FIDELITY(REGISTERED TRADEMARK)
OTC
PORTFOLIO
SEMIANNUAL REPORT
JANUARY 31, 2000
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 6 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 9 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 10 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 19 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 23 Notes to the financial
statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY(registered trademark) FUND,
INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-6666 FOR
A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
While no major Y2K glitches disrupted the financial markets to start
the new year, inflation worries re-emerged to hinder stock performance
throughout January. The S&P 500(Registered trademark) and Dow Jones
Industrial Average each fell approximately 5%, while the
technology-oriented NASDAQ Index dropped more than 3% for the month.
In bond markets, the potential for further rate hikes as a pre-emptive
move against inflation continued to be an obstacle to fixed-income
performance.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-6666, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). Total returns do not include the effect of the
3.00% sales load which was eliminated as of September 30, 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY OTC 40.08% 51.90% 337.55% 709.01%
NASDAQ 49.52% 57.68% 436.31% 939.74%
Mid-Cap Funds Average 22.89% 33.88% 188.83% 397.10%
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the NASDAQ Composite Index - a market capitalization-weighted index
that is designed to represent the performance of the National Market
System which includes over 5,000 stocks traded only over-the-counter
and not on an exchange. To measure how the fund's performance stacked
up against its peers, you can compare it to the mid-cap funds average,
which reflects the performance of mutual funds with similar objectives
tracked by Lipper Inc. The past six months average represents a peer
group of 462 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges. Lipper has created new comparison categories that group funds
according to portfolio characteristics and capitalization, as well as
by capitalization only. These averages are listed on page 5 of this
report.*
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY OTC 51.90% 34.34% 23.25%
NASDAQ 57.68% 39.92% 26.38%
Mid-Cap Funds Average 33.88% 22.65% 16.61%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER 10 YEARS
OTC Portfolio NASDAQ
00093 F0091
1990/01/31 10000.00 10000.00
1990/02/28 10277.93 10255.23
1990/03/31 10668.09 10503.41
1990/04/30 10358.10 10144.86
1990/05/31 11036.88 11098.62
1990/06/30 11058.26 11193.25
1990/07/31 10913.95 10625.26
1990/08/31 9973.28 9256.80
1990/09/30 9424.40 8379.64
1990/10/31 9225.65 8036.92
1990/11/30 9866.08 8762.97
1990/12/31 10252.87 9137.67
1991/01/31 11060.27 10138.10
1991/02/28 11917.44 11102.96
1991/03/31 12586.58 11833.69
1991/04/30 12564.46 11907.04
1991/05/31 13178.31 12446.36
1991/06/30 12542.34 11717.87
1991/07/31 13427.16 12374.99
1991/08/31 14135.02 12971.85
1991/09/30 14010.80 13015.55
1991/10/31 14619.97 13427.46
1991/11/30 13928.80 12969.66
1991/12/31 15293.12 14529.58
1992/01/31 15953.48 15383.35
1992/02/29 15984.33 15726.91
1992/03/31 15472.09 15004.18
1992/04/30 15015.40 14395.41
1992/05/31 15231.40 14575.14
1992/06/30 14898.14 14049.38
1992/07/31 15212.89 14493.73
1992/08/31 14836.42 14066.68
1992/09/30 15294.35 14584.71
1992/10/31 15864.28 15147.46
1992/11/30 16984.03 16353.27
1992/12/31 17577.88 16975.48
1993/01/31 17694.38 17477.13
1993/02/28 17002.23 16850.80
1993/03/31 17591.58 17352.75
1993/04/30 17077.61 16646.66
1993/05/31 17536.76 17647.15
1993/06/30 17557.32 17749.56
1993/07/31 17749.20 17785.05
1993/08/31 18078.14 18764.49
1993/09/30 18574.98 19285.37
1993/10/31 18819.98 19719.44
1993/11/30 18322.57 19108.07
1993/12/31 19042.72 19692.91
1994/01/31 19555.47 20310.73
1994/02/28 19350.37 20126.44
1994/03/31 18577.30 18898.95
1994/04/30 18064.56 18672.28
1994/05/31 17969.89 18724.56
1994/06/30 17307.26 17997.93
1994/07/31 17685.91 18428.89
1994/08/31 18569.42 19556.35
1994/09/30 18616.75 19541.25
1994/10/31 19042.72 19897.96
1994/11/30 18419.54 19221.81
1994/12/31 18529.45 19283.73
1995/01/31 18489.63 19386.99
1995/02/28 19461.09 20396.49
1995/03/31 20114.04 21020.50
1995/04/30 20958.10 21729.89
1995/05/31 21555.31 22281.05
1995/06/30 23227.50 24076.75
1995/07/31 24756.36 25846.02
1995/08/31 25074.87 26355.87
1995/09/30 25436.74 26983.23
1995/10/31 25298.81 26811.69
1995/11/30 25753.18 27429.94
