FIDELITY COMMONWEALTH TRUST, N-30D, 1996-12-17

FIDELITY COMMONWEALTH TRUST
N-30D, 1996-12-17

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(2_FIDELITY_LOGOS)FIDELITY

INTERMEDIATE BOND
FUND
SEMIANNUAL REPORT
OCTOBER 31, 1996
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 7 The manager's review of fund
performance, strategy and outlook.

INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.

INVESTMENTS 11 A complete list of the fund's
investments with their market
values.

FINANCIAL STATEMENTS 25 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 29 Notes to the financial statements.

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE

(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in both the stock and bond markets so far
this year. In 1995, both stock and bond markets posted strong results,
while the year before, stocks posted below-average returns and bonds had
one of the worst years in history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide 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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(or income) and capital gains (the profits the fund earns when it sells
bonds that have grown in value). You can also look at the fund's income to
measure performance. If Fidelity had not reimbursed certain fund expenses,
the past five and 10 year total returns and dividends would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS

Intermediate Bond 4.25% 5.21% 40.65% 106.37%

Lehman Brothers Intermediate 4.59% 5.81% 41.23% 115.39%
Government/Corporate Bond Index

Intermediate Investment 4.85% 5.12% 41.54% 109.97%
Grade Debt Funds Average

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 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 Lehman Brothers
Intermediate Government/Corporate Bond Index, which is a market value
weighted performance benchmark for government and corporate fixed-rate debt
issues with maturities between one and 10 years. To measure how the fund's
performance stacked up against its peers, you can compare it to the
intermediate investment grade debt funds average, which reflects the
performance of 187 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. over the past six months. These benchmarks
include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Intermediate Bond 5.21% 7.06% 7.51%

Lehman Brothers Intermediate 5.81% 7.15% 7.97%
Government/Corporate Bond Index

Intermediate Investment 5.12% 7.18% 7.69%
Grade Debt Funds Average

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19961031 19961114 094900 S00000000000001
Intermediate Bond LB Intermediate Govt/Corp
00032 LB007
1986/10/31 10000.00 10000.00
1986/11/30 10094.83 10095.49
1986/12/31 10147.54 10129.42
1987/01/31 10262.69 10232.29
1987/02/28 10327.47 10284.28
1987/03/31 10289.87 10262.93
1987/04/30 10019.09 10075.52
1987/05/31 9972.40 10052.26
1987/06/30 10112.46 10173.74
1987/07/31 10121.80 10197.00
1987/08/31 10084.45 10170.46
1987/09/30 9915.44 10038.58
1987/10/31 10146.53 10325.32
1987/11/30 10265.88 10390.98
1987/12/31 10350.94 10500.15
1988/01/31 10655.03 10768.83
1988/02/29 10792.53 10888.67
1988/03/31 10711.32 10846.81
1988/04/30 10671.41 10828.75
1988/05/31 10612.11 10780.87
1988/06/30 10796.58 10952.69
1988/07/31 10789.27 10929.44
1988/08/31 10814.16 10945.85
1988/09/30 10990.52 11135.74
1988/10/31 11136.01 11287.04
1988/11/30 11071.38 11190.73
1988/12/31 11097.84 11200.58
1989/01/31 11215.33 11318.23
1989/02/28 11194.35 11271.44
1989/03/31 11246.71 11320.15
1989/04/30 11415.60 11546.42
1989/05/31 11635.08 11775.70
1989/06/30 11900.30 12072.56
1989/07/31 12132.21 12320.45
1989/08/31 11970.76 12161.21
1989/09/30 12035.25 12218.67
1989/10/31 12286.39 12476.95
1989/11/30 12381.70 12596.24
1989/12/31 12409.38 12630.71
1990/01/31 12285.10 12549.73
1990/02/28 12318.62 12595.42
1990/03/31 12321.69 12611.84
1990/04/30 12241.61 12568.06
1990/05/31 12518.24 12406.63
1990/06/30 12680.76 13016.22
1990/07/31 12846.18 13196.80
1990/08/31 12741.40 13142.63
1990/09/30 12841.84 13244.14
1990/10/31 12957.09 13397.90
1990/11/30 13176.39 13130.87
1990/12/31 13345.48 13787.24
1991/01/31 13475.43 13927.06
1991/02/28 13571.92 14038.41
1991/03/31 13645.36 14133.90
1991/04/30 13785.00 14287.94
1991/05/31 13845.59 14375.77
1991/06/30 13836.62 14385.89
1991/07/31 13996.55 14546.23
1991/08/31 14268.02 14823.93
1991/09/30 14538.67 15078.94
1991/10/31 14672.22 15251.03
1991/11/30 14788.79 15426.14
1991/12/31 15280.27 15802.89
1992/01/31 15054.40 15659.80
1992/02/29 15127.59 15721.63
1992/03/31 15061.11 15659.80
1992/04/30 15138.12 15797.42
1992/05/31 15395.34 16042.30
1992/06/30 15605.84 16279.79
1992/07/31 15985.66 16603.46
1992/08/31 16112.94 16769.54
1992/09/30 16221.23 16997.18
1992/10/31 16042.58 16776.66
1992/11/30 15960.20 16712.91
1992/12/31 16209.21 16936.72
1993/01/31 16585.08 17266.14
1993/02/28 16920.45 17538.37
1993/03/31 17000.00 17608.14
1993/04/30 17090.56 17749.87
1993/05/31 17099.19 17710.47
1993/06/30 17456.73 17988.45
1993/07/31 17622.73 18032.50
1993/08/31 18001.50 18318.42
1993/09/30 18067.37 18394.48
1993/10/31 18178.79 18443.73
1993/11/30 18069.99 18340.86
1993/12/31 18147.84 18424.85
1994/01/31 18360.24 18629.51
1994/02/28 17992.78 18353.99
1994/03/31 17669.49 18051.11
1994/04/30 17590.65 17928.26
1994/05/31 17562.27 17940.30
1994/06/30 17582.82 17942.76
1994/07/31 17762.48 18201.05
1994/08/31 17784.36 18257.96
1994/09/30 17698.46 18089.96
1994/10/31 17703.92 18087.50
1994/11/30 17724.40 18005.42
1994/12/31 17783.28 18069.17
1995/01/31 17987.52 18373.69
1995/02/28 18239.58 18754.82
1995/03/31 18356.73 18862.08
1995/04/30 18526.43 19094.91
1995/05/31 18994.85 19672.22
1995/06/30 19109.46 19804.10
1995/07/31 19096.38 19806.83
1995/08/31 19271.17 19987.14
1995/09/30 19392.75 20131.88
1995/10/31 19614.39 20356.23
1995/11/30 19854.11 20623.82
1995/12/31 20060.98 20839.97
1996/01/31 20211.22 21019.73
1996/02/29 19984.28 20772.93
1996/03/31 19862.98 20665.96
1996/04/30 19794.78 20592.90
1996/05/31 19767.54 20577.31
1996/06/30 19973.85 20795.92
1996/07/31 20023.73 20857.75
1996/08/31 20033.18 20874.17
1996/09/30 20301.72 21165.01
1996/10/31 20636.89 21539.03
IMATRL PRASUN SHR__CHT 19961031 19961114 094903 R00000000000123

$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Intermediate Bond Fund on October 31, 1986. As the chart shows, by
October 31, 1996, the value of the investment would have grown to $20,637 -
a 106.37% increase on the initial investment. For comparison, look at how
the Lehman Brothers Intermediate Government/Corporate Bond Index did over
the same period. With dividends reinvested, the same $10,000 investment
would have grown to $21,539 - a 115.39% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds 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.
(checkmark)
TOTAL RETURN COMPONENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX YEARS ENDED APRIL 30,
MONTHS
ENDED
OCTOBER
31,

1996 1996 1995 1994 1993 1992

Dividend return 3.35% 6.65% 6.40% A 6.49% 8.08% 7.83%

Capital appreciation return 0.90% 0.20% -1.08% -3.56% 4.82% 1.99%

Total return 4.25% 6.85% 5.32% 2.93% 12.90% 9.82%
</TABLE>
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR

Dividends per share 5.51(cents) 32.77(cents) 66.51(cents)

Annualized dividend rate 6.45% 6.50% 6.56%

30-day annualized yield 5.78% n/a n/a

DIVIDENDS per share show the income paid by the fund for a set period and
do not reflect any tax reclassifications. If you annualize this number,
based on an average share price of $10.06 over the past month, $10.00 over
the past six months, and $10.14 over the past year, you can compare the
fund's income over these three periods. The 30-day annualized YIELD is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis.

A DIVIDENDS PAID ARE BASED ON THE FUND'S INVESTMENT INCOME AND DO NOT
REFLECT CURRENCY RELATED LOSSES. AS A RESULT OF CURRENCY LOSSES, DIVIDENDS
OF APPROXIMATELY 1.9(CENTS) PER SHARE PAID DURING 1995 WERE A NON-TAXABLE
RETURN OF CAPITAL.
FUND TALK: THE MANAGER'S OVERVIEW

An interview with Christine Thompson, Portfolio Manager, Fidelity
Intermediate Bond Fund
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. For the six-month period ending October 31, 1996, the fund had a total
return of 4.25%. The Lehman Brothers Intermediate Government/Corporate Bond
Index, which reflects the marketplace in which the fund invests, had a
return of 4.59% over the same period. To see how the fund stacked up
against its peers, the intermediate investment grade debt funds average had
a six-month return of 4.85%, as tracked by Lipper Analytical Services. For
the 12 months ending October 31, 1996, the fund returned 5.21%, while the
Lehman Brothers index and peer group had returns of 5.81% and 5.12%,
respectively.
Q. WHAT FACTORS WOULD YOU POINT TO IN EXPLAINING WHY THE FUND PERFORMED AS
IT DID?
A. An important thing to remember is that short-term market fluctuations do
not dictate how I manage the portfolio. Instead, I manage the fund to
closely replicate the interest rate sensitivity of its investing universe,
as reflected by the Lehman Brothers index. Strong sector and issue
selection, coupled with effective yield spread strategies, helped the fund
provide an incremental return above that of its index, but not enough to
fully offset the normal operating expenses and transaction costs which are
figured into the fund's total return. With respect to its peer group, the
fund has one of the shortest overall durations within the group.
Accordingly, the fund's returns generally compare more favorably when
interest rates are rising - as in the first part of the period - than when
they are declining, as we saw in the latter part of the period.
Q. WOULD YOU SAY BOND INVESTORS MONITORED FEDERAL RESERVE BOARD ACTIVITY
MORE THAN USUAL DURING THE PERIOD?
A. Absolutely. The market was focused on the strength of the economy and
how that would affect monetary policy. Through the first half of 1996,
market expectations were driven mainly by economic statistics showing
accelerating growth. By mid-summer, the market had factored in the
expectation of a short-term rate increase from the Fed. The outlook,
though, changed in the third quarter. We saw signs of a slowing economy,
inflation fears subsided, and the market began to eliminate expectations
for higher short-term interest rates. As the period closed, market debate
centered on whether the next Fed move might in fact be to ease rather than
tighten monetary policy.
Q. WHAT AREAS OF THE INVESTMENT-GRADE BOND MARKET DREW YOUR INTEREST?
A. The "spread sectors" - the portions of the market that trade at
incremental yield spreads to Treasury bonds - turned in healthy
performances. Corporate bonds performed well due to strong corporate
profitability in a supportive environment of moderate growth and low
inflation. Mortgage-backed and asset-backed securities also continued to be
strong alternatives to Treasuries, as valuations remained relatively stable
and the sectors benefited from higher yields.
Q. WITHIN THE CORPORATE MARKET, WAS THERE A PARTICULAR AREA OF FOCUS?
A. My overall strategy has been to manage the fund with a defensive,
corporate orientation. In line with this, I increased the fund's exposure
to yankee bonds. Yankee bonds are issued by foreign entities, and
denominated in U.S. dollars. What makes them attractive is that they
generally trade at premiums to equivalent-quality domestic issues. Yankees
contain different risks than those you'd find in domestic issues and,
because many of these bonds are issued by foreign governments, their credit
quality is less tied to U.S. economic conditions. Yankees, therefore, can
be a good hedge when the domestic economy slows. The two regions where I
have my largest yankee exposures are the Canadian and the Asian markets,
particularly Malaysia and Korea.
Q. WHAT HOLDINGS INFLUENCED THE FUND'S PERFORMANCE?
A. Within the mortgage market, pass-throughs and commercial mortgage-backed
securities made positive contributions. Generally, the mortgage sector is
highly sensitive to interest rate fluctuations. However, the range of rates
we've seen over the past six months resulted in relatively predictable
trends concerning prepayment activity. This degree of predictability
allowed the mortgage sector to trade with unusually consistent valuations.
In the corporate sector, Yankee exposures in Canadian provincial paper
performed well, as did the fund's positions in energy-related companies.
Looking back, overall I could have been more aggressive with the fund's
corporate holdings. Reflecting my belief that corporate valuations were
somewhat rich, I concentrated mainly on short-intermediate corporate
issues, where the price impact of yield spread changes are moderate.
Tightening spreads in the corporate market, however, continued to reward
longer-term bonds.
Q. WHAT'S YOUR OUTLOOK?
A. I expect the bond market to continue to focus on Federal Reserve
monetary policy. As always, I won't position the fund based on one
particular interest rate view. The fund is positioned to control its
interest rate sensitivity and to emphasize sector and security selection
strategies. In doing so, the fund will have the ability to perform well in
a number of different rate environments. I'll continue to actively analyze
opportunities in the corporate, mortgage, and asset-backed sectors, and
will most likely decrease the fund's Treasury holdings.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.

FUND FACTS
GOAL: high current income by
investing mainly in
investment-grade debt
securities while normally
maintaining an average
maturity of three to 10 years
FUND NUMBER: 032
TRADING SYMBOL: FTHRX
START DATE: May 23, 1975
SIZE: as of October 31, 1996,
more than $3.0 billion
MANAGER: Christine
Thompson, since 1995;
manager, Fidelity U.S. Bond
Index Fund, since 1990;
Fidelity Target Timeline
Funds and Fidelity Global
Bond Fund, since February
1996; joined Fidelity in 1985
(checkmark)
CHRISTINE THOMPSON ON THE
IMPORTANCE OF BOND RESEARCH:
"In the bond market, it is
important to be right but more
important not to be wrong. You
can't afford to have a bond
default and you need to know
what may impact the pattern
and timing of an investment's
interest and principle
payments. That's where bond
research - a definite
strength of Fidelity's - plays
a huge role in helping me
choose the fund's
investments. Our research
staff allows us to firmly grasp
the complexities of a
particular issue. We can
monitor credit quality and
cash flow situations in-house
and not have to rely on
second-hand information.
Bond research influences my
choices by evaluating the
condition of an issuer,
dissecting the structures of
individual bonds and assessing
the appropriateness of an
investment from a valuation
standpoint. The corporate,
mortgage and asset-backed
sectors all pose unique
challenges. Credit research
on corporates is driven largely
by understanding the issuer's
management and financial
strategies. Mortgage
analysis, on the other hand, is
much more focused on
security structure and
prepayment activity.
Asset-backed research
involves elements of both
credit and cash flow analysis.
I think the experience and
knowledge that our research
team brings to the table gives
us a distinct advantage over
our competitors."
INVESTMENT CHANGES

QUALITY DIVERSIFICATION AS OF OCTOBER 31, 1996
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Aaa 59.1 66.1

Aa 4.7 4.7

A 15.8 14.1

Baa 17.3 13.2

Ba 1.9 0.6

B 0.0 0.0

Not rated 0.0 0.0

TABLE EXCLUDES SHORT-TERM INVESTMENTS.WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS. SECURITIES RATED AS "BA" OR BELOW WERE
RATED INVESTMENT GRADE BY OTHER NATIONALLY RECOGNIZED RATING AGENCIES OR
ASSIGNED AN INVESTMENT GRADE RATING AT THE TIME OF ACQUISITION BY FIDELITY.
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1996
6 MONTHS AGO

Years 4.7 4.9

AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF OCTOBER 31, 1996
6 MONTHS AGO

Years 3.3 3.3

DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION, IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996 * AS OF APRIL 30, 1996 **

Row: 1, Col: 1, Value: 1.8
Row: 1, Col: 2, Value: 3.0
Row: 1, Col: 3, Value: 3.2
Row: 1, Col: 4, Value: 46.0
Row: 1, Col: 5, Value: 46.0
Row: 1, Col: 1, Value: 2.0
Row: 1, Col: 2, Value: 2.8
Row: 1, Col: 3, Value: 2.9
Row: 1, Col: 4, Value: 55.0
Row: 1, Col: 5, Value: 37.3
Corporate bonds 46.1%
U.S. government
and agency
obligations 46.5%
Foreign
government
obligations 3.2%
Other 3.0%
Short-term
investments 1.2%
Corporate bonds 37.9%
U.S. government
and agency
obligations 55.0%
Foreign
government
obligations 2.9%
Other 2.8%
Short-term
investments 1.4%
* FOREIGN
INVESTMENTS 10.5%
** FOREIGN
INVESTMENTS 9.8%
INVESTMENTS OCTOBER 31, 1996 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

