FIDELITY DEVONSHIRE TRUST, N-30B-2, 1994-03-23

FIDELITY DEVONSHIRE TRUST
N-30B-2, 1994-03-23

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EXHIBIT 24(A)(1)

FIDELITY
UTILITIES INCOME
FUND

(Registered trademark)
ANNUAL REPORT
JANUARY 31, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 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 last six
months.

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

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

NOTES 29 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 33 The auditor's opinion.
ACCOUNTANTS

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. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
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. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).

CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Utilities Income 19.34% 104.73% 140.04%

S&P 500(Registered trademark) 12.88% 90.05% 141.58%

S&P Utilities Index 13.41% 92.78% 135.26%

Average Utility Fund 11.78% 88.85% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on November 27, 1987. You can compare these figures to the
performance of the Standard & Poor's 500 Composite Stock Price Index, a
common proxy for the U.S. stock market, or the Standard & Poor's
Utilities Index, an unmanaged index of 45 gas, electric, and telephone
stocks. You can also compare them to the average utility fund, which
reflects the performance of 67 utility funds tracked by Lipper Analytical
Services. All three benchmarks include reinvested dividends and capital
gains, if any.

AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Utilities Income 19.34% 15.41% 15.21%

S&P 500(Registered trademark) 12.88% 13.70% 15.32%

S&P Utilities Index 13.41% 14.03% 14.83%

Average Utility Fund 11.78% 13.53% 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
Utilities Inc S&P Utilities S&P 500
11/27/87 10000.00 10000.00 10000.00
11/30/87 10000.00 9671.16 9438.71
12/31/87 10059.80 9776.58 10157.00
01/31/88 10983.45 10908.71 10584.61
02/29/88 10873.02 10721.08 11077.85
03/31/88 10500.31 10156.08 10735.55
04/30/88 10510.44 10170.29 10854.71
05/31/88 10946.26 10635.08 10949.15
06/30/88 11087.51 10969.02 11451.71
07/31/88 10954.05 10985.47 11408.20
08/31/88 10902.72 10830.58 11020.32
09/30/88 11295.53 11275.71 11489.78
10/31/88 11534.75 11568.88 11809.20
11/30/88 11451.55 11476.33 11640.33
12/31/88 11545.15 11547.48 11844.03
01/31/89 11724.72 12203.38 12711.02
02/28/89 11502.90 11934.91 12394.51
03/31/89 11631.16 12248.79 12683.30
04/30/89 11984.27 13014.34 13341.57
05/31/89 12562.08 13761.37 13881.90
06/30/89 12820.04 13974.67 13802.77
07/31/89 13493.63 15089.85 15049.17
08/31/89 13352.40 14996.29 15344.13
09/30/89 13418.39 15243.73 15281.22
10/31/89 13462.49 15300.13 14926.69
11/30/89 13892.50 15803.50 15231.20
12/31/89 14537.87 16954.00 15596.75
01/31/90 13799.44 15582.42 14550.21
02/28/90 13834.05 15411.01 14737.90
03/31/90 13821.86 15697.66 15128.46
04/30/90 13264.24 15088.59 14750.25
05/31/90 13904.91 16117.63 16188.40
06/30/90 13964.05 15777.55 16078.31
07/31/90 13976.10 15728.64 16026.86
08/31/90 13265.24 14478.21 14578.03
09/30/90 13470.06 15071.82 13868.08
10/31/90 14290.51 16054.50 13808.45
11/30/90 14608.89 16364.35 14700.48
12/31/90 14806.39 16506.72 15110.62
01/31/91 14743.60 16003.27 15769.44
02/28/91 15271.05 16560.18 16896.96
03/31/91 15451.98 16886.42 17305.87
04/30/91 15451.98 16616.24 17347.40
05/31/91 15451.98 16401.89 18096.81
06/30/91 15336.57 16172.26 17267.97
07/31/91 15817.06 16667.13 18072.66
08/31/91 16206.64 17097.14 18500.98
09/30/91 16719.54 17442.51 18192.02
10/31/91 16930.18 17786.12 18435.79

11/30/91 17061.83 17606.48 17692.83
12/31/91 17942.73 18897.04 19716.89
01/31/92 17352.68 17889.83 19350.15
02/29/92 17285.63 17405.01 19601.71
03/31/92 17084.74 17154.38 19219.47
04/30/92 17645.12 18259.12 19784.52
05/31/92 18000.48 18231.73 19881.47
06/30/92 18179.33 18488.80 19585.23
07/31/92 19161.63 19949.42 20386.27
08/31/92 19189.30 19799.80 19968.35
09/30/92 19244.80 19944.33 20203.98
10/31/92 19216.81 19754.86 20274.69
11/30/92 19398.76 19723.25 20966.06
12/31/92 19898.60 20429.35 21223.94
01/31/93 20115.04 20743.96 21402.22
02/28/93 21182.84 22237.52 21693.29
03/31/93 21752.81 22640.02 22151.02
04/30/93 21547.74 22162.32 21614.97
05/31/93 21606.33 22142.37 22194.25
06/30/93 22623.23 23167.56 22258.61
07/31/93 22903.99 23686.52 22169.58
08/31/93 23953.14 24830.58 23009.80
09/30/93 23967.57 24778.43 22832.63
10/31/93 23773.92 24733.83 23305.26
11/30/93 22790.79 23482.30 23083.86
12/31/93 23004.24 23357.84 23363.18
01/31/94 23989.27 23526.02 24157.53

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Utilities Income Fund on November 27, 1987, when the fund started. As the
chart shows, by January 31, 1994, the value of your investment would have
grown to $24,004 - a 140.04% increase on your initial investment. For
comparison, look at how both the S&P 500 and the S&P Utilities
Index did over the same period. With dividends reinvested, the same $10,000
investment in the S&P 500 would have grown to $24,158 a 141.58%
increase. A $10,000 investment in the S&P Utilities index would have
grown to $23,526 - a 135.26% increase.

UNDERSTANDING
PERFORMANCE
(checkmark)
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.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Low inflation, falling interest rates
and an improving economy
boosