FIDELITY
BLUE CHIP GROWTH
Presentation to The
Investment Committee
Of The
...... Company
Defined Benefit Plan
March 1998
FIDELITY
Blue Chip Growth
Fund Facts
Diversified fund organized as a Massachusetts
business trust on October 2, 1984.
As of July 31, 1997, $12.8 Billions in assets.
Focuses on well known established (blue chip)
companies.
Low Investment costs: Total fund operating
expenses 0.80%.
Morningstar rating *****
FIDELITY
Blue Chip Growth
Investment Objective
n Primary - Long-Term Capital Growth
Who Runs the Funds?
n The fund is managed by FMR, which chooses
the fund’s investments and handles its business
affairs. Fidelity Management & Research (U.K.)
Inc. (FMR U.K.) in London, England and FMR
Far East in Tokyo, Japan assist FMR with
foreign investments.
FIDELITY
Blue Chip Growth
Investment Strategy
n Invests mainly in common stocks of well known
and established companies.
n Strong growth prospects and reasonable
valuations.
n Use various investment techniques to hedge a
portion of the fund’s risks.
n Seeks companies that it expects will
demonstrate greater long-term earnings growth
than the average company included in S&P 500.
FIDELITY
Blue Chip Growth
Investment Strategy (Cont’d)
n
High turnover rates: 51%, 206%, and 182%
during 1997, 1996,and 1995 respectively.
Average turnover is 139%.
FIDELITY
Blue Chip Growth
Portfolio Strategy
n Seek growth of capital over the long term by
investing in a diversified portfolio of common
stocks.
n 65% of the funds total assets in Blue chip
companies.
n Blue chip company is defined as a firm with at
least $200m capitalization if the stock is
included in the S&P 500 or the Dow Jones
Industrial Average; $1 billion if not included in
either index.
FIDELITY
Blue Chip Growth
Fund, Market, and Risk Characteristics
n Geographical Emphasis: Predominantly U.S. and
Canada.
n Portfolio Manager: John McDowell, MBA, CFA
since March 1996.
Senior Vice president with Fidelity Management
Trust Co.
Employed since 1985
Other Assets managed: Fidelity Large Cap Stock
from June 1995 - April 1996
FIDELITY
Blue Chip Growth
Risk Characteristics
n Risk associated with individual companies,
general markets and overall economy.
n For foreign securities additional risk factors such
as Political and Economic Risks, Legal and
Regulatory Issues, and exposure to currency
fluctuations
FIDELITY
Blue Chip Growth
How is Risk Managed?
n By diversification.
n The Fund reserves the right to invest without
limitation in Preferred Stocks and investment
grade debt instruments for temporary
defensive purposes.
n Debt securities are Baa rated or better.
FIDELITY
Blue Chip Growth
How is Risk Managed? (Cont’d)
n The fund may borrow only for temporary or
emergency purposes, but not in the amount
exceeding 33.33% of total assets.
n Loans in aggregate may not exceed 33.33% of
total assets.
Risk- Reward Potential
n Moderate
FIDELITY
Blue Chip Growth
n
n
n
Investment Policies and Practices
Investors are encouraged to take a long term
view of their portfolios.
FMR selects companies that demonstrate the
potential to become blue chip companies in the
future.
Importance of earnings growth is stressed.
FIDELITY
Blue Chip Growth
Investment Policies and Practices
3 step selection process for companies with earnings growth
potential
* Focus on a universe of 500-600 blue chip growth stock.
* Meet with company management to determine which
companies offer the best future earnings growth.
* Strike a good balance between rapid earnings growth
and reasonable valuation.
FIDELITY
Blue Chip Growth
Organization and Management of the Fund
The Corporation is governed by a Board of Trustees.
Board of trustees review the fund’s performance,
expenses and other business affairs.
Fund is managed by FMR which chooses fund’s
investment and handles its business affairs.
John McDowell is Vice President and Manager of Blue
Chip Growth, which he has managed since March
1996.