NONCONVERTIBLE BONDS - 46.1%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
AEROSPACE & DEFENSE - 0.3%
Lockheed Martin Corp. 6 5/8%, 6/15/98 $ 10,130 $ 10,215
BASIC INDUSTRIES - 1.1%
CHEMICALS & PLASTICS - 0.9%
Methanex Corp. yankee 8 7/8%, 11/15/01 25,560 27,558
PAPER & FOREST PRODUCTS - 0.2%
Champion International Corp. 7.70%, 12/15/99 5,000 5,182
Chesapeake Corp. 10 3/8%, 10/1/00 1,500 1,693
6,875
TOTAL BASIC INDUSTRIES 34,433
DURABLES - 0.9%
AUTOS, TIRES, & ACCESSORIES - 0.3%
General Motors Corp. 9 5/8%, 12/1/00 6,870 7,632
CONSUMER ELECTRONICS - 0.1%
Black & Decker Corp. 7 1/2%, 4/1/03 3,000 3,100
TEXTILES & APPAREL - 0.5%
Levi Strauss & Co.:
6.80%, 11/1/03 (b) 9,650 9,615
7%, 11/1/06 5,700 5,677
15,292
TOTAL DURABLES 26,024
ENERGY - 3.9%
ENERGY SERVICES - 1.2%
Petroliam Nasional BHD yankee (b):
6 5/8%, 10/18/01 16,000 16,093
6 7/8%, 7/1/03 7,650 7,692
7 1/8%, 8/15/05 11,500 11,633
35,418
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ENERGY - CONTINUED
OIL & GAS - 2.7%
Nationale Elf Aquitaine yankee 7 3/4%, 5/1/99 $ 15,000 $ 15,490
Occidental Petroleum Corp.:
6.46%, 9/8/97 3,600 3,617
6.04%, 9/15/97 7,500 7,511
5.84%, 11/9/98 2,780 2,758
5.85%, 11/9/98 9,560 9,486
5.93%, 11/9/98 5,000 4,969
5.95%, 11/9/98 2,900 2,883
5.96%, 11/9/98 3,900 3,878
6.93%, 10/15/99 4,500 4,558
6.09%, 11/29/99 2,250 2,227
10.72%, 4/6/00 2,000 2,255
10.69%, 7/27/00 5,000 5,679
6.35%, 11/9/00 5,000 4,964
6.24%, 11/24/00 6,550 6,476
9 1/2%, 8/1/01 4,000 4,460
81,211
TOTAL ENERGY 116,629
FINANCE - 31.0%
ASSET-BACKED SECURITIES -12.0%
Boatmens Auto Trust 6.35%, 10/15/01 2,820 2,826
CPS Auto Grantor Trust 6.70%, 2/15/02 6,308 6,351
Capita Equipment Receivables Trust 6.57%, 3/15/01 7,200 7,243
Case Equipment Loan Trust:
6.45%, 9/15/02 6,140 6,017
5.85%, 2/15/03 4,370 4,291
Caterpillar Financial Asset Trust 6.55%, 5/22/02 2,837 2,856
Chase Manhattan Grantor Trust:
5.90%, 11/15/01 19,302 19,290
6.76%, 9/15/02 6,785 6,844
Chevy Chase Auto Receivables Trust 5.80%, 6/15/02 24,271 24,248
Discover Card Trust 7 1/2%, 6/16/00 8,150 8,300
Ford Credit Auto Loan Master Trust 7 3/8%, 4/15/99 12,000 12,082
Ford Credit Grantor Trust 5.90%, 10/15/00 24,192 24,200
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
FINANCE - CONTINUED
ASSET-BACKED SECURITIES - CONTINUED
Green Tree Financial Corp.:
5 1/2%, 1/31/00 $ 2,363 $ 2,339
6.10%, 4/15/27 17,592 17,565
6.45%, 5/15/27 8,780 8,832
6.70%, 5/15/27 9,220 9,301
6 1/2%, 6/15/27 5,780 5,820
6.65%, 7/15/27 12,670 12,777
7.15%, 7/15/27 3,000 3,073
6.55%, 9/15/28 9,000 9,068
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 1,338 1,336
Premier Auto Trust:
8.05%, 4/4/00 6,350 6,539
6%, 5/6/00 7,350 7,355
6.35%, 7/6/00 10,800 10,810
Railcar Trust 7 3/4%, 6/1/04 12,413 12,987
SCFC Recreational Vehicle Loan Trust 7 1/4%, 9/15/06 1,659 1,663
Sears Credit Account Master Trust II:
6 1/2%, 10/15/03 21,170 21,348
7%, 1/15/04 4,860 4,966
Standard Credit Card Master Trust I 7.65%, 2/15/00 2,800 2,843
Toyota Auto Receivables Grantor Trust 6.15%, 1/15/99 2,510 2,504
Union Federal Savings Bank Grantor Trust:
6.975%, 7/10/00 839 840
7.275%, 10/10/00 866 872
WFS Financial Owner Trust:
6.05%, 6/1/00 18,920 18,939
7.05%, 11/20/03 18,560 18,800
6.90%, 12/20/03 13,870 14,049
Western Financial Grantor Trust:
6.05%, 11/1/00 7,531 7,529
6.20%, 2/1/02 6,529 6,518
5 7/8%, 3/1/02 29,800 29,705
362,926
BANKS - 11.9%
ABN Amro Bank NV 6 5/8%, 10/31/01 17,000 17,092
Banponce Financial Corp.:
6.69%, 9/21/00 2,680 2,693
6 3/4%, 8/9/01 3,850 3,862
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Banponce Corp.:
5 3/4%, 3/1/99 $ 5,420 $ 5,344
6.378%, 4/8/99 6,000 5,986
Capital One Bank 8 1/8%, 2/27/98 29,900 30,594
Central Fidelity Banks, Inc. 8.15%, 11/15/02 16,200 17,240
Chase Manhattan Corp. 7 3/4%, 11/1/99 8,260 8,586
Citicorp 8.80%, 2/1/00 5,820 5,860
Corporacion Andina de Fomento:
6 5/8%, 10/14/98 5,000 5,009
yankee 7 1/4%, 4/30/98 (b) 6,100 6,165
yankee 7.10%, 2/1/03 5,000 4,994
Crestar Financial Corp. 8 3/4%, 11/15/04 7,100 7,833
First Fidelity Bancorporation 9 5/8%, 8/15/99 2,700 2,924
First Hawaiian, Inc. 6 1/4%, 8/15/00 11,255 11,112
First Interstate Bancorp 8 5/8%, 4/1/99 10,000 10,540
First Maryland Bancorp 10 3/8%, 8/1/99 2,895 3,176
First Tennessee National Corp.:
10 3/8%, 6/1/99 4,270 4,675
6 3/4%, 11/15/05 3,750 3,653
First USA Bank 5 3/4%, 1/15/99 12,000 11,845
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 6,570 6,809
Florida National Banks, Inc. 9 7/8%, 5/15/99 5,000 5,417
HSBC Americas, Inc. 7%, 11/1/06 11,400 11,304
Hartford National Corp. 9.85%, 6/1/99 2,155 2,324
Integra Financial Corp. 6 1/2%, 4/15/00 3,000 2,992
Kansallis-Osake-Pankki:
6 3/8%, 8/15/00 235 233
10%, 5/1/02 3,840 4,400
yankee 9 3/4%, 12/15/98 6,715 7,172
Korea Development Bank:
9 1/2%, 3/15/01 3,000 3,317
9.40%, 8/1/01 5,000 5,536
yankee 9 1/4%, 6/15/98 5,300 5,570
yankee 5 7/8%, 12/1/98 1,640 1,632
yankee 7%, 7/15/99 3,300 3,351
yankee 6 1/4%, 5/1/00 1,000 996
Merita Bank Ltd. yankee 6 1/2%, 1/15/06 12,000 11,498
Midland American Capital Corp. gtd. 12 3/4%, 11/15/03 1,930 2,164
Midland Bank PLC yankee 7 5/8%, 6/15/06 8,240 8,569
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Midlantic Corp. 9 1/4%, 9/1/99 $ 5,075 $ 5,435
Provident Bank:
6 1/8%, 12/15/00 24,405 24,043
6 3/8%, 1/15/04 3,250 3,133
Shawmut National Corp.:
8 5/8%, 12/15/99 3,670 3,886
7.20%, 4/15/03 7,610 7,654
Signet Banking Corp.:
5 5/8%, 5/15/97 (a) 750 748
5 3/4%, 4/15/98 (a) 3,201 3,183
9 5/8%, 6/1/99 2,000 2,146
7.80%, 9/15/06 8,000 8,337
Sovran Financial Corp. 9 3/4%, 6/15/99 7,430 8,036
Summit Bancorp 8 5/8%, 12/10/02 10,000 10,921
Union Planters Corp. 6 3/4%, 11/1/05 9,000 8,756
Union Planters National Bank 6.53%, 8/20/99 5,000 5,025
Wachovia Bank 7 3/4%, 4/15/02 11,000 11,407
Zions Bancorp 8 5/8%, 10/15/02 3,900 4,253
359,430
CREDIT & OTHER FINANCE - 6.0%
AT&T Capital Corp. 5.85%, 1/5/99 3,585 3,560
Aristar, Inc.:
8 7/8%, 8/15/98 820 858
7 1/2%, 7/1/99 12,450 12,819
Chyrsler Financial Corp.:
5.70%, 1/12/98 5,000 4,992
5.71%, 1/12/98 4,500 4,493
5.64%, 1/13/98 5,000 4,988
Countrywide Home Loans, Inc. 8.41%, 11/17/99 5,000 5,270
Deere (John) Capital Corp. 9 5/8%, 11/1/98 6,000 6,369
Finova Capital Corp.:
5.98%, 10/31/97 5,000 4,999
6.14%, 11/2/98 4,340 4,338
6.38%, 4/15/99 5,000 5,015
6.30%, 11/1/99 3,500 3,495
Ford Capital BV:
gtd. 9%, 8/15/98 13,850 14,520
yankee 9 3/8%, 1/1/98 3,310 3,436
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
General Motors Acceptance Corp.:
7 7/8%, 2/23/98 $ 16,000 $ 16,394
5 3/8%, 3/9/98 4,000 3,974
7 1/2%, 5/18/98 10,000 10,223
6.40%, 6/8/98 12,500 12,578
Greyhound Financial Corp. 8 1/2%, 5/1/98 3,980 4,108
Heller Financial, Inc. 9 3/8%, 3/15/98 750 781
MCN Investment Corp.:
5.84%, 2/1/99 8,730 8,662
6.82%, 5/13/99 9,400 9,520
6.03%, 2/1/01 11,600 11,378
Secured Finance, Inc. gtd. secured 9.05%, 12/15/04 4,450 5,071
Southwestern Bell Capital Corp. 6.86%, 7/26/99 4,380 4,451
Tenneco Credit Corp.:
10 1/8%, 12/1/97 11,315 11,781
10.05%, 8/17/98 1,940 2,066
Union Acceptance Corp. 7.075%, 7/10/02 2,232 2,235
182,374
INSURANCE - 0.6%
Metropolitan Life Insurance Co. (b):
6.30%, 11/1/03 4,500 4,363
7%, 11/1/05 5,000 4,985
Protective Life Corp. 7.95%, 7/1/04 1,000 1,049
URC Holdings Corp. 7 7/8%, 6/30/06 (b) 8,800 9,210
19,607
SAVINGS & LOANS - 0.5%
Ahmanson (H.F.) & Co.:
9 7/8%, 11/15/99 11,500 12,580
7 7/8%, 9/1/04 1,250 1,309
13,889
TOTAL FINANCE 938,226
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
Tenneco, Inc. 10%, 8/1/98 15,410 16,383
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MEDIA & LEISURE - 1.2%
BROADCASTING - 1.0%
Time Warner, Inc.:
7.45%, 2/1/98 $ 5,140 $ 5,216
7.95%, 2/1/00 26,025 26,946
32,162
PUBLISHING - 0.2%
News America Holdings, Inc.:
12%, 12/15/01 1,835 1,955
8 5/8%, 2/1/03 3,240 3,507
5,462
TOTAL MEDIA & LEISURE 37,624
NONDURABLES - 1.8%
BEVERAGES - 0.1%
Coors Adolph Co. 9.05%, 6/15/98 3,500 3,659
FOODS - 1.3%
Dart and Kraft Finance NV 7 3/4%, 11/30/98 5,847 6,015
Nabisco, Inc. 8.30%, 4/15/99 11,000 11,441
Quaker Oats Co.:
6.91%, 5/15/03 3,000 3,025
9 1/8%, 12/15/04 1,000 1,138
7 1/2%, 5/2/05 3,000 3,107
7.51%, 5/2/05 3,000 3,109
Ralcorp Holdings, Inc. 8 3/4%, 9/15/04 9,180 10,066
37,901
TOBACCO - 0.4%
Philip Morris Companies, Inc.:
7 1/8%, 12/1/99 5,000 5,088
9 1/4%, 2/15/00 5,909 6,379
11,467
TOTAL NONDURABLES 53,027
RETAIL & WHOLESALE - 0.2%
GENERAL MERCHANDISE STORES - 0.2%
Dayton Hudson Corp. 10%, 12/1/00 5,867 6,585
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TECHNOLOGY - 1.9%
COMPUTERS & OFFICE EQUIPMENT - 1.9%
Comdisco, Inc.:
7 1/4%, 4/15/98 $ 12,500 $ 12,704
6.70%, 7/1/98 9,510 9,607
6.35%, 8/7/98 7,340 7,372
6.59%, 9/1/98 2,500 2,521
6.29%, 10/22/98 7,000 7,018
5 3/4%, 1/19/99 3,000 2,972
5.76%, 1/19/99 2,000 1,982
7 3/4%, 9/1/99 125 129
9.45%, 6/8/00 1,740 1,905
9.30%, 6/27/00 2,950 3,224
5 3/4%, 2/15/01 7,700 7,476
56,910
TRANSPORTATION - 0.5%
AIR TRANSPORTATION - 0.5%
AMR Corp.:
7 3/4%, 12/1/97 1,420 1,443
8.10%, 11/1/98 6,650 6,879
Delta Air Lines, Inc. 9 7/8%, 1/1/98 7,990 8,310
16,632
UTILITIES - 2.8%
CELLULAR - 0.5%
360 Degrees Communications Co. 7 1/8%, 3/1/03 14,060 13,934
ELECTRIC UTILITY - 0.8%
British Columbia Hydro & Power Authority yankee:
15 1/2%, 11/15/11 12,500 13,409
12 1/2%, 1/15/14 6,750 7,870
Texas Utilities Electric Co. 5 1/2%, 10/1/98 2,000 1,975
23,254
GAS - 1.5%
Columbia Gas System, Inc.:
6.39%, 11/28/00 5,478 5,459
6.61%, 11/28/02 5,328 5,312
Enron Corp.:
10%, 6/1/98 4,500 4,759
8 1/2%, 2/1/00 2,920 2,938
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
UTILITIES - CONTINUED
GAS - CONTINUED
InterNorth, Inc. 9 5/8%, 3/15/06 $ 9,610 $ 11,252
Kern River Funding Corp. 6.42%, 3/31/01 (b) 13,162 13,099
Southwest Gas Corp. 9 3/4%, 6/15/02 3,840 4,362
47,181
TOTAL UTILITIES 84,369
TOTAL NONCONVERTIBLE BONDS
(Cost $1,397,145) 1,397,057
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 40.7%
U.S. TREASURY OBLIGATIONS - 25.4%
6 1/8%, 3/31/98 91,855 92,444
9%, 5/15/98 88,000 92,263
6 1/4%, 7/31/98 29,605 29,864
9 1/4%, 8/15/98 4,760 5,040
9 1/8%, 5/15/99 38,500 41,424
7 3/4%, 12/31/99 94,487 99,314
6 7/8%, 3/31/00 273,682 281,165
11 7/8%, 11/15/03 37,800 49,725
12 3/4%, 11/15/10 (callable) 36,175 51,617
12%, 8/15/13 (callable) 2,450 3,527
9%, 11/15/18 9,370 11,789
6%, 2/15/26 12,500 11,402
769,574
U.S. GOVERNMENT AGENCY OBLIGATIONS - 15.3%
Farm Credit System Financial Assistance Corp.
9 3/8%, 7/21/03 20,813 24,120
Federal Farm Credit Bank:
9 1/2%, 5/9/00 6,000 6,634
6.32%, 9/9/02 4,640 4,636
6.20%, 9/23/02 7,180 7,132
6.40%, 10/3/02 2,270 2,277
7.31%, 4/25/05 5,000 5,229
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Federal Home Loan Bank:
9.05%, 5/23/00 $ 5,000 $ 5,462
8.85%, 6/21/00 2,960 3,219
5.49%, 2/1/01 3,775 3,672
6 3/4%, 4/5/04 3,060 3,097
6.89%, 4/6/04 4,465 4,573
7.36%, 7/1/04 19,335 20,275
7.38%, 8/5/04 5,890 6,186
7.46%, 9/9/04 5,000 5,275
7.59%, 3/10/05 3,010 3,202
7.315%, 4/21/05 6,320 6,614
Federal Home Loan Mortgage Corporation:
7.93%, 1/20/05 12,195 13,211
8%, 1/26/05 3,300 3,588
8.115%, 1/31/05 25,475 27,875
Federal National Mortgage Association:
5.72%, 3/8/01 4,400 4,311
5.73%, 1/6/03 7,865 7,606
7.49%, 3/2/05 1,815 1,917
7.65%, 3/10/05 10,620 11,343
7.35%, 3/28/05 14,635 15,333
7 3/8%, 3/28/05 4,450 4,678
7.16%, 5/11/05 32,635 33,726
Government Trust Certificates (assets of Trust guaranteed by
U.S. Government through Defense Security Assistance
Agency) Class 1-C, 9 1/4%, 11/15/01 990 1,061
Guaranteed Export Trust Certificates
(assets of Trust guaranteed by U.S. Government
through Export-Import Bank) Series:
1993-C, 5.20%, 10/15/04 5,879 5,645
1993-D, 5.23%, 5/15/05 4,222 4,050
1994-A, 7.39%, 6/26/06 15,918 16,510
1994-C, 6.61%, 9/15/99 1,188 1,199
1994-F, 8.187%, 12/15/04 3,072 3,248
1995-B, 6.13%, 6/15/04 1,732 1,721
Guaranteed Trade Trust Certificates (assets of Trust guaranteed
by U.S. Government through Export-Import Bank)
Series 1994-B, 7 1/2%, 1/26/06 3,158 3,299
Overseas Private Investment Corp. (U.S. Government
guaranteed participation certificate) Series 1994-1995,
6.08%, 8/15/04 9,680 9,542
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Private Export Funding Corp. secured:
7.90%, 3/31/00 $ 1,610 $ 1,697
8.40%, 7/31/01 16,780 18,210
6.24%, 5/15/02 3,195 3,176
State of Israel (guaranteed by U.S. Government through
Agency for International Development):
6 1/8%, 8/15/99 39,380 39,500
7 1/8%, 8/15/99 2,627 2,696
8%, 11/15/01 5,590 5,999
6 1/4%, 8/15/02 23,402 23,271
6 1/8%, 3/15/03 2,421 2,381
6 5/8%, 8/15/03 15,800 16,028
6 5/8%, 2/15/04 840 837
7 5/8%, 8/15/04 4,710 4,978
5.89%, 8/15/05 20,448 19,469
U.S. Housing & Urban Development:
6.44%, 8/1/99 10,000 10,095
6.59%, 8/1/00 13,500 13,667
6.67%, 8/1/01 7,000 7,101
7.66%, 8/1/15 3,715 3,787
U.S. Trade Trust 6 3/4%, 8/15/08 10,000 10,115
464,473
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,230,080) 1,234,047
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 5.8%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.5%
7%, 7/1/99 to 7/1/01 13,232 13,382
8 1/2%, 6/15/13 112 116
13,498
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 5.2%
6%, 2/15/11 to 4/15/26 78,453 75,593
6 1/2%, 9/15/25 to 4/15/26 86,713 82,957
8.67%, 6/15/97 (a) 19 19
12 1/2%, 9/15/11 to 8/15/15 334 394
158,963
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.1%
7 1/2%, 9/15/25 $ 1,239 $ 1,244
8%, 5/15/22 25 26
9 1/2%, 9/15/09 to 10/15/15 153 167
10%, 12/15/13 to 8/15/17 441 484
1,921
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $173,954) 174,382
COMMERCIAL MORTGAGE SECURITIES - 2.2%
Blackrock Capital Funding LLC
Series 1996 Class C2, 7.62%, 11/16/26 (b) 3,850 3,908
CS First Boston Mortgage Securities Corp.
Series 1995-WF1 Class A-2, 6.648%, 12/21/27 15,000 14,715
Midland Realty Acceptance Corp. sequential pay
Series 1997-C1 Class A1, 7.315%, 4/25/03 8,000 8,114
Oregon Commerical Mortgage, Inc.
Series 1995-1 Class A, 7.15%, 6/25/26 (b) 5,605 5,640
Resolution Trust Corp. Series:
1995-C1 Class A-4A, 6 1/4%, 2/25/27 3,634 3,630
1995-C2 Class A-1B, 6 1/4%, 5/25/27 7,850 7,700
1995-C2 Class D, 7%, 5/25/27 3,061 2,964
Structured Asset Securities Corp. Series:
1993-C1 Class A-1, 6.60%, 10/25/24 825 824
1995-C4 Class A-1A, 6.90%, 6/25/26 6,962 6,962
1996 Class A-1A, 5.711%, 2/25/28 761 757
1996 Class A-1B, 5.751%, 2/25/28 2,470 2,446
Wells Fargo Capital Markets Apartment Financing Trust
6.56%, 12/29/05 (b) 8,000 7,920
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $65,741) 65,580
FOREIGN GOVERNMENT OBLIGATIONS - 3.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
Irish Republic yankee 8 5/8%, 4/15/01 $ 10,500 $ 11,332
Manitoba Province yankee:
6 3/8%, 10/15/99 16,340 16,434
6 7/8%, 9/15/02 17,500 17,810
Newfoundland Province yankee 7.32%, 10/13/23 7,054 6,892
Ontario Province yankee:
7 3/4%, 6/4/02 11,000 11,660
7 3/8%, 1/27/03 7,500 7,812
17%, 11/5/11 12,145 12,951
15 1/4%, 8/31/12 5,085 5,748
11 1/2%, 3/10/13 6,270 6,946
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $100,652) 97,585
SUPRANATIONAL OBLIGATIONS - 0.8%
African Development Bank:
10%, 11/1/97 4,000 4,164
8.70%, 5/1/01 5,000 5,441
7 3/4%, 12/15/01 8,000 8,443
European Investment Bank 11 5/8%, 2/1/99 2,500 3,042
Inter-American Development Bank 9.45%, 9/15/98 2,000 2,120
International Bank for Reconstruction & Development euro
11 1/8%, 1/13/98 2,000 2,114
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $24,949) 25,324
CASH EQUIVALENTS - 1.2%
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 37,935 37,929
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,030,450) $ 3,031,904
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $100,323,000 or 3.3% of net
assets.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 77.4% AAA, AA, A 73.6%
Baa 16.8% BBB 21.2%
Ba 1.9% BB 0.8%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 89.5%
Canada 4.5
Supranational 1.4
Malaysia 1.2
Netherlands 1.2
Others (individually less than 1%) 2.2
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1996 the aggregate cost of investment securities for income
tax purposes was $3,030,450,000. Net unrealized appreciation aggregated
$1,454,000, of which $28,661,000 related to appreciated investment
securities and $27,207,000 related to depreciated investment securities.