1995/12/31 25612.41 27266.60
1996/01/31 25553.29 27484.34
1996/02/29 26465.31 28547.45
1996/03/31 26515.98 28601.30
1996/04/30 28179.56 30934.13
1996/05/31 29209.80 32327.51
1996/06/30 28188.00 30822.79
1996/07/31 26347.08 28120.12
1996/08/31 27900.89 29718.54
1996/09/30 29857.96 31956.26
1996/10/31 29737.75 31830.20
1996/11/30 31855.27 33697.80
1996/12/31 31691.51 33671.76
1997/01/31 32960.72 36003.00
1997/02/28 31352.41 34168.90
1997/03/31 28969.01 31903.50
1997/04/30 30141.33 32937.17
1997/05/31 32844.46 36596.49
1997/06/30 33726.12 37702.05
1997/07/31 37262.47 41684.13
1997/08/31 36681.16 41528.92
1997/09/30 39153.65 44116.17
1997/10/31 35916.58 41720.95
1997/11/30 35797.06 41912.86
1997/12/31 34833.27 41136.76
1998/01/31 35614.28 42436.89
1998/02/28 40279.55 46414.93
1998/03/31 41300.07 48139.44
1998/04/30 41747.85 49014.10
1998/05/31 38748.76 46681.91
1998/06/30 41352.14 49739.20
1998/07/31 41685.37 49169.28
1998/08/31 33260.82 39387.29
1998/09/30 37949.08 44516.12
1998/10/31 39686.27 46570.90
1998/11/30 42835.62 51271.66
1998/12/31 48898.95 57682.69
1999/01/31 53258.73 65939.01
1999/02/28 50871.50 60223.39
1999/03/31 53695.82 64803.95
1999/04/30 53751.86 66965.39
1999/05/31 54850.21 65077.95
1999/06/30 57831.44 70774.34
1999/07/31 57752.99 69536.18
1999/08/31 57943.52 72211.14
1999/09/30 57718.85 72407.55
1999/10/31 63392.33 78231.66
1999/11/30 69819.03 88000.63
1999/12/31 84364.03 107357.42
2000/01/31 80901.09 103973.52
IMATRL PRASUN SHR__CHT 20000131 20000210 162329 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity OTC Portfolio on January 31, 1990. As the chart
shows, by January 31, 2000, the value of the investment would have
grown to $80,901 - a 709.01% increase on the initial investment. For
comparison, look at how the NASDAQ Composite Index did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 would have grown to $103,974 - a 939.74% 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.
* THE LIPPER MULTI-CAP GROWTH FUNDS AVERAGE REFLECTS THE PERFORMANCE
(EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO
CHARACTERISTICS AND CAPITALIZATION. THE LIPPER MULTI-CAP SUPERGROUP
AVERAGE REFLECTS THE PERFORMANCE (EXCLUDING SALES CHARGES) OF MUTUAL
FUNDS WITH SIMILAR CAPITALIZATION. AS OF JANUARY 31, 2000, THE SIX
MONTH, ONE YEAR, FIVE YEAR AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR
THE MULTI-CAP GROWTH FUNDS AVERAGE WERE, 33.29%, 41.87%, 252.58%, AND
524.11%, RESPECTIVELY. THE ONE YEAR, FIVE YEAR AND 10 YEAR AVERAGE
ANNUAL TOTAL RETURNS WERE, 41.87%, 28.07%, AND 19.70%. THE SIX MONTH,
ONE YEAR, FIVE YEAR AND 10 YEAR CUMULATIVE TOTAL RETURNS FOR THE
MULTI-CAP SUPERGROUP AVERAGE WERE, 10.49%, 16.91%, 173.02%, AND
351.31%, RESPECTIVELY. THE ONE YEAR, FIVE YEAR AND 10 YEAR AVERAGE
ANNUAL TOTAL RETURNS WERE, 16.91%, 21.50%, AND 15.66%.
FUND TALK: THE MANAGERS' OVERVIEW
MARKET RECAP
What goes up must come down. Or
must it? Technology stocks seemed
united in their quest to prove this
age-old theory wrong during the six
months that ended January 31, 2000.
Driven in large part by investors'
ongoing fancy with the Internet and
dot.com stocks, the technology sector
- - as measured by the NASDAQ
Index - returned 49.52% during
the six-month period. In contrast,
the Standard & Poor's 500 SM Index,
which serves as a general barometer
of overall U.S. stock performance,
returned 5.59%. It wasn't only the
industry leaders that got into the
act, either, as the technology rally
included scores of smaller and
medium-sized stocks. The Russell
2000(Registered trademark) Index - a popular gauge
of small-cap stock performance -
returned a respectable 12.25%
during the period. The NASDAQ,
however, continued to be the
index du jour during the period -
the index was at around 2700 points
when the period began, crossed
4000 before New Year's and ended
January just under that threshold.
Since many tech stocks rose despite
a lack of discernible earnings, these
gains perplexed some money
managers, especially those that feel a
company's stock price follows its
earnings growth. Sensing that the
Federal Reserve Board would raise
interest rates in early February, tech
stocks sold off some throughout
January. Time will tell, though, if it's
only a speed bump.
(photograph of Robert Bertelson) (photograph of Jason Weiner)
NOTE TO SHAREHOLDERS: On February 14, 2000, Jason Weiner (right)
became Portfolio Manager of Fidelity OTC Portfolio. The following is
an interview with Robert Bertelson (left), who managed the fund during
the period covered by this report, with additional comments from Jason
Weiner.
