Fidelity New Millennium Fund

Transcription

1 Fidelity New Millennium Fund Key Takeaways The fund gained 8.25% for the semiannual reporting period ending May 31, 2017, trailing the 10.81% return of the benchmark S&P 500 index. Portfolio Manager John Roth avoided tech giants he thought were overbought, which hurt the fund as these stocks rallied this period. Includied was index component Apple, the fund's largest individual detractor. Commodity prices declined the past six months, which dragged on several of the fund's energy investments, including Anadarko Petroleum, a Texas-based exploration & production (E&P) firm. John tends to avoid the large energy multinationals, such as Exxon Mobil, in favor of energy firms operating in niche areas, such as those exposed to U.S. gas and infrastructure. Falling energy prices hurt Exxon, and not owning this index member was the fund's largest individual contributor. Given what John considers the late stage of the market cycle and uncertainty surrounding future government economic policies, he positioned the fund cautiously, keeping some cash in reserve and limiting exposure to more-cyclical investments. MARKET RECAP The U.S. equity bellwether S&P 500 index returned 10.81% for the six months ending May 31, 2017, displaying a strong ramp-up during the first half of the period on optimism for President Trump's pro-business agenda. Equity markets leveled off in March, however, as the fledgling administration faced the first test of its domestic agenda. The S&P reacted with uncertainty to efforts by Congress to repeal and replace the Affordable Care Act (ACA) and was relatively flat through May 31. In a reversal from much of 2016, growth-oriented stocks handily topped their value counterparts the past six months. Among sectors, information technology (+22%) fared best, surging in 2017 as a handful of constituents posted stellar returns. Certain so-called bond-proxy sectors bounced back after struggling in late 2016, with consumer staples (+14%) and utilities (+17%) rising strongly for the full six months; conversely, dividend-rich telecom (-1%) struggled amid rising interest rates and increased competition. Health care (+12%) performed well in February and again in April, climbing higher following the ACA's reprieve. Meanwhile, financials (+4%) lagged the broader market when sentiment regarding the potential for deregulation and lower taxes faded as the White House turned its attention to other initiatives. Lastly, lower oil prices sent energy (-11%) to the bottom of the sector performance rankings. Not FDIC Insured May Lose Value No Bank Guarantee

2 Q&A An interview with Portfolio Manager John Roth Fund Facts Trading Symbol: John Roth Portfolio Manager FMILX Start Date: December 28, 1992 Size (in millions): $3, Investment Approach Fidelity New Millennium Fund is managed with an opportunistic approach, investing across all sectors, market capitalizations and styles. Philosophically, we believe a company's stock price reflects the market's collective view of its future earnings power, but the collective view is often wrong. We believe bottom-up, fundamental analysis can identify those opportunities where our earnings forecasts deviate from consensus, and where the potential reward for being right is high. We look for growth stocks where we have a differentiated view on the magnitude or sustainability of the growth rate; cyclical stocks, based on differing expectations for the timing, duration or magnitude of the cycle; and intrinsicvalue stocks, where we have a contrary assessment of the underlying asset value. In constructing the portfolio, we size positions by assessing our conviction in the differentiated view on future earnings power versus its potential payoff. Q: John, how did the fund perform for the semiannual reporting period ending May 31, 2017 The fund rose 8.25%, trailing the 10.81% return of the S&P 500 benchmark. For the same time frame, the fund also lagged our peer group average. The fund's underperformance of the index was almost entirely due to its poor positioning among energy and information technology stocks. We were significantly overweight energy, which returned roughly -11% this period, and underweight the strong-performing tech sector, where stock selection further dragged on relative performance. Looking further out, the fund fell short of the benchmark and peer group average for the 12 months ending May 31. Q: Let's start with energy. What was your approach and why didn't it pan out the past six months As I do across all market sectors, I try to locate situations where I have a more positive view of a company's future prospects than the consensus. Within energy, inventories remained stubbornly high, while an acceleration of drilling has been concentrated on one area: the Permian Basin of west Texas and southeast New Mexico. The combination of both of these factors concerned investors. Conversely, I continued to think the risk/reward balance of owning energy names was still favorable. It appeared as if we're about halfway through the energy cycle, and I believed global demand still had room to improve. While the energy market may face some volatility during the remainder of 2017, at period end I am more bullish on the sector's outlook. I've positioned the fund in select energy names that I think stand to benefit from my positive outlook for the sector, including those exposed to U.S. natural gas and infrastructure, as well as U.S. producers of natural gas and oil. Unfortunately for the fund, commodity prices declined the past six months, which hurt several of our investments here, including Anadarko Petroleum (-27%), an E&P firm; 2 For definitions, fund risks and other important information, please see the Definitions and Important section of this Q&A.