.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) OCTOBER 31, 1996 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 3,031,904
agreements of $37,929) (cost $3,030,450) -
See accompanying schedule

Cash 3,986

Receivable for investments sold 135,563

Interest receivable 50,120

TOTAL ASSETS 3,221,573

LIABILITIES

Payable for investments purchased $ 158,591

Payable for fund shares redeemed 9,529

Distributions payable 580

Accrued management fee 1,122

Other payables and accrued expenses 695

TOTAL LIABILITIES 170,517

NET ASSETS $ 3,051,056

Net Assets consist of:

Paid in capital $ 3,081,972

Distributions in excess of net investment income (8,492)

Accumulated undistributed net realized gain (loss) on (23,861)
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 1,437
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 301,721 shares outstanding $ 3,051,056

NET ASSET VALUE, offering price and redemption price $10.11
per share ($3,051,056 (divided by) 301,721 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)

INVESTMENT INCOME $ 106,423
Interest

EXPENSES

Management fee $ 6,529

Transfer agent fees 3,431

Accounting fees and expenses 358

Non-interested trustees' compensation 6

Custodian fees and expenses 53

Registration fees 33

Audit 26

Legal 12

Miscellaneous 6

Total expenses before reductions 10,454

Expense reductions (243) 10,211

NET INVESTMENT INCOME 96,212

REALIZED AND UNREALIZED GAIN (LOSS) (20,486)
Net realized gain (loss) on investment securities

Change in net unrealized appreciation (depreciation) on 50,663
investment securities

NET GAIN (LOSS) 30,177

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 126,389
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED OCTOBER APRIL 30,
31,1996 1996
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 96,212 $ 176,237
Net investment income

Net realized gain (loss) (20,486) 39,087

Change in net unrealized appreciation (depreciation) 50,663 (42,093)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 126,389 173,231
FROM OPERATIONS

Distributions to shareholders (96,334) (175,620)
From net investment income

From net realized gain (5,259) -

In excess of net realized gain (3,376) -

TOTAL DISTRIBUTIONS (104,969) (175,620)

Share transactions 796,017 1,657,878
Net proceeds from sales of shares

Reinvestment of distributions 100,663 167,400

Cost of shares redeemed (747,829) (1,404,741)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 148,851 420,537
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 170,271 418,148

NET ASSETS

Beginning of period 2,880,785 2,462,637

End of period (including distributions in excess of net $ 3,051,056 $ 2,880,785
investment income of $8,492 and $8,370,
respectively)

OTHER INFORMATION
Shares

Sold 80,146 161,750

Issued in reinvestment of distributions 10,076 16,326

Redeemed (75,192) (136,971)

Net increase (decrease) 15,030 41,105

</TABLE>

FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED APRIL 30,
ENDED OCTOBER
31, 1996

(UNAUDITED) 1996 1995 1994 D 1993 1992

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, $ 10.050 $ 10.030 $ 10.230 $ 10.700 $ 10.270 $ 10.070
beginning of period

Income from Investment .329 .684 .591 .705 .784 .764
Operations
Net investment
income

Net realized and .089 (.004) (.074) (.381) .496 .197
unrealized gain
(loss)

Total from investment .418 .680 .517 .324 1.280 .961
operations

Less Distributions (.328) (.660) (.598) (.704) (.790) (.761)
From net investment
income

From net (.020) - - - (.060) -
realized gain

In excess of net (.010) - (.100) (.090) - -
realized gain

Return of capital - - (.019) - - -

Total distributions (.358) (.660) (.717) (.794) (.850) (.761)

Net asset value, $ 10.110 $ 10.050 $ 10.030 $ 10.230 $ 10.700 $ 10.270
end of period

TOTAL RETURN B, C 4.25% 6.85% 5.32% 2.93% 12.90% 9.82%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 3,051 $ 2,881 $ 2,463 $ 1,782 $ 1,639 $ 1,235
period (in millions)

Ratio of expenses to .71% A .73% .68% .64% .61% .63%
average net assets E E

Ratio of expenses to .69% A .71% .68% .64% .61% .63%
average net assets , F F
after expense
reductions

Ratio of net investment 6.50% A 6.48% 6.31% 6.88% 7.44% 7.45%
income to average
net assets

Portfolio turnover rate 123% A 169% 75% 81% 51% 80%

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED .
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
D EFFECTIVE MAY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Intermediate Bond Fund (the fund) is a fund of Fidelity
Commonwealth Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), 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 permit 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 are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. 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. Securities
(including restricted securities) for which market quotations are not
readily available are valued at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees.
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. Income receipts and expense payments are translated into U.S. dollars
at the prevailing exchange rate on the respective dates of the
transactions. Purchases and sales of securities are translated into U.S
dollars at the contractual currency exchange rates established at the time
of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange
rates on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, 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 paydown
gains/losses on certain securities, futures transactions, market discount
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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Distributions in excess of net investment
income 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 securities. Losses may
arise from changes in the value of the foreign currency or if the
counterparties do not perform under the contracts' terms. The U.S. dollar
value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, 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 that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
underlying securities remains in accordance with the market value
requirements stated above.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, the
fund had no investments in restricted securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,906,736,000 and $1,755,675,000, respectively, of which U.S.
government and government agency obligations aggregated $1,380,234,000 and
$1,558,133,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. For
the period, the management fee was equivalent to an annualized rate of .44%
of average net assets.
TRANSFER AGENT FEES. Fidelity Service Co. (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
.23% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
5. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby interest earned on uninvested cash balances was used to
offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $13,000 and $230,000,
respectively, under these arrangements.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
Mortgage Securities
New Markets Income
Short-Intermediate Government
Short-Term Bond
Spartan(registered trademark) Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity Government
Spartan Short-Intermediate Government
Spartan Short-Term Bond
Target Timeline 1999, 2001 & 2003
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
* INDEPENDENT TRUSTEES
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)FIDELITY

LARGE CAP STOCK
FUND
SEMIANNUAL REPORT
OCTOBER 31, 1996
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 The managers' 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.

DISTRIBUTIONS 27

(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in both the stock and bond markets so far
this year. In 1995, both stock and bond markets posted strong results,
while the year before, stocks posted below-average returns and bonds had
one of the worst years in history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term. You also can help to manage some of the risks of investing
through diversification. A stock fund is already diversified because it
invests in many issues. You can diversify even further by placing some of
your money in several different types of stock funds or in other investment
categories, such 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, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide 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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(or income) and capital gains (the profits the fund earns when it sells
securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND

Large Cap Stock 9.29% 21.28% 28.44%

S&P 500 (registered trademark) 9.08% 24.10% 33.74%

Growth Funds Average 4.81% 18.47% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on June 22, 1995. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. To measure how the fund's performance stacked up against its
peers, you can compare it to the performance of the growth funds average,
which reflects the performance of 721 mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. over the past six months. Both
benchmarks include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND

Large Cap Stock 21.28% 20.14%

S&P 500 24.10% 23.76%

Growth Funds Average 18.47% n/a

$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Large Cap Stock Fund on June 22, 1995, when the fund
started. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $12,844 - a 28.44% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends reinvested, the same $10,000 investment would have
grown to $13,374 - a 33.74% increase.

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
growth in the long run and
volatility in the short run. 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.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW

An interview with Thomas Sprague, Portfolio Manager of Fidelity Large Cap
Stock Fund
Q. HOW DID THE FUND PERFORM, TOM?
A. For the six months that ended October 31, 1996, the fund had a total
return of 9.29%. For the past year, it returned 21.28%. For the same
periods, the Standard & Poor's 500 Index returned 9.08% and 24.10%,
respectively. Additionally, the growth funds average, as tracked by Lipper
Analytical Services, was 4.81% for the past six months and 18.47% for the
past year.
Q. HOW WOULD YOU CHARACTERIZE THE INVESTING CLIMATE DURING THE PERIOD?
A. It's been pretty benign. Interest rates, after rising early in the year,
were flat to down over the past six months. Corporate earnings have come in
stronger than expected. According to Dow Jones, net income rose 27% in the
third quarter on a year-over-year basis after a 19% increase in the second
quarter and flat earnings at the beginning of the year. This combination of
good earnings growth and an absence of rising rates allowed the market to
post solid returns during the period.
Q. BEFORE WE LOOK AT WHAT HAPPENED WITH THE FUND, WOULD YOU MIND
SUMMARIZING WHAT YOU LOOK FOR IN A COMPANY?
A. Basically, I look for companies that offer three things: strong
short-term earnings momentum, good long-term earnings growth and attractive
valuations. I'm looking for companies with a competitive edge and those
that have built a substainable competitive advantage in manufacturing,
distribution, marketing or R&D. These are the types of companies that can
grow their earnings at least 10% a year over a three- to five-year time
frame.
Q. LET'S LOOK AT SOME OF THE MAJOR INDUSTRY AREAS IN THE FUND. WHAT
HAPPENED WITH TECHNOLOGY?
A. Technology stocks were a mixed bag. Earlier in the period, we saw rising
inventories, weakening demand and negative earnings announcements from some
of the larger tech companies. Since the market correction in July, however,
not only have the valuations of technology stocks improved, but their
business prospects also have shown improvement. Inventories are being
worked down and demand has increased - as evident in the uptick in the
semiconductor industry's book-to-bill ratio. As a result, I've overweighted
the technology sector in the fund. Some tech stocks I favored included
chip-maker Intel - which reported a 41% year-over-year earnings gain for
the third quarter - semiconductor company Adaptec, IBM and networking firm
Cisco Systems.
Q. HOW ABOUT RETAIL?
A. Retail stocks, after two or three years of subpar performance, turned
out to be a pleasant story as companies cut expenses, slashed inventory
levels and decreased square footage growth. As a result, even on only
moderate sales growth, retail profitability has been up strongly to date. I
owned some specialty retailers with a good niche business, such as Gymboree
and PETsMART. I also focused on broad-lined retailers that are reinventing
the way they do business, such as Sears and Toys-R-Us.
Q. WHAT TYPE OF COMPANY DID YOU LOOK FOR IN HEALTH CARE?
A. I liked pharmaceuticals. Health care stocks, particularly
pharmaceuticals, did well over the period as demand remained strong and
earnings projections were generally met or beaten. In a nutshell,
pharmaceutical usage is increasing fairly rapidly driven by an aging
population - Baby Boomers are entering their higher prescription-usage
years - and an acceleration of new drug approvals by the FDA.
Q. THE FUND ALSO HAS A FAIRLY LARGE POSITION IN FINANCE STOCKS. WHAT'S THE
STORY THERE?
A. The finance sector has performed pretty well for some time. We've seen a
fairly favorable interest rate environment, a strong stock market, good
earnings and solid across-the-board demand for financial services.
Additionally, the banking industry has improved earnings through
consolidation, balance sheet restructuring and cost cutting.
Q. WAS THERE AN AREA THAT PROVED DISAPPOINTING?
A. The fund was hurt by exposure in the telecommunications area -
specifically, its positions in long-distance and local telephone companies.
AT&T, in a development that was representative of the entire sector, lost
10% of its value when it announced its earnings would be adversely affected
by a slowdown in the consumer long-distance market. In addition, as
investors began to sort out the ramifications of the telecommunications law
enacted earlier this year, it appeared the law would hurt local phone
companies in the short term by opening up their markets to long-distance
carriers.
Q. WHAT DO YOU SEE GOING FORWARD?
A. Earnings growth and interest rates have the most impact on stock market
performance. Since I can't predict where rates are going, I'll concentrate
on earnings and stick to my basic philosophy of looking for companies that
offer short-term earnings momentum, long-term earnings growth and good
valuations. If rates stay where they are and earnings growth momentum can
be sustained, the market should stay healthy. If something significant
happens - be it a rate hike or a recession - it could be a different
ballgame.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.

FUND FACTS
GOAL: to seek long-term
growth of capital by investing
in companies with market
capitalizations greater than
$1 billion at the time of
investment
FUND NUMBER: 338
TRADING SYMBOL: FLCSX
START DATE: June 22, 1995
SIZE: as of October 31, 1996,
more than $106 million
MANAGER: Tom Sprague,
since March, 1996; manager,
Fidelity Advisor Large Cap
Fund, since March 1996;
joined Fidelity in 1989
(checkmark)
TOM SPRAGUE COMPARES AND
CONTRASTS LARGE AND SMALL
COMPANIES:
"Large companies typically
have been around longer and
are more entrenched within
their marketplaces. So,
they're able to develop
capabilities smaller
companies just can't compete
with. A good large company
has lots of weapons in its
arsenal. Take a company like
Walt Disney for example,
which rarely has "down"
earnings. If it's looking at a
weak period, it just dips into
its film archives and
re-releases "Snow White," for
instance. This gives it a boost
in earnings that smaller movie
companies can't match.
"The drawback to larger
companies is that because of
their sheer size, they normally
don't exhibit the rapid
growth rate typified by smaller
companies. Smaller
companies can also react to
market shifts more quickly."
INVESTMENT CHANGES

TOP TEN STOCKS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

International Business Machines 2.3 3.1
Corp.

General Electric Co. 2.0 2.4

Merck & Co., Inc. 1.7 1.3

Aetna, Inc. 1.6 0.5

Adaptec, Inc. 1.5 1.3

Cisco Systems, Inc. 1.4 1.4

Toys "R" Us, Inc. 1.4 0.6

Sears, Roebuck & Co. 1.4 1.1

American Home Products Corp. 1.4 0.8

Intel Corp. 1.3 0.3

TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO

Technology 19.1 18.5

Health 12.7 15.3

Finance 11.8 11.4

Retail & Wholesale 9.9 9.5

Energy 7.2 6.1

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996 * AS OF APRIL 30, 1996 **
Row: 1, Col: 1, Value: 8.6
Row: 1, Col: 2, Value: 91.40000000000001
Row: 1, Col: 1, Value: 1.1
Row: 1, Col: 2, Value: 98.90000000000001
Stocks 91.4%
Short-term
investments 8.6%
FOREIGN
INVESTMENTS 3.3%

Stocks 98.9%
Short-term
investments 1.1%
FOREIGN
INVESTMENTS 3.1%
*
**
INVESTMENTS OCTOBER 31, 1996 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 91.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.4%
Lockheed Martin Corp. 5,280 $ 473,220
BASIC INDUSTRIES - 3.2%
CHEMICALS & PLASTICS - 1.5%
du Pont (E.I.) de Nemours & Co. 6,900 639,956
Monsanto Co. 8,100 320,963
Praxair, Inc. 12,900 570,825
1,531,744
METALS & MINING - 0.1%
Alumax, Inc. 3,300 106,013
PACKAGING & CONTAINERS - 1.6%
Owens-Illinois, Inc. (a) 86,070 1,334,085
Tupperware Corp. 6,800 349,350
1,683,435
PAPER & FOREST PRODUCTS - 0.0%
Kimberly-Clark Corp. 300 27,975
TOTAL BASIC INDUSTRIES 3,349,167
CONGLOMERATES - 1.7%
AlliedSignal, Inc. 11,400 746,700
Tyco International Ltd. 21,660 1,074,878
1,821,578
CONSTRUCTION & REAL ESTATE - 0.5%
BUILDING MATERIALS - 0.5%
Sherwin-Williams Co. 12,000 601,500
DURABLES - 2.9%
AUTOS, TIRES, & ACCESSORIES - 0.9%
Echlin, Inc. 7,100 231,638
Snap-on Tools Corp. 20,300 652,138
883,776
CONSUMER ELECTRONICS - 0.5%
Black & Decker Corp. 14,700 549,413
HOME FURNISHINGS - 0.6%
Leggett & Platt, Inc. 22,400 669,200
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
TEXTILES & APPAREL - 0.9%
Jones Apparel Group, Inc. (a) 5,900 $ 184,375
Nine West Group, Inc. (a) 7,240 361,095
Warnaco Group, Inc. Class A 17,500 435,313
980,783
TOTAL DURABLES 3,083,172
ENERGY - 7.2%
ENERGY SERVICES - 2.2%
BJ Services Co. (a) 10,600 475,675
Dresser Industries, Inc. 12,300 404,363
Halliburton Co. 15,600 883,350
Schlumberger Ltd. 6,040 598,715
2,362,103
OIL & GAS - 5.0%
Anadarko Petroleum Corp. 6,900 439,013
Atlantic Richfield Co. 3,820 506,150
British Petroleum PLC ADR 10,207 1,312,875
Burlington Resources, Inc. 10,400 523,900
Occidental Petroleum Corp. 17,100 418,950
Oryx Energy Co. (a) 11,100 213,675
Phillips Petroleum Co. 9,010 369,410
Royal Dutch Petroleum Co. ADR 6,100 1,008,788
Unocal Corp. 12,249 448,620
5,241,381
TOTAL ENERGY 7,603,484
FINANCE - 11.8%
BANKS - 3.8%
BankAmerica Corp. 6,700 613,050
Bank of New York Co., Inc. 36,980 1,224,963
Citicorp 8,100 801,900
NationsBank Corp. 14,500 1,366,625
4,006,538
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 1.5%
American Express Co. 23,610 $ 1,109,670
Household International, Inc. 5,400 477,900
1,587,570
FEDERAL SPONSORED CREDIT - 2.2%
Federal Home Loan Mortgage Corporation 10,300 1,040,300
Federal National Mortgage Association 33,700 1,318,513
2,358,813
INSURANCE - 4.3%
Aetna, Inc. 25,100 1,678,563
Allstate Corp. 25,071 1,407,110
American International Group, Inc. 4,600 499,675
MBIA, Inc. 7,300 646,963
UNUM Corp. 4,200 264,075
4,496,386
TOTAL FINANCE 12,449,307
HEALTH - 12.7%
DRUGS & PHARMACEUTICALS - 5.7%
Allergan, Inc. 3,900 118,950
American Home Products Corp. 23,620 1,446,725
Bristol-Myers Squibb Co. 8,700 920,025
Merck & Co., Inc. 24,170 1,791,601
Pharmacia & Upjohn, Inc. 9,900 356,400
Pfizer, Inc. 4,450 368,238
Schering-Plough Corp. 7,590 485,760
SmithKline Beecham PLC ADR 9,200 576,150
6,063,849
MEDICAL EQUIPMENT & SUPPLIES - 3.8%
Baxter International, Inc. 15,880 661,005
Becton, Dickinson & Co. 20,440 889,140
Bergen Brunswig Corp. Class A 35,000 1,098,125
Cardinal Health, Inc. 2,700 211,950
Johnson & Johnson 12,500 615,625
St. Jude Medical, Inc. (a) 13,220 522,190
3,998,035
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - 3.2%
Columbia/HCA Healthcare Corp. 37,575 $ 1,343,306
HEALTHSOUTH Rehabilitation Corp. (a) 2,900 108,750
Health Care & Retirement Corp. (a) 15,150 373,069
Health Management Associates, Inc. Class A (a) 21,530 473,660
Oxford Health Plans, Inc. (a) 4,200 191,100
PacifiCare Health Systems, Inc. Class B (a) 6,800 477,700
Tenet Healthcare Corp. (a) 18,400 384,100
3,351,685
TOTAL HEALTH 13,413,569
INDUSTRIAL MACHINERY & EQUIPMENT - 4.6%
ELECTRICAL EQUIPMENT - 2.5%
General Electric Co. 22,390 2,166,233
Westinghouse Electric Corp. 24,800 424,700
2,590,933
INDUSTRIAL MACHINERY & EQUIPMENT - 2.1%
Caterpillar, Inc. 13,470 924,379
Ingersoll-Rand Co. 12,900 536,963
Stanley Works 27,700 782,525
2,243,867
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,834,800
MEDIA & LEISURE - 5.0%
ENTERTAINMENT - 0.2%
Carnival Cruise Lines, Inc. Class A 5,300 159,663
Disney (Walt) Co. 1,400 92,225
251,888
LEISURE DURABLES & TOYS - 0.3%
Hasbro, Inc. 8,000 311,000
LODGING & GAMING - 2.6%
HFS, Inc. (a) 13,280 972,760
Hilton Hotels Corp. 8,700 264,263
ITT Corp. (a) 5,300 222,600
La Quinta Motor Inns, Inc. 19,700 394,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - CONTINUED
Marriott International, Inc. 10,940 $ 622,213
Mirage Resorts, Inc. (a) 11,900 261,800
2,737,636
PUBLISHING - 1.3%
Knight-Ridder, Inc. 13,000 485,875
Scholastic Corp. (a) 5,000 366,250
Times Mirror Co. Class A 10,800 499,500
1,351,625
RESTAURANTS - 0.6%
Brinker International, Inc. (a) 27,300 464,100
Rainforest Cafe, Inc. (a) 6,600 214,500
678,600
TOTAL MEDIA & LEISURE 5,330,749
NONDURABLES - 6.2%
AGRICULTURE - 0.4%
Pioneer Hi-Bred International, Inc. 6,400 429,600
BEVERAGES - 0.7%
Coca-Cola Co. (The) 5,360 270,680
PepsiCo, Inc. 17,140 507,773
778,453
FOODS - 1.2%
ConAgra, Inc. 3,800 189,525
General Mills, Inc. 7,100 405,588
Ralston Purina Group 3,670 242,679
Sysco Corp. 11,000 374,000
1,211,792
HOUSEHOLD PRODUCTS - 1.7%
First Brands Corp. 14,800 419,950
Gillette Co. 5,500 411,125
Procter & Gamble Co. 9,390 929,610
1,760,685
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
TOBACCO - 2.2%
Philip Morris Companies, Inc. 14,380 $ 1,331,948
RJR Nabisco Holdings Corp. 35,096 1,013,397
2,345,345
TOTAL NONDURABLES 6,525,875
PRECIOUS METALS - 0.3%
Newmont Mining Corp. 6,900 319,125
RETAIL & WHOLESALE - 9.9%
APPAREL STORES - 0.8%
Gymboree Corp. (a) 28,820 900,625
DRUG STORES - 2.0%
Eckerd Corp. (a) 22,700 629,925
General Nutrition Companies, Inc. (a) 44,500 812,125
Rite Aid Corp. 19,900 676,600
2,118,650
GENERAL MERCHANDISE STORES - 2.0%
Dollar General Corp. 9,175 254,606
Sears, Roebuck & Co. 30,380 1,469,633
Wal-Mart Stores, Inc. 15,530 413,486
2,137,725
GROCERY STORES - 0.6%
Kroger Co. (The) (a) 13,700 611,363
RETAIL & WHOLESALE, MISCELLANEOUS - 4.5%
Circuit City Stores, Inc. 24,300 795,825
Home Depot, Inc. (The) 3,700 202,575
Lowe's Companies, Inc. 19,310 779,641
PETsMART, Inc. (a) 33,200 896,400
Staples, Inc. (a) 20,500 381,813
Sunglass Hut International, Inc. (a) 1,300 11,538
Toys "R" Us, Inc. (a) 43,700 1,480,338
Viking Office Products, Inc. (a) 5,900 171,838
4,719,968
TOTAL RETAIL & WHOLESALE 10,488,331
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 1.1%
ADVERTISING - 0.6%
Omnicom Group, Inc. 11,800 $ 587,050
SERVICES - 0.5%
CDI Corp. (a) 6,500 178,750
Service Corp. International 13,660 389,310
568,060
TOTAL SERVICES 1,155,110
TECHNOLOGY - 19.1%
COMMUNICATIONS EQUIPMENT - 4.2%
Ascend Communications, Inc. (a) 19,790 1,293,771
Cisco Systems, Inc. (a) 23,960 1,482,525
Lucent Technologies, Inc. 2,025 95,175
Network General Corp. (a) 42,300 1,020,488
Pairgain Technologies, Inc. 1,400 96,425
3Com Corp. (a) 7,080 478,785
4,467,169
COMPUTER SERVICES & SOFTWARE - 4.8%
America Online, Inc. (a) 9,900 268,538
American Management Systems, Inc. (a) 14,600 461,725
Automatic Data Processing, Inc. 16,860 701,798
CUC International, Inc. (a) 43,123 1,056,514
Ceridian Corp. (a) 5,050 250,606
Computer Sciences Corp. (a) 6,860 509,355
Electronic Data Systems Corp. 7,140 321,300
Equifax Inc. 14,700 437,325
Forte Software, Inc. (a) 10,300 388,825
Oracle Systems Corp. (a) 9,500 401,969
PeopleSoft, Inc. (a) 3,100 278,225
5,076,180
COMPUTERS & OFFICE EQUIPMENT - 5.8%
Adaptec, Inc. (a) 26,520 1,614,405
Bay Networks, Inc. (a) 27,495 556,774
Compaq Computer Corp. (a) 7,620 530,543
International Business Machines Corp. 18,720 2,414,880
Pitney Bowes, Inc. 17,810 995,134
6,111,736
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - 3.3%
Analog Devices, Inc. (a) 20,200 $ 525,200
Intel Corp. 13,000 1,428,375
Linear Technology Corp. 35,540 1,190,590
Maxim Integrated Products, Inc. (a) 10,500 367,500
3,511,665
PHOTOGRAPHIC EQUIPMENT - 1.0%
Eastman Kodak Co. 13,470 1,074,233
TOTAL TECHNOLOGY 20,240,983
TRANSPORTATION - 0.9%
RAILROADS - 0.9%
CSX Corp. 22,316 962,378
UTILITIES - 3.9%
CELLULAR - 0.9%
360 Degrees Communications Co. (a) 22,800 515,850
Vodafone Group PLC sponsored ADR 10,000 386,250
902,100
TELEPHONE SERVICES - 3.0%
Ameritech Corp. 16,650 911,588
Frontier Corp. 24,790 718,910
LCI International, Inc. (a) 11,000 350,625
MCI Communications Corp. 4,400 110,550
SBC Communications, Inc. 18,180 884,003
WorldCom, Inc. (a) 9,600 234,000
3,209,676
TOTAL UTILITIES 4,111,776
TOTAL COMMON STOCKS
(Cost $88,033,560) 96,764,124
CASH EQUIVALENTS - 8.6%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 9,048,392 $ 9,047,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $97,080,560) $ 105,811,124
LEGEND
1. Non-income producing
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $97,305,035. Net unrealized appreciation aggregated
$8,506,089, of which $10,443,557 related to appreciated investment
securities and $1,937,468 related to depreciated investment securities.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS OCTOBER 31, 1996 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 105,811,124
agreements of $9,047,000) (cost $97,080,560) -
See accompanying schedule

Cash 25,696

Receivable for investments sold 882,305

Receivable for fund shares sold 2,017,781

Dividends receivable 104,969

TOTAL ASSETS 108,841,875

LIABILITIES

Payable for investments purchased $ 1,782,912

Payable for fund shares redeemed 903,876

Accrued management fee 45,780

Other payables and accrued expenses 57,680

TOTAL LIABILITIES 2,790,248

NET ASSETS $ 106,051,627

Net Assets consist of:

Paid in capital $ 94,666,239

Undistributed net investment income 321,225

Accumulated undistributed net realized gain (loss) 2,333,599
on investments

Net unrealized appreciation (depreciation) on investments 8,730,564

NET ASSETS, for 8,740,077 shares outstanding $ 106,051,627

NET ASSET VALUE, offering price and redemption price per $12.13
share ($106,051,627 (divided by) 8,740,077 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)

INVESTMENT INCOME $ 629,832
Dividends

Interest 154,892

TOTAL INCOME 784,724

EXPENSES

Management fee $ 254,184
Basic fee

Performance adjustment (15,152)

Transfer agent fees 143,458

Accounting fees and expenses 30,422

Non-interested trustees' compensation 184

Custodian fees and expenses 14,494

Registration fees 17,165

Audit 19,995

Legal 366

Miscellaneous 134

Total expenses before reductions 465,250

Expense reductions (7,017) 458,233

NET INVESTMENT INCOME 326,491

REALIZED AND UNREALIZED GAIN (LOSS) 2,767,243
Net realized gain (loss) on investment securities

Change in net unrealized appreciation (depreciation) on 4,249,032
investment securities

NET GAIN (LOSS) 7,016,275

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 7,342,766
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS JUNE 22, 1995
ENDED OCTOBER (COMMENCEMENT
31, OF OPERATIONS) TO
1996 APRIL 30, 1996
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 326,491 $ 378,629
Net investment income

Net realized gain (loss) 2,767,243 4,227,079

Change in net unrealized appreciation (depreciation) 4,249,032 4,481,532

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 7,342,766 9,087,240
FROM OPERATIONS

Distributions to shareholders (131,443) (234,188)
From net investment income

From net realized gain (4,074,742) -

TOTAL DISTRIBUTIONS (4,206,185) (234,188)

Share transactions 82,790,992 175,308,389
Net proceeds from sales of shares

Reinvestment of distributions 4,158,520 232,753

Cost of shares redeemed (72,200,503) (96,228,157)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 14,749,009 79,312,985
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 17,885,590 88,166,037

NET ASSETS

Beginning of period 88,166,037 -

End of period (including undistributed net investment $ 106,051,627 $ 88,166,037
income of $321,225 and $144,441, respectively)

OTHER INFORMATION
Shares

Sold 7,073,855 16,103,293

Issued in reinvestment of distributions 363,824 21,007

Redeemed (6,218,200) (8,603,702)

Net increase (decrease) 1,219,479 7,520,598

</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS JUNE 22, 1995
ENDED (COMMENCEMEN
OCTOBER 31,
1996 T
OF OPERATIONS)TO

(UNAUDITED) APRIL 30, 1996

SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 11.72 $ 10.00

Income from Investment Operations

Net investment income .04 .05

Net realized and unrealized gain (loss) 1.01 1.70

Total from investment operations 1.05 1.75

Less Distributions

From net investment income (.02) (.03)

From net realized gain (.62) -

Total distributions (.64) (.03)

Net asset value, end of period $ 12.13 $ 11.72

TOTAL RETURN B, C 9.29% 17.52%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 106,052 $ 88,166

Ratio of expenses to average net assets 1.08% A 1.31% A

Ratio of expenses to average net assets after expense 1.07% A, D 1.30% A
reductions , D

Ratio of net investment income to average net assets .76% A .70% A

Portfolio turnover rate 111% A 155% A

Average commission rate E $ .0360
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Large Cap Stock Fund (the fund) is a fund of Fidelity Commonwealth
Trust (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), 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 permit management to make certain estimates and assumptions at the
date of the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an exchange)
are valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange
rates on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. 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 between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences may result in distribution reclassifications,
are primarily due to differing treatments for losses deferred due to wash
sales. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain
(loss) on investments may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign securities. Losses may
arise from changes in the value of the foreign currency or if the
counterparties do not perform under the contracts' terms. The U.S. dollar
value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contract is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, 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 that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $52,679,266 and $45,604,584, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2500% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. The
basic fee is subject to a performance adjustment (up to a maximum of
(plus/minus) .20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. The fund's performance
adjustment took effect in June, 1996. For the period, the management fee
was equivalent to an annualized rate of .56% of average net assets after
the performance adjustment.
TRANSFER AGENT FEES. Fidelity Service Co. (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
.33% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $12,112 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$6,847 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $82 and $88,
respectively, under these arrangements.
DISTRIBUTIONS

The Board of Trustees of Fidelity Large Cap Stock Fund voted to pay on
December 9, 1996, to shareholders of record at the opening of business on
December 6, 1996, a distribution of $.18 per share derived from capital
gains realized from sales of portfolio securities and a dividend of $.03
per share from net investment income.
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 TouchTone Xpressprovides a single toll-free number to access
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SM
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TOTAL
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(2_FIDELITY_LOGOS)FIDELITY

SMALL CAP STOCK
FUND
SEMIANNUAL REPORT
OCTOBER 31, 1996
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 23 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 27 Notes to the financial statements.

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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(or income) and capital gains (the profits the fund earns when it sells
securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND

Small Cap Stock -4.32% 5.44% 42.89%

Small Cap Stock (incl. 3% sales charge) -7.19% 2.27% 38.60%

Russell 2000(registered trademark) -1.53% 16.60% 55.94%

Small Company Growth Funds Average -0.05% 20.44% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on June 28, 1993. For example, if you 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
Russell 2000 Index - an unmanaged index of 2,000 small capitalization
stocks with market values of $250 million or less. To measure how the
fund's performance stacked up against its peers, you can compare it to the
small company growth funds average, which reflects the performance of 410
mutual funds with similar objectives tracked by Lipper Analytical Services,
Inc. over the past six months. Both benchmarks include reinvested dividends
and capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND

Small Cap Stock 5.44% 11.25%

Small Cap Stock (incl. 3% sales charge) 2.27% 10.24%

Russell 2000 16.60% 14.19%

Small Company Growth Funds 20.44% n/a
Average

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19961031 19961111 095418 S00000000000001
Small Cap Stock RS Russell 2000
00336 RS002
1993/06/28 9700.00 10000.00
1993/06/30 9700.00 10166.14
1993/07/31 9767.90 10306.50
1993/08/31 10126.80 10751.75
1993/09/30 10340.20 11055.17
1993/10/31 10417.80 11339.71
1993/11/30 10126.80 10966.49
1993/12/31 10555.20 11341.44
1994/01/31 10818.60 11697.03
1994/02/28 10906.39 11654.72
1994/03/31 10184.50 11039.38
1994/04/30 10350.34 11105.00
1994/05/31 10077.19 10980.30
1994/06/30 9579.68 10607.45
1994/07/31 9657.72 10781.73
1994/08/31 10340.59 11382.51
1994/09/30 10282.06 11344.40
1994/10/31 10477.16 11299.63
1994/11/30 9979.64 10843.27
1994/12/31 10204.29 11134.60
1995/01/31 9823.46 10994.12
1995/02/28 10165.23 11451.46
1995/03/31 10438.65 11648.68
1995/04/30 10673.01 11907.69
1995/05/31 10878.07 12112.44
1995/06/30 12085.13 12740.78
1995/07/31 13331.93 13474.67
1995/08/31 13518.46 13753.42
1995/09/30 13862.06 13999.04
1995/10/31 13145.40 13372.97
1995/11/30 13322.11 13934.83
1995/12/31 12921.50 14302.49
1996/01/31 12702.49 14287.16
1996/02/29 13004.93 14732.41
1996/03/31 13244.79 15032.31
1996/04/30 14485.84 15836.11
1996/05/31 14976.00 16460.16
1996/06/30 14130.95 15784.25
1996/07/31 13091.43 14405.60
1996/08/31 13708.65 15241.99
1996/09/30 14293.37 15837.64
1996/10/31 13860.24 15593.55
IMATRL PRASUN SHR__CHT 19961031 19961111 095420 R00000000000044

$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Small Cap Stock Fund on June 28, 1993, when the fund
started, and a 3% sales charge was paid. As the chart shows, by October 31,
1996, the value of the investment would have grown to $13,860 - a 38.60%
increase on the initial investment. For comparison, look at how the Russell
2000 Index did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to $15,594 -
a 55.94% increase.

An interview with Brad Lewis, Portfolio Manager of Small Cap Stock Fund
Q. HOW DID THE FUND PERFORM, BRAD?
A. For the six- and 12-month periods ending on October 31, 1996, the fund
returned -4.32% and 5.44%, respectively. The small company growth funds
average was -0.05% for the six month period and 20.44% for the 12-month
time period, according to Lipper Analytical Services.
Q. WHY DID THE FUND UNDERPERFORM ITS PEERS?
A. As you can see by the six- and 12-month performance numbers, the fund's
performance still lags its peers, but has improved - versus the average
small company fund - during the past six months. The fund's
underperformance during the past six months isn't attributable to any one
investment or sector weighting. While the fund underperformed its Lipper
average, I think that a more accurate comparison is the Russell 2000, an
index of smaller cap companies, which returned -1.53% for the period. This
fund is a straightforward small cap fund while many competitors invest in
larger cap companies and performed better than this fund during the period.
Another reason for underperformance is recurring significant cash flows
both into and out of the fund. Accommodating trading has hurt the fund's
performance due to the high cost of trading small cap stocks. A 90-day
redemption fee was implemented at the end of last year in order to
discourage investments in the portfolio by individuals with a very short
term investment horizon.
Q. WHAT CHANGES HAVE YOU MADE TO THE FUND'S QUANTITATIVE MODELS SINCE THE
LAST REPORT SIX MONTHS AGO?
A. The quantitative group developed and is using a proprietary optimizer
that is much more flexible than the commercial one I used before. An
optimizer is the computer program that takes the expected returns of stocks
and reconciles them with factors such as liquidity and desired industry
weightings, and actually creates the portfolio. This new tool enables me to
choose listed stocks in favor of those that are traded over-the-counter.
For example, if I've found two stocks that are otherwise pretty equal in
terms of expected returns and one of them is listed on the New York Stock
Exchange and the other is a NASDAQ security, then the optimizer will buy
the listed security. As NASDAQ trading practices have come under increased
scrutiny, liquidity has become worse since fewer dealers are making markets
in over-the-counter stocks. Of course, in large stocks such as Microsoft
and Intel it doesn't make a difference, but in some smaller stocks, bid and
ask spreads have been increasing.
Q. WHAT OTHER CHANGES HAVE YOU MADE TO THE FUND'S STOCK SELECTION
METHODOLOGY?
A. I've placed less emphasis on top-down industry models and more on
bottom-up stock selection models, since they seem to work better in this
type of market environment.
Q. WHAT STOCKS CONTRIBUTED TO THE FUND'S PERFORMANCE DURING THE PAST SIX
MONTHS?
A. Although I cut the fund's technology weighting by nearly two-thirds, a
couple of high-tech stocks were stand-out performers. Western Digital's
stock more than doubled in the past six months. The company has benefited
from increased demand for hard disk drives. Its earnings were up more than
300% in the third quarter after a 58% increase in sales. I sold the fund's
position in Western Digital by the end of the period because the stock
price exceeded my expectations. Another stock, Chips & Technologies, was a
beneficiary of a booming market for laptop computers, its revenues were up
more than 20% and its earnings were up more than 100% during the past six
months.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. American Travelers, an insurance company, made a couple of acquisitions
that were applauded by Wall Street, and Red Lion Hotels was bought out by
Doubletree Corporation at a very favorable price. I sold the fund's
position in American Travelers by the end of the period, realizing a gain
for the fund.
Q. WHICH INVESTMENTS DIDN'T WORK OUT AS YOU WOULD HAVE LIKED?
A. Credence Systems had excellent revenues and earnings growth during the
period, but its stock suffered because it makes test equipment for
semiconductor manufacturers and semiconductor pricing has eroded during
1996. By the end of the period, the fund no longer owned Credence Systems.
Similarly, LTX Corp.'s earnings dropped off due to weakness in the
semiconductor equipment market. By the end of the period, the fund no
longer owned shares of either company.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I've done some quantitative research recently that suggests small cap
stocks will probably stop underperforming the overall market in the next
six to 12 months, although it's unlikely that they'll outperform during
that period. Small company stocks tend to perform best when the economy is
emerging from a bear market - certainly not the market backdrop we've been
experiencing. However, small cap stocks have had their own bear market -
severely lagging big cap stocks - since 1994, and I think that cycle could
be coming to an end. Going forward, however, I expect earnings growth to
decelerate, which will make stock selection much more important. I welcome
that change since I believe this fund tends to do better in an environment
of decelerating earnings; that's because I try to emphasize stocks with
earnings growth that is greater than the overall market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.