Q. HOW DID THE FUND PERFORM, BOB?
R.B. It fared well, returning 40.08% for the six-month period that
ended January 31, 2000. Comparatively, the fund outpaced the 22.89%
return of the mid-cap funds average tracked by Lipper Inc., yet
trailed the red-hot NASDAQ Composite Index, which was up 49.52% for
the same period. For the 12-month period that ended January 31, 2000,
the fund's 51.90% return topped the 33.88% increase turned in by the
Lipper average, but couldn't keep pace with the 57.68% delivered by
the NASDAQ.
Q. WHAT FACTORS POWERED FUND RETURNS AND SHAPED RELATIVE PERFORMANCE
DURING THE SIX-MONTH PERIOD?
R.B. The market became increasingly enamored with opportunities for
earnings growth in the technology sector, driven primarily by the
growth of the Internet and its wide-reaching influence on various
industry segments. Strong business conditions in the U.S., coupled
with improving global economies, facilitated the sector's advances.
While the fund maintained a considerable tech weighting during the
period - averaging between 40-45% - it was underexposed relative to
the NASDAQ. The NASDAQ is a tremendously concentrated index, with
approximately 60-65% of its assets in technology issuers. Given the
dramatic run-up in tech stocks, our underexposure to the sector took
its toll on relative performance. The fund's overall stake, however,
was more than enough to vault it past its Lipper peers.
Q. IN A TECHNOLOGY-LED MARKET, WHY DID YOU DECIDE TO REMAIN
UNDERWEIGHTED IN THE SECTOR?
R.B. Although technology had some of the best growth opportunities in
the market, I found that other segments - namely, biotechnology and
telecommunications - offered comparable growth potential at more
reasonable valuation levels. By delving into these areas, the fund
should benefit from the additional diversification offered by firms
not tied to the Net or tech spending.
Q. WHAT WERE SOME OF YOUR OTHER STRATEGIES, AND HOW DID THEY PLAY OUT
FOR THE FUND?
R.B. Given my bullishness on the economy, I increased the fund's
exposure to companies I felt were poised to deliver the fastest
revenue growth, and cut back on those names that tend to get their
legs in a more moderate economic environment. In technology, it became
clear that Internet infrastructure was going to be the predominant
theme for some time to come. So, I focused on companies that offer
critical services aimed at "Webifying" businesses. These include
firms, such as BEA Systems, that enable connections between the Web
and a company's various internal applications, and also help improve
the delivery of Web content. Going forward, as corporate America
becomes increasingly Web-centric, these enablers should enjoy strong
earnings growth.
Q. WHICH STOCKS HELPED PERFORMANCE THE MOST?
R.B. Immunex, a biopharmaceutical firm, soared on strong earnings and
sharply higher sales of its arthritis drug, Enbrel. UnitedGlobalCom, a
leading broadband communications provider outside of the U.S.,
benefited from sharply higher subscriber growth. I invested in Aspect
Communications knowing that it faced a potentially long and difficult
transition. Our research, though, showed excellent potential for
success. As it turned out, Aspect made the transition successfully
from a call center switch company to an integrated customer
relationship software provider, and it paid off beautifully for the
fund.
Q. WHICH STOCKS HURT?
R.B. MCI WorldCom trended lower on decelerating revenue growth.
Comcast was a solid absolute performer but, on a relative basis, was
unable to keep pace with the rate of growth investors demanded from
NASDAQ stocks in this unusual market environment. At Home was felled
by uncertainty surrounding the company's ability to maintain its
revenue growth when exclusive arrangements with various cable TV
partners expire in the coming years.
Q. TURNING TO YOU, JASON, WHAT'S YOUR OUTLOOK?
J.W. In the near term, the backdrop looks favorable for the types of
companies in which we invest. Inflation remains under control.
Interest rates, although rising, are not at levels that seem likely to
choke off economic growth any time soon. Given the astounding
performance of stocks on the NASDAQ, however, valuation levels have
ascended to new heights. While that may or may not be a constraint on
future appreciation, it is a
measure of the implicit risk level should there be a change in the
investment landscape. Over the long term, though, I intend to remain
focused on uncovering the winners within these fast-moving spaces.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS 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: capital appreciation by
normally investing in
securities principally traded
on the over-the-counter
market
FUND NUMBER: 093
TRADING SYMBOL: FOCPX
START DATE: December 31,
1984
SIZE: as of January 31,
2000, more than $11.8
billion
MANAGER: Jason Weiner,
since February, 2000;
manager, Contrafund II,
1998-2000; 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 ASSESSING
STOCK VALUATIONS:
"Valuation - as measured by a
company's price-to-earnings, or P/E
ratio - is one of the tools investors
look at in deciding whether or not
to own a security. For rapidly
growing companies, determining the
right valuation can be challenging.
This was particularly true over the
past six months in the OTC market,
the home for companies early in
their life-
cycles that have a lot of uncertainty
surrounding their business models. A
company's P/E ratio is a barometer of
investors' enthusiasm for a concept
or for a company itself; it's also a
measure of a stock's risk. And when
valuations move to very high levels
as they have recently, it reflects an
enormous amount of optimism and
enthusiasm for the sector. For
example, we're seeing investors bid up
companies that are perceived to be
beneficiaries of the Internet bonanza,
particularly in the crowded IPO
market.
