(registered trademark) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 www.fidelity.com -----END PRIVACY-ENHANCED MESSAGE-----