Fidelity Growth Strategies Fund Key Takeaways For the fiscal year ending November 30, 2017, the fund's Retail Class shares gained 21.63%, underperforming the 25.03% return of the benchmark Russell Midcap Growth Index. The strong result for the fund's Russell benchmark the past 12 months was driven by many of its riskier components, which proved a challenging backdrop for Manager Jean Park's bias for higher-quality stocks. Unfavorable stock selection was the biggest detractor versus the benchmark, especially within the consumer discretionary, industrials, information technology and financials sectors. The fund's biggest individual relative detractor was Jean's decision to avoid benchmark component and computer graphics-card designer Nvidia while it was in the fund's benchmark until being removed in June. On the positive side, stock picking in consumer staples helped the fund's relative result. The top individual contributor was the fund's sizable overweighting in credit-card payment processor Total System Services. After a strong year of performance for mid-cap stocks, Jean is cautiously optimistic about the near term, as proposed regulatory changes and tax reform could buoy many mid-cap companies' earnings and bolster their stock prices. MARKET RECAP The U.S. equity bellwether S&P 500 index gained 22.87% for the year ending November 30, 2017, rising steadily and closing the period at an alltime high after a particularly strong three-month finish. Early on, equities rallied on optimism for President Trump's pro-business agenda but leveled off in March amid fading optimism and stalled efforts by Congress to repeal and replace the Affordable Care Act. Upward momentum soon returned and continued through period-end with consumer sentiment and other market indicators staying positive. The lone exception was a brief cooldown in August, when geopolitical tension escalated and uncertainty grew regarding the future of health care, tax reform and the debt ceiling. Sectorwise, info tech (+41%) led by a wide margin, surging amid strong earnings growth from several major index constituents. Utilities and financials each gained about 25%, the latter group riding an uptick in bond yields. Conversely, consumer discretionary (+20%) also rose solidly but lagged the broader market, as many brick-andmortar retailers continued to suffer from increased online competition. Rising interest rates held back real estate (+16%), while consumer staples (+15%) and telecom (+1%) struggled due to investors' general preference for risk assets. Lastly, sluggish oil prices pushed energy to a -4% return. Not FDIC Insured May Lose Value No Bank Guarantee
Q&A An interview with Manager Jean Park Fund Facts Trading Symbol: Jean Park Manager FDEGX Start Date: December 28, 1990 Size (in millions): $2,727.75 Investment Approach Fidelity Growth Strategies Fund is a diversified domestic equity strategy with a mid-cap growth orientation. Our guiding philosophy is that stocks of high-quality companies that exhibit persistent growth and generate positive free cash flow, when purchased at reasonable prices, can outperform the market over time. We believe differences often exist between a stock's price and its true value because the market incorrectly forecasts the sustainability and/or magnitude of future growth. We look to uncover these opportunities through in-depth bottom-up, fundamental analysis, working in concert with Fidelity's global research team. Q: Jean, how did the fund perform for the fiscal year ending November 30, 2017 The fund's Retail Class shares gained 21.63%, disappointingly behind the 25.03% advance of the benchmark Russell Midcap Growth Index. We also trailed the peer group average, but by a slimmer margin. Q: Please describe the investment environment for mid-cap growth stocks the past 12 months. Investors exhibited general excitement that President Trump's pro-growth policies and promises of regulatory easing and tax reform could benefit corporate earnings across many business segments. Our benchmark was up 25% this period, but at times during the year pulled back or went sideways. This happened when these potentially positive changes appeared to be at risk or when there was turmoil in the White House and Congress. Q: Given the environment, did the fund perform according to your expectations Yes, it did, but it's always disappointing to underperform the benchmark. In a strong up market, investors tend to be most forgiving to the riskiest assets, which certainly played out the past 12 months. These companies generally don't fit my process, as they can be less profitable or have a more speculative or less durable business model. For an active manager, this situation can be frustrating, but as I look back, the fund has done best during market pullbacks. That said, timing the market is extremely hard, so I remain fully committed to my investment process and my focus on valuation and quality. Within the fund's predominantly mid-cap universe, I first screen for companies generating strong free-cash-flow (FCF) yield because I believe such stocks, if purchased at a reasonable price, should outperform the market over time. Next, I sort stocks by relative valuation, based on priceearnings (P/E) multiples versus the market average. Because markets can incorrectly forecast the sustainability of a company's future growth or the magnitude of that growth, I see the key to identifying value as finding the 2 For definitions, fund risks and other important information, please see the Definitions and Important section of this Q&A.