"Investors should remember that
when valuations are high, a lot of
money can be lost if economic
conditions, market sentiment or
company-specific items change. At
Fidelity, we approach this thorny
problem by relying on our depth of
research to determine a company's
potential for success. Further, we try
to neutralize risk by maintaining
smaller positions in the youngest
companies to reduce the impact of
possible failures. Admittedly, the
NASDAQ is a universe where
opportunities for capital appreciation
abound. But in this period of very
high returns, it's imperative to keep
a watchful eye on managing risk."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JANUARY
31, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
Microsoft Corp. 9.7 8.8
Cisco Systems, Inc. 5.3 2.7
Amgen, Inc. 3.6 3.7
Intel Corp. 3.0 1.2
Dell Computer Corp. 2.5 0.5
BEA Systems, Inc. 2.3 0.0
Immunex Corp. 2.3 1.4
EMC Corp. 1.9 0.0
Telefonaktiebolaget LM 1.9 0.2
Ericsson sponsored ADR
Comverse Technology, Inc. 1.7 1.8
34.2 20.3
TOP FIVE MARKET SECTORS AS OF
JANUARY 31, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
TECHNOLOGY 57.4 33.9
HEALTH 12.8 15.2
UTILITIES 6.7 11.4
MEDIA & LEISURE 6.0 12.7
ENERGY 3.1 5.6
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF JANUARY 31, 2000 * AS OF JULY 31, 1999 **
Stocks 94.6% Stocks 95.3%
Short-Term Investments and Short-Term Investments and
Net Other Assets 5.4% Net Other Assets 4.7%
* FOREIGN INVESTMENTS 4.5% ** FOREIGN INVESTMENTS 4.1%
Row: 1, Col: 1, Value: 94.59999999999999 Row: 1, Col: 1, Value: 95.3
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 5.4 Row: 1, Col: 8, Value: 4.7
</TABLE>
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS JANUARY 31, 2000 (UNAUDITED)
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 94.6%
SHARES VALUE (NOTE 1) (000S)
BASIC INDUSTRIES - 0.9%
CHEMICALS & PLASTICS - 0.4%
Praxair, Inc. 1,100,000 $ 44,619
METALS & MINING - 0.2%
Alcoa, Inc. 400,000 27,875
PAPER & FOREST PRODUCTS - 0.3%
Smurfit-Stone Container Corp. 1,800,000 35,663
(a)
TOTAL BASIC INDUSTRIES 108,157
DURABLES - 1.3%
CONSUMER ELECTRONICS - 1.3%
Audible, Inc. 104,800 1,624
Gemstar International Group 2,370,400 157,335
Ltd. (a)
158,959
ENERGY - 3.1%
ENERGY SERVICES - 0.8%
Baker Hughes, Inc. 400,000 9,850
BJ Services Co. (a) 1,200,000 51,450
Halliburton Co. 1,000,000 36,000
Marine Drilling Companies, 56,100 1,080
Inc. (a)
98,380
OIL & GAS - 2.3%
Amerada Hess Corp. 1,091,000 58,028
Anadarko Petroleum Corp. 500,000 16,406
Apache Corp. 527,700 19,261
Kerr-McGee Corp. 716,600 39,682
Newfield Exploration Co. (a) 1,739,700 47,842
Rio Alto Exploration Ltd. (a) 600,000 7,576
Vastar Resources, Inc. 1,387,600 77,185
265,980
TOTAL ENERGY 364,360
FINANCE - 2.2%
BANKS - 1.7%
Fifth Third Bancorp 100,000 6,638
Marshall & Ilsley Corp. 877,200 44,957
Northern Trust Corp. 400,000 24,150
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Peoples Heritage Financial 1,479,000 $ 21,723
Group, Inc.
