FIDELITY
CONTRAFUND(REGISTERED TRADEMARK) II
ANNUAL REPORT
JUNE 30, 1999
(2 FIDELITY LOGO GRAPHICS)
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.
REPORT OF INDEPENDENT 26 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 27
OF SPECIAL NOTE 28
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 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
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 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY CONTRAFUND II 21.74% 26.00%
FIDELITY CONTRAFUND II (INCL. 18.09% 22.22%
3.00% SALES CHARGE)
S&P 500 (registered trademark) 22.76% 26.81%
Growth Funds Average 18.87% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on March 31, 1998. For example, if you had invested $1,000 in
a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Standard & Poor's 500 Index - a market
capitalization-weighted index of common stocks. To measure how the
fund's performance stacked up against its peers, you can compare it to
the growth funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Inc. The past one year
average represents a peer group of 1,067 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR LIFE OF FUND
FIDELITY CONTRAFUND II 21.74% 20.31%
FIDELITY CONTRAFUND II (INCL. 18.09% 17.41%
3.00% SALES CHARGE)
S&P 500 22.76% 20.93%
Growth Funds Average 18.87% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmatic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER LIFE OF FUND
Contrafund II S&P 500
00339 SP001
1998/03/31 9700.00 10000.00
1998/04/30 9738.80 10100.60
1998/05/31 9457.50 9926.97
1998/06/30 10039.50 10330.20
1998/07/31 9787.30 10220.19
1998/08/31 7992.80 8742.55
1998/09/30 8691.20 9302.60
1998/10/31 8914.30 10059.27
1998/11/30 9797.00 10668.97
1998/12/31 10805.80 11283.71
1999/01/31 11416.90 11755.60
1999/02/28 10999.80 11390.23
1999/03/31 11630.30 11845.96
1999/04/30 11921.30 12304.75
1999/05/31 11717.60 12014.24
1999/06/30 12222.00 12681.03
IMATRL PRASUN SHR__CHT 19990630 19990716 090001 R00000000000018
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Contrafund II on March 31, 1998, when the fund
started, and the current 3.00% sales charge was paid. As the chart
shows, by June 30, 1999, the value of the investment would have grown
to $12,222 - a 22.22% increase on the initial investment. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 would have grown to $12,681 - a 26.81% 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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
An eventful year for domestic stock
markets ended on an upbeat note,
as the Federal Reserve Board backed
off from its bias shift toward raising
interest rates and switched to a
neutral position on June 30, 1999.
Despite the Fed's simultaneous
quarter-point rate hike that same
day, stock markets jumped for joy
- - figuratively, if not literally - on
news of the shift, sending several
equity indexes into record-high
territory. For the 12 months ending
June 30, 1999, the Dow Jones
Industrial Average - an index of 30
blue-chip stocks - returned
24.58%. The tech-heavy NASDAQ
Index rose a staggering 42.29%,
while the Standard & Poor's 500
Index - a popular measure of U.S.
stock markets - returned 22.76%
during the same one-year period.
Late last summer and early fall,
financial and economic crises in
Asian and emerging markets
contributed to precipitous drops
in U.S. equity markets. Shortly
thereafter, the Fed stepped in with
three consecutive interest-rate cuts
to help restore confidence and
liquidity to the markets. Its actions
revived the bull market, which
roared into the second quarter of
1999, with a handful of large-cap
growth stocks - particularly in the
technology sector - leading the
charge. By mid-April, however,
as corporate earnings broadened
and the global economy improved,
investors rotated out of the
expensive large-cap growth stocks,
and into smaller, economically
sensitive cyclical and value stocks.
(PHOTOGRAPH OF JASON WEINER)
An interview with Jason Weiner, Portfolio Manager of Contrafund II
Q. HOW DID THE FUND PERFORM, JASON?
A. The fund finished the period slightly behind the Standard & Poor's
500 Index but comfortably ahead of its peer group. For the 12 months
that ended June 30, 1999, the fund returned 21.74%, compared to 22.76%
for the S&P 500 and 18.87% for the growth funds average monitored by
Lipper Inc.
Q. WHAT FACTORS WERE PARTICULARLY RELEVANT TO THE FUND'S PERFORMANCE?
A. The fund's technology holdings, which comprised the largest sector
weighting during the period, were a helpful influence on performance.
Technology sub-groups in which the fund had successful investments
included software, networking and Internet-related stocks. Cable and
broadcasting stocks from the media and leisure sector also helped, as
did long-distance and wireless telecommunications stocks in the
utilities sector. On the downside, performance was limited by the
fund's large concentration of small- and mid-capitalization stocks
going into last fall's correction, when investors fled these stocks
for the perceived greater safety of large-cap holdings. During the
first half of 1999, the fund also was hurt by an underexposure to
cyclical stocks, which rallied in the last few months of the period.
Cyclical stocks are especially sensitive to fluctuations in the
economy and are included in categories such as energy, paper,
chemicals, metals and mining, and industrial equipment.
Q. HOW DID THE FUND'S POSITIONING CHANGE DURING THE PERIOD?
A. Last fall, when stocks declined sharply, I substantially increased
the average market capitalization of the fund's holdings. Toward the
end of the period, however, the fund's average capitalization crept
lower, as I noticed small- and mid-cap shares participating in the
rally in cyclical stocks that began in April. In addition, during the
third quarter of 1998, I increased the fund's technology weighting but
scaled it back later in the period after technology stocks had a good
run. Early in 1999, I added to the fund's energy and energy service
holdings in anticipation of a rally resulting from higher crude oil
prices. When this rally transpired as expected, I reduced
energy-related holdings because I felt that the rally in oil prices
had played itself out. Other than energy stocks, the fund did not have
a particular focus on cyclical stocks. It is true that these stocks
can have periods of outstanding performance when the economy is
growing rapidly. However, as a long-term strategy, I favor the stocks
of companies capable of more consistent earnings growth.
Q. WHAT STOCKS PERFORMED WELL DURING THE PERIOD?
A. America Online was one of the fund's best performers, benefiting
from continued strong growth in subscribers, advertising and
electronic commerce. I liquidated the position when the stock reached
what I considered an excessively high valuation. Another helpful
holding was Abercrombie & Fitch. The company, a specialty clothing
retailer, experienced rapid growth in new and existing stores. MCI
WorldCom also did well, based on the telecommunications company's
positioning as a leader in the high-growth markets of data and
Internet traffic. Finally, the stock of Time Warner, a diversified
entertainment company with extensive interests in the cable industry,
was strong. The story there was investors' ongoing appreciation of the
value of Time Warner's cable assets for delivery of broadband access
to the home. Furthermore, Time Warner owns other prized cable assets
such as the HBO network.
Q. WHAT HOLDINGS DISAPPOINTED YOU?
A. Saville Systems was one of last fall's small-cap disappointments.
The company provides billing software and services to competitive
local exchange carriers (CLECs), the next-generation local telephone
companies that are competing against the regional Bell operating
companies. Last fall's credit crunch, combined with a relatively
limited universe of possible customers, caused the stock to plummet.
NBTY, formerly Nature's Bounty, weakened due to stiffer competition
and the absence of any new blockbuster products in the nutritional
supplement market. I liquidated the fund's positions in both stocks.
Q. WHAT'S YOUR OUTLOOK, JASON?
A. The rebound in stock prices last fall was driven largely by the
aggressive actions of the Federal Reserve Board in lowering interest
rates. During 1999, stocks have responded to the improved earnings
prospects attributable to an economy that's growing faster than most
people expected. Going forward, however, I have to wonder whether
investors have been too enthusiastic in bidding up share prices in
some sectors, especially in view of the recent upward trend in
interest rates. In the current environment of rich stock valuations,
the fund's emphasis on the stocks priced at reasonable valuations
relative to their growth outlooks seems especially appropriate. In
other words, I've constructed a portfolio of earnings growth without
extended valuations.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(CHECKMARK)
FUND FACTS
GOAL: to increase the value of
the fund's shares over the
long term by investing in
companies whose value FMR
believes is not fully recognized
by the public
FUND NUMBER: 339
TRADING SYMBOL: FCONX
START DATE: March 31, 1998
SIZE: as of June 30, 1999,
more than $900 million
MANAGER: Jason Weiner, since
inception; manager, Fidelity
Export and Multinational
Fund,1997-1998; Fidelity
Select Computers Portfolio,
1996-1997; Fidelity Select
Air Transportation Portfolio,
1994-1996; joined Fidelity
in 1991
JASON WEINER ON BALANCING
GROWTH AND VALUE:
"The fund has the goal of
long-term capital appreciation,
but as its name implies, there's
also a value component to the
fund's strategy. Where do I look for
growth and value? To some extent,
I'm once again looking at stocks
with a smaller capitalization than
that of the average S&P 500 stock.
Although the average
capitalization of the fund's
holdings is higher than it was at
the beginning of the period, I still
believe there are many
opportunities in smaller stocks
and am hopeful that the recently
improved performance of the sector
is indicative of more to come.