difference between a stock's current price and what I calculate to be its intrinsic, or real, value. I rely heavily on fundamental analysis to differentiate between expectations and what I view as a company's real underlying growth potential. It's this sweet spot, this price/value mismatch, where I find opportunities to generate alpha, or above-index return. I'm looking to optimize the probability of upside return while also managing downside risk. Q: What factors held back the fund's result The fund's underperformance of the benchmark was mainly due to stock selection, with my choices in consumer discretionary detracting most. Here, untimely ownership of car-parts retailers O'Reilly Automotive and AutoZone were among the fund's largest individual detractors. After years of strong growth, both AutoZone and O'Reilly slowed the past year, resulting in disappointing financial results and lower stock prices. Whenever a stock is underperforming, I take a closer look to make sure my original thesis remains intact. I also check my ongoing list of potential tax-loss losers, especially if the fund has held them for over a year, because fund positions sold at a loss can help offset gains elsewhere for tax purposes. This is a strategy I use to help keep the fund tax-efficient. As I scrutinized O'Reilly and AutoZone, I concluded that in both cases my thesis was no longer valid. Since originally building the fund's positions based on the likelihood of consumers repairing aging vehicles newer trends such as self-driving vehicles had emerged. I concluded that, over time, self-driving cars would equate to lower demand for personal vehicles and, in turn, car parts for repairs. Additionally, I considered the threat of online retailing giant Amazon.com. In August, Amazon purchased Whole Foods Market, entering the grocery sphere. With a greater number of consumers relying on delivery services for many products, fewer would be making the drive to the store, thereby reducing the miles driven per car in the long term and thus diminishing the need to repair those cars. Since the fund had held these positions for well over a year, they also appeared on my tax-loss report. This shift in my thesis combined with the tax benefits of selling these holdings was more than enough to prompt me to eliminate both positions by period-end. Q: What else detracted Choices in information technology also dampened our relative result. Specifically, in the semiconductors & semiconductor equipment group, avoiding graphics-card designer Nvidia (in the benchmark until June) delivered the biggest hit to relative performance. The firm reported increased revenue and strong earnings growth, boosting its share price in the first half of the reporting period. While Nvidia did have a positive FCF yield a key component of my investment criteria the stock was too expensive, in my opinion, and several other semiconductor companies screened as more attractive. Q: What helped the fund's relative result While stock picking in tech hurt overall, we did have some individual standouts from this sector. In fact, the fund's biggest contributor came from software & services: creditcard payment processor Total System Services (TSS). TSS was among the fund's biggest holdings the past year because it met several of my investment criteria. It had one of the highest FCF yields in the mid-cap space, an aboveaverage return on equity (ROE) and a reasonable valuation. TSS also has shrewdly allocated its capital, in my view, and has been slowly and consistently buying back stock. Additionally, secular trends were in the company's favor. As consumers increasingly moved away from carrying cash in favor of using credit for purchases, TSS has been part of the plumbing that allows for this trend to play out. Shares of TSS gained 52% this period, and it was the fund's largest holding as of November 30. Also within the software & services segment, it helped to hold a sizable position in internet security services provider VeriSign, whose shares returned 46% the past 12 months. With solid FCF yield and growing market share the company owns the rights to every website name ending in ".com," VeriSign performed well based on its continued solid business execution and financial results. From my perspective, VeriSign has one of the highest FCF margins in the technology sector better than either Facebook or Google parent Alphabet. With little competition and a continuous source of revenue from its annual fees for internet domain names, VeriSign remained a sizable holding based on the firm's growth prospects. Q: Jean, any final thoughts for shareholders Mid-caps had a strong run over the past 12 months, and I remain cautiously optimistic, even though most of the growth came from P/E-multiple expansion rather than earnings uplift. Regulatory and tax reform still represent a positive tailwind for many companies, in my view, potentially increasing earnings and bolstering stock prices. Looking ahead, I'll be closely monitoring these changes to determine which ones could influence the market 3 For definitions, fund risks and other important information, please see the Definitions and Important section of this Q&A.
LARGEST CONTRIBUTORS VS. BENCHMARK Jean Park on the potential impact of the millennial generation: "While I build the portfolio based on bottom-up, stock-by-stock analysis, I also track broader social trends in an effort to uncover new investment opportunities. As I have noted in past shareholder updates, I've been taking a closer look at the impact of the millennial generation. "Millennials U.S. citizens born between 1980 and 1996 now have surpassed baby boomers as the largest living generation. This generation is more technologically adept and more likely to trust technology in their everyday lives. "In the context of the market moving higher, I wanted to be positioned in areas where I see secular growth trends, such as millennials' reliance on technology, as well as durability in business models. And, of course, I wanted to remain true to my emphasis of high FCF yields. "One area that screened well in my process was semiconductors, with many companies showing up with good FCF yields and high ROEs. Secular trends also looked favorable. The adoption of technology and connectivity has increased with millennials. The trend is poised to continue for the coming generations, which would keep demand firm for these companies' products. "To take advantage of the opportunities I identified, I reduced the fund's positions in the consumer discretionary sector and redeployed some of the proceeds in semiconductor names that fit my strategy and had strong fundamental growth drivers over the long term, even though the short term may be less certain." Holding Total System Services, Inc. VeriSign, Inc. Visteon Corp. Electronic Arts, Inc. Omnicom Group, Inc. * 1 basis point = 0.01%. Market Segment Average Relative LARGEST DETRACTORS VS. BENCHMARK Holding NVIDIA Corp. O'Reilly Automotive, Inc. AutoZone, Inc. Foot Locker, Inc. Newell Brands, Inc. * 1 basis point = 0.01%. ASSET ALLOCATION Asset Class Market Segment Relative Contribution (basis points)* 1.84% 45 1.93% 37 0.98% 36 1.30% 36-0.65% 31 Average Relative Relative Contribution (basis points)* -1.12% -104 0.63% -91 0.59% -86 0.42% -50 0.82% -43 Six Months Ago Domestic Equities 96.14% 95.51% International Equities 2.76% 3.48% Developed Markets 2.76% 3.48% Emerging Markets 0.00% 0.00% Tax-Advantaged Domiciles 0.00% 0.00% Bonds 0.00% 0.00% Cash & Net Other Assets 1.10% 1.01% 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.