Zions Bancorp 1,701,000 100,572
198,040
CREDIT & OTHER FINANCE - 0.2%
Concord EFS, Inc. (a) 878,100 17,836
SAVINGS & LOANS - 0.3%
Charter One Financial, Inc. 1,925,937 37,435
Golden State Bancorp, Inc. 874,440 874
litigation warrants 1/1/10
(a)
38,309
TOTAL FINANCE 254,185
HEALTH - 12.8%
DRUGS & PHARMACEUTICALS - 11.6%
Abgenix, Inc. (a) 200,000 26,400
Allergan, Inc. 600,000 34,200
Amgen, Inc. (a) 6,670,400 424,821
Biogen, Inc. (a) 1,730,980 149,297
Cephalon, Inc. (a) 1,100,000 39,050
Chiron Corp. (a) 1,596,900 70,862
CV Therapeutics, Inc. (a) 200,000 6,975
Cytyc Corp. (a) 838,000 25,192
Genentech, Inc. 100,000 14,050
Gilead Sciences, Inc. (a) 100,000 4,681
IDEC Pharmaceuticals Corp. (a) 647,800 81,744
Immunex Corp. (a) 2,045,000 267,384
Medarex, Inc. (a) 100,000 4,975
Medimmune, Inc. (a) 637,200 93,031
Millennium Pharmaceuticals, 143,300 26,860
Inc. (a)
QLT PhotoTherapeutics, Inc. 468,200 31,746
(a)
Sepracor, Inc. (a) 545,900 76,426
1,377,694
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT
- - 1.2%
Lincare Holdings, Inc. (a)(c) 3,262,500 $ 115,615
Oxford Health Plans, Inc. (a) 1,600,000 22,700
138,315
TOTAL HEALTH 1,516,009
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.9%
ELECTRICAL EQUIPMENT - 0.5%
ANTEC Corp. (a) 1,100,000 43,038
Pace Micro Technology PLC 1,000,000 12,601
55,639
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.4%
Ingersoll-Rand Co. 600,000 28,238
Parker-Hannifin Corp. 500,000 21,625
49,863
TOTAL INDUSTRIAL MACHINERY & 105,502
EQUIPMENT
MEDIA & LEISURE - 6.0%
BROADCASTING - 5.7%
AMFM, Inc. (a) 401,200 31,294
AT&T Corp. - Liberty Media 1,489,268 76,139
Group Class A (a)
CAIS Internet, Inc. 502,900 17,602
Clear Channel Communications, 462,926 39,985
Inc. (a)
Comcast Corp. Class A 2,342,480 107,754
(special)
EchoStar Communications Corp. 1,661,200 135,284
Class A (a)
Emmis Communications Corp. 100,000 8,844
Class A (a)
Netro Corp. 200,000 8,600
Sinclair Broadcast Group, 733,700 5,870
Inc. Class A (a)
UnitedGlobalCom, Inc. (a) 2,911,200 199,053
USA Networks, Inc. (a) 800,000 39,700
670,125
RESTAURANTS - 0.3%
Outback Steakhouse, Inc. (a) 1,550,000 38,363
TOTAL MEDIA & LEISURE 708,488
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
RETAIL & WHOLESALE - 2.6%
GENERAL MERCHANDISE STORES -
1.3%
Ames Department Stores, Inc. 1,300,000 $ 27,138
(a)
Costco Wholesale Corp. (a) 1,492,800 73,054
Dollar Tree Stores, Inc. (a) 600,000 26,438
Michaels Stores, Inc. (a) 700,000 18,725
Stein Mart, Inc. (a) 1,650,100 7,941
153,296
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.3%
Bed Bath & Beyond, Inc. (a) 1,700,000 46,219
PETsMART, Inc. (a) 5,000,000 21,250
Staples, Inc. (a) 3,141,975 74,818
Sunglass Hut International, 800,000 7,150
Inc. (a)
149,437
TOTAL RETAIL & WHOLESALE 302,733
SERVICES - 0.2%
EDUCATIONAL SERVICES - 0.0%
SkillSoft Corp. 3,800 53
SERVICES - 0.2%
CheckFree Holdings Corp. (a) 200,000 11,800
FreeMarkets, Inc. 50,900 11,656
23,456
TOTAL SERVICES 23,509
TECHNOLOGY - 57.4%
COMMUNICATIONS EQUIPMENT - 9.2%
Advanced Fibre 1,859,500 68,453
Communications, Inc. (a)
Aspect Communications Corp. 2,206,200 107,828
(a)
Cisco Systems, Inc. (a) 5,701,376 624,301
KPNQwest NV 400,000 25,450
Tekelec (a) 600,000 14,325
Telefonaktiebolaget LM 3,000,000 223,688
Ericsson sponsored ADR
Tellabs, Inc. (a) 410,400 22,162
Turnstone Systems, Inc. 2,200 64
1,086,271
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - 30.7%
Adobe Systems, Inc. 175,000 $ 9,636
Akamai Technologies, Inc. 83,600 20,827
Ariba, Inc. 213,800 34,769
Aspect Development, Inc. (a) 1,086,780 72,814
At Home Corp. Series A (a) 4,641,510 167,312
Avant! Corp. (a) 500,000 8,906
Axent Technolgies, Inc. (a)(c) 2,012,300 42,636
BackWeb Technologies Ltd. 400,000 14,000
Baltimore Technologies PLC 200,000 21,000
sponsored ADR (a)
BEA Systems, Inc. (a) 3,584,775 270,202
BindView Development Corp. (a) 294,600 13,552
BMC Software, Inc. (a) 3,395,000 128,586
CacheFlow, Inc. 103,400 8,996
Cambridge Technology 500,000 10,031
Partners, Inc. (a)
CBT Group PLC sponsored ADR 367,500 12,495
(a)
Compuware Corp. (a) 4,099,600 86,860
Covad Communications Group, 700,000 49,525
Inc.
DSET Corp. (a) 200,000 6,200
E.piphany, Inc. 100,000 15,800
El Sitio, Inc. 600,000 14,325
Electronics for Imaging, Inc. 2,239,000 104,953
(a)
Fiserv, Inc. (a) 1,593,925 54,094
Healtheon/Web Maryland Corp. 699,100 45,442
i2 Technologies, Inc. (a) 300,000 57,788
InfoSpace.com, Inc. 100,000 14,013
Inktomi Corp. (a) 100,000 9,944
Internap Network Services 281,000 17,422
Corp.