FUND FACTS
GOAL: capital appreciation
by investing mainly in equity
securities of companies with
small market capitalizations,
chosen in part by using
computer-aided
quantitative analysis.
FUND NUMBER: 336
TRADING SYMBOL: FDSCX
START DATE: June 28, 1993
SIZE: as of October 31, 1996,
more than $524 million
MANAGER: Bradford Lewis,
since 1993; manager, Fidelity
Disciplined Equity, since 1988,
and Fidelity Stock Selector,
since 1990; joined Fidelity in
1985
(checkmark)
BRAD LEWIS ON HIS INVESTMENT
PHILOSOPHY:
"Smaller companies
generally have a much
greater potential for
increasing their earnings than
do the larger companies that
dominate the Standard &
Poor's 500 Index. However, in
a market environment in which
well-known consumer
nondurable companies are
favored over smaller,
higher-growth stocks, it's
nearly impossible for small
companies to outperform the
market.
"I think that skewing this
fund's holdings in favor of
slower-growing, high-priced
stocks because they're
temporarily in favor would be
a disservice to shareholders.
That's not what this fund was
designed to do. Instead, my
goal is to maintain a
diversified portfolio of stocks
whose earnings and revenue
growth are stronger than that
of the overall market. I think
that if I continue to employ
quantitative and fundamental
research methods to
reconcile value and growth
with near-term earnings
prospects, the fund will be in a
better position to outperform
the overall market over time.
"During the past six months,
we've seen the market really
bid up expensive consumer
nondurable stocks. While it may
be frustrating in the near term, I
believe that with a longer time
horizon, investors are much
better off owning smaller
stocks with better growth
prospects and lower
price-to-earnings multiples."
INVESTMENT CHANGES

TOP TEN STOCKS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

Ross Stores, Inc. 2.5 1.6

Aames Financial Corp. 2.4 2.1

Champion Enterprises, Inc. 1.9 1.1

Exide Corp. 1.8 0.0

California Federal Bancorp., Inc. 1.7 1.3

Sanmina Corp. 1.5 1.6

Department 56, Inc. 1.2 0.9

Tiffany & Co., Inc. 1.1 1.0

Olympic Financial Ltd. 1.1 1.1

Houghton Mifflin Co. 1.1 0.0

TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO

Finance 22.0 17.9

Technology 8.9 31.3

Retail & Wholesale 8.3 3.5

Health 6.5 4.9

Energy 6.5 1.8

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996 * AS OF APRIL 30, 1996 **
Row: 1, Col: 1, Value: 15.5
Row: 1, Col: 2, Value: 44.5
Row: 1, Col: 3, Value: 40.0
Row: 1, Col: 1, Value: 13.8
Row: 1, Col: 2, Value: 46.2
Row: 1, Col: 3, Value: 40.0
Stocks 84.5
%
Short-term
investments 15.5
%
FOREIGN
INVESTMENTS 0.4
%
Stocks 86.2%
Short-term
investments 13.8%
FOREIGN
INVESTMENTS 1.3%
*
**
INVESTMENTS OCTOBER 31, 1996 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 84.5%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.5%
AEROSPACE & DEFENSE - 0.0%
Wyman-Gordon Co. (a) 7,900 $ 173,800
DEFENSE ELECTRONICS - 0.5%
Logicon, Inc. 42,000 1,737,750
Tracor, Inc. (a) 50,000 1,137,500
2,875,250
TOTAL AEROSPACE & DEFENSE 3,049,050
BASIC INDUSTRIES - 3.6%
CHEMICALS & PLASTICS - 1.5%
Cytec Industries, Inc. (a) 62,400 2,230,800
Foamex International, Inc. (a) 156,000 2,437,500
Fuller (H.B.) Co. 75,000 3,131,250
Tredegar Industries, Inc. 150 5,738
7,805,288
IRON & STEEL - 0.2%
WHX Corp. (a) 148,900 1,247,038
METALS & MINING - 1.5%
AFC Cable Systems, Inc. 10,000 177,500
Belden, Inc. 84,300 2,423,625
Commonwealth Aluminum Corp. 68,000 1,071,000
Encore Wire Corp. 15,000 240,000
Olympic Steel, Inc. (a) 48,000 1,200,000
Reliance Steel & Aluminum Co. 14,000 512,750
Superior Telecom, Inc. (a) 16,000 284,000
Wolverine Tube, Inc. (a) 56,000 2,233,000
8,141,875
PAPER & FOREST PRODUCTS - 0.4%
Fibreboard Corp. (a) 63,000 2,023,875
Mosinee Paper Corp. 10,000 285,000
2,308,875
TOTAL BASIC INDUSTRIES 19,503,076
CONGLOMERATES - 0.4%
GenCorp, Inc. 127,000 2,095,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONSTRUCTION & REAL ESTATE - 3.5%
BUILDING MATERIALS - 1.6%
ACX Technologies, Inc. (a) 118,000 $ 2,094,500
Carlisle Companies, Inc. 23,000 1,308,125
Centex Construction Products, Inc. 21,100 329,688
Insilco Corp. (a) 28,000 1,092,000
Lone Star Industries, Inc. 72,000 2,646,000
Southdown, Inc. 40,000 1,095,000
8,565,313
CONSTRUCTION - 1.7%
Cavalier Homes, Inc. 98,000 1,825,250
Continental Homes Holding Corp. 90,000 1,462,500
Crossman Communities, Inc. (a) 23,000 428,375
Jacobs Engineering Group, Inc. 70,000 1,548,750
M/I Schottenstein Homes, Inc. (a) 4,000 35,500
NCI Building Systems, Inc. (a) 87,400 2,862,350
Schult Homes Corp. 7,000 168,875
Southern Energy Homes, Inc. (a) 72,000 1,071,000
9,402,600
ENGINEERING - 0.2%
Apogee Enterprises, Inc. 28,000 1,078,000
REAL ESTATE - 0.0%
Arden Realty Group, Inc. (a) 4,000 90,500
TOTAL CONSTRUCTION & REAL ESTATE 19,136,413
DURABLES - 5.5%
AUTOS, TIRES, & ACCESSORIES - 0.6%
Miller Industries, Inc. (a) 8,000 187,000
Mascotech, Inc. 57,000 897,750
R & B, Inc. (a) 23,000 186,875
Smith (A.O.) Corp. Class B 73,000 1,916,250
United Auto Group, Inc. 500 17,188
3,205,063
CONSUMER DURABLES - 2.0%
Department 56, Inc. (a) 291,400 6,410,800
Sola Group Ltd. (a) 124,000 4,479,500
10,890,300
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
HOME FURNISHINGS - 0.8%
Chromcraft Revington, Inc. 20,000 $ 515,000
Ethan Allen Interiors, Inc. 87,000 3,110,250
O'Sullivan Corp. (a) 38,300 445,238
4,070,488
TEXTILES & APPAREL - 2.1%
Galey & Lord, Inc. (a) 15,500 215,063
Mohawk Industries, Inc. (a) 111,000 2,691,750
Phillips-Van Heusen Corp. 79,000 869,000
St. John Knits, Inc. 40,000 1,830,000
Vans, Inc. (a) 124,000 2,061,500
Westpoint Stevens, Inc. Class A (a) 90,000 2,396,250
Wolverine World Wide, Inc. 57,000 1,410,750
11,474,313
TOTAL DURABLES 29,640,164
ENERGY - 6.5%
COAL - 0.5%
Zeigler Coal Holding Co. 146,000 2,646,250
ENERGY SERVICES - 3.4%
Cliffs Drilling Co. (a) 35,000 1,500,625
Energy Ventures, Inc. (a) 20,000 880,000
Global Industries Ltd. (a) 230,000 4,140,000
Marine Drilling Companies, Inc. 180,000 2,497,500
Maverick Tube Corp. (a) 29,000 456,750
Newpark Resources, Inc. 76,000 2,850,000
Seacor Holdings, Inc. (a) 31,000 1,674,000
Seitel, Inc. 56,900 2,261,775
Tuboscope Vetco Corp. (a) 144,000 2,196,000
18,456,650
OIL & GAS - 2.6%
Caltex Australia Ltd. 70,900 233,433
Comstock Resources, Inc. (a) 170,000 2,188,750
Giant Industries, Inc. 33,000 507,375
KCS Group, Inc. 800 34,500
McFarland Energy, Inc. (a) 500 5,750
National-Oilwell, Inc. 500 11,625
Newfield Exploration Co. (a) 16,500 779,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Nuevo Energy Corp. (a) 16,300 $ 812,963
Parker & Parsley Petroleum Co. 203,000 5,836,250
Plains Resources, Inc. (a) 73,000 1,022,000
Veritas DGC, Inc. 46,000 943,000
Vintage Petroleum, Inc. 21,100 622,450
Western Gas Resources, Inc. 74,000 1,174,750
14,172,471
TOTAL ENERGY 35,275,371
FINANCE - 22.0%
BANKS - 4.7%
CCB Financial Corp. 53,000 3,021,000
Centura Banks, Inc. 32,000 1,244,000
City National Corp. 189,500 3,316,250
Hancock Holding Co. 4,000 159,000
Imperial Bancorp 78,000 1,511,250
Magna Group, Inc. 94,000 2,632,000
Mississippi Valley Bancshares, Inc. 1,000 38,000
National Commerce Bancorp. 15,000 525,000
North Fork Bancorp., Inc. 82,000 2,593,250
ONBANCorp, Inc. 70,000 2,546,250
One Valley Bancorp of West Virginia, Inc. 28,750 937,969
Silicon Valley Bancshares (a) 25,000 653,125
T R Financial Corp. 83,000 2,521,125
Trustmark Corp. 15,000 375,000
UAB Financial Corp. 21,000 829,500
UST Corp. 52,000 932,750
USBANCORP, Inc. 22,000 858,000
Westamerica Bancorp 19,000 964,250
25,657,719
CLOSED END INVESTMENT COMPANY - 1.9%
All Seasons Global Fund, Inc. 108,300 473,813
Alliance Global Environment Fund 60,000 795,000
Central European Equity Fund 51,284 1,006,449
Emerging Germany Fund, Inc. (a) 100,000 787,500
Emerging Markets Infrastructure Fund, Inc. 68,300 717,150
GT Global Developing Markets Fund 225,000 2,475,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
CLOSED END INVESTMENT COMPANY - CONTINUED
Global Health Sciences Fund (a) 15,000 $ 255,000
Growth Fund of Spain, Inc. 30,000 363,750
Morgan Stanley Asia-Pacific Fund, Inc. 50,000 512,500
Southern Africa Fund, Inc. 25,200 415,800
TCW/DW Emerging Markets Opportunities Trust (SBI) 200,000 2,050,000
Templeton Dragon Fund, Inc. 45,000 630,000
10,481,962
CREDIT & OTHER FINANCE - 6.4%
Aames Financial Corp. 290,550 12,965,785
AmeriCredit Corp. (a) 190,900 3,627,100
Consumer Portfolio Services, Inc. (a) 34,000 416,500
First Merchants Acceptance Corp. 94,200 1,672,050
Money Store, Inc. 223,500 5,755,125
Olympic Financial Ltd. 381,600 6,057,900
RCSB Financial, Inc. 103,000 2,987,000
Southern Pacific Funding Corp. (a) 1,000 31,500
Triad Guaranty, Inc. (a) 31,500 952,875
34,465,835
INSURANCE - 3.0%
American Heritage Life Investment Corp. 15,000 331,875
Arbatax International, Inc. (a) 107,500 741,750
CMAC Investments 58,800 4,064,550
Capital Re Corp. 38,000 1,472,500
Delphi Financial Group, Inc. Class A (a) 37,200 1,046,250
First American Financial Corp. (a) 8,000 301,000
Guaranty National Corp. 50,000 787,500
Life USA Holding, Inc. (a) 124,200 1,179,900
Markel Corp. (a) 15,500 1,348,500
Navigators Group, Inc. (a) 20,000 365,000
Philadelphia Consolidated Holding Corp. (a) 12,000 279,000
RLI Corp. 13,000 359,125
Reinsurance Group of America, Inc. 20,000 907,500
Security-Connecticut Corp. 52,000 1,664,000
Zurich Reinsurance Centre Holdings, Inc. 38,000 1,140,000
15,988,450
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
SAVINGS & LOANS - 6.0%
Albank Financial Corp. 54,000 $ 1,498,500
Astoria Financial Corp. 13,600 481,100
California Federal Bancorp., Inc. (a) 385,400 8,960,550
California Federal Bank FSB contingent litigation
recovery rights (a) 24,640 267,960
California Financial Holding Co. 19,000 448,875
CenFed Financial Corp. 35,493 940,565
CitFed Bancorp, Inc. 15,000 671,250
Commercial Federal Corp. 104,000 4,355,000
Farmers & Mechanics Bank (a) 18,000 569,250
First Liberty Financial Corp. 7,500 131,250
First Republic Bancorp, Inc. (a) 30,000 461,250
FirstFed Financial Corp. (a) 15,000 330,000
Glendale Federal Bank FSB 103,000 1,892,625
Haven Bancorp., Inc. 59,000 1,578,250
Interwest Bancorp., Inc. 17,000 514,250
Metropolitan Bancorp (a) 16,000 282,000
St. Paul Bancorp, Inc. 87,000 2,294,625
Security Capital Corp. 26,000 1,716,000
Sovereign Bancorp., Inc. 193,000 2,267,750
Washington Federal, Inc. 126,000 3,024,000
32,685,050
TOTAL FINANCE 119,279,016
HEALTH - 6.5%
DRUGS & PHARMACEUTICALS - 1.1%
Curative Technologies, Inc. (a) 77,000 1,751,750
Dura Pharmaceuticals, Inc. (a) 125,000 4,312,500
6,064,250
MEDICAL EQUIPMENT & SUPPLIES - 2.0%
AmeriSource Health Corp. Class A (a) 126,000 5,339,250
BEC Group, Inc. (a) 443,000 2,159,625
EMPI, Inc. (a) 25,800 403,125
Sofamor/Danek Group, Inc. (a) 113,600 3,124,000
11,026,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - 3.4%
GranCare, Inc. (a) 107,000 $ 1,926,000
Living Centers of America, Inc. (a) 114,000 2,664,750
Orthodontic Centers of America, Inc. (a) 89,600 1,288,000
Regency Health Services, Inc. 14,500 163,125
Renal Treatment Centers, Inc. (a) 146,200 3,910,850
Rotech Medical Corp. (a) 182,000 2,912,000
Sun Healthcare Group (a) 276,700 3,527,925
Universal Health Services, Inc. Class B (a) 81,000 2,025,000
18,417,650
TOTAL HEALTH 35,507,900
INDUSTRIAL MACHINERY & EQUIPMENT - 6.3%
ELECTRICAL EQUIPMENT - 2.5%
American Power Conversion Corp. (a) 1,200 25,650
Antec Corp. (a) 75,900 811,181
BMC Industries, Inc. 157,000 4,651,125
Computer Products, Inc. (a) 172,000 3,397,000
Hughes Supply, Inc. 43,000 1,634,000
LSI Lighting Systems, Inc. 64,900 649,000
MagneTek, Inc. 60,000 667,500
Oak Industries, Inc. (a) 73,000 1,852,375
13,687,831
INDUSTRIAL MACHINERY & EQUIPMENT - 3.7%
Bearings, Inc. 42,000 1,092,000
Commercial Intertech Corp. 135,000 1,501,875
DT Industries, Inc. 32,500 1,283,750
Donaldson Company, Inc. 8,300 242,775
Exide Corp. 381,000 9,906,000
Gardner Denver Machinery, Inc. (a) 32,000 1,008,000
Global Industrial Technologies, Inc. (a) 78,000 1,452,750
Graco, Inc. 53,000 1,212,375
IDEX Corp. 20,500 771,313
Lindsay Manufacturing Co. 10,000 430,000
Watts Industries, Inc. Class A 60,000 1,252,500
20,153,338
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 0.1%
Zurn Industries, Inc. 15,300 $ 384,413
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 34,225,582
MEDIA & LEISURE - 5.3%
BROADCASTING - 0.3%
International Family Entertainment Class B (a) 86,000 1,537,250
ENTERTAINMENT - 0.0%
GC Companies, Inc. (a) 6,000 203,250
LEISURE DURABLES & TOYS - 2.9%
Champion Enterprises, Inc. (a) 513,440 10,140,440
Coachmen Industries, Inc. 49,600 1,388,800
Coastcast Corp. (a) 92,000 1,679,000
Galoob (Lewis) Toys, Inc. (a) 65,000 1,746,875
Tyco Toys, Inc. (a) 168,000 1,071,000
16,026,115
LODGING & GAMING - 0.5%
Doubletree Corp. (a) 42,000 1,703,625
Homegate Hospitality, Inc. 100,000 875,000
2,578,625
PUBLISHING - 1.1%
Houghton Mifflin Co. 119,000 5,905,375
RESTAURANTS - 0.5%
Foodmaker, Inc. (a) 160,000 1,560,000
Morton's Restaurant Group, Inc. (a) 20,000 307,500
Sbarro, Inc. 26,200 691,025
2,558,525
TOTAL MEDIA & LEISURE 28,809,140
NONDURABLES - 0.9%
HOUSEHOLD PRODUCTS - 0.4%
Paragon Trade Brands, Inc. (a) 81,000 2,126,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
TOBACCO - 0.5%
Dimon, Inc. 30,000 $ 570,000
Universal Corp. 78,000 2,125,500
2,695,500
TOTAL NONDURABLES 4,821,750
RETAIL & WHOLESALE - 8.3%
APPAREL STORES - 2.9%
Buckle, Inc. (The) (a) 20,000 510,000
Burlington Coat Factory Warehouse Corp. (a) 70,000 857,500
Dress Barn, Inc. (a) 60,000 787,500
Hibbett Sporting Goods, Inc. (a) 3,000 61,500
Ross Stores, Inc. 329,000 13,653,500
15,870,000
DRUG STORES - 0.4%
Arbor Drugs, Inc. 86,000 1,945,750
GENERAL MERCHANDISE STORES - 1.5%
Family Dollar Stores, Inc. 135,000 2,295,000
MacFrugals Bargains Closeouts, Inc. (a) 54,000 1,316,250
Meyer (Fred), Inc. (a) 70,000 2,458,750
Proffitts, Inc. (a) 56,100 2,265,038
8,335,038
GROCERY STORES - 0.1%
Riser Foods, Inc. Class A 15,000 403,125
RETAIL & WHOLESALE, MISCELLANEOUS - 3.4%
Daisytek International Corp. (a) 27,000 1,032,750
Damark International, Inc. Class A (a) 70,000 621,250
Eagle Hardware & Garden, Inc. (a) 150,000 4,293,750
Finish Line, Inc. Class A (a) 46,900 1,993,250
Land's End, Inc. 30,000 645,000
Sports Authority, Inc. (a) 129,000 3,128,250
Tandycrafts, Inc. (a) 27,000 175,500
Tiffany & Co., Inc. 168,000 6,216,000
Zale Corp. (a) 24,500 474,688
18,580,438
TOTAL RETAIL & WHOLESALE 45,134,351
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 2.0%
EDUCATIONAL SERVICES - 0.2%
Educational Medical, Inc. 80,000 $ 802,500
ITT Educational Services, Inc. (a) 7,000 254,625
1,057,125
LEASING & RENTAL - 0.3%
Oxford Resources Corp. Class A (a) 60,000 1,530,000
PRINTING - 0.1%
Valassis Communications, Inc. 30,000 540,000
SERVICES - 1.4%
ABR Information Services, Inc. (a) 14,000 969,500
CFI Proservices, Inc. (a) 26,700 520,650
Day Runner, Inc. (a) 46,000 1,288,000
Interim Services, Inc. (a) 59,600 2,384,000
Lawyers Title Corp. 73,400 1,293,675
Robert Half International, Inc. (a) 11,000 441,375
Seattle FilmWorks, Inc. (a) 29,000 551,000
Staffmark, Inc. (a) 8,800 114,400
7,562,600
TOTAL SERVICES 10,689,725
TECHNOLOGY - 8.9%
COMMUNICATIONS EQUIPMENT - 2.8%
Brooktrout Technology, Inc. (a) 51,000 1,644,750
Davox Corp. (a) 40,000 1,440,000
Dynatech Corp. (a) 60,000 2,966,250
ITI Technologies, Inc. (a) 42,000 1,207,500
Jabil Circuit, Inc. 75,000 1,800,000
Periphonics Corp. (a) 140,600 2,495,650
Teltrend, Inc. (a) 40,000 1,320,000
Xircom, Inc. (a) 106,000 2,146,500
15,020,650
COMPUTER SERVICES & SOFTWARE - 1.4%
Award Software International, Inc. 50,000 350,000
CACI International, Inc. Class A 30,000 519,375
Inacom Corp. (a) 120,000 3,795,000
Intersolv, Inc. 151,300 1,229,313
MDL Information Systems, Inc. (a) 30,000 461,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Quickturn Design Systems, Inc. (a) 19,000 $ 277,875
SPSS, Inc. (a) 28,200 877,725
TALX Corp. 2,300 16,388
7,526,926
COMPUTERS & OFFICE EQUIPMENT - 1.0%
Comverse Technology, Inc. 60,000 2,100,000
Encad, Inc. 17,700 725,700
Ingram Micro, Inc. Class A 1,000 18,000
Insight Enterprises, Inc. 42,000 1,428,000
Microtouch Systems, Inc. (a) 58,000 1,051,250
5,322,950
ELECTRONIC INSTRUMENTS - 0.2%
Fluke Corp. 33,000 1,320,000
ELECTRONICS - 3.5%
Chips & Technologies, Inc. (a) 130,700 2,597,663
Digital Microwave Corp. (a) 91,800 2,099,925
Esterline Technologies Corp. 30,500 712,938
Hadco Corp. (a) 80,000 2,430,000
Photronics, Inc. (a) 36,500 985,500
Rexel, Inc. (a) 141,000 2,044,500
Sanmina Corp. (a) 175,000 8,006,250
18,876,776
TOTAL TECHNOLOGY 48,067,302
TRANSPORTATION - 1.2%
SHIPPING - 0.4%
Kirby Corp. (a) 103,000 2,008,500
TRUCKING & FREIGHT - 0.8%
Expeditors International of Washington, Inc. 65,000 2,721,875
Swift Transportation Co., Inc. (a) 74,000 1,683,500
4,405,375
TOTAL TRANSPORTATION 6,413,875
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - 3.1%
ELECTRIC UTILITY - 0.9%
CILCORP, Inc. 27,000 $ 985,500
Central Louisiana Electric Co., Inc. 58,000 1,573,250
Orange & Rockland Utilities, Inc. 31,000 1,088,875
WPS Resources Corp. 46,000 1,368,500
5,016,125
GAS - 2.0%
Aquila Gas Pipeline Corp. 24,700 358,150
Eastern Enterprises Co. 76,000 2,926,000
MDU Resources Group, Inc. 57,800 1,293,275
Northwest Natural Gas Co. 31,500 799,313
ONEOK, Inc. 77,000 2,069,375
Southwest Gas Corp. 58,000 1,109,250
Tejas Gas Corp. 3,800 154,375
Washington Energy Co. 50,000 962,500
WICOR, Inc. 35,000 1,246,875
10,919,113
TELEPHONE SERVICES - 0.2%
Smartalk Teleservices, Inc. 8,000 120,000
Viatel, Inc. 50,000 600,000
720,000
WATER - 0.0%
Philadelphia Suburban Corp. 5,100 86,700
TOTAL UTILITIES 16,741,938
TOTAL COMMON STOCKS
(Cost $397,837,058) 458,390,153
CASH EQUIVALENTS - 15.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.54%, dated
10/31/96 due 11/1/96 $ 83,993,924 83,981,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $481,818,058) $ 542,371,153
LEGEND
1. Non-income producing
INCOME TAX INFORMATION
At October 31, 1996 the aggregate cost of investment securities for income
tax purposes was $481,883,808. Net unrealized appreciation aggregated
$60,487,345 of which $73,180,176 related to appreciated investment
securities and $12,692,831 related to depreciated investment securities.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS OCTOBER 31, 1996 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 542,371,153
agreements of $83,981,000) (cost $481,818,058) -
See accompanying schedule