"The fund also takes a very
selective approach to the
`hottest' sectors of the market,
which currently include
semiconductor and Internet
stocks. What I aim for is to keep
the fund's overall earnings growth
prospects approximately 50%
higher than the projected
earnings growth for the S&P 500
index. At the same time, I try to
maintain the fund's composite
price-to-earnings ratio at the same
level as that of the index. Higher
earnings growth than the index
combined with comparable value
should, in theory, lead to superior
returns."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JUNE 30,
1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCKS 6 MONTHS AGO
Microsoft Corp. 4.1 2.4
Fannie Mae 3.1 2.1
MCI WorldCom, Inc. 2.9 3.0
Lilly (Eli) & Co. 2.9 1.9
Merck & Co., Inc. 2.3 1.2
Abercrombie & Fitch Co. Class A 2.1 3.1
CIGNA Corp. 2.1 0.0
Republic Services, Inc. Class A 1.9 0.0
Freddie Mac 1.8 2.2
Cardinal Health, Inc. 1.8 0.0
TOP FIVE MARKET SECTORS AS OF
JUNE 30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO
TECHNOLOGY 16.8 19.2
FINANCE 15.4 10.0
HEALTH 13.5 12.8
RETAIL & WHOLESALE 10.2 4.7
UTILITIES 8.4 7.6
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JUNE 30, 1999 * AS OF DECEMBER 31, 1998 **
Stocks 97.6% Stocks 91.0%
Short-term Investments 2.4% Short-Term Investments 9.0%
* FOREIGN INVESTMENTS 3.3% ** FOREIGN INVESTMENTS 3.8%
</TABLE>
Row: 1, Col: 1, Value: 97.59999999999999
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 2.4
Row: 1, Col: 1, Value: 91.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 9.0
INVESTMENTS JUNE 30, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.0%
AEROSPACE & DEFENSE - 0.5%
Textron, Inc. 55,000 $ 4,527,188
DEFENSE ELECTRONICS - 0.5%
Raytheon Co. Class B 70,000 4,926,250
TOTAL AEROSPACE & DEFENSE 9,453,438
BASIC INDUSTRIES - 2.0%
CHEMICALS & PLASTICS - 1.2%
Fuller (H.B.) Co. 44,700 3,056,363
Georgia Gulf Corp. 270,000 4,556,250
Spartech Corp. 100,000 3,162,500
10,775,113
METALS & MINING - 0.8%
Alcoa, Inc. 120,000 7,425,000
TOTAL BASIC INDUSTRIES 18,200,113
CONSTRUCTION & REAL ESTATE -
1.2%
BUILDING MATERIALS - 0.4%
Southdown, Inc. 60,300 3,874,275
REAL ESTATE INVESTMENT TRUSTS
- - 0.8%
Indymac Mortgage Holdings, 150,000 2,400,000
Inc.
Starwood Hotels & Resorts 160,000 4,890,000
Worldwide, Inc.
7,290,000
TOTAL CONSTRUCTION & REAL 11,164,275
ESTATE
DURABLES - 1.3%
AUTOS, TIRES, & ACCESSORIES -
0.5%
SPX Corp. 51,700 4,316,950
HOME FURNISHINGS - 0.8%
Maxim Group, Inc. (a) 254,300 2,209,231
Miller (Herman), Inc. 260,000 5,460,000
7,669,231
TOTAL DURABLES 11,986,181
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - 5.4%
ENERGY SERVICES - 1.4%
BJ Services Co. (a) 160,000 $ 4,710,000
Smith International, Inc. (a) 200,000 8,687,500
13,397,500
OIL & GAS - 4.0%
Apache Corp. 150,000 5,850,000
Cooper Cameron Corp. (a) 100,000 3,706,250
Mobil Corp. 101,000 9,999,000
Santa Fe Snyder Corp. (a) 471,500 3,595,188
Texaco, Inc. 65,000 4,062,500
USX-Marathon Group 150,000 4,884,375
Vintage Petroleum, Inc. 385,000 4,138,750
36,236,063
TOTAL ENERGY 49,633,563
FINANCE - 15.4%
BANKS - 3.8%
Bank of New York Co., Inc. 275,000 10,089,063
Chase Manhattan Corp. 177,100 15,341,288
Comerica, Inc. 97,000 5,765,438
U.S. Bancorp 115,000 3,910,000
35,105,789
CREDIT & OTHER FINANCE - 3.6%
Associates First Capital 110,000 4,874,375
Corp. Class A
Citigroup, Inc. 184,500 8,763,750
Concord EFS, Inc. (a) 141,000 5,966,063
MBNA Corp. 277,500 8,498,438
Providian Financial Corp. 50,000 4,675,000
32,777,626
FEDERAL SPONSORED CREDIT - 4.9%
Fannie Mae 414,300 28,327,763
Freddie Mac 282,900 16,408,200
44,735,963
INSURANCE - 3.1%
Ambac Financial Group, Inc. 90,000 5,141,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Berkshire Hathaway, Inc. 58 $ 3,996,200
Class A (a)
CIGNA Corp. 212,400 18,903,600
28,041,050
TOTAL FINANCE 140,660,428
HEALTH - 13.5%
DRUGS & PHARMACEUTICALS - 9.1%
Genzyme Corp. 18,796 82,820
Genzyme Corp. (General 105,000 5,092,500
Division)
Immunex Corp. (a) 10,000 1,274,375
Lilly (Eli) & Co. 366,200 26,229,075
Merck & Co., Inc. 279,500 20,683,000
PE Corp. (Biosystems Group) 50,000 5,737,500
Quintiles Transnational Corp. 215,000 9,030,000
(a)
Schering-Plough Corp. 140,000 7,420,000
Sepracor, Inc. (a) 48,600 3,948,750
Transkaryotic Therapies, Inc. 105,000 3,465,000
(a)
82,963,020
MEDICAL EQUIPMENT & SUPPLIES
- - 3.5%
Biomet, Inc. 102,600 4,078,350
Cardinal Health, Inc. 255,000 16,351,875
Johnson & Johnson 60,000 5,880,000
Resmed, Inc. (a) 180,000 5,973,750
32,283,975
MEDICAL FACILITIES MANAGEMENT
- - 0.9%
Health Management Associates, 592,100 6,661,125
Inc. Class A (a)
Medquist, Inc. (a) 35,000 1,531,250
8,192,375
TOTAL HEALTH 123,439,370
INDUSTRIAL MACHINERY &
EQUIPMENT - 4.1%
INDUSTRIAL MACHINERY &
EQUIPMENT - 2.2%
Case Corp. 119,800 5,765,375
Ingersoll-Rand Co. 67,900 4,388,038
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
Mettler-Toledo International, 200,000 $ 4,962,500
Inc. (a)
Parker-Hannifin Corp. 100,000 4,575,000
19,690,913
POLLUTION CONTROL - 1.9%
Republic Services, Inc. Class 710,000 17,572,500
A
TOTAL INDUSTRIAL MACHINERY & 37,263,413
EQUIPMENT
MEDIA & LEISURE - 7.3%
BROADCASTING - 6.3%
AT&T Corp. (Liberty Media 280,000 10,290,000
Group) Class A (a)
Clear Channel Communications, 75,000 5,170,313
Inc. (a)
Comcast Corp. Class A 160,000 6,150,000
(special)
Cox Communications, Inc. 323,200 11,897,800
Class A (a)
MediaOne Group, Inc. 115,000 8,553,125
Time Warner, Inc. 205,185 15,081,098
57,142,336
RESTAURANTS - 1.0%
Foodmaker, Inc. (a) 100,000 2,837,500
McDonald's Corp. 150,000 6,196,875
9,034,375
TOTAL MEDIA & LEISURE 66,176,711
NONDURABLES - 6.6%
BEVERAGES - 2.5%
Anheuser-Busch Companies, 130,000 9,221,875
Inc.
Canandaigua Wine, Inc. Class 175,000 9,176,563
A (a)
Coors (Adolph) Co. Class B 95,000 4,702,500
23,100,938
FOODS - 2.4%
Dean Foods Co. 121,300 5,041,531
Earthgrains Co. 106,500 2,749,031
Heinz (H.J.) Co. 150,000 7,518,750
Keebler Foods Co. (a) 210,000 6,378,750
21,688,062
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
TOBACCO - 1.7%
Philip Morris Companies, Inc. 375,000 $ 15,070,313
TOTAL NONDURABLES 59,859,313
RETAIL & WHOLESALE - 10.2%
APPAREL STORES - 2.4%
Abercrombie & Fitch Co. Class 400,200 19,209,600
A (a)
Wet Seal, Inc. Class A (a) 99,000 2,833,875
22,043,475
DRUG STORES - 1.3%
CVS Corp. 138,600 7,033,950
Duane Reade, Inc. (a) 134,100 4,106,813
11,140,763
GENERAL MERCHANDISE STORES -
1.6%
Dollar Tree Stores, Inc. (a) 185,300 8,153,200
Nordstrom, Inc. 130,000 4,355,000
Saks, Inc. (a) 74,500 2,151,188
14,659,388
GROCERY STORES - 2.5%
Kroger Co. (a) 285,000 7,962,188
Safeway, Inc. (a) 300,000 14,850,000
22,812,188
RETAIL & WHOLESALE,
MISCELLANEOUS - 2.4%
Office Depot, Inc. (a) 723,950 15,972,147
Williams-Sonoma, Inc. (a) 175,800 6,120,038
22,092,185
TOTAL RETAIL & WHOLESALE 92,747,999
SERVICES - 4.1%
ADVERTISING - 0.8%
Young & Rubicam, Inc. 165,000 7,497,188
EDUCATIONAL SERVICES - 0.2%
Apollo Group, Inc. Class A (a) 67,700 1,798,281
SERVICES - 3.1%
Block (H&R), Inc. 190,600 9,530,000
Carriage Services, Inc. Class 225,000 4,218,750
A (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
SERVICES - CONTINUED
Catalina Marketing Corp. (a) 25,000 $ 2,300,000
CheckFree Holdings Corp. (a) 231,900 6,391,744
Manpower, Inc. 195,000 4,411,875
Student Advantage, Inc. 125,000 1,187,500
28,039,869
TOTAL SERVICES 37,335,338
TECHNOLOGY - 16.8%
COMMUNICATIONS EQUIPMENT - 2.9%
Cisco Systems, Inc. (a) 203,000 13,080,813
Nokia AB sponsored ADR 143,000 13,093,438
26,174,251
COMPUTER SERVICES & SOFTWARE
- - 10.5%
Advantage Learning Systems, 300,000 6,637,500
Inc. (a)
Amdocs Ltd. 200,000 4,550,000
Ask Jeeves, Inc. 200 2,800
At Home Corp. Series A (a) 195,000 10,517,813
Brocade Communications 25,500 2,459,156
Systems, Inc.