Intershop Communication AG (a) 100,000 28,627
Intertrust Technologies Corp. 53,200 7,681
Intuit, Inc. (a) 1,069,900 64,528
J. D. Edwards & Co. (a) 1,500,000 44,719
Legato Systems, Inc. (a)(c) 4,568,380 115,066
Mercury Interactive Corp. (a) 200,000 21,875
Metasolv Software, Inc. 403,300 43,052
Microsoft Corp. (a) 11,739,200 1,148,961
Netegrity, Inc. (a) 400,000 27,800
NetIQ Corp. 309,200 17,315
Networks Associates, Inc. (a) 1,200,000 31,125
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - CONTINUED
New Era of Networks, Inc. (a) 1,517,698 $ 79,205
OnDisplay, Inc. 50,800 4,096
Open Market, Inc. (a) 765,000 39,398
OpenTV Corp. 600,000 59,738
Oracle Corp. (a) 241,000 12,039
Peregrine Systems, Inc. (a) 1,000,000 75,938
Proxicom, Inc. 345,000 34,845
Quest Software, Inc. 230,000 22,195
Rational Software Corp. (a) 732,900 38,111
Redback Networks, Inc. 49,000 9,123
Scient Corp. 200,000 15,125
Siebel Systems, Inc. (a) 591,000 54,187
SilverStream Software, Inc. 120,000 13,350
Software.com, Inc. 50,000 3,394
Technology Solutions, Inc. (a) 1,100,000 38,706
The Bisys Group (a) 565,000 33,512
TSI International Software 939,400 57,597
Ltd. (a)
VeriSign, Inc. (a) 36,800 5,939
VERITAS Software Corp. (a) 150,000 21,881
Viant Corp. 200,000 19,200
Vignette Corp. 404,600 78,897
Visual Networks, Inc. (a) 336,400 21,151
Yahoo!, Inc. (a) 100,000 32,206
3,632,710
COMPUTERS & OFFICE EQUIPMENT
- - 7.8%
Computer Network Technology 38,000 461
Corp. (a)
Comverse Technology, Inc. (a) 1,426,390 204,509
Dell Computer Corp. (a) 7,730,600 297,145
EMC Corp. (a) 2,132,000 227,058
Emulex Corp. (a) 181,200 18,120
Juniper Networks, Inc. 210,000 28,416
RSA Security, Inc. (a) 900,000 48,938
SanDisk Corp. (a) 414,000 55,424
Sun Microsystems, Inc. (a) 600,000 47,138
927,209
ELECTRONIC INSTRUMENTS - 0.9%
Agilent Technologies, Inc. 431,300 28,547
Applied Materials, Inc. (a) 400,000 54,900
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS -
CONTINUED
Novellus Systems, Inc. (a) 351,000 $ 17,243
Sequenom, Inc. 4,000 104
100,794
ELECTRONICS - 8.8%
Altera Corp. (a) 1,363,700 89,663
Amkor Technology, Inc. (a) 200,000 6,350
Applied Micro Circuits Corp. 197,400 29,166
(a)
Atmel Corp. (a) 1,000,000 31,063
Broadcom Corp. Class A (a) 41,900 12,122
Brocade Communications 53,800 8,716
Systems, Inc.
Chartered Semiconduct 521,900 42,861
Manufacturing Ltd. ADR
Cree Research, Inc. (a) 100,000 9,413
Epcos AG sponsored ADR (a) 400,000 36,100
Intel Corp. 3,563,100 352,524
JDS Uniphase Corp. (a) 200,000 40,788
KEMET Corp. (a) 500,000 23,781
Lattice Semiconductor Corp. 100,000 5,131
(a)
Linear Technology Corp. 200,000 18,938
Maxim Integrated Products, 1,000,000 50,125
Inc. (a)
Microchip Technology, Inc. (a) 333,100 20,944
Next Level Communications, 204,800 16,512
Inc.
PMC-Sierra, Inc. (a) 366,800 66,207
Quantum Effect Devices, Inc. 2,800 45
Sanmina Corp. (a) 350,000 37,188
Texas Instruments, Inc. 1,200,000 129,450
Vitesse Semiconductor Corp. 72,200 3,141
(a)
Xilinx, Inc. (a) 200,000 9,150
1,039,378
TOTAL TECHNOLOGY 6,786,362
TRANSPORTATION - 0.5%
AIR TRANSPORTATION - 0.1%
Midwest Express Holdings, 3,250 72
Inc. (a)
Northwest Airlines Corp. 775,400 15,653
Class A (a)
15,725
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - 0.4%
Expeditors International of 1,139,500 $ 48,037
Washington, Inc.