3 Williams Companies (-5%), which owns a majority stake in Williams Partners, a North American pipeline owner and another fund holding; multinational energy firm ConocoPhillips (-7%); and Denbury Resources, a nonindex E&P that returned about -60% for the fund. Q: What tech-related names disappointed stocks rallied this period, led by the so-called "FANGs" Facebook, Amazon, Netflix and Google (through Alphabet, its parent company). E-commerce giant Amazon, while not categorized as a tech name, is a major player in data storage and cloud computing. Despite solid fundamentals for each of these firms, I chose not to hold Netflix and underweighted the other three names based on valuation concerns, as I found all four stocks overbought. This stance hurt, particularly being underexposed to Apple, the fund's biggest individual detractor the past six months. Apple shares rose 39% this period, driven by better-thanexpected first-quarter sales for its iphone 7 device, along with excitement over its upcoming iphone 8. I further reduced the fund's stake in Apple this period, as it appeared to me the market had priced in a "super cycle" for the iphone 8. Avoiding Amazon (+33%) and underweighting Alphabet (+27%) also significantly dampened relative results. gained 32% on consecutive quarters of better-thananticipated financial results. In addition, in March the firm announced plans to acquire Symetis, a Switzerland-based maker of implantable heart valves, in an effort to bolster its product lineup in the heart-valve-replacement market. In May, Boston Scientific reported positive results from a trial for its Alair treatment for asthma. Q: John, how is the fund positioned now As of period end, I think it's a bit of a tricky time to gauge the future. We've had a long run in the market's recovery and, as time passes, the potential for fiscal stimulus appears less and less likely. While I still am finding areas that look interesting to me including businesses within the energy services industry and those with recurring revenues I've maintained a sense of caution in terms of the fund's positioning. I'm keeping some cash in reserve about 6% at period end and limiting the fund's exposure to more-cyclical investments. Q: Where did you find success Looking at individual names, the fund's top-two relative contributors were large-cap index components I chose not to own: energy giant Exxon Mobil and multinational conglomerate General Electric (GE). I tend to avoid the large energy multinationals, such as Exxon, in favor of firms I find more interesting, such as those exposed to U.S. gas and infrastructure. Exxon shares returned -6%, hurt by falling energy prices, making our zero weighting in Exxon our largest individual contributor this period. Meanwhile, GE did not look attractive to me due to its cyclical exposure and valuation. Avoiding GE was a plus as its shares began to fall in January after the firm reported disappointing quarterly financials. Despite better firstquarter results, the stock fell in April when investors became concerned about some of GE's industrial businesses and its cash outflow. GE rode a volatile path for the remainder of the period and the stock returned -10% for the full six months. Elsewhere, my choices within health care also were additive. Here, longtime fund holding and medical device maker Boston Scientific was a big contributor. The stock 3 For definitions, fund risks and other important information, please see the Definitions and Important section of this Q&A.