Clarent Corp. 600 9,000
DST Systems, Inc. (a) 8,400 528,150
IMS Health, Inc. 49,800 1,556,250
Medical Manager Corp. (a) 5,600 247,800
Meta Group, Inc. (a) 210,000 3,228,750
Microsoft Corp. (a) 419,000 37,788,553
National Instrument Corp. (a) 30,000 1,211,250
Project Software & 2,700 84,375
Development, Inc. (a)
Sabre Group Holdings, Inc. 183,400 12,608,750
Class A (a)
VeriSign, Inc. (a) 107,200 9,246,000
Visual Networks, Inc. (a) 170,000 5,440,000
96,116,147
COMPUTERS & OFFICE EQUIPMENT
- - 1.2%
Comverse Technology, Inc. (a) 95,500 7,210,250
SCI Systems, Inc. 79,000 3,752,500
10,962,750
ELECTRONICS - 2.2%
Celestica, Inc. (sub-vtg.) 100,000 4,354,960
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
National Semiconductor Corp. 452,500 $ 11,453,906
(a)
Texas Instruments, Inc. 30,000 4,350,000
20,158,866
TOTAL TECHNOLOGY 153,412,014
TRANSPORTATION - 0.3%
TRUCKING & FREIGHT - 0.3%
Expeditors International of 110,000 2,997,500
Washington, Inc.
UTILITIES - 8.4%
CELLULAR - 1.5%
ALLTEL Corp. 80,000 5,720,000
Vodafone AirTouch PLC 37,500 7,387,500
sponsored ADR
13,107,500
ELECTRIC UTILITY - 0.3%
CILCORP, Inc. 48,100 3,006,250
GAS - 0.4%
Ocean Energy, Inc. (a) 400,000 3,850,000
TELEPHONE SERVICES - 6.2%
Cincinnati Bell, Inc. 525,200 13,097,175
MCI WorldCom, Inc. (a) 305,014 26,250,267
Metromedia Fiber Network, 160,000 5,750,000
Inc. Class A (a)
Sprint Corp. (FON Group) 100,000 5,281,250
WinStar Communications, Inc. 124,500 6,069,375
(a)
56,448,067
TOTAL UTILITIES 76,411,817
TOTAL COMMON STOCKS 890,741,473
(Cost $795,072,258)
CASH EQUIVALENTS - 2.4%
Taxable Central Cash Fund (b) 21,940,506 21,940,506
(Cost $21,940,506)
TOTAL INVESTMENT IN $ 912,681,979
SECURITIES - 100%
(Cost $817,012,764)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.84%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $826,730,276. Net unrealized appreciation
aggregated $85,951,703, of which $114,138,497 related to appreciated
investment securities and $28,186,794 related to depreciated
investment securities.
The fund hereby designates approximately $422,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
ASSETS
Investment in securities, at $ 912,681,979
value (cost $817,012,764) -
See accompanying schedule
Cash 673,853
Receivable for investments 30,723,965
sold
Receivable for fund shares 1,387,109
sold
Dividends receivable 647,099
Interest receivable 158,972
TOTAL ASSETS 946,272,977
LIABILITIES
Payable for investments $ 35,385,714
purchased
Payable for fund shares 1,433,578
redeemed
Accrued management fee 414,451
Other payables and accrued 233,187
expenses
Collateral on securities 7,871,700
loaned, at value
TOTAL LIABILITIES 45,338,630
NET ASSETS $ 900,934,347
Net Assets consist of:
Paid in capital $ 761,877,301
Undistributed net investment 7,603
income
Accumulated undistributed net 43,379,628
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 95,669,815
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 71,497,764 $ 900,934,347
shares outstanding
NET ASSET VALUE and $12.60
redemption price per share
($900,934,347 (divided by)
71,497,764 shares)
Maximum offering price per $12.99
share (100/97.00 of $12.60)
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1999
INVESTMENT INCOME $ 3,382,127
Dividends
Interest (including income on 1,490,074
securities loaned of
$160,723)
TOTAL INCOME 4,872,201
EXPENSES
Management fee Basic fee $ 3,316,233
Performance adjustment 8,814
Transfer agent fees 1,355,725
Accounting and security 268,992
lending fees
Non-interested trustees' 1,696
compensation
Custodian fees and expenses 6,851
Registration fees 262,832
Audit 37,523
Legal 3,416
Miscellaneous 697
Total expenses before 5,262,779
reductions
Expense reductions (361,475) 4,901,304
NET INVESTMENT INCOME (LOSS) (29,103)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 51,163,550
Foreign currency transactions 38,344 51,201,894
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 79,238,214
Assets and liabilities in 600 79,238,814
foreign currencies
NET GAIN (LOSS) 130,440,708
NET INCREASE (DECREASE) IN $ 130,411,605
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JUNE 30, 1999 MARCH 31, 1998 (COMMENCEMENT
OF OPERATIONS) TO JUNE 30,
1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (29,103) $ (160,293)
income (loss)
Net realized gain (loss) 51,201,894 (7,787,378)
Change in net unrealized 79,238,814 16,431,001
appreciation (depreciation)
NET INCREASE (DECREASE) IN 130,411,605 8,483,330
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions Net 800,818,387 343,953,540
proceeds from sales of shares
Cost of shares redeemed (349,421,640) (33,310,875)
NET INCREASE (DECREASE) IN 451,396,747 310,642,665
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 581,808,352 319,125,995
IN NET ASSETS
NET ASSETS
Beginning of period 319,125,995 -
End of period (including $ 900,934,347 $ 319,125,995
undistributed net investment
income of $7,603 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 73,179,837 34,157,092
Redeemed (32,500,988) (3,338,177)
Net increase (decrease) 40,678,849 30,818,915
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED JUNE 30, 1999 1998 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.35 $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D .00 (.01)
Net realized and unrealized 2.25 .36
gain (loss)
Total from investment 2.25 .35
operations
Net asset value, end of period $ 12.60 $ 10.35
TOTAL RETURN B, C 21.74% 3.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 900,934 $ 319,126
(000 omitted)
Ratio of expenses to average .93% 1.28% A
net assets
Ratio of expenses to average .86% F 1.23% A, F
net assets after expense
reductions
Ratio of net investment (.01)% (.28)% A
income (loss) to average net
assets
Portfolio turnover rate 293% 141% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD MARCH 31, 1998 (COMMENCEMENT OF OPERATIONS) TO JUNE
30, 1998.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Contrafund II (the fund) is a fund of Fidelity Hastings
Street Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company
organized as a Massachusetts business trust. The financial statements
have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
received. Interest income is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, non-taxable dividends
and losses deferred due to wash sales. The fund also utilized earnings
and profits distributed to shareholders on redemption of shares as a
part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
fund's investment adviser, is responsible for determining that the
value of the underlying securities remains in accordance with the
market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,054,883,576 and $1,598,920,275, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. The fund's
performance adjustment took effect March 1, 1999. For the period, the
management fee was equivalent to an annual rate of .59% of average net
assets after the performance adjustment.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC),
an affiliate of FMR and the general distributor of the fund, received
sales charges of $2,139,834 on sales of shares of the fund of which
$2,135,677 was retained.
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 annual rate of .24% 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 $284,636 for the
period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income.
The fund receives U.S. Treasury obligations and/or cash as collateral
against the loaned securities, in an amount at least equal to 102% of
the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan.
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. At period end, the
value of the securities loaned amounted to $8,142,125. The fund
received cash collateral of $7,781,700.
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 $346,029 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's custodian and transfer agent fees were
reduced by $15,295 and $151, respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Hastings Street Trust and the Shareholders
of Fidelity Contrafund II:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Contrafund II (a fund of Fidelity Hastings Street Trust ) at
June 30, 1999, and the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fidelity
Contrafund II's management; our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at June 30,
1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 6, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Contrafund II voted to pay on August
9, 1999, to shareholders of record at the opening of business on
August 6, 1999, a distribution of $.72 per share derived from capital
gains realized from sales of portfolio securities.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
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
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 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU
SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL
BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
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
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400 East Las Colinas Blvd.
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511 Pine Street
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1900 K Street, N.W.
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WISCONSIN
595 North Barker Road
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INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Bart A. Grenier, Vice President
Jason L. Weiner, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Aggressive Growth Fund
Blue Chip Growth Fund
Capital Appreciation Fund
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Contrafund(registered trademark) II
Disciplined Equity Fund
Dividend Growth Fund
Export and Multinational Fund
Fidelity Fifty SM
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
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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 1-800-544-7777
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82 Devonshire St., Boston, MA 02109
www.fidelity.com
FIDELITY FIFTY SM
ANNUAL REPORT
JUNE 30, 1999
(2 FIDELITY LOGOS)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 6 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 9 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 10 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 15 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 19 Notes to the financial
statements.