Receivable for investments sold 19,319,695

Receivable for fund shares sold 687,103

Dividends receivable 248,942

Redemption fees receivable 314

Other receivables 304,903

TOTAL ASSETS 562,932,110

LIABILITIES

Payable to custodian bank $ 50,044

Payable for investments purchased 35,551,350

Payable for fund shares redeemed 2,204,027

Accrued management fee 254,641

Other payables and accrued expenses 215,976

TOTAL LIABILITIES 38,276,038

NET ASSETS $ 524,656,072

Net Assets consist of:

Paid in capital $ 468,568,610

Undistributed net investment income 746,198

Accumulated undistributed net realized gain (loss) on (5,211,831)
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 60,553,095
investments

NET ASSETS, for 40,990,197 shares outstanding $ 524,656,072

NET ASSET VALUE and redemption price per share $12.80
($524,656,072 (divided by) 40,990,197 shares)

Maximum offering price per share (100/97.00 of $12.80) $13.20

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)

INVESTMENT INCOME $ 1,266,596
Dividends

Interest 2,101,725

TOTAL INCOME 3,368,321

EXPENSES

Management fee $ 1,936,899
Basic fee

Performance adjustment (178,552)

Transfer agent fees 950,329

Accounting fees and expenses 166,187

Non-interested trustees' compensation 1,171

Custodian fees and expenses 31,069

Registration fees 33,402

Audit 17,547

Legal 4,548

Miscellaneous 1,267

Total expenses before reductions 2,963,867

Expense reductions (136,190) 2,827,677

NET INVESTMENT INCOME 540,644

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:

Investment securities (8,122,952)

Foreign currency transactions 17

Futures contracts 3,195,882 (4,927,053)

Change in net unrealized appreciation (depreciation) on (26,632,756)
investment securities

NET GAIN (LOSS) (31,559,809)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (31,019,165)
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED APRIL 30,
OCTOBER 31, 1996 1996
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 540,644 $ 1,921,992
Net investment income

Net realized gain (loss) (4,927,053) 103,781,965

Change in net unrealized appreciation (depreciation) (26,632,756) 27,853,163

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (31,019,165) 133,557,120
FROM OPERATIONS

Distributions to shareholders (465,940) (2,767,732)
From net investment income

From net realized gain (23,807,837) (29,041,972)

TOTAL DISTRIBUTIONS (24,273,777) (31,809,704)

Share transactions 225,862,402 797,374,193
Net proceeds from sales of shares

Reinvestment of distributions 24,127,349 31,586,673

Cost of shares redeemed (225,294,744) (938,938,514)

Redemption fees 680,851 67,458

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 25,375,858 (109,910,190)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS (29,917,084) (8,162,774)

NET ASSETS

Beginning of period 554,573,156 562,735,930

End of period (including undistributed net investment $ 524,656,072 $ 554,573,156
income of $746,198 and $1,263,137, respectively)

OTHER INFORMATION
Shares

Sold 16,618,312 60,870,576

Issued in reinvestment of distributions 1,776,682 2,512,301

Redeemed (17,340,056) (74,948,283)

Net increase (decrease) 1,054,938 (11,565,406)

</TABLE>

FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED APRIL 30, JUNE 28, 1993
ENDED OCTOBER (COMMENCEMENT
31, 1996 OF OPERATIONS) TO

SELECTED PER-SHARE DATA (UNAUDITED) 1996 1995 APRIL 30, 1994

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net asset value, beginning $ 13.89 $ 10.93 $ 10.61 $ 10.00
of period

Income from Investment
Operations

Net investment income .01 F .07 .05 .02

Net realized and unrealized (.60) 3.74 .28 .65
gain (loss)

Total from investment (.59) 3.81 .33 .67
operations

Less Distributions

From net investment income (.01) (.08) (.01) -

In excess of net investment - - - (.02)
income

From net realized gain (.51) (.77) - -

In excess of net realized gain - - - (.04)

Total distributions (.52) (.85) (.01) (.06)

Redemption fees added to .02 - - -
paid in capital

Net asset value, end of period $ 12.80 $ 13.89 $ 10.93 $ 10.61

TOTAL RETURN B, C (4.32)% 35.72% 3.12% 6.70%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 524,656 $ 554,573 $ 562,736 $ 661,804
(000 omitted)

Ratio of expenses to average .98% A 1.01% .97% 1.20% A
net assets

Ratio of expenses to average net .94% A, .99% D .90% D 1.18% A,
assets after expense D D
reductions

Ratio of net investment income .18% A .39% .40% .03% A
to average net assets

Portfolio turnover rate 212% A 192% 182% 210% A

Average commission rate E $ .0351

</TABLE>

A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Small Cap Stock Fund (the fund) is a fund of Fidelity Commonwealth
Trust (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), 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 permit management to make certain estimates and assumptions at the
date of the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an exchange)
are valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange
rates on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Investment income
is recorded net of foreign
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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 between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for litigation
proceeds, futures and options transactions, foreign currency transactions,
passive foreign investment companies (PFIC), partnerships, capital loss
carryforwards, 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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
REDEMPTION FEES. Shares held in the fund less than 90 days are subject to a
redemption fee equal to .75% of the proceeds of the redeemed shares. The
fee, which is retained by the fund, is accounted for as an addition to paid
in capital.
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 securities. Losses may
arise from changes in the value of the foreign currency or if the
counterparties do not perform under the contracts' terms. The U.S. dollar
value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
trading accounts. These balances are invested in one or more repurchase
agreements that mature in 60 days or less from the date of purchase for
U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
FUTURES CONTRACTS AND OPTIONS. The fund generally uses futures contracts
and options to manage its exposure to the stock market and to fluctuations
in interest rates and currency values. Buying futures, writing puts, and
buying calls tend to increase the fund's exposure to the underlying
instrument. Selling futures, buying puts, and writing calls tend to
decrease the fund's exposure to the underlying instrument, or hedge other
fund investments. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $576,349,730 and $550,872,618, respectively.
The market value of futures contracts opened and closed during the period
amounted to $283,740,362 and $286,936,244, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2500% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .35%. The
basic fee is subject to a performance
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
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 .58% of average net assets after the performance adjustment.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC), an
affiliate of FMR and the general distributor of the fund, received sales
charges of $346,536 on sales of shares of the fund.
TRANSFER AGENT FEES. Fidelity Service Co. (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
.32% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $51,830 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$121,349 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $6,167 and $8,674,
respectively, under these arrangements.
MANAGING YOUR INVESTMENTS

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity Management & Research
(U.K.) Inc., London, England
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Bradford Lewis, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export Fund
Fidelity Fifty Fund
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-5555
(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)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
* INDEPENDENT TRUSTEES
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)FIDELITY

MARKET INDEX
FUND
SEMIANNUAL REPORT
OCTOBER 31, 1996
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 29 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 33 Notes to the financial statements.

DISTRIBUTIONS 37

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. A fund's total
return includes changes in share price, plus reinvestment of any dividends
(or income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). If Fidelity had not reimbursed
certain expenses, the past five years and life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND

Market Index 8.89% 23.74% 102.64% 149.61%

S&P 500(registered trademark) 9.08% 24.10% 106.02% 153.00%

S&P 500 Index Objective Funds 8.85% 23.55% 101.32% n/a
Average

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
since the fund started on March 6, 1990. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Standard & Poor's 500 Index - a widely recognized,
unmanaged index of common stocks. To measure how the fund's performance
stacked up against its peers, you can compare it to the S&P 500 index
objective funds average, which reflects the performance of 47 mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc. over
the past six months. Both benchmarks include reinvested dividends and
capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Market Index 23.74% 15.17% 14.72%

S&P 500 24.10% 15.55% 14.96%

S&P 500 Index Objective Funds Average 23.55% 15.02% n/a

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.

$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19961031 19961107 142033 S00000000000001
Market Index Fund SP Standard & Poor 500
00317 SP001
1990/03/06 10000.00 10000.00
1990/03/31 10080.00 10077.26
1990/04/30 9832.00 9825.33
1990/05/31 10828.00 10783.30
1990/06/30 10759.05 10709.97
1990/07/31 10726.82 10675.70
1990/08/31 9755.68 9710.62
1990/09/30 9278.83 9237.71
1990/10/31 9246.32 9197.99
1990/11/30 9843.77 9792.18
1990/12/31 10104.76 10065.38
1991/01/31 10552.31 10504.23
1991/02/28 11307.81 11255.28
1991/03/31 11576.40 11527.66
1991/04/30 11605.36 11555.33
1991/05/31 12101.66 12054.52
1991/06/30 11541.33 11502.42
1991/07/31 12083.37 12038.43
1991/08/31 12362.73 12323.74
1991/09/30 12158.48 12117.94
1991/10/31 12318.02 12280.32
1991/11/30 11818.41 11785.42
1991/12/31 13169.28 13133.67
1992/01/31 12923.44 12889.39
1992/02/29 13084.50 13056.95
1992/03/31 12824.48 12802.34
1992/04/30 13199.92 13178.73
1992/05/31 13259.64 13243.30
1992/06/30 13062.40 13045.98
1992/07/31 13590.56 13579.56
1992/08/31 13311.45 13301.18
1992/09/30 13465.08 13458.13
1992/10/31 13503.97 13505.23
1992/11/30 13957.71 13965.76
1992/12/31 14131.46 14137.54
1993/01/31 14240.20 14256.30
1993/02/28 14431.57 14450.18
1993/03/31 14731.95 14755.08
1993/04/30 14368.79 14398.01
1993/05/31 14749.45 14783.88
1993/06/30 14784.85 14826.75
1993/07/31 14718.47 14767.44
1993/08/31 15267.21 15327.13
1993/09/30 15147.31 15209.11
1993/10/31 15458.89 15523.94
1993/11/30 15307.55 15376.46
1993/12/31 15490.51 15562.52
1994/01/31 16009.85 16091.64
1994/02/28 15571.10 15655.56
1994/03/31 14886.68 14972.97
1994/04/30 15080.31 15164.63
1994/05/31 15323.46 15413.33
1994/06/30 14942.26 15035.70
1994/07/31 15431.43 15528.87
1994/08/31 16056.48 16165.56
1994/09/30 15661.49 15769.50
1994/10/31 16007.70 16124.31
1994/11/30 15420.05 15537.07
1994/12/31 15649.20 15767.48
1995/01/31 16052.46 16176.33
1995/02/28 16671.10 16806.72
1995/03/31 17154.37 17302.69
1995/04/30 17656.61 17812.26
1995/05/31 18352.37 18524.21
1995/06/30 18766.45 18954.53
1995/07/31 19389.52 19583.06
1995/08/31 19436.02 19632.21
1995/09/30 20247.40 20460.69
1995/10/31 20172.60 20387.65
1995/11/30 21046.82 21282.67
1995/12/31 21439.08 21692.57
1996/01/31 22172.32 22430.99
1996/02/29 22371.00 22638.92
1996/03/31 22600.27 22856.93
1996/04/30 22923.54 23193.85
1996/05/31 23503.52 23792.01
1996/06/30 23597.08 23882.66
1996/07/31 22548.32 22827.53
1996/08/31 23009.58 23308.96
1996/09/30 24292.52 24620.79
1996/10/31 24960.81 25299.83
IMATRL PRASUN SHR__CHT 19961031 19961107 142035 R00000000000083

$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Market Index Fund on March 6, 1990, when the fund
started. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $24,961 - a 149.61% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends reinvested, the same $10,000 investment would have
grown to $25,300 - a 153.00% increase.
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
growth in the long run and
volatility in the short run. 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.
(checkmark)

FUND TALK: THE MANAGER'S OVERVIEW

An interview with Jennifer Farrelly, Portfolio Manager of Fidelity Market
Index Fund
Q. HOW DID THE FUND PERFORM, JEN?
A. For the six months that ended October 31, 1996, the fund had a total
return of 8.89%. Additionally, for the past year, the fund returned 23.74%.
These returns compare with the 9.08% return of the Standard & Poor's 500
Index for the past six months and the 24.10% return of the index for the
one-year period. Of course, the fund's total return is slightly lower than
the index due to management expenses. Additionally, the S&P 500 index
objective funds average, as tracked by Lipper Analytical Services, was
8.85% for the past six months and 23.55% for the year.
Q. WHAT HAVE BEEN SOME OF THE MAJOR DEVELOPMENTS IN THE MARKET OVER THE
PAST SIX MONTHS?
A. Well, the biggest development was that investors received conclusive
evidence that the economy was slowing. The result was the Dow Jones
Industrial Average surged above 6000 for the first time and the S&P 500
moved to record levels, bouncing back from a brief correction in July.
Investors took heart in the fact that a slower economy - as demonstrated by
data such as monthly employment, new unemployment claims, consumer
spending, consumer sentiment and third quarter GDP - would not spawn a rise
in interest rates and, thus, crimp corporate profits. Additionally, as
investors pored over economic data during the period, the Federal Reserve
Board took no action on short-term interest rates at its September meeting.
More important, from the market's perspective was the fact that wage
pressure is not yet an issue for employers. The U.S. Labor Department said
that employment costs rose 0.6% in the third quarter, down from 0.8% in the
second quarter. Additionally, unemployment in October remained steady at
5.2%.
Q. WERE INVESTORS CONCERNED ABOUT CORPORATE EARNINGS?
A. Absolutely. The strong dollar, combined with a tight labor market, the
potential for rising wages, a slower economy and pricing pressure, had
investors concerned throughout the period that earnings were going to be
lower. A strong dollar is significant because it raises the costs of
American goods sold abroad. Additionally, if companies are not able to pass
on higher employment costs in the form of price increases, then their
profits will suffer. As it turned out, these concerns were unfounded, as
third quarter earnings came in stronger than expected. According to Dow
Jones, average corporate net income rose 27% on a year-over-year basis
after a 19% increase in the second quarter and flat earnings at the
beginning of the year.
Q. WHY HAVE LARGE-CAPITALIZATION STOCKS OUTPERFORMED SMALL-CAPITALIZATION
STOCKS?
A. What we've witnessed this year is what investors call a "flight to
quality," where large-capitalization companies are sought because of their
stable earnings growth and liquidity, meaning they are easier to buy and
sell. As the market climbs higher and higher, it becomes more difficult for
portfolio managers to pick stocks that will outperform. Many managers,
therefore, have moved to larger companies with established track records as
a way of keeping up with the market. Some large-cap stocks are also
considered "defensive" because they are not influenced by the vagaries of
the economy. In the past few months, investors sought defensive stocks -
such as food or personal care companies - as signs of a slowing economy
emerged.
Q. LET'S LOOK AT SOME OF THE MAJOR SECTORS OF THE MARKET. WHAT HAPPENED IN
TECHNOLOGY?
A. Memory chip demand recovered after hitting an all time low in March. In
addition, personal computer sales came in stronger than expected, which
buoyed many companies with products related to PCs. As an example,
chip-maker Intel reported a 41% year-over-year earnings gain for the third
quarter. Microsoft also continued its dominance of the software business,
and IBM had better earnings than the Street anticipated.
Q. HOW ABOUT SOME OF THE CYCLICAL INDUSTRIES SUCH AS AUTOS?
A. Auto sales continued to be robust, contrary to what many analysts had
expected. Much of the uptick in demand is a result of the popularity of
minivans and sport-utility vehicles, which are considered high-profit
models. Therefore, production is running at high levels at the Big Three
auto makers and, as of the third quarter, earnings were strong. One concern
for General Motors, however, was a 20-day strike at GM in Canada. Costs
associated with the strike have already had a negative effect on the auto
maker's earnings.
Q. WHAT'S BEEN THE STORY WITH FINANCE STOCKS?
A. The finance sector has performed pretty well for some time. We've seen a
fairly favorable interest rate environment, a strong stock market, good
earnings and solid across-the-board demand for financial services.
Additionally, the banking industry has improved earnings through
consolidation, balance sheet restructuring and cost cutting.
Q. WAS THERE ANY DOWNSIDE TO THE CONTINUALLY STRONG PERFORMANCE OF THE
STOCK MARKET?
A. Yes. With investors so fearful about future earnings, companies
reporting earnings below Street expectations or those that didn't beat
expectations by enough, saw their stock prices punished by the market. One
prime example was AT&T, which lost 10% of its value when it announced its
earnings would be adversely affected by a slowdown in the consumer
long-distance market. As for sectors, some basic industries such as paper
and commodity chemicals were hurt by falling prices and increased costs.
Q. WHAT DO YOU SEE GOING FORWARD?
A. The current evidence of a slowing economy has increased investors'
confidence in the stock market. Despite this development, I think that
investors should understand there is still a great amount of uncertainty
given the stock market's high valuations and the questionable strength of
future corporate earnings.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.