TOTAL TRANSPORTATION 63,762
UTILITIES - 6.7%
CELLULAR - 2.5%
Nextel Communications, Inc. 1,700,000 180,837
Class A (a)
QUALCOMM, Inc. (a) 208,000 26,416
Sprint Corp. - PCS Group 800,000 88,050
Series 1 (a)
295,303
TELEPHONE SERVICES - 4.2%
Allegiance Telecom, Inc. (a) 442,000 46,576
iBasis, Inc. 303,100 22,619
Intermedia Communications, 200,000 8,600
Inc. (a)
ITXC Corp. 217,400 23,371
Level 3 Communications, Inc. 100,000 11,794
(a)
MCI WorldCom, Inc. (a) 3,464,456 159,148
McLeodUSA, Inc. Class A (a) 957,400 65,821
Metromedia Fiber Network, 1,511,200 102,289
Inc. Class A (a)
NEXTLINK Communications, Inc. 100,000 8,438
Class A (a)
Time Warner Telecom, Inc. 190,000 11,543
WinStar Communications, Inc. 500,000 35,406
(a)
495,605
TOTAL UTILITIES 790,908
TOTAL COMMON STOCKS 11,182,934
(Cost $7,633,746)
CASH EQUIVALENTS - 5.6%
SHARES VALUE (NOTE 1) (000S)
Central Cash Collateral Fund, 86,777,500 $ 86,778
5.56% (b)
Taxable Central Cash Fund, 541,693,343 541,693
5.45% (b)
MATURITY AMOUNT (000S)
Investments in repurchase $ 31,717 31,712
agreements (U.S. Treasury
obligations), in a joint
trading account at 5.7%,
dated 1/31/00 due 2/1/00
TOTAL CASH EQUIVALENTS 660,183
(Cost $660,183)
</TABLE>
TOTAL INVESTMENT PORTFOLIO - 11,843,117
100.2%
(Cost $8,293,929)
NET OTHER ASSETS - (0.2)% (25,091)
NET ASSETS - 100% $ 11,818,026
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Affiliated company
INCOME TAX INFORMATION
At January 31, 2000, the aggregate
cost of investment securities for income
tax purposes was $8,340,765,000.
Net unrealized appreciation aggre-
gated $3,502,352,000, of which $3,927,658,000 related to appreciated
investment securities and $425,306,000 related to depreciated
investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) JANUARY 31, 2000 (UNAUDITED)
ASSETS
Investment in securities, at $ 11,843,117
value (including repurchase
agreements of $31,712) (cost
$8,293,929) - See
accompanying schedule
Receivable for investments 414,473
sold
Receivable for fund shares 56,981
sold
Dividends receivable 739
Interest receivable 2,064
Other receivables 1,341
TOTAL ASSETS 12,318,715
LIABILITIES
Payable for investments $ 361,147
purchased
Payable for fund shares 44,960
redeemed
Accrued management fee 5,274
Other payables and accrued 2,530
expenses
Collateral on securities 86,778
loaned, at value
TOTAL LIABILITIES 500,689
NET ASSETS $ 11,818,026
Net Assets consist of:
Paid in capital $ 6,931,975
Accumulated net investment (17,686)
(loss)
Accumulated undistributed net 1,354,547
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 3,549,190
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 181,327 $ 11,818,026
shares outstanding
NET ASSET VALUE, offering $65.18
price and redemption price
per share ($11,818,026
(divided by) 181,327 shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX
MONTHS ENDED JANUARY 31,
2000 (UNAUDITED)
INVESTMENT INCOME $ 6,224
Dividends
Interest 9,554
Security lending 190
TOTAL INCOME 15,968
EXPENSES
Management fee Basic fee $ 28,151
Performance adjustment (4,874)
Transfer agent fees 9,205
Accounting and security 478
lending fees
Non-interested trustees' 31
compensation
Custodian fees and expenses 95
Registration fees 1,059
Audit 24
Legal 33
Miscellaneous 16
Total expenses before 34,218
reductions
Expense reductions (564) 33,654
NET INVESTMENT INCOME (LOSS) (17,686)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,604,554
(including realized gain
(loss) of $(13,788) on
sales of investments in
affiliated issuers)
Foreign currency transactions 18 1,604,572
Change in net unrealized 1,478,363
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 3,082,935
NET INCREASE (DECREASE) IN $ 3,065,249
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1999
2000 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (17,686) $ (9,088)
income (loss)
Net realized gain (loss) 1,604,572 756,466
Change in net unrealized 1,478,363 1,083,299
appreciation (depreciation)
NET INCREASE (DECREASE) IN 3,065,249 1,830,677
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (818,319) (266,093)
from net realized gains
Share transactions Net 4,139,845 4,757,859
proceeds from sales of shares
Reinvestment of distributions 802,460 260,154
Cost of shares redeemed (2,668,808) (3,777,986)
NET INCREASE (DECREASE) IN 2,273,497 1,240,027
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 4,520,427 2,804,611
IN NET ASSETS
NET ASSETS
Beginning of period 7,297,599 4,492,988
End of period (including $ 11,818,026 $ 7,297,599
accumulated net investment
loss of $17,686 and $0,
respectively)
OTHER INFORMATION
Shares
Sold 71,093 108,722
Issued in reinvestment of 15,285 8,336
distributions
Redeemed (46,664) (87,687)
Net increase (decrease) 39,714 29,371
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
2000
(UNAUDITED) 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 51.53 $ 40.03 $ 38.46 $ 31.20 $ 31.09 $ 22.42
period
Income from Invest- ment
Operations
Net investment income (loss) (.11) D (.07) D (.12) D (.05) D .13 .09
Net realized and unrealized 19.27 13.95 4.21 11.71 1.80 8.79
gain (loss)
Total from investment 19.16 13.88 4.09 11.66 1.93 8.88
operations
Less Distributions
From net investment income - - - (.08) (.02) (.09)
From net realized gain (5.51) (2.38) (2.52) (4.32) (1.80) (.12)
Total distributions (5.51) (2.38) (2.52) (4.40) (1.82) (.21)
Net asset value, end of $ 65.18 $ 51.53 $ 40.03 $ 38.46 $ 31.20 $ 31.09
period
TOTAL RETURN B, C 40.08% 38.54% 11.87% 41.43% 6.43% 39.98%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 11,818 $ 7,298 $ 4,493 $ 4,023 $ 2,635 $ 2,110
millions)
Ratio of expenses to average .76% A .75% .76% .85% .83% .82%
net assets
Ratio of expenses to average .75% A, E .74% E .75% E .84% E .82% E .81% E
net assets after expense
reductions
Ratio of net invest- ment (.39)% A (.16)% (.32)% (.15)% .42% .35%
income (loss) to average
net assets
Portfolio turnover rate 144% A 117% 125% 147% 133% 62%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE FORMER ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity OTC Portfolio (the fund) is a fund of Fidelity Securities
Fund (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company
organized as a Massachusetts business trust. The financial statements
have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Foreign securities are valued based
on quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of the business of the fund, are expected
to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into
account. Fair value is determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange) are valued primarily using dealer-supplied valuations or at
their fair value. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES - CONTINUED
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
market discount, net operating losses and losses deferred due to wash
sales. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated net investment loss and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
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.