REPORT OF INDEPENDENT 24 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 25
OF SPECIAL NOTE 26
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND.
THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
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 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Fidelity Fifty has a 3% sales charge, which was
waived beginning January 1, 1995 through December 31, 1998. Effective
January 1, 1999, the fund's 3% sales charge has been reinstated.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY FIFTY 29.38% 199.01% 204.38%
FIDELITY FIFTY (INCL. 3.00% 25.50% 190.04% 195.25%
SALES CHARGE)
S&P 500 (registered trademark) 22.76% 241.86% 238.38%
Capital Appreciation Funds 20.04% 160.85% n/a
Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on September 17, 1993. For example, if you had
invested $1,000 in a fund that had a 5% return over the past year, the
value of your investment would be $1,050. You can compare the fund's
returns to the performance of the Standard & Poor's 500 Index - a
market capitalization-weighted index of common stocks. To measure how
the fund's performance stacked up against its peers, you can compare
it to the capital appreciation funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past one year average represents a peer group of 264 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY FIFTY 29.38% 24.49% 21.21%
FIDELITY FIFTY (INCL. 3.00% 25.50% 23.73% 20.58%
SALES CHARGE)
S&P 500 22.76% 27.87% 23.45%
Capital Appreciation Funds 20.04% 19.28% n/a
Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER LIFE OF FUND
Fidelity Fifty S&P 500
$33,838
$29,525
$
'99
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Fifty on September 17, 1993, when the fund
started, and the current 3.00% sales charge was paid. As the chart
shows, by June 30, 1999, the value of the investment would have grown
to $29,525 - a 195.25% 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 $33,838 - a 238.38% 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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
An eventful year for domestic stock
markets ended on an upbeat note,
as the Federal Reserve Board backed
off from its bias shift toward raising
interest rates and switched to a
neutral position on June 30, 1999.
Despite the Fed's simultaneous
quarter-point rate hike that same
day, stock markets jumped for joy
- - figuratively, if not literally - on
news of the shift, sending several
equity indexes into record-high
territory. For the 12 months ending
June 30, 1999, the Dow Jones
Industrial Average - an index of 30
blue-chip stocks - returned
24.58%. The tech-heavy NASDAQ
Index rose a staggering 42.29%,
while the Standard & Poor's 500
Index - a popular measure of U.S.
stock markets - returned 22.76%
during the same one-year period.
Late last summer and early fall,
financial and economic crises in
Asian and emerging markets
contributed to precipitous drops
in U.S. equity markets. Shortly
thereafter, the Fed stepped in with
three consecutive interest-rate cuts
to help restore confidence and
liquidity to the markets. Its actions
revived the bull market, which
roared into the second quarter of
1999 with a handful of large-cap
growth stocks - particularly in the
technology sector - leading the
charge. By mid-April, however,
as corporate earnings broadened
and the global economy improved,
investors rotated out of the
expensive large-cap growth stocks,
and into smaller, economically
sensitive cyclical and value stocks.
(PHOTOGRAPH OF JOHN MURESIANU)
An interview with John Muresianu, Portfolio Manager of Fidelity Fifty
Q. HOW DID THE FUND PERFORM, JOHN?
A. Quite well. For the 12 months that ended June 30, 1999, the fund
had a total return of 29.38%. That topped the total return of the
fund's benchmark index, the Standard & Poor's 500 Index, which was
22.76% during the same period. The fund also beat the capital
appreciation funds average, which was up 20.04% during the period,
according to Lipper Inc.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG SHOWING DURING THE
PERIOD?
A. The fund benefited from strong security selection in the technology
and utilities sectors. Most of its gains came from having a high
concentration in Internet stocks during the first quarter of the year.
Other technology holdings, such as Microsoft, also helped. The fund
did gain some from industry selection, with its average
underweightings in nondurables, finance, energy and health care
relative to its benchmark, which helped as these sectors
underperformed the broader market.
Q. WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE TAKING OVER THE
FUND IN JANUARY?
A. I adjusted the fund's positioning significantly in terms of sector
weightings and stock selection. I overweighted the portfolio in
technology stocks in the first quarter, specifically those involved
with the Internet. I am a strong believer in the power of major
Internet brands to reshape the future course of business. I chose to
take profits in the second quarter, selling some shares after their
sharp rise in the first quarter. Meanwhile, I shifted some assets to a
few of the cyclical names in energy, industrial machinery and
equipment, and basic industries that had lagged the market in 1998.
And instead of investing directly in Internet pure plays, I moved to
more indirect beneficiaries like IBM.
Q. WHICH HOLDINGS CONTRIBUTED TO PERFORMANCE DURING THE PERIOD?
A. America Online, Amazon.com and Yahoo! were three of the top overall
contributors, as these companies benefited from explosive revenue
growth and expanding multiples. I sold off the fund's positions in
each of these holdings later in the period based on fundamentals and
price considerations. MCI WorldCom offered a healthy lift as investors
viewed the company as ideally positioned to capture the benefits of
data delivery and the Internet. Microsoft rallied on the company's
much-anticipated release of both Office 2000 and Windows 2000.
Q. WHICH HOLDINGS DETRACTED?
A. Prior to taking over the fund in January, the portfolio's
smaller-capitalization bias hurt performance in the third quarter of
1998, as investors shunned small caps in favor of larger companies.
Also during this time, FIRSTPLUS Financial, a sub-prime home-equity
lender, was hurt after the securitization market, on which it relies
for external financing, all but disappeared. The fund no longer owns
FIRSTPLUS Financial. Blue chips Gillette and Coca-Cola retreated as
well on fears that global economic problems would limit profit growth.
Q. WOULD YOU DESCRIBE YOUR INVESTMENT STYLE AS AGGRESSIVE?
A. I will, from time to time, make very large stock or sector bets,
which will increase the fund's volatility. Currently, there aren't any
such bets in the fund, but this could change at any time. I invest
where I see the most undervaluation relative to the superior long-term
opportunity. This strategy, at different times, could have me heavily
invested in growth, value or even a blend of the two styles. I can
move aggressively across style boundaries, or even market
capitalizations. I'm simply looking for the best long-term growth
stories out there regardless of size, shape or color.
Q. WHAT'S YOUR OUTLOOK?
A. It's an extremely risky market environment. Stocks could suffer if
the Fed changes its mind and shifts back to a tightening bias from its
neutral positioning. The market is likely to remain jittery over
inflation concerns, rising interest rates and the Year 2000 change-
over. The fact is, I'm a stock picker, and I don't see the value in
speculating on things that I can't predict. Should the macroeconomic
environment remain favorable, and the market continue broadening,
strong stock picking could be handsomely rewarded in the coming
months.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(CHECKMARK)
FUND FACTS
GOAL: to increase the value of
the fund's shares by investing
mainly in equity securities,
normally 50 to 60 stocks
FUND NUMBER: 500
TRADING SYMBOL: FFTYX
START DATE: September 17,
1993
SIZE: as of June 30, 1999,
more than $522 million
MANAGER: John Muresianu,
since January 1999; manager,
Fidelity American Trust
Portfolio, since 1997; Fidelity
Advisor Utilities Growth
Fund, 1996-1997; several
Fidelity Select Portfolios,
1992-1997; joined Fidelity
in 1986
JOHN MURESIANU ON THE
ROLE OF PARADIGM SHIFTS
IN PORTFOLIO MANAGEMENT:
"Much of my analysis revolves
around paradigm shifts, or major
structural changes or trends in a
particular industry that will have
a profound impact on the
investment landscape. Having
been trained as a historian, I have
a longer-term time horizon than
most in that, instead of looking at
only one or two quarters in either
direction, I focus on the 10- to
20-year timeframe. This helps me
recognize changes in long-term
trends, allowing for early entry
and exit once the change has been
fully discounted. A good example
of this is the Internet, which saves
people time and money, and
enhances the quality of their lives.
Some time ago, many skeptical
investors viewed the Internet as
simply a fad; I saw it as a real,
fundamental change in consumer
habits and business practices. As
such, I bought stocks such as
Amazon.com, Yahoo! and AOL,
selling them when the consensus
had become overwhelmingly
positive and after the market had
priced in a full appreciation of the
power of the medium. Another
example involves the deregulation
of electric utilities in the
1990s. As a utilities fund manager
at the time, my sector allocation
and stock selection benefited from
my early recognition of the impact
that deregulation would have on
utility stocks. Consequently, I
avoided high-cost electric utilities
and overweighted gas utilities,
which benefited from
consolidation."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JUNE 30,
1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCK 6 MONTHS AGO
Schlumberger Ltd. 5.3 0.0
Microsoft Corp. 4.3 6.0
AT&T Corp. 3.5 1.7
Philip Morris Companies, Inc. 3.4 0.0
Cisco Systems, Inc. 3.3 1.0
Lucent Technologies, Inc. 3.1 0.0
General Electric Co. 3.0 0.0
Waste Management, Inc. 2.9 0.0
PG&E Corp. 2.5 1.3
Wal-Mart Stores, Inc. 2.3 0.0
TOP FIVE MARKET SECTORS AS OF
JUNE 30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO
TECHNOLOGY 20.3 22.8
UTILITIES 15.3 16.4
HEALTH 12.4 6.9
FINANCE 8.6 12.2
ENERGY 7.6 3.5
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF JUNE 30, 1999 *
Stocks 92.9%
Short-term Investments and
net other assets 7.1%
* FOREIGN INVESTMENTS 10.1%
Stocks and equity futures
98.6%
Short-term Investments and
net other assets 1.4%
** FOREIGN INVESTMENTS 4.1%
</TABLE>
Row: 1, Col: 1, Value: 92.90000000000001
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 7.1
Row: 1, Col: 1, Value: 92.90000000000001
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 1.4
INVESTMENTS JUNE 30, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.9%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.3%
DEFENSE ELECTRONICS - 1.3%
Raytheon Co. Class A 100,000 $ 6,887,500
BASIC INDUSTRIES - 2.9%
CHEMICALS & PLASTICS - 1.7%
E.I. du Pont de Nemours and 131,300 8,969,431
Co.