FUND FACTS
GOAL: to provide returns that
correspond to those of the
S&P 500 Index
FUND NUMBER: 317
TRADING SYMBOL: FSMKX
START DATE: March 6, 1990
SIZE: as of October 31,1996,
more than $1.3 billion
MANAGER: Jennifer Farrelly,
since 1994; manager,
Fidelity U.S. Equity Index
Fund and VIPII: Index 500
Portfolio, since 1994; joined
Fidelity in 1988
(checkmark)
JENNIFER FARRELLY ON CHANGES TO
THE S&P 500:
"The S&P 500 is an index of
500 stocks chosen to be
representative of the broader
market. Periodically, companies
will be added or deleted from the
index. Usually, these changes
are based on events such as
acquisitions, spin-offs or shifts
in asset size."
Some changes to the index in
the past six months involving
some well-known companies
include:
(solid bullet) May 30: Tupperware Corp.
is added to the housewares
segment of the index.
(solid bullet) July 18: Following its
merger with Aetna Life &
Casualty, U.S. Healthcare is
removed from the S&P 500.
The company is now known
as Aetna, Inc.
(solid bullet) August 15: Dial Corp. is
removed following the spin-off of
its consumer products division
into a new company called
The Dial Corporation.
(solid bullet) September 30: Lucent
Technologies - formerly a
unit of AT&T - is added to the
index.
INVESTMENT CHANGES

TOP TEN STOCKS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

General Electric Co. 2.9 2.6

Coca-Cola Co. (The) 2.3 2.0

Exxon Corp. 2.0 2.1

Intel Corp. 1.6 1.1

Merck & Co., Inc. 1.6 1.5

Royal Dutch Petroleum Co. ADR 1.6 1.5

Microsoft Corp. 1.5 1.3

Philip Morris Companies, Inc. 1.4 1.5

International Business Machines 1.2 1.2
Corp.

Procter & Gamble Co. 1.2 1.1

TOP TEN MARKET SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO

Finance 14.2 13.2

Technology 12.4 11.7

Nondurables 10.9 10.8

Health 10.1 10.0

Utilities 9.8 11.7

Energy 8.9 8.8

Basic Industries 5.9 6.8

Industrial Machinery & Equipment 5.4 5.4

Retail & Wholesale 4.5 4.7

Media & Leisure 4.0 4.3

ASSET ALLOCATION
TO MATCH THE STANDARD & POOR'S 500 INDEX, FIDELITY MARKET INDEX FUND SEEKS
100% INVESTMENT EXPOSURE TO STOCKS AT ALL TIMES.
INVESTMENTS OCTOBER 31, 1996 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 95.9%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.7%
AEROSPACE & DEFENSE - 1.4%
Boeing Co. 86,280 $ 8,229
Lockheed Martin Corp. 49,668 4,456
McDonnell Douglas Corp. 53,400 2,910
Northrop Grumman Corp. 14,200 1,147
Rockwell International Corp. 54,200 2,981
19,723
DEFENSE ELECTRONICS - 0.2%
Raytheon Co. 58,640 2,888
SHIP BUILDING & REPAIR - 0.1%
General Dynamics Corp. 15,700 1,077
TOTAL AEROSPACE & DEFENSE 23,688
BASIC INDUSTRIES - 5.9%
CHEMICALS & PLASTICS - 3.0%
Air Products & Chemicals, Inc. 27,720 1,663
Avery Dennison Corp. 12,900 850
Dow Chemical Co. 60,870 4,733
du Pont (E.I.) de Nemours & Co. 138,930 12,885
Eastman Chemical Co. 19,342 1,020
Engelhard Corp. 35,737 652
FMC Corp. (a) 9,100 670
Goodrich (B.F.) Co. 13,220 560
Grace (W.R.) & Co. 21,900 1,161
Great Lakes Chemical Corp. 15,700 818
Hercules, Inc. 26,620 1,268
Monsanto Co. 145,200 5,754
Morton International, Inc. 35,200 1,386
Nalco Chemical Co. 16,580 603
PPG Industries, Inc. 46,300 2,639
Praxair, Inc. 38,500 1,704
Raychem Corp. 11,000 859
Rohm & Haas Co. 16,200 1,156
Union Carbide Corp. 32,200 1,373
41,754
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - 0.3%
Allegheny Teledyne, Inc. 43,025 $ 920
Armco, Inc. (a) 26,400 99
Bethlehem Steel Corp. (a) 27,400 223
Inland Steel Industries, Inc. 12,000 194
Nucor Corp. 21,800 1,032
USX-U.S. Steel Group 20,860 568
Worthington Industries, Inc. 22,425 465
3,501
METALS & MINING - 0.7%
Alcan Aluminium Ltd. 56,103 1,844
Aluminum Co. of America 43,220 2,534
ASARCO, Inc. 10,500 276
Cyprus Amax Minerals Co. 23,050 522
Freeport-McMoRan Copper & Gold, Inc. Class B 48,500 1,473
Inco Ltd. 41,758 1,321
Phelps Dodge Corp. 16,340 1,027
Reynolds Metals Co. 15,840 891
9,888
PACKAGING & CONTAINERS - 0.4%
Ball Corp. 7,555 182
Bemis Co., Inc. 13,100 459
Corning, Inc. 56,940 2,206
Crown Cork & Seal Co., Inc. 31,680 1,521
Tupperware Corp. 15,300 786
5,154
PAPER & FOREST PRODUCTS - 1.5%
Boise Cascade Corp. 12,100 375
Champion International Corp. 23,600 1,027
Georgia-Pacific Corp. 22,700 1,703
International Paper Co. 74,400 3,181
James River Corp. of Virginia 21,000 662
Kimberly-Clark Corp. 69,765 6,504
Louisiana-Pacific Corp. 26,860 561
Mead Corp. 12,900 732
Potlatch Corp. 7,240 310
Stone Container Corp. 24,514 374
Temple-Inland, Inc. 13,800 707
Union Camp Corp. 16,900 824
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Westvaco Corp. 25,150 $ 717
Weyerhaeuser Co. 49,200 2,257
Willamette Industries, Inc. 13,600 918
20,852
TOTAL BASIC INDUSTRIES 81,149
CONGLOMERATES - 1.0%
AlliedSignal, Inc. 70,000 4,586
Crane Co. 7,500 349
Harris Corp. 9,700 607
ITT Industries, Inc. 29,270 681
Textron, Inc. 19,900 1,766
Tyco International Ltd. 37,880 1,880
United Technologies Corp. 30,270 3,897
Whitman Corp. 26,000 631
14,397
CONSTRUCTION & REAL ESTATE - 0.4%
BUILDING MATERIALS - 0.3%
Armstrong World Industries, Inc. 9,110 608
Masco Corp. 39,700 1,246
Owens-Corning 12,700 492
Sherwin-Williams Co. 21,340 1,070
3,416
CONSTRUCTION - 0.0%
Centex Corp. 6,960 210
Kaufman & Broad Home Corp. 9,600 115
Pulte Corp. 6,000 159
484
ENGINEERING - 0.1%
EG & G, Inc. 11,820 208
Fluor Corp. 20,630 1,351
Foster Wheeler Corp. 10,000 410
1,969
TOTAL CONSTRUCTION & REAL ESTATE 5,869
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 4.0%
AUTOS, TIRES, & ACCESSORIES - 2.6%
Chrysler Corp. 180,600 $ 6,073
Cooper Tire & Rubber Co. 20,800 408
Cummins Engine Co., Inc. 9,900 412
Dana Corp. 25,300 750
Eaton Corp. 19,180 1,146
Echlin, Inc. 15,300 499
Ford Motor Co. 293,100 9,159
General Motors Corp. 187,356 10,093
Genuine Parts Co. 30,125 1,318
Goodyear Tire & Rubber Co. 38,400 1,762
Johnson Controls, Inc. 10,200 745
NACCO Industries, Inc. Class A 2,300 106
Navistar International Corp. (a) 18,560 172
PACCAR, Inc. 9,538 532
Pep Boys-Manny, Moe & Jack 15,500 543
Snap-on Tools Corp. 15,050 483
TRW, Inc. 16,060 1,453
35,654
CONSUMER DURABLES - 0.6%
Minnesota Mining & Manufacturing Co. 103,920 7,963
CONSUMER ELECTRONICS - 0.2%
Black & Decker Corp. 21,800 815
Maytag Co. 25,100 499
Newell Co. 39,300 1,115
Whirlpool Corp. 18,500 874
3,303
TEXTILES & APPAREL - 0.6%
Fruit of the Loom, Inc. Class A (a) 18,800 684
Liz Claiborne, Inc. 18,200 769
NIKE, Inc. Class B 70,920 4,175
Reebok International Ltd. 13,900 497
Russell Corp. 9,600 272
Springs Industries, Inc. Class A 4,900 221
Stride Rite Corp. 12,200 101
VF Corp. 15,800 1,033
7,752
TOTAL DURABLES 54,672
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 8.9%
ENERGY SERVICES - 0.9%
Baker Hughes, Inc. 35,900 $ 1,279
Dresser Industries, Inc. 42,140 1,385
Halliburton Co. 30,880 1,749
Helmerich & Payne, Inc. 6,100 330
McDermott International, Inc. 13,500 240
Rowan Companies, Inc. (a) 21,000 470
Schlumberger Ltd. 60,780 6,024
Western Atlas, Inc. (a) 13,140 912
12,389
OIL & GAS - 8.0%
Amerada Hess Corp. 23,140 1,281
Amoco Corp. 123,110 9,326
Ashland, Inc. 16,030 681
Atlantic Richfield Co. 39,920 5,289
Burlington Resources, Inc. 27,800 1,400
Chevron Corp. 161,780 10,637
Coastal Corp. (The) 26,100 1,122
Exxon Corp. 307,760 27,275
Kerr-McGee Corp. 12,260 769
Louisiana Land & Exploration Co. 8,540 486
Mobil Corp. 97,650 11,401
Occidental Petroleum Corp. 80,100 1,962
Oryx Energy Co. (a) 25,860 498
Pennzoil Co. 11,430 583
Phillips Petroleum Co. 65,100 2,669
Royal Dutch Petroleum Co. ADR 132,720 21,949
Santa Fe Energy Resources, Inc. (a) 22,366 319
Sun Co., Inc. 18,280 409
Texaco, Inc. 65,540 6,661
USX-Marathon Group 71,300 1,560
Union Pacific Resources Group, Inc. 61,663 1,696
Unocal Corp. 61,604 2,256
110,229
TOTAL ENERGY 122,618
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 14.2%
BANKS - 7.3%
Banc One Corp. 107,814 $ 4,569
Bank of Boston Corp. 37,799 2,419
Bank of New York Co., Inc. 95,500 3,163
BankAmerica Corp. 89,064 8,149
Bankers Trust New York Corp. 19,950 1,686
Barnett Banks, Inc. 47,700 1,819
Boatmen's Bancshares, Inc. 38,900 2,363
Chase Manhattan Corp. 108,148 9,274
Citicorp 119,169 11,797
Comerica, Inc. 28,400 1,509
CoreStates Financial Corp. 55,100 2,679
Fifth Third Bancorp 26,300 1,647
First Bank System, Inc. 34,900 2,303
First Union Corp. 68,264 4,966
Fleet Financial Group, Inc. 64,980 3,241
KeyCorp. 57,155 2,665
Mellon Bank Corp. 32,313 2,104
Morgan (J.P.) & Co., Inc. 46,119 3,984
National City Corp. 55,044 2,388
NationsBank Corp. 72,050 6,791
Norwest Corp. 91,900 4,032
PNC Financial Corp. 84,360 3,058
Republic New York Corp. 13,800 1,052
SunTrust Banks, Inc. 55,200 2,574
U.S. Bancorp 38,350 1,534
Wachovia Corp. 41,400 2,225
Wells Fargo & Co. 23,374 6,244
100,235
CREDIT & OTHER FINANCE - 1.3%
American Express Co. 89,472 4,207
Beneficial Corp. 13,200 772
Dean Witter, Discover & Co. 40,618 2,391
First Chicago NBD Corp. 78,360 3,996
Green Tree Financial Corp. 34,100 1,351
Household International, Inc. 23,929 2,118
MBNA Corp. 55,100 2,080
Transamerica Corp. 16,322 1,238
18,153
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
FEDERAL SPONSORED CREDIT - 1.1%
Federal Home Loan Mortgage Corporation 44,200 $ 4,464
Federal National Mortgage Association 270,480 10,583
15,047
INSURANCE - 3.9%
Aetna, Inc. 37,230 2,490
Alexander & Alexander Services, Inc. 11,100 169
Allstate Corp. 110,283 6,190
American General Corp. 50,620 1,886
American International Group, Inc. 116,262 12,629
Aon Corp. 26,800 1,548
CIGNA Corp. 18,920 2,469
Chubb Corp. (The) 43,260 2,163
General Re Corp. 20,540 3,025
ITT Hartford Group, Inc. 28,970 1,825
Jefferson Pilot Corp. 17,722 1,008
Lincoln National Corp. 25,760 1,249
Loews Corp. 28,600 2,363
MGIC Investment Corp. 14,500 995
Marsh & McLennan Companies, Inc. 17,960 1,870
Providian Corp. 23,220 1,091
SAFECO Corp. 31,320 1,182
St. Paul Companies, Inc. (The) 20,900 1,136
Torchmark Corp. 17,720 857
Travelers, Inc. (The) 118,931 6,452
UNUM Corp. 18,100 1,138
USF&G Corp. 29,100 553
USLIFE Corp. 8,570 268
54,556
SAVINGS & LOANS - 0.2%
Ahmanson (H.F.) & Co. 26,500 831
Golden West Financial Corp. 14,200 922
Great Western Financial Corp. 33,938 950
2,703
SECURITIES INDUSTRY - 0.4%
Merrill Lynch & Co., Inc. 41,700 2,930
Morgan Stanley Group, Inc. 37,700 1,894
Salomon, Inc. 26,000 1,173
5,997
TOTAL FINANCE 196,691
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 10.1%
DRUGS & PHARMACEUTICALS - 6.4%
Allergan, Inc. 16,100 $ 491
ALZA Corp. Class A (a) 21,000 543
American Home Products Corp. 157,520 9,648
Amgen, Inc. (a) 65,500 4,016
Bristol-Myers Squibb Co. 124,190 13,133
Lilly (Eli) & Co. 135,408 9,546
Merck & Co., Inc. 301,490 22,347
Pharmacia & Upjohn, Inc. 126,042 4,538
Pfizer, Inc. 159,080 13,164
Schering-Plough Corp. 91,540 5,859
Sigma Aldrich Corp. 12,300 723
Warner-Lambert Co. 67,280 4,281
88,289
MEDICAL EQUIPMENT & SUPPLIES - 3.0%
Abbott Laboratories 193,320 9,787
Bard (C.R.), Inc. 14,200 401
Bausch & Lomb, Inc. 13,940 470
Baxter International, Inc. 67,600 2,814
Becton, Dickinson & Co. 30,800 1,340
Biomet, Inc. 28,600 461
Boston Scientific Corp. (a) 43,900 2,387
Johnson & Johnson 330,240 16,264
Mallinckrodt, Inc. 18,330 797
Medtronic, Inc. 59,400 3,824
Millipore Corp. 10,800 378
Pall Corp. 28,666 735
St. Jude Medical, Inc. (a) 19,950 788
U.S. Surgical Corp. 15,400 645
41,091
MEDICAL FACILITIES MANAGEMENT - 0.7%
Beverly Enterprises, Inc. (a) 24,500 303
Columbia/HCA Healthcare Corp. 166,080 5,938
Humana, Inc. (a) 40,200 734
Manor Care, Inc. 15,650 614
Tenet Healthcare Corp. (a) 53,500 1,117
United HealthCare Corp. 45,500 1,723
10,429
TOTAL HEALTH 139,809
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HOLDING COMPANIES - 0.3%
CINergy Corp. 39,017 $ 1,292
Norfolk Southern Corp. 31,140 2,776
4,068
INDUSTRIAL MACHINERY & EQUIPMENT - 5.4%
ELECTRICAL EQUIPMENT - 3.6%
Emerson Electric Co. 55,470 4,937
General Electric Co. 409,000 39,571
General Instrument Corp. (a) 33,900 682
General Signal Corp. 12,260 500
Grainger (W.W.), Inc. 12,700 941
Honeywell, Inc. 31,280 1,943
Scientific-Atlanta, Inc. 19,100 277
Westinghouse Electric Corp. 104,330 1,787
50,638
INDUSTRIAL MACHINERY & EQUIPMENT - 1.3%
Briggs & Stratton Corp. 7,100 284
Case Corp. 15,900 739
Caterpillar, Inc. 47,860 3,284
Cincinnati Milacron, Inc. 9,800 187
Cooper Industries, Inc. 26,679 1,074
Deere & Co. 64,070 2,675
Dover Corp. 28,120 1,445
Giddings & Lewis, Inc. 8,500 100
Harnischfeger Industries, Inc. 11,600 464
Illinois Tool Works, Inc. 30,260 2,126
Ingersoll-Rand Co. 27,140 1,130
Parker-Hannifin Corp. 18,450 699
Stanley Works 22,100 624
Tenneco, Inc. 42,255 2,092
Timken Co. 7,753 346
TRINOVA Corp. 7,000 230
17,499
POLLUTION CONTROL - 0.5%
Browning-Ferris Industries, Inc. 52,560 1,380
Laidlaw, Inc. Class B 77,600 913
Safety Kleen Corp. 14,325 224
WMX Technologies, Inc. 121,760 4,185
6,702
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 74,839
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 4.0%
BROADCASTING - 0.8%
Comcast Corp. Class A special 57,750 $ 852
TCI Group Class A 161,700 2,011
Time Warner, Inc. 140,944 5,250
Viacom, Inc. Class B (non-vtg.) (a) 88,300 2,881
10,994
ENTERTAINMENT - 0.8%
Disney (Walt) Co. 168,130 11,076
King World Productions, Inc. (a) 9,400 338
11,414
LEISURE DURABLES & TOYS - 0.3%
Brunswick Corp. 24,300 571
Fleetwood Enterprises, Inc. 9,600 324
Hasbro, Inc. 21,450 834
Mattel, Inc. 67,795 1,958
3,687
LODGING & GAMING - 0.5%
Bally Entertainment Corp. 12,700 383
HFS, Inc. (a) 30,600 2,241
Harrah's Entertainment, Inc. (a) 25,450 426
Hilton Hotels Corp. 48,360 1,469
ITT Corp. (a) 29,070 1,221
Marriott International, Inc. 31,800 1,809
7,549
PUBLISHING - 0.9%
American Greetings Corp. Class A 18,460 541
Dow Jones & Co., Inc. 24,100 795
Dun & Bradstreet Corp. 42,220 2,443
Gannett Co., Inc. 34,850 2,643
Harcourt General, Inc. 17,976 894
Knight-Ridder, Inc. 23,660 884
McGraw-Hill, Inc. 24,700 1,158
Meredith Corp. 6,600 332
New York Times Co. (The) Class A 24,300 878
Times Mirror Co. Class A 25,700 1,189
Tribune Co. 15,090 1,234
12,991
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.7%
Darden Restaurants, Inc. 39,020 $ 327
Luby's Cafeterias, Inc. 6,050 127
McDonald's Corp. 173,300 7,690
Ryan's Family Steak Houses, Inc. (a) 12,600 93
Shoney's, Inc. (a) 11,900 88
Wendy's International, Inc. 31,800 656
8,981
TOTAL MEDIA & LEISURE 55,616
NONDURABLES - 10.9%
AGRICULTURE - 0.1%
Pioneer Hi-Bred International, Inc. 20,500 1,376
BEVERAGES - 3.8%
Anheuser-Busch Companies, Inc. 122,940 4,733
Brown-Forman Corp. Class B 17,180 743
Coca-Cola Co. (The) 617,580 31,189
Coors (Adolph) Co. Class B 9,400 183
PepsiCo, Inc. 388,020 11,495
Seagram Co. Ltd. 92,720 3,498
51,841
FOODS - 2.5%
Archer-Daniels-Midland Co. 135,186 2,940
CPC International, Inc. 35,820 2,825
Campbell Soup Co. 58,080 4,648
ConAgra, Inc. 60,150 3,000
General Mills, Inc. 39,320 2,246
Heinz (H.J.) Co. 91,700 3,255
Hershey Foods Corp. 38,020 1,839
Kellogg Co. 52,540 3,336
Quaker Oats Co. 33,500 1,189
Ralston Purina Group 26,180 1,731
Sara Lee Corp. 120,200 4,267
Sysco Corp. 44,940 1,528
Wrigley (Wm.) Jr. Co. 28,880 1,740
34,544
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 2.9%
Alberto Culver Co. Class B 6,800 $ 311
Avon Products, Inc. 32,920 1,786
Clorox Co. 12,860 1,403
Colgate-Palmolive Co. 36,460 3,354
Gillette Co. 110,460 8,257
International Flavors & Fragrances, Inc. 27,350 1,132
Procter & Gamble Co. 169,760 16,807
Rubbermaid, Inc. 37,180 864
Unilever NV ADR 39,570 6,049
39,963
TOBACCO - 1.6%
American Brands, Inc. 42,160 2,013
Philip Morris Companies, Inc. 202,760 18,781
UST, Inc. 46,500 1,343
22,137
TOTAL NONDURABLES 149,861
PRECIOUS METALS - 0.5%
Barrick Gold Corp. 88,400 2,319
Battle Mountain Gold Co. 55,600 424
Echo Bay Mines Ltd. 34,600 271
Homestake Mining Co. 36,300 517
Newmont Mining Corp. 24,738 1,144
Placer Dome, Inc. 59,400 1,427
Santa Fe Pacific Gold Corp. 32,545 386
6,488
RETAIL & WHOLESALE - 4.5%
APPAREL STORES - 0.4%
Charming Shoppes, Inc. (a) 25,700 119
Gap, Inc. 71,060 2,061
Limited, Inc. (The) 67,071 1,232
Melville Corp. 26,260 978
TJX Companies, Inc. 18,000 720
5,110
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
DRUG STORES - 0.2%
Long Drug Stores, Inc. 4,870 $ 219
Rite Aid Corp. 20,700 704
Walgreen Co. 60,940 2,300
3,223
GENERAL MERCHANDISE STORES - 2.5%
Dayton Hudson Corp. 53,650 1,858
Dillard Department Stores, Inc. Class A 28,060 891
Federated Department Stores, Inc. (a) 51,400 1,696
K mart Corp. 120,400 1,174
May Department Stores Co. (The) 61,980 2,936
Mercantile Stores Co., Inc. 9,210 457
Nordstrom, Inc. 20,100 725
Penney (J.C.) Co., Inc. 55,820 2,931
Price/Costco, Inc. (a) 48,495 964
Sears, Roebuck & Co. 96,910 4,688
Wal-Mart Stores, Inc. 568,160 15,127
Woolworth Corp. (a) 32,940 692
34,139
GROCERY STORES - 0.6%
Albertson's, Inc. 62,380 2,144
American Stores Co. 36,080 1,493
Fleming Companies, Inc. 9,286 161
Giant Food, Inc. Class A 14,700 496
Great Atlantic & Pacific Tea Co., Inc. 9,550 287
Kroger Co. (The) (a) 31,200 1,392
Supervalu, Inc. 16,800 500
Winn-Dixie Stores, Inc. 37,540 1,253
7,726
RETAIL & WHOLESALE, MISCELLANEOUS - 0.8%
Circuit City Stores, Inc. 20,300 665
Home Depot, Inc. (The) 118,782 6,503
Lowe's Companies, Inc. 42,560 1,718
Tandy Corp. 14,666 552
Toys "R" Us, Inc. (a) 67,725 2,294
11,732
TOTAL RETAIL & WHOLESALE 61,930
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 0.7%
ADVERTISING - 0.1%
Interpublic Group of Companies, Inc. 20,100 $ 974
LEASING & RENTAL - 0.0%
Ryder Systems, Inc. 20,200 601
PRINTING - 0.3%
Alco Standard Corp. 32,200 1,493
Deluxe Corp. 20,500 669
Donnelley (R.R.) & Sons Co. 37,920 1,152
Harland (John H.) Co. 7,700 240
Moore Corp. Ltd. 24,837 501
4,055
SERVICES - 0.3%
Block (H&R), Inc. 25,680 636
Ecolab, Inc. 16,000 584
Jostens, Inc. 9,500 204
National Service Industries, Inc. 11,700 404
Service Corp. International 58,300 1,661
3,489
TOTAL SERVICES 9,119
TECHNOLOGY - 12.4%
COMMUNICATIONS EQUIPMENT - 2.1%
Andrew Corp. (a) 14,875 725
Cabletron Systems, Inc. (a) 18,700 1,166
Cisco Systems, Inc. (a) 160,300 9,919
DSC Communications Corp. (a) 28,800 400
Lucent Technologies, Inc. 157,650 7,410
Northern Telecom Ltd. 64,100 4,181
Tellabs, Inc. (a) 22,000 1,873
3Com Corp. (a) 41,900 2,833
28,507
COMPUTER SERVICES & SOFTWARE - 3.3%
Autodesk, Inc. 11,440 262
Automatic Data Processing, Inc. 71,720 2,985
CUC International, Inc. (a) 91,375 2,239
Ceridian Corp. (a) 16,900 839
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Computer Associates International, Inc. 90,325 $ 5,340
Computer Sciences Corp. (a) 18,550 1,377
First Data Corp. 55,400 4,418
Microsoft Corp. (a) 148,300 20,354
Novell, Inc. (a) 87,400 808
Oracle Systems Corp. (a) 162,000 6,855
Shared Medical Systems Corp. 5,900 285
45,762
COMPUTERS & OFFICE EQUIPMENT - 3.7%
Amdahl Corp. (a) 29,900 306
Apple Computer, Inc. 30,750 707
Bay Networks, Inc. (a) 46,600 944
Compaq Computer Corp. (a) 66,780 4,650
Data General Corp. (a) 9,800 146
Dell Computer Corp. (a) 22,400 1,823
Digital Equipment Corp. (a) 38,620 1,139
EMC Corp. (a) 57,300 1,504
Hewlett-Packard Co. 253,220 11,173
Intergraph Corp. (a) 11,600 109
International Business Machines Corp. 130,770 16,868
Pitney Bowes, Inc. 37,040 2,070
Seagate Technology (a) 26,200 1,749
Silicon Graphics, Inc. (a) 42,800 792
Sun Microsystems, Inc. (a) 45,700 2,788
Tandem Computers, Inc. (a) 29,100 367
Unisys Corp. (a) 42,900 268
Xerox Corp. 80,550 3,736
51,139
ELECTRONIC INSTRUMENTS - 0.1%
Applied Materials, Inc. (a) 44,400 1,173
Perkin-Elmer Corp. 10,900 585
Tektronix, Inc. 8,200 321
2,079
ELECTRONICS - 2.7%
Advanced Micro Devices, Inc. (a) 33,400 593
AMP, Inc. 54,464 1,845
Intel Corp. 203,660 22,378
LSI Logic Corp. (a) 32,100 851
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Micron Technology, Inc. 51,600 $ 1,309
Motorola, Inc. 146,900 6,757
National Semiconductor Corp. (a) 34,200 658
Texas Instruments, Inc. 47,060 2,265
Thomas & Betts Corp. 9,920 420
37,076
PHOTOGRAPHIC EQUIPMENT - 0.5%
Eastman Kodak Co. 83,470 6,656
Polaroid Corp. 11,240 457
7,113
TOTAL TECHNOLOGY 171,676
TRANSPORTATION - 1.2%
AIR TRANSPORTATION - 0.3%
AMR Corp. (a) 22,470 1,887
Delta Air Lines, Inc. 19,680 1,395
Southwest Airlines Co. 35,800 806
USAir Group, Inc. (a) 15,900 276
4,364
RAILROADS - 0.8%
Burlington Northern Santa Fe Corp. 37,843 3,117
CSX Corp. 52,472 2,263
Conrail, Inc. 20,140 1,916
Union Pacific Corp. 60,440 3,392
10,688
TRUCKING & FREIGHT - 0.1%
Caliber System, Inc. 9,800 165
Consolidated Freightways, Inc. 11,000 264
Federal Express Corp. (a) 14,190 1,143
Yellow Corp. (a) 6,900 90
1,662
TOTAL TRANSPORTATION 16,714
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 9.8%
CELLULAR - 0.2%
AirTouch Communications, Inc. (a) 123,530 $ 3,227
ELECTRIC UTILITY - 2.8%
American Electric Power Co., Inc. 46,500 1,930
Baltimore Gas & Electric Co. 36,650 999
Carolina Power & Light Co. 37,600 1,358
Central & South West Corp. 51,980 1,377
Consolidated Edison Co. of New York, Inc. 58,300 1,705
DTE Energy Co. 35,900 1,081
Dominion Resources, Inc. 44,010 1,661
Duke Power Co. 50,160 2,452
Edison International 108,700 2,147
Entergy Corp. 56,400 1,579
FPL Group, Inc. 45,500 2,093
GPU, Inc. 29,800 980
Houston Industries, Inc. 65,000 1,487
Niagara Mohawk Power Corp. 35,700 303
Northern States Power Co. 16,960 797
Ohio Edison Co. 37,700 787
PECO Energy Co. 55,200 1,394
PP&L Resources, Inc. 40,100 937
Pacific Gas & Electric Co. 103,100 2,424
PacifiCorp. 72,800 1,538
Public Service Enterprise Group, Inc. 60,500 1,626
Southern Co. 166,800 3,690
Texas Utilities Co. 55,586 2,251
Unicom Corp. 53,300 1,386
Union Electric Co. 25,400 981
38,963
GAS - 0.9%
Columbia Gas System, Inc. (The) 13,720 833
Consolidated Natural Gas Co. 23,490 1,248
Eastern Enterprises Co. 5,100 196
Enron Corp. 62,940 2,928
ENSERCH Corp. 17,000 366
NICOR, Inc. 12,340 430
Noram Energy Corp. 33,900 521
ONEOK, Inc. 6,700 180
Pacific Enterprises 20,980 645
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - CONTINUED
PanEnergy Corp. 37,500 $ 1,444
Peoples Energy Corp. 8,600 303
Sonat, Inc. 21,460 1,057
Williams Companies, Inc. 25,900 1,353
11,504
TELEPHONE SERVICES - 5.9%
AT&T Corp. 399,562 13,936
ALLTEL Corp. 46,900 1,430
Ameritech Corp. 136,100 7,451
Bell Atlantic Corp. 108,550 6,540
BellSouth Corp. 246,340 10,038
GTE Corp. 239,680 10,097
MCI Communications Corp. 170,460 4,283
NYNEX Corp. 108,720 4,838
Pacific Telesis Group 106,030 3,605
SBC Communications, Inc. 151,020 7,343
Sprint Corp. 106,590 4,184
U.S. West, Inc. 118,240 3,592
U.S. West, Inc. (Media Group) (a) 117,340 1,833
WorldCom, Inc. (a) 96,100 2,342
81,512
TOTAL UTILITIES 135,206
TOTAL COMMON STOCKS
(Cost $1,031,418) 1,324,410
U.S. TREASURY OBLIGATIONS - 0.4%
PRINCIPAL
AMOUNT (000S)
U.S. Treasury Bills, yields at date of purchase,
5.13% to 5.40%, 3/6/97 (b) (Cost $5,497) $ 5,600 5,497
CASH EQUIVALENTS - 3.7%
SHARES VALUE (NOTE 1)
Taxable Central Cash Fund (c) 50,518 $ 50,518
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,087,433) $ 1,380,425
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
(000S) (000S)
PURCHASED
173 S&P 500 Index Contracts December 1996 $ 61,385 $ 342
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 4.4%
LEGEND
1. Non-income producing
2. A portion of the security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $2,340,000.
3. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.33%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $1,087,591,000. Net unrealized appreciation aggregated
$292,834,000, of which $320,962,000 related to appreciated investment
securities and $28,128,000 related to depreciated investment securities.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) OCTOBER 31, 1996 (UNAUDITED)