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
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
the foreign currency or if the counterparties do not perform under the
contracts' terms. The U.S. dollar value of foreign currency contracts
is determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury, Federal Agency,
and other obligations found satisfactory by FMR are transferred to an
account of the fund, or to the Joint Trading Account, at a bank
custodian. The securities are marked-to-market daily and maintained at
a value at least equal to the principal amount of the repurchase
agreement (including accrued interest). FMR, the fund's investment
adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC,
the fund may invest in the Taxable Central Cash Fund and the Central
Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments
Money Management, Inc., an affiliate of FMR. The Cash Funds are
open-end money market funds available only to investment companies and
other accounts managed by FMR and its affiliates. The Cash Funds seek
preservation of capital, liquidity, and current income. Income
distributions from the Cash Funds are declared daily and paid monthly
from net interest income. Income distributions earned by the fund are
recorded as either interest income or security lending income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $7,403,220,000 and $6,255,756,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2167% to
.5200% for the period. The annual individual fund fee rate is .35%. In
the event that these rates were lower than the contractual rates in
effect during the
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. The basic fee is subject to a
performance adjustment (up to a maximum of (plus/minus).20% of the
fund's average net assets over the performance period) based on the
fund's investment performance as compared to the appropriate index
over a specified period of time. For the period, the management fee
was equivalent to an annualized rate of .52% of average net assets
after the performance adjustment.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annualized rate of .21% of average net assets.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $18,000 for the
period.
5. SECURITY LENDING.
The fund lends portfolio securities from time to time in order to earn
additional income. The fund receives collateral in the form of U.S.
Treasury obligations, letters of credit, and/or cash against the
loaned securities, and maintains collateral in an amount not less than
100% of the market value of the loaned securities during the period of
the loan. The market value of the loaned securities is determined at
the close of business of the fund and any additional required
collateral is delivered to the fund on the next business day. If the
borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the fund could experience
delays and costs in recovering the securities loaned or in gaining
access to the collateral. At period end, the value of the securities
loaned amounted to $82,333,000. The fund received cash collateral of
$86,778,000 which was invested in cash equivalents.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $354,000 under this arrangement.
6. EXPENSE REDUCTIONS - CONTINUED
In addition, through arrangements with the fund's custodian and
transfer agent, credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During
the period, the fund's custodian and transfer agent fees were reduced
by $1,000 and $209,000, respectively, under these arrangements.
7. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF TRANSACTIONS WITH
AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
Axent Technologies, Inc. $ 8,173 $ 22,045 $ - $ 42,636
EFTC Corp. - 1,732 - -
Legato Systems, Inc. - - - 115,066
Lincare Holdings, Inc. 9,022 8,042 - 115,615
Netegrity, Inc. - - - -
TOTALS $ 17,195 $ 31,819 $ - $ 273,317
</TABLE>
8. CHANGE IN INDEPENDENT AUDITOR
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP as the fund's independent auditor and voted to appoint Deloitte &
Touche LLP for the fiscal year ended July 31, 2000. During the two
most recent fiscal years and through January 20, 2000,
PricewaterhouseCoopers LLP's audit reports contained no adverse
opinion or disclaimer of opinion; nor were their reports qualified as
to uncertainty, audit scope, or accounting principles. Further, there
were no disagreements between the fund and PricewaterhouseCoopers LLP
on accounting principles, financial statements disclosure or audit
scope, which if not resolved to the satisfaction of
PricewaterhouseCoopers LLP would have caused them to make reference to
the disagreement in their report.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE (FASTSM)
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-0240 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5587
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5587
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity Investments Japan Ltd.
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Robert Bertelson, Vice President
Abigail P. Johnson, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Maria F. Dwyer, Deputy Treasurer
John H. Costello, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
OTC-SANN-0300 95617
1.700332.102
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Aggressive Growth Fund
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund (registered trademark)
Contrafund(registered trademark) II
Disciplined Equity Fund
Dividend Growth Fund
Export and Multinational Fund
Fidelity FiftySM
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium Fund(registered trademark)
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Small Cap Stock Fund
Stock Selector
Tax Managed Stock Fund
TechnoQuant(registered trademark) Growth Fund
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com