METALS & MINING - 1.2%
Phelps Dodge Corp. 100,000 6,193,750
TOTAL BASIC INDUSTRIES 15,163,181
ENERGY - 7.6%
ENERGY SERVICES - 5.3%
Schlumberger Ltd. 439,900 28,016,128
OIL & GAS - 2.3%
Exxon Corp. 153,900 11,869,538
TOTAL ENERGY 39,885,666
FINANCE - 8.6%
BANKS - 1.5%
Bank One Corp. 73,600 4,383,800
Wells Fargo & Co. 78,800 3,368,700
7,752,500
CREDIT & OTHER FINANCE - 1.0%
Citigroup, Inc. 115,850 5,502,875
FEDERAL SPONSORED CREDIT - 4.0%
Fannie Mae 130,500 8,922,938
Freddie Mac 120,500 6,989,000
SLM Holding Corp. 114,300 5,236,369
21,148,307
INSURANCE - 2.1%
American International Group, 32,000 3,746,000
Inc.
Berkshire Hathaway, Inc. 105 7,234,500
Class A (a)
10,980,500
TOTAL FINANCE 45,384,182
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - 12.4%
DRUGS & PHARMACEUTICALS - 10.8%
American Home Products Corp. 66,800 $ 3,841,000
Biogen, Inc. (a) 93,600 6,019,650
Bristol-Myers Squibb Co. 87,300 6,149,194
Lilly (Eli) & Co. 69,800 4,999,425
Merck & Co., Inc. 80,000 5,920,000
PE Corp.:
(Biosystems Group) 58,900 6,758,775
(Celera Genomics Group) 129,500 2,096,281
Pfizer, Inc. 30,800 3,380,300
Pharmacia & Upjohn, Inc. 100,000 5,681,250
Schering-Plough Corp. 126,500 6,704,500
Warner-Lambert Co. 80,500 5,584,688
57,135,063
MEDICAL EQUIPMENT & SUPPLIES
- - 1.6%
Guidant Corp. 85,800 4,413,338
Medtronic, Inc. 47,000 3,660,125
8,073,463
TOTAL HEALTH 65,208,526
INDUSTRIAL MACHINERY &
EQUIPMENT - 5.9%
ELECTRICAL EQUIPMENT - 3.0%
General Electric Co. 138,800 15,684,400
POLLUTION CONTROL - 2.9%
Waste Management, Inc. 287,800 15,469,250
TOTAL INDUSTRIAL MACHINERY & 31,153,650
EQUIPMENT
MEDIA & LEISURE - 5.8%
BROADCASTING - 2.7%
CBS Corp. (a) 204,000 8,861,250
Clear Channel Communications, 78,300 5,397,806
Inc. (a)
14,259,056
ENTERTAINMENT - 1.2%
Disney (Walt) Co. 201,200 6,199,475
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 1.9%
McDonald's Corp. 119,600 $ 4,940,975
Starbucks Corp. (a) 140,900 5,292,556
10,233,531
TOTAL MEDIA & LEISURE 30,692,062
NONDURABLES - 6.0%
BEVERAGES - 0.8%
Coca-Cola Co. (The) 66,500 4,156,250
HOUSEHOLD PRODUCTS - 1.8%
Gillette Co. 106,200 4,354,200
Procter & Gamble Co. 60,400 5,390,700
9,744,900
TOBACCO - 3.4%
Philip Morris Companies, Inc. 446,100 17,927,644
TOTAL NONDURABLES 31,828,794
RETAIL & WHOLESALE - 5.1%
APPAREL STORES - 1.5%
Abercrombie & Fitch Co. Class 59,000 2,832,000
A (a)
Gap, Inc. 103,200 5,198,700
8,030,700
GENERAL MERCHANDISE STORES -
2.3%
Wal-Mart Stores, Inc. 252,400 12,178,300
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.3%
Home Depot, Inc. 76,400 4,923,025
Intimate Brands, Inc. Class A 38,850 1,840,519
6,763,544
TOTAL RETAIL & WHOLESALE 26,972,544
SERVICES - 0.7%
Medpartners, Inc. (a) 500,000 3,781,250
TECHNOLOGY - 20.3%
COMMUNICATIONS EQUIPMENT - 9.5%
Cisco Systems, Inc. (a) 269,800 17,385,238
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT -
CONTINUED
Lucent Technologies, Inc. 245,900 $ 16,582,881
Nokia AB sponsored ADR 120,800 11,060,750
Northern Telecom Ltd. 60,000 5,168,524
50,197,393
COMPUTER SERVICES & SOFTWARE
- - 6.5%
Ask Jeeves, Inc. 100 1,400
Clarent Corp. 300 4,500
International Business 90,000 11,632,500
Machines Corp.
Microsoft Corp. (a) 251,500 22,682,156
34,320,556
COMPUTERS & OFFICE EQUIPMENT
- - 1.9%
Hewlett-Packard Co. 100,000 10,050,000
ELECTRONICS - 2.4%
Intel Corp. 93,500 5,563,250
Texas Instruments, Inc. 50,000 7,250,000
12,813,250
TOTAL TECHNOLOGY 107,381,199
UTILITIES - 15.3%
CELLULAR - 1.6%
Vodafone AirTouch PLC 42,700 8,411,900
sponsored ADR
ELECTRIC UTILITY - 3.7%
Dominion Resources, Inc. 153,800 6,661,463
PG&E Corp. 400,000 13,000,000
19,661,463
TELEPHONE SERVICES - 10.0%
Ameritech Corp. 89,000 6,541,500
AT&T Corp. 331,200 18,485,100
MCI WorldCom, Inc. (a) 128,900 11,093,456
SBC Communications, Inc. 200,000 11,600,000
Sprint Corp. (FON Group) 96,200 5,080,563
52,800,619
TOTAL UTILITIES 80,873,982
TOTAL COMMON STOCKS 485,212,536
(Cost $453,522,683)
CASH EQUIVALENTS - 8.1%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (b) 42,959,681 $ 42,959,681
(Cost $42,959,681)
TOTAL INVESTMENT IN $ 528,172,217
SECURITIES - 100%
(Cost $496,482,364)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.84%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total net assets is as follows:
United States of America 82.8%
Netherlands Antilles 5.4
Finland 2.1
United Kingdom 1.6
Canada 1.0
Short-term Investments and 7.1
net other assets
100.0%
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $500,961,088. Net unrealized appreciation
aggregated $27,211,129, of which $41,990,308 related to appreciated
investment securities and $14,779,179 related to depreciated
investment securities.