ASSETS

Investment in securities, at value (cost $1,087,433) - $ 1,380,425
See accompanying schedule

Receivable for fund shares sold 5,594

Dividends receivable 1,831

Interest receivable 88

Redemption fees receivable 1

Receivable for daily variation on futures contracts 575

Other receivables 3

TOTAL ASSETS 1,388,517

LIABILITIES

Payable for fund shares redeemed $ 1,723

Accrued management fee 505

TOTAL LIABILITIES 2,228

NET ASSETS $ 1,386,289

Net Assets consist of:

Paid in capital $ 1,084,909

Undistributed net investment income 1,421

Accumulated undistributed net realized gain (loss) on 6,625
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 293,334
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 27,093 shares outstanding $ 1,386,289

NET ASSET VALUE, offering price and redemption price $51.17
per share ($1,386,289 (divided by) 27,093 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)

INVESTMENT INCOME $ 12,488
Dividends

Interest 1,946

TOTAL INCOME 14,434

EXPENSES

Management fee $ 2,610

Non-interested trustees' compensation 2

Total expenses before reductions 2,612

Expense reductions (7) 2,605

NET INVESTMENT INCOME 11,829

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:

Investment securities 975

Futures contracts 6,265 7,240

Change in net unrealized appreciation (depreciation) on:

Investment securities 84,863

Futures contracts (40) 84,823

NET GAIN (LOSS) 92,063

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 103,892
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED OCTOBER APRIL 30,
31,1996 1996
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 11,829 $ 13,438
Net investment income

Net realized gain (loss) 7,240 21,710

Change in net unrealized appreciation (depreciation) 84,823 118,461

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 103,892 153,609
FROM OPERATIONS

Distributions to shareholders (10,796) (13,997)
From net investment income

From net realized gain (17,689) (4,833)

TOTAL DISTRIBUTIONS (28,485) (18,830)

Share transactions 402,674 601,874
Net proceeds from sales of shares

Reinvestment of distributions 27,544 17,854

Cost of shares redeemed (130,448) (134,662)

Redemption fees 171 363

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 299,941 485,429
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 375,348 620,208

NET ASSETS

Beginning of period 1,010,941 390,733

End of period (including undistributed net investment $ 1,386,289 $ 1,010,941
income of $1,421 and $388, respectively)

OTHER INFORMATION
Shares

Sold 8,265 13,365

Issued in reinvestment of distributions 563 408

Redeemed (2,701) (3,004)

Net increase (decrease) 6,127 10,769

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS SIX MONTHS YEARS ENDED APRIL 30,
ENDED OCTOBER
31, 1996

(UNAUDITED) 1996 1995 1994 D 1993 1992

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 48.22 $ 38.32 $ 33.49 $ 32.84 $ 30.94 $ 28.06

Income from Investment Operations

Net investment income .49 .92 .85 .81 .81 .82

Net realized and unrealized gain (loss) 3.72 10.32 4.77 .81 1.89 2.94

Total from investment operations 4.21 11.24 5.62 1.62 2.70 3.76

Less Distributions

From net investment income (.46) (.99) (.80) (.80) (.81) (.83)

From net realized gain (.81) (.37) - (.17) - (.07)

In excess of net realized gain - - - (.01) - -

Total distributions (1.27) (1.36) (.80) (.98) (.81) (.90)

Redemption fees added to paid in capital .01 .02 .01 .01 .01 .02

Net asset value, end of period $ 51.17 $ 48.22 $ 38.32 $ 33.49 $ 32.84 $ 30.94

TOTAL RETURN B, C 8.89% 29.83% 17.08% 4.95% 8.85% 13.74%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (in millions) $ 1,386 $ 1,011 $ 391 $ 283 $ 305 $ 230

Ratio of expenses to average net assets .45% A .45% .45% .45% .44% .35%
E E

Ratio of net investment income to average net assets 2.00% A 2.11% 2.49% 2.38% 2.54% 2.84%

Portfolio turnover rate 1% A 5% 2% 3% 0% 1%

Average commission rate F $ .0349

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
D EFFECTIVE MAY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Market Index Fund (the fund) is a fund of Fidelity Commonwealth
Trust (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), 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 permit management to make certain estimates and assumptions at the
date of the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an exchange)
are valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange
rates on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
is informed of the ex-dividend date. 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 between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions 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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
REDEMPTION FEES. Effective July 1, 1996, shares held in the fund less than
90 days (180 days prior to July 1, 1996) are subject to a redemption fee
equal to .50% of the proceeds of the redeemed shares. The fee, which is
retained by the fund, is accounted for as an addition to paid in capital.
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 securities. Losses may
arise from changes in the value of the foreign currency or if the
counterparties do not perform under the contracts' terms. The U.S. dollar
value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
cash balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements that mature in 60 days or
less from the date of purchase for U.S. Treasury or Federal Agency
obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR. The Cash Fund is an open-end money market fund available
only to investment companies and other accounts managed by FMR and its
affiliates. The Cash Fund seeks preservation of capital, liquidity, and
current income by investing in U.S. Treasury securities and repurchase
agreements for these securities, and may be utilized by the fund as an
additional cash management option. Dividends from the Cash Fund are
declared daily and paid monthly from net interest income. Income
distributions received by the fund are recorded as interest income.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period
end, is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $264,080,000 and $5,752,000, respectively.
The market value of futures contracts opened and closed during the period
amounted to $416,523,000 and $391,814,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR pays all expenses,
except the compensation of the non-interested Trustees and certain
exceptions such as interest, taxes, brokerage commissions and extraordinary
expenses. FMR receives a fee that is computed daily at an annual rate of
.45% of the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$89,000 for the period.
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 $500 for the period.
5. EXPENSE REDUCTIONS.
FMR has entered into arrangements on behalf of the fund with the fund's
custodian and transfer agent whereby interest earned on uninvested cash
balances was used to offset a portion of the fund's expenses. During the
period, the fund's expenses were reduced by $7,000 under these
arrangements.

DISTRIBUTIONS

The Board of Trustees of Fidelity Market Index Fund voted to pay on
December 9, 1996, to shareholders of record at the opening of business on
December 6, 1996, a distribution of $.24 per share derived from capital
gains realized from sales of portfolio securities and a dividend of $.22
per share from net investment income.
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
MANAGING YOUR INVESTMENTS

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)(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)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
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 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(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 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Market Index Fund
Puritan(registered trademark) Fund
Real Estate Portfolio
Utilities Income Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-5555
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
* INDEPENDENT TRUSTEES
AUTOMATED LINE FOR QUICKEST SERVICE