MARKET-SEGMENT DIVERSIFICATION 10 LARGEST HOLDINGS Market Segment Six Months Ago 32.12% 24.86% Health Care 16.05% 16.25% 15.05% 20.81% Industrials 14.83% 16.29% Financials 10.58% 6.59% Staples 4.56% 6.19% Real Estate 2.90% 2.93% Materials 2.25% 4.20% Energy 0.58% 0.88% Telecommunication Services 0.00% 0.00% Utilities 0.00% 0.00% Other 0.00% 0.00% Holding Total System Services, Inc. VeriSign, Inc. Huntington Ingalls Industries, Inc. Delphi Automotive PLC Wyndham Worldwide Corp. Market Segment Six Months Ago 2.74% 2.12% 2.48% 2.01% Industrials 2.42% 1.87% 2.36% -- 2.12% 1.23% Progressive Corp. Financials 2.10% 0.59% Citizens Financial Group, Inc. Financials 2.07% 2.11% Citrix Systems, Inc. Fiserv, Inc. 2.06% 1.27% 1.97% 1.72% Cerner Corp. Health Care 1.89% 1.79% 10 Largest Holdings as a % of Net Assets 22.20% 19.71% Total Number of Holdings 100 113 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 November 30, 2017 6 Month Cumulative YTD 1 3 Annualized 5 10 / LOF 1 Fidelity Growth Strategies Fund Gross Expense Ratio: 0.89% 2 9.17% 20.51% 21.63% 8.45% 15.16% 6.26% Russell Midcap Growth Index 12.18% 24.60% 25.03% 10.00% 15.59% 9.07% Morningstar Fund Mid-Cap Growth 11.53% 23.29% 23.75% 9.19% 13.95% 7.65% % Rank in Morningstar Category (1% = Best) -- -- 65% 67% 24% 79% # of Funds in Morningstar Category -- -- 613 560 491 365 1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 12/28/1990. 2 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. 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.
Definitions and Important 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. FUND RISKS The value of the fund's domestic and foreign investments will vary from day to day in response to many factors. Stock values fluctuate in response to the activities of individual companies, general market, and economic conditions. You may have a gain or loss when you sell your shares. The securities of smaller, less well-known companies may be more volatile than those of larger companies. Foreign investments involve greater risks than those of U.S. investments. "Growth" stocks can perform differently from the market as a whole and other types of stocks and can be more volatile than other types of stocks. 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. Multiple share classes of a fund have a common portfolio but impose different expense structures. 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. 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. 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. Russell Midcap Growth Index is a market-capitalization-weighted index designed to measure the performance of the mid-cap growth segment of the U.S. equity market. It includes those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. 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 2018 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 6
Manager Facts Jean Park is a portfolio manager at Fidelity Management & Research Company (FMR Co.), 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, Ms. Park manages Fidelity Growth Strategies Fund and Fidelity Fund. Prior to assuming her current responsibilities, Ms. Park managed Select Leisure and served as an equity research analyst on the team and on the Financials team. Before joining Fidelity in 2006, Ms. Park was an associate and an analyst at Goldman Sachs Asset Management, and an intern at JP Morgan. She has been in the investments industry since 2001. Ms. Park earned her bachelor of arts degree, magna cum laude, in economics from Harvard University and her master of business administration degree, with honors, in finance from the Wharton School at the University of Pennsylvania. She is also a CFA charterholder and a member of CFA Society Boston. 7 For definitions, fund risks and other important information, please see the Definitions and Important section of this Q&A.
PERFORMANCE SUMMARY: Quarter ending March 31, 2018 1 3 Annualized 5 10 / LOF 1 Fidelity Growth Strategies Fund Gross Expense Ratio: 0.78% 2 15.02% 7.30% 13.04% 8.88% 1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 12/28/1990. 2 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. Diversification does not ensure a profit or guarantee against a loss. 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 02917. Fidelity Investments Institutional Services Company, Inc., 500 Salem Street, Smithfield, RI 02917. 2018 FMR LLC. All rights reserved. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee. 710535.7.0