The fund hereby designates approximately $11,781,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
ASSETS
Investment in securities, at $ 528,172,217
value (cost $496,482,364) -
See accompanying schedule
Receivable for investments 2,023,148
sold
Receivable for fund shares 6,016,969
sold
Dividends receivable 530,912
Interest receivable 311,428
Other receivables 50,926
TOTAL ASSETS 537,105,600
LIABILITIES
Payable to custodian bank $ 2,207
Payable for investments 10,770,450
purchased
Payable for fund shares 3,865,159
redeemed
Accrued management fee 208,251
Other payables and accrued 182,564
expenses
TOTAL LIABILITIES 15,028,631
NET ASSETS $ 522,076,969
Net Assets consist of:
Paid in capital $ 436,219,375
Undistributed net investment 1,125,208
income
Accumulated undistributed net 53,043,821
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 31,688,565
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 24,403,642 $ 522,076,969
shares outstanding
NET ASSET VALUE and $21.39
redemption price per share
($522,076,969 (divided by)
24,403,642 shares)
Maximum offering price per $22.05
share (100/97.00 of $21.39)
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1999
INVESTMENT INCOME $ 1,757,651
Dividends
Interest (including income on 1,443,988
securities loaned of
$288,058)
TOTAL INCOME 3,201,639
EXPENSES
Management fee Basic fee $ 1,611,780
Performance adjustment (350,479)
Transfer agent fees 667,162
Accounting and security 137,151
lending fees
Non-interested trustees' 805
compensation
Custodian fees and expenses 19,986
Registration fees 150,212
Audit 18,299
Legal 20,433
Interest 3,647
Miscellaneous 342
Total expenses before 2,279,338
reductions
Expense reductions (90,114) 2,189,224
NET INVESTMENT INCOME 1,012,415
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 51,927,970
Foreign currency transactions (14,277)
Futures contracts 1,892,352 53,806,045
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (1,533,632)
Assets and liabilities in (1,288)
foreign currencies
Futures contracts (388,142) (1,923,062)
NET GAIN (LOSS) 51,882,983
NET INCREASE (DECREASE) IN $ 52,895,398
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 1999 YEAR ENDED JUNE 30,
1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 1,012,415 $ 494,044
income
Net realized gain (loss) 53,806,045 21,111,377
Change in net unrealized (1,923,062) 9,699,300
appreciation (depreciation)
NET INCREASE (DECREASE) IN 52,895,398 31,304,721
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (220,177) (495,564)
From net investment income
From net realized gain (7,371,283) (20,129,202)
TOTAL DISTRIBUTIONS (7,591,460) (20,624,766)
Share transactions Net 861,346,449 203,058,297
proceeds from sales of shares
Reinvestment of distributions 7,510,494 20,420,206
Cost of shares redeemed (584,704,549) (197,674,155)
NET INCREASE (DECREASE) IN 284,152,394 25,804,348
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 329,456,332 36,484,303
IN NET ASSETS
NET ASSETS
Beginning of period 192,620,637 156,136,334
End of period (including $ 522,076,969 $ 192,620,637
undistributed net investment
income of $1,125,208 and
$335,632, respectively)
OTHER INFORMATION
Shares
Sold 42,455,516 12,278,921
Issued in reinvestment of 472,062 1,311,377
distributions
Redeemed (29,688,090) (12,000,886)
Net increase (decrease) 13,239,488 1,589,412
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED JUNE 30, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 17.25 $ 16.31 $ 14.00 $ 13.10 $ 10.17
of period
Income from Investment
Operations
Net investment income .07 C .04 C .07 C .15 .08
Net realized and unrealized 4.76 2.95 3.16 2.12 2.97
gain (loss)
Total from investment 4.83 2.99 3.23 2.27 3.05
operations
Less Distributions
From net investment income (.02) (.05) (.09) (.13) (.02)
From net realized gain (.67) (2.00) (.83) (1.24) (.10)
Total distributions (.69) (2.05) (.92) (1.37) (.12)
Net asset value, end of period $ 21.39 $ 17.25 $ 16.31 $ 14.00 $ 13.10
TOTAL RETURN A, B 29.38% 20.06% 24.75% 18.46% 30.26%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 522,077 $ 192,621 $ 156,136 $ 180,983 $ 128,572
(000 omitted)
Ratio of expenses to average .83% .80% .88% 1.03% 1.22%
net assets
Ratio of expenses to average .79% D .77% D .84% D .99% D 1.19% D
net assets after expense
reductions
Ratio of net investment .37% .27% .53% 1.20% 1.15%
income to average net assets
Portfolio turnover rate 316% 121% 131% 152% 180%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Fifty (the fund) is a fund of Fidelity Hastings Street Trust
(the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company organized as a
Massachusetts business trust. The financial statements have been
prepared in conformity with generally accepted accounting principles
which require management to make certain estimates and assumptions at
the date of the financial statements. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
the fair market value of the securities received. Interest income is
accrued as earned. Investment income is recorded net of foreign taxes
withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, futures transactions, foreign
currency transactions, passive foreign investment companies (PFIC),
and losses deferred due to wash sales. The fund also utilized earnings
and profits distributed to shareholders on redemption of shares as a
part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
the principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock market. Buying futures tends to increase the
fund's exposure to the underlying instrument, while selling futures
tends to decrease the fund's exposure to the underlying instrument or
hedge other fund investments. Losses may arise from changes in the
value of the underlying instruments or if the counterparties do not
perform under the contracts' terms. Gains (losses) are realized upon
the expiration or closing of the futures contracts. Futures contracts
are valued at the settlement price established each day by the board
of trade or exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,067,139,732 and $809,888,537, respectively.
The market value of futures contracts opened and closed during the
period amounted to $68,627,482 and $80,120,892, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
basic fee is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .46% of average net
assets after the performance adjustment.
SALES LOAD. Effective January 1, 1999, Fidelity Distributors
Corporation (FDC), an affiliate of FMR and the general distributor of
the fund, has reinstated the sales charge on the sale of shares of the
fund.
For the period, FDC received sales charges of $996,380 on sales of
shares of the fund of which $994,577 was retained.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .24% 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 $132,930 for the
period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income.
The fund receives U.S. Treasury obligations and/or cash as collateral
against the loaned securities, in an amount at least equal to 102% of
the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan.
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. At period end there
were no loans outstanding.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
6. BANK BORROWINGS - CONTINUED
to time. The average daily loan balances during the period for which
loans were outstanding amounted to $5,248,600. The weighted average
interest rate was 5.0%.
7. 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 $80,734 under this arrangement.
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's custodian and transfer agent fees were
reduced by $4,620 and $4,760, respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Hastings Street Trust and the Shareholders
of Fidelity Fifty:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Fifty (a fund of Fidelity Hastings Street Trust) at June 30,
1999, and the results of its operations, the changes in its net assets
and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of Fidelity Fifty's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at June 30, 1999 by correspondence
with the custodian and brokers, provide a reasonable basis for the
opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 6, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Fifty voted to pay on August 9,
1999, to shareholders of record at the opening of business on August
6, 1999, a distribution of $1.43 per share derived from capital gains
realized from sales of portfolio securities and a dividend of $.03 per
share from net investment income.
A total of 42% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
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
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 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU
SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL
BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
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
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OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Robert A. Lawrence, Vice President
John M. Muresianu, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Richard M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
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* INDEPENDENT TRUSTEES
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Brown Brothers Harriman & Co.
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FIDELITY
GROWTH & INCOME II
PORTFOLIO
ANNUAL REPORT
JUNE 30, 1999
(2 Fidelity Logos)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 6 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 9 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 10 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 17 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 21 Notes to the financial
statements.
REPORT OF INDEPENDENT 25 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 26
OF SPECIAL NOTE 27
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 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
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 1-800-544-8888, 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
PERIOD ENDED JUNE 30, 1999 LIFE OF FUND
FIDELITY GROWTH & INCOME II 7.81%
S&P 500 (registered trademark) 12.74%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, since the fund started on
December 28, 1998. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Standard & Poor's 500 Index - a market capitalization-weighted
index of common stocks. This benchmark includes reinvested dividends
and capital gains, if any, and excludes the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
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. Average annual total returns will appear once
the fund is a year old.
$10,000 LIFE OF FUND
Growth & Income II S&P 500
00361 SP001
1998/12/28 10000.00 10000.00
1998/12/31 10100.00 10031.66
1999/01/31 10290.00 10451.19
1999/02/28 10060.00 10126.36
1999/03/31 10360.00 10531.52
1999/04/30 10640.00 10939.40
1999/05/31 10340.00 10681.13
1999/06/30 10781.46 11273.93
IMATRL PRASUN SHR__CHT 19990630 19990730 101247 R00000000000010
$10,000 LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Growth & Income II Portfolio on December 28,
1998, when the fund started. As the chart shows, by June 30, 1999, the
value of the investment would have grown to $10,781 - a 7.81% 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
$11,274 - a 12.74% 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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
An eventful year for domestic stock
markets ended on an upbeat note,
as the Federal Reserve Board backed
off from its bias shift toward raising
interest rates and switched to a
neutral position on June 30, 1999.
Despite the Fed's simultaneous
quarter-point rate hike that same
day, stock markets jumped for joy
- - figuratively, if not literally - on
news of the shift, sending several
equity indexes into record-high
territory. For the 12 months ending
June 30, 1999, the Dow Jones
Industrial Average - an index of 30
blue-chip stocks - returned
24.58%. The tech-heavy NASDAQ
Index rose a staggering 42.29%,
while the Standard & Poor's 500
Index - a popular measure of U.S.
stock markets - returned 22.76%
during the same one-year period.
Late last summer and early fall,
financial and economic crises in
Asian and emerging markets
contributed to precipitous drops
in U.S. equity markets. Shortly
thereafter, the Fed stepped in with
three consecutive interest-rate cuts
to help restore confidence and
liquidity to the markets. Its actions
revived the bull market, which
roared into the second quarter of
1999 with a handful of large-cap
growth stocks - particularly in the
technology sector - leading the
charge. By mid-April, however,
as corporate earnings broadened
and the global economy improved,
investors rotated out of the
expensive large-cap growth stocks
and into smaller, economically
sensitive cyclical and value stocks.
(Photograph of Louis Salemy)
An interview with Louis Salemy, Portfolio Manager of Fidelity Growth &
Income II Portfolio
Q. HOW DID THE FUND PERFORM, LOUIS?
A. It was a disappointing period in terms of relative performance,
although the fund's absolute return was respectable. From inception on
December 28, 1998, through June 30, 1999, the fund returned 7.81%,
trailing the 12.74% return of the Standard & Poor's 500 Index. Going
forward, we will look at the fund's performance at six- and 12-month
intervals and compare it to its peer group.
Q. WHAT PREVENTED THE FUND FROM KEEPING UP WITH THE INDEX?
A. After a positive first quarter, the fund lost ground over the next
three months. The main contributing factor was a dramatic shift in
investor interest from growth to value stocks. Surprisingly strong
growth in the U.S. economy and improving prospects overseas, along
with surging crude oil prices, led investors to seek out the shares of
cyclical companies - those that are especially sensitive to
fluctuations in the economy. Examples of cyclical stocks would be
those in the energy, paper, chemicals and industrial equipment
sectors. Since the fund favors the shares of companies that tend to
have steady, dependable earnings growth, it was hurt by these
developments. For instance, pharmaceutical stocks, where the fund was
overweighted relative to the index, had been one of the
best-performing categories during 1998, but underperformed badly in
the first six months of 1999. Rising interest rates were another
factor that detracted from performance. The fund had some large
positions in several financial stocks that fare better when interest
rates are stable or falling. Finally, the fund's position of almost
10% in cash equivalents held back performance.