Fidelity Distributors Corporation (FDC) distributes and
markets Fidelity funds and services.
FIDELITY
Blue Chip Growth
Regional Exposure (% of Assets)
As of December 31, 1997
3
US & Canada
Europe
92.8
FIDELITY
Blue Chip Growth
Top 5 Country Exposure (As of 07-31-97)
Top 5 Countries
USA
United Kingdom
Netherlands
France
Switzerland
%Assets
92.8
1.5
0.6
0.5
0.3
FIDELITY
Blue Chip Growth
Transaction and Fund Expenses
Individual Fund Fee
Shareholder Transaction Expenses
Sales charge “load” on purchase
3.00% **
Sales charge “load” on reinvest. Distribution None
Redemption fee
None
Exchange fee
None
FIDELITY
Blue Chip Growth
Transaction and Fund Expenses
Annual Fund Expenses
Percent of Fiscal 1996
average net assets
Management fee
0.51%
Marketing fee (12b-1)
None
Other (shareholder servicing,
custodial, auditing, etc..)
0.29%
Total fund expenses
0.80%
** Waived for certain Fidelity retirement plan accounts
marketed and distributed directly by fidelity.
FIDELITY
Blue Chip Growth
Performance(in %)
Calender
Year
Fidelity
1993 24.50
1994 9.85
1995 28.38
1996 15.38
1997 27.02
1 Year
5 Year
10 Year
+/- S&P 500
14.44
8.53
-9.15
-7.57
-6.33
23.21%
20.07
19.87
+/-Will LargeBlend
14.76
12.20
-9.28
-6.17
-6.28
FIDELITY
Blue Chip Growth
1919
Sector Weightings
(As of 07-31-97)
% of stocks
Utilities
Energy
Financial
Industrial Cyclicals
Consumer Durables
Consumer Staples
Services
Retail
Health
Technology
0.0
5.0
3.3
15.9
1.9
10.1
10.8
7.8
16.1
19.2
Relative
S&P 500
0.0
0.61
0.79
1.11
0.56
0.95
0.78
1.39
1.36
1.51
FIDELITY
Blue Chip Growth
Investment Changes(as of July 31,1997)
% of fund
investments
General Electric Company
Philip Morris Companies Inc
Intel Corp
Microsoft Corp
Merck & Co Inc
Procter & Gamble Co
Americanhome Products Corp
Intern’l Business Machines Corp.
Bristol-Myers Squibb Co.
Wal- Mart Stores Inc
3.0
2.3
2.2
2.1
1.7
1.6
1.5
1.4
1.4
1.4
% of fund investments
in these stocks
6 months ago
2.8
2.4
1.9
0.6
2.0
1.3
1.0
2.2
1.4
0.6
FIDELITY
Blue Chip Growth
Investment Changes(as of July 31,1997)
% of fund
investments
% of fund investments
in these market sectors
6 months ago
18.9
Technology
21.4
Health
15.1
14.4
Finance
12.8
11.8
Nondurables
10.0
10.1
Retail & Wholesale
7.1
6.1
FIDELITY
Blue Chip Growth
Portfolio
Relative
Statistics Average
Index
P/E Ratio
28.5
1.05
P/CF Ratio
19.8
1.11
P/B Ratio
6.6
1.08
3 yr. Earnings
growth
21%
1.02
Modern Portfolio Theory Statistics
Alpha Beta
R-Square
3 yr. -3.7
0.98
85
5 yr.
1.9
0.93
72
10 yr. 2.0
1.05
83
Sharpe Index
Year Mean Std. Dev
3 yr.
25.27
14.81
5 yr.
21.20 13.84
10 yr. 20.38 16.60
Sharpe
1.53
---
Morningstar Measures
Year Risk Return Risk Adj Ret
3 yr.
0.97
1.10
5 yr.
0.90
1.62
10 yr. 0.96
1.85
3*
5*
5*