4 LARGEST CONTRIBUTORS VS. BENCHMARK John Roth on the housing industry: "The market has notched some impressive gains this past year, but I think it's important to maintain perspective on where we are in the market cycle, particularly when it comes to consumer-oriented investments. Looking at the macroeconomic picture, consumer confidence is near an all-time high surpassing even what we saw in 2007 and unemployment is low. "Curiously, though, consumer spending has stayed relatively anemic, indicating to me a disconnect between consumer confidence and where people are deciding to spend their money. That said, the automotive industry recently enjoyed record sales, though I think that cycle likely has peaked. "In my view, this mixed data suggests it's important to maintain caution when it comes to consumer stocks; however, I am bullish on opportunities I'm finding in the housing industry. Median home prices have recovered from their post-financialcrisis low which bodes well for consumers' balance sheets as well as their credit. Importantly, new construction has been slow to recover in the past 10 years, and is still not anywhere near peak. I also view the industry's supply and demand balance as fair. At period end, the fund is invested in select housing names I think have the potential to grow against this backdrop. "One such fund investment is in D.R. Horton, the largest home-construction company in the United States. In my view, the firm has been prudent with its capital during the market recovery, executing its business well and avoiding many of the mistakes made by others during the last housing cycle. In addition, D.R. Horton has been proactive about bringing innovative products to market, including its Freedom line of affordable homes for seniors in age-restricted communities." Holding Market Segment Average Relative Relative Contribution (basis points)* Exxon Mobil Corp. Energy -1.75% 32 General Electric Co. Industrials -1.33% 29 Boston Scientific Corp. Health Care 1.26% 24 Mobileye NV 0.48% 24 Catalent, Inc. Health Care 0.65% 22 * 1 basis point = 0.01%. LARGEST DETRACTORS VS. BENCHMARK Holding Apple, Inc. Market Segment Average Relative Relative Contribution (basis points)* -2.19% -54 Anadarko Petroleum Corp. Energy 0.86% -39 The Williams Companies, Inc. Amazon.com, Inc. Energy 2.00% -34 Consumer Discretionary -1.68% -34 KEYW Holding Corp. Industrials 0.57% -26 * 1 basis point = 0.01%. ASSET ALLOCATION Asset Class Portfolio Portfolio Six Months Ago Domestic Equities 81.56% 88.18% International Equities 12.63% 9.50% Developed Markets 12.14% 9.24% Emerging Markets 0.33% 0.26% Tax-Advantaged Domiciles 0.16% 0.00% Bonds 0.28% 0.26% Cash & Net Other Assets 5.53% 2.06% Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number. "Tax-Advantaged Domiciles" represent countries whose tax policies may be favorable for company incorporation. 4 For definitions, fund risks and other important information, please see the Definitions and Important section of this Q&A.

5 MARKET-SEGMENT DIVERSIFICATION 10 LARGEST HOLDINGS Market Segment Portfolio Portfolio Six Months Ago 18.44% 19.94% Financials 18.26% 19.08% Health Care 12.94% 9.90% Energy 11.44% 15.42% Industrials 10.41% 10.86% Consumer Discretionary 10.03% 9.16% Consumer Staples 5.35% 3.41% Utilities 3.60% 4.03% Materials 2.62% 3.38% Real Estate 1.10% 0.76% Telecommunication Services 0.00% 1.75% Other 0.00% 0.00% Holding Market Segment Portfolio Portfolio Six Months Ago Bank of America Corp. Financials 2.93% 2.75% Cisco Systems, Inc. 2.23% 2.19% Eurofins Scientific SA Health Care 2.15% 1.67% The Williams Companies, Inc. Energy 2.04% 2.27% Chevron Corp. Energy 1.69% 1.91% UnitedHealth Group, Inc. Health Care 1.67% 1.57% Boston Scientific Corp. Health Care 1.59% 1.25% Visa, Inc. Class A Apple, Inc. American International Group, Inc. 1.51% 1.47% 1.42% 1.59% Financials 1.42% 1.47% 10 Largest Holdings as a % of Net Assets 18.65% 18.88% Total Number of Holdings The 10 largest holdings are as of the end of the reporting period, and may not be representative of the fund's current or future investments. Holdings do not include money market investments. FISCAL PERFORMANCE SUMMARY: Periods ending May 31, Month Cumulative YTD 1 3 Annualized 5 10 / LOF 1 Fidelity New Millennium Fund Gross Expense Ratio: 0.54% % 6.27% 16.77% 6.79% 13.96% 8.04% S&P 500 Index 10.81% 8.66% 17.47% 10.14% 15.42% 6.94% Morningstar Fund Large Growth 14.64% 14.06% 18.19% 9.67% 14.45% 7.41% % Rank in Morningstar Category (1% = Best) % 88% 62% 35% # of Funds in Morningstar Category ,426 1,284 1, Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 12/28/ This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit fidelity.com/performance, advisor.fidelity.com, or 401k.com. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Please see the last page(s) of this Q&A document for most-recent calendarquarter performance. 5 For definitions, fund risks and other important information, please see the Definitions and Important section of this Q&A.