Q. WHY DID THE FUND HAVE SUCH A LARGE POSITION IN CASH EQUIVALENTS?
A. I started 1999 with a fairly cautious outlook, especially in view
of the market's relatively high valuations. Although April, May and
June provided some grounds for questioning my judgment, it was still
unclear as the period ended whether the rally in cyclical shares was a
short-term phenomenon or the beginning of an important new trend. At
the end of June, other commodities had failed to confirm the rally in
crude oil, leaving open the possibility that many cyclical stocks had
far exceeded the price levels justified by underlying supply and
demand considerations. I wanted to have some buying power in the event
of a correction in stock prices.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Citigroup was one of the fund's best performers and also one of its
largest holdings. The stock benefited from the synergies resulting
from the recent merger of Citicorp with Travelers Group, as well as
strong earnings growth in its Salomon Smith Barney brokerage unit.
Microsoft, a core technology holding, also did well. The company
continued to beat earnings estimates and generate substantial cash
flow. Another outstanding performer, American Express, benefited from
favorable earnings in its international operations compared to those
of last year, which were weakened by lower Asian demand. The company's
domestic business also continued to perform well.
Q. WHAT HOLDINGS FAILED TO PERFORM UP TO YOUR EXPECTATIONS?
A. Philip Morris was by far the biggest detractor from performance.
The company lost two important lawsuits, and the federal government
filed suit against the company to recover Medicare funds spent on
smoking-related ailments. The shares of pharmaceutical giant Eli Lilly
suffered from competitive pressure on some of the company's leading
drugs and the general move away from growth stocks. Finally, rising
interest rates hurt financial sector holdings Freddie Mac and Fannie
Mae, as did a perceived pricing war between them.
Q. WHAT'S YOUR OUTLOOK, LOUIS?
A. During the second half of 1999, I'll be watching the economy
closely to see whether growth is picking up or decelerating. If the
trend is toward faster growth, I may shift more of the fund's assets
into cyclicals and other economically sensitive shares. Second, I'll
be monitoring the technology sector to see if spending there
accelerates. If so, I'll consider adding more technology stocks to the
fund's portfolio. The jury is still out on these trends and, if the
economy begins to slow, the fund's positioning in solid growth stocks
could be timely.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: seeks a high total
return through a combination
of current income and capital
appreciation by investing
mainly in common stocks
FUND NUMBER: 361
TRADING SYMBOL: FGRTX
START DATE: December 28,
1998
SIZE: as of June 30, 1999,
more than $216 million
MANAGER: Louis Salemy, since
inception; manager, Fidelity
VIP: Growth & Income
Portfolio, since 1998;
various Fidelity Select
Portfolios, 1992-1998;
joined Fidelity in 1992
LOUIS SALEMY ON THE FUND'S
POSITIONING IN FINANCE STOCKS
DURING A PERIOD OF RISING RATES:
"The fund's largest sector weighting
during the period was finance, at
roughly 22% of assets as of June 30,
1999. Some investors, thinking that
finance stocks typically perform
poorly in a time of rising interest
rates, might wonder about the
fund's emphasis on this sector.
"Although some of the fund's finance
holdings are vulnerable to rising
interest rates, many respond well
to such an environment. For
example, companies with credit
card operations benefit from an
accelerating economy. As economic
activity picks up, consumers
increase their credit card
spending, resulting in higher
revenues to card issuers from
finance charges and service fees.
Similarly, consumer finance
companies see increased use of
their services during good
economic times. Moreover, both
credit card and consumer finance
companies tend to benefit from
the improved credit quality
characteristic of a strong
economy. Finally, some companies
in the finance sector have
overseas operations that would
likely get a boost from a pickup in
economic activity abroad.
"In fact, the fund is fairly well
balanced between finance stocks
that benefit from rising interest
rates and those that flourish in an
environment of stable to lower
rates."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JUNE 30,
1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCKS 6 MONTHS AGO
Associates First Capital 4.3 4.6
Corp. Class A
Fannie Mae 3.5 2.4
Microsoft Corp. 3.3 4.6
Citigroup, Inc. 3.0 4.1
General Electric Co. 3.0 3.8
American Express Co. 3.0 2.2
Merck & Co., Inc. 2.5 4.5
Philip Morris Companies, Inc. 2.5 3.7
Exxon Corp. 2.4 1.1
Freddie Mac 2.4 2.3
TOP FIVE MARKET SECTORS AS OF
JUNE 30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO
FINANCE 21.6 21.5
TECHNOLOGY 12.8 12.9
HEALTH 11.5 14.4
UTILITIES 8.9 10.8
NONDURABLES 8.3 12.6
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JUNE 30, 1999 *
Stocks 90.2%
Short-term Investments 9.8%
* FOREIGN INVESTMENTS 3.1%
AS OF DECEMBER 31, 1998 **
Stocks 100.0%
Short-term Investments 0.0%
** FOREIGN INVESTMENTS 2.8%
Row: 1, Col: 1, Value: 90.2
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 9.800000000000001
Row: 1, Col: 1, Value: 100.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 0.0
INVESTMENTS JUNE 30, 1999
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.2%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.1%
DEFENSE ELECTRONICS - 0.6%
Litton Industries, Inc. (a) 17,200 $ 1,234,100
SHIP BUILDING & REPAIR - 0.5%
General Dynamics Corp. 15,790 1,081,615
TOTAL AEROSPACE & DEFENSE 2,315,715
BASIC INDUSTRIES - 1.7%
CHEMICALS & PLASTICS - 0.7%
Lyondell Chemical Co. 53,800 1,109,625
Nalco Chemical Co. 6,700 347,563
1,457,188
PACKAGING & CONTAINERS - 1.0%
Ball Corp. 22,600 954,850
Owens-Illinois, Inc. (a) 37,900 1,238,856
2,193,706
TOTAL BASIC INDUSTRIES 3,650,894
CONSTRUCTION & REAL ESTATE -
1.4%
REAL ESTATE INVESTMENT TRUSTS
- - 1.4%
Equity Office Properties Trust 37,010 948,381
Equity Residential Properties 22,330 1,006,246
Trust (SBI)
Public Storage, Inc. 36,190 1,013,320
2,967,947
DURABLES - 1.7%
AUTOS, TIRES, & ACCESSORIES -
1.7%
Federal-Mogul Corp. 26,100 1,357,200
Ford Motor Co. 29,300 1,653,619
General Motors Corp. 11,650 768,900
3,779,719
ENERGY - 6.2%
OIL & GAS - 6.2%
BP Amoco PLC sponsored ADR 22,779 2,471,522
Chevron Corp. 11,870 1,129,876
Exxon Corp. 68,240 5,263,010
Mobil Corp. 11,060 1,094,940
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Royal Dutch Petroleum Co. (NY 39,130 $ 2,357,583
Registry Gilder 1.25)
Texaco, Inc. 19,510 1,219,375
13,536,306
FINANCE - 21.6%
BANKS - 3.5%
Bank of New York Co., Inc. 63,190 2,318,283
Mellon Bank Corp. 28,700 1,043,963
Wachovia Corp. 50,600 4,329,463
7,691,709
CREDIT & OTHER FINANCE - 10.7%
American Express Co. 50,000 6,506,250
Associates First Capital 211,790 9,384,939
Corp. Class A
Citigroup, Inc. 137,725 6,541,938
Household International, Inc. 17,620 834,748
23,267,875
FEDERAL SPONSORED CREDIT - 5.9%
Fannie Mae 111,090 7,595,779
Freddie Mac 89,130 5,169,540
12,765,319
INSURANCE - 1.5%
American International Group, 17,510 2,049,764
Inc.
Hartford Financial Services 20,700 1,207,069
Group, Inc.
3,256,833
TOTAL FINANCE 46,981,736
HEALTH - 11.5%
DRUGS & PHARMACEUTICALS - 8.9%
Bristol-Myers Squibb Co. 63,240 4,454,468
Lilly (Eli) & Co. 53,200 3,810,450
Merck & Co., Inc. 74,160 5,487,840
Schering-Plough Corp. 20,700 1,097,100
Warner-Lambert Co. 65,710 4,558,631
19,408,489
MEDICAL EQUIPMENT & SUPPLIES
- - 1.8%
Baxter International, Inc. 15,380 932,413
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES
- - CONTINUED
Becton, Dickinson & Co. 30,110 $ 903,300
Johnson & Johnson 21,370 2,094,260
3,929,973
MEDICAL FACILITIES MANAGEMENT
- - 0.8%
Health Management Associates, 151,090 1,699,763
Inc. Class A (a)
TOTAL HEALTH 25,038,225
INDUSTRIAL MACHINERY &
EQUIPMENT - 4.6%
ELECTRICAL EQUIPMENT - 3.4%
Emerson Electric Co. 16,080 1,011,030
General Electric Co. 57,740 6,524,620
7,535,650
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.2%
Ingersoll-Rand Co. 18,640 1,204,610
Tyco International Ltd. 14,080 1,334,080
2,538,690
TOTAL INDUSTRIAL MACHINERY & 10,074,340
EQUIPMENT
MEDIA & LEISURE - 2.9%
BROADCASTING - 0.5%
CBS Corp. (a) 24,732 1,074,296
Chancellor Media Corp. (a) 100 5,513
1,079,809
ENTERTAINMENT - 0.7%
Disney (Walt) Co. 30,600 942,863
Scientific Games Holdings 30,180 588,510
Corp. (a)
1,531,373
LODGING & GAMING - 0.4%
Station Casinos, Inc. (a) 43,444 885,171
PUBLISHING - 0.5%
Central Newspapers, Inc. 2,300 86,538
Class A
Times Mirror Co. Class A 17,470 1,035,098
1,121,636
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.8%
Starbucks Corp. (a) 19,100 $ 717,444
Tricon Global Restaurants, 19,210 1,039,741
Inc. (a)
1,757,185
TOTAL MEDIA & LEISURE 6,375,174
NONDURABLES - 8.3%
BEVERAGES - 1.8%
Coors (Adolph) Co. Class B 14,610 723,195
PepsiCo, Inc. 55,770 2,157,602
Whitman Corp. 54,430 979,740
3,860,537
FOODS - 1.0%
Bestfoods 22,330 1,105,335
Ralston Purina Co. 37,050 1,127,709
2,233,044
HOUSEHOLD PRODUCTS - 3.0%
Clorox Co. 22,100 2,360,556
Procter & Gamble Co. 48,140 4,296,495
6,657,051
TOBACCO - 2.5%
Philip Morris Companies, Inc. 133,330 5,358,199
TOTAL NONDURABLES 18,108,831
RETAIL & WHOLESALE - 5.3%
APPAREL STORES - 0.7%
Gap, Inc. 29,280 1,474,980
DRUG STORES - 0.5%
CVS Corp. 20,000 1,015,000
GENERAL MERCHANDISE STORES -
2.7%
Costco Companies, Inc. (a) 26,690 2,136,868
Dayton Hudson Corp. 19,310 1,255,150
Wal-Mart Stores, Inc. 52,620 2,538,915
5,930,933
GROCERY STORES - 0.4%
Safeway, Inc. (a) 17,400 861,300
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.0%
Bed Bath & Beyond, Inc. (a) 31,890 $ 1,227,765
Home Depot, Inc. 15,890 1,023,912
2,251,677
TOTAL RETAIL & WHOLESALE 11,533,890
SERVICES - 1.6%
ADVERTISING - 1.6%
Omnicom Group, Inc. 25,400 2,032,000
Outdoor Systems, Inc. (a) 37,810 1,380,065
3,412,065
TECHNOLOGY - 12.8%
COMMUNICATIONS EQUIPMENT - 1.4%
Cisco Systems, Inc. (a) 29,700 1,913,794
Lucent Technologies, Inc. 17,100 1,153,181
3,066,975
COMPUTER SERVICES & SOFTWARE
- - 6.7%
Ask Jeeves, Inc. 100 1,400
Automatic Data Processing, 55,580 2,445,520
Inc.
Clarent Corp. 100 1,500
DST Systems, Inc. (a) 23,000 1,446,125
Equifax, Inc. 27,960 997,823
IMS Health, Inc. 75,780 2,368,125
Microsoft Corp. (a) 78,800 7,106,775
Unisys Corp. (a) 3,100 120,706
14,487,974
COMPUTERS & OFFICE EQUIPMENT
- - 3.1%
EMC Corp. (a) 17,540 964,700
Hewlett-Packard Co. 13,200 1,326,600
Lexmark International Group, 9,520 628,915
Inc. Class A (a)
Pitney Bowes, Inc. 42,700 2,743,475
Xerox Corp. 18,300 1,080,844
6,744,534
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - 1.6%
Intel Corp. 30,780 $ 1,831,410
Solectron Corp. (a) 25,760 1,717,870
3,549,280
TOTAL TECHNOLOGY 27,848,763
TRANSPORTATION - 0.6%
RAILROADS - 0.6%
Burlington Northern Santa Fe 41,212 1,277,572
Corp.
UTILITIES - 8.9%
CELLULAR - 1.6%
ALLTEL Corp. 18,910 1,352,065
Vodafone AirTouch PLC 10,100 1,989,700
sponsored ADR
3,341,765
ELECTRIC UTILITY - 0.4%
IPALCO Enterprises, Inc. 42,100 891,994
TELEPHONE SERVICES - 6.9%
Ameritech Corp. 20,800 1,528,800
AT&T Corp. 71,710 4,002,314
BellSouth Corp. 21,630 1,013,906
Cincinnati Bell, Inc. 55,200 1,376,550
MCI WorldCom, Inc. (a) 53,120 4,571,640
SBC Communications, Inc. 44,310 2,569,980
15,063,190
TOTAL UTILITIES 19,296,949
TOTAL COMMON STOCKS 196,198,126
(Cost $188,013,503)
CASH EQUIVALENTS - 9.8%
Taxable Central Cash Fund (b) 21,259,891 21,259,891
(Cost $21,259,891)
TOTAL INVESTMENT IN $ 217,458,017
SECURITIES - 100%
(Cost $209,273,394)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.84%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $209,521,890. Net unrealized appreciation
aggregated $7,936,127, of which $13,129,573 related to appreciated
investment securities and $5,193,446 related to depreciated investment
securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
ASSETS
Investment in securities, at $ 217,458,017
value (cost $209,273,394) -
See accompanying schedule
Receivable for investments 1,597,739
sold
Receivable for fund shares 525,269
sold
Dividends receivable 207,181
Interest receivable 60,661
TOTAL ASSETS 219,848,867
LIABILITIES
Payable for investments $ 2,925,031
purchased
Payable for fund shares 423,683
redeemed
Accrued management fee 82,328
Other payables and accrued 128,596
expenses
TOTAL LIABILITIES 3,559,638
NET ASSETS $ 216,289,229
Net Assets consist of:
Paid in capital $ 207,346,077
Accumulated undistributed net 758,529
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 8,184,623
(depreciation) on investments
NET ASSETS, for 20,113,974 $ 216,289,229
shares outstanding
NET ASSET VALUE, offering $10.75
price and redemption price
per share ($216,289,229
(divided by) 20,113,974
shares)
STATEMENT OF OPERATIONS
DECEMBER 28, 1998
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
INVESTMENT INCOME $ 792,032
Dividends
Interest 340,924
TOTAL INCOME 1,132,956
EXPENSES
Management fee $ 313,583
Transfer agent fees 198,360
Accounting fees and expenses 37,458
Non-interested trustees' 142
compensation
Custodian fees and expenses 34,882
Registration fees 136,261
Audit 19,551
Legal 124
Miscellaneous 486
Total expenses before 740,847
reductions
Expense reductions (11,757) 729,090
NET INVESTMENT INCOME 403,866
REALIZED AND UNREALIZED GAIN 943,152
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 8,184,623
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 9,127,775
NET INCREASE (DECREASE) IN $ 9,531,641
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 28, 1998
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 403,866
income
Net realized gain (loss) 943,152
Change in net unrealized 8,184,623
appreciation (depreciation)
NET INCREASE (DECREASE) IN 9,531,641
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (403,866)
From net investment income
In excess of net investment (184,623)
income
Total distributions (588,489)
Share transactions Net 234,891,043
proceeds from sales of shares
Reinvestment of distributions 561,168
Cost of shares redeemed (28,106,134)
NET INCREASE (DECREASE) IN 207,346,077
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 216,289,229
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period $ 216,289,229
OTHER INFORMATION
Shares
Sold 22,753,650
Issued in reinvestment of 54,748
distributions
Redeemed (2,694,424)
Net increase (decrease) 20,113,974
FINANCIAL HIGHLIGHTS
1999 E
YEAR ENDED JUNE 30,
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .03
Net realized and unrealized .75
gain (loss)
Total from investment .78
operations
Less Distributions
From net investment income (.02)
In excess of net investment (.01)
income
Total distributions (.03)
Net asset value, end of period $ 10.75
TOTAL RETURN B, C 7.81%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 216,289
(000 omitted)
Ratio of expenses to average 1.14% A
net assets
Ratio of expenses to average 1.12% A, F
net assets after expense
reductions
Ratio of net investment .62% A
income to average net assets
Portfolio turnover rate 59% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD DECEMBER 28, 1998 (COMMENCEMENT OF OPERATIONS) TO
JUNE 30, 1999.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Growth & Income II Portfolio (the fund) is a fund of Fidelity
Hastings Street Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. 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. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
date. Non-cash dividends included in dividend income, if any, are
recorded at the fair market value of the securities received. Interest
income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for losses deferred due to wash sales. The fund also
utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for
income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences that will reverse in
a subsequent period. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money
2. OPERATING POLICIES - CONTINUED
TAXABLE CENTRAL CASH FUND - CONTINUED
market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities. Income
distributions from the Cash Fund are declared daily and paid monthly
from net interest income. Income distributions earned by the fund are
recorded as interest income in the accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $221,335,261 and $34,264,910, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .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 .30% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $19,623 for the
period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $11,287 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During
the period, the fund's custodian fees were reduced by $470 under this
arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Hastings Street Trust and the Shareholders
of Fidelity Growth & Income II Portfolio:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Growth & Income II Portfolio (a fund of Fidelity Hastings
Street Trust) at June 30, 1999, and the results of its operations,
the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Growth & Income II Portfolio's
management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of
these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which
included confirmation of securities at June 30, 1999 by correspondence
with the custodian and brokers, provides a reasonable basis for the
opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 6, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Growth & Income II Portfolio voted
to pay on August 9, 1999, to shareholders of record at the opening of
business on August 6, 1999, a distribution of $.05 per share derived
from capital gains realized from sales of portfolio securities.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
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
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 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU
SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL
BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)
MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)
FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)
FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
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 Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard A. Spillane Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity(registered trademark) Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II Portfolio
Puritan (registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated
Service Telephone (Automated Graphic) 1-800-544-5555
(Automated Graphic) AUTOMATED LINE FOR QUICKEST SERVICE
GII-ANN-0899 82096
1.723705.100
(Fidelity Logo Graphic)(Registered Trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
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