6 Definitions and Important FUND RISKS Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks. IMPORTANT FUND INFORMATION Relative positioning data presented in this commentary is based on the fund's primary benchmark (index) unless a secondary benchmark is provided to assess performance. Unless otherwise disclosed to you, in providing this information, Fidelity is not undertaking to provide impartial investment advice, act as an impartial adviser, or to give advice in a fiduciary capacity. INDICES It is not possible to invest directly in an index. All indices represented are unmanaged. All indices include reinvestment of dividends and interest income unless otherwise noted. S&P 500 is a market-capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. MARKET-SEGMENT WEIGHTS Market-segment weights illustrate examples of sectors or industries in which the fund may invest, and may not be representative of the fund's current or future investments. Should not be construed or used as a recommendation for any sector or industry. RANKING INFORMATION 2017 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund's current prospectus for the most up-to-date information concerning applicable loads, fees and expenses. % Rank in Morningstar Category is the fund's total-return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1%. % Rank in Morningstar Category is based on total returns which include reinvested dividends and capital gains, if any, and exclude sales charges. RELATIVE WEIGHTS Relative weights represents the % of fund assets in a particular market segment, asset class or credit quality relative to the benchmark. A positive number represents an overweight, and a negative number is an underweight. The fund's benchmark is listed immediately under the fund name in the Performance Summary. 6

7 Manager Facts John Roth is a portfolio manager at Fidelity Management & Research Company (FMRCo), the investment advisor for Fidelity's family of mutual funds. Fidelity Investments is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and other financial products and services to more than 20 million individuals, institutions and financial intermediaries. In this role, Mr. Roth manages Fidelity New Millennium Fund (since 2006) and Fidelity Mid-Cap Stock Fund (since 2011). He also co-manages Fidelity Advisor New Insights Fund (since 2013). Prior to assuming his current responsibilities, Mr. Roth was comanager of Fidelity Balanced Fund, Fidelity Advisor Balanced Fund and Fidelity Series All-Sector Equity Fund from 2008 to He also managed the consumer discretionary sub-portfolio of VIP Contrafund from 2007 to Previously, Mr. Roth held various other roles at Fidelity, including that of consumer sector leader/portfolio manager of Select Consumer Discretionary Portfolio, VIP Consumer Discretionary Portfolio, Fidelity Advisor Consumer Discretionary Fund, and Fidelity Select Multimedia Portfolio from 2004 to Additionally, he was portfolio manager of Select Chemicals Portfolio from 2002 to 2004 and Select Utilities Portfolio from 1999 to 2002, and an equity analyst starting in Before joining Fidelity full-time in 1999, Mr. Roth worked as an equity trader at Tucker Anthony from 1992 to He has been in the investments industry since Mr. Roth earned his bachelor of arts degree in economics from Colby College and his master of business administration degree from the MIT Sloan School of Management. He is also a Chartered Financial Analyst (CFA ) charterholder. 7 For definitions, fund risks and other important information, please see the Definitions and Important section of this Q&A.

8 PERFORMANCE SUMMARY: Quarter ending September 30, Annualized 5 10 / LOF 1 Fidelity New Millennium Fund Gross Expense Ratio: 0.54% % 8.73% 12.96% 8.22% 1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 12/28/ This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit fidelity.com/performance, institutional.fidelity.com, or 401k.com. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, call or write Fidelity for a free prospectus or, if available, a summary prospectus. Read it carefully before you invest. Past performance is no guarantee of future results. Views expressed are through the end of the period stated and do not necessarily represent the views of Fidelity. 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. The securities mentioned are not necessarily holdings invested in by the portfolio manager(s) or FMR LLC. References to specific company securities should not be construed as recommendations or investment advice. included on this page is as of the most recent calendar quarter. S&P 500 is a registered service mark of Standard & Poor's Financial Services LLC. 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 LLC or an affiliated company. Fidelity Brokerage Services LLC, Member NYSE, SIPC., 900 Salem Street, Smithfield, RI Fidelity Investments Institutional Services Company, Inc., 500 Salem Street, Smithfield, RI FMR LLC. All rights reserved. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee Diversification does not ensure a profit or guarantee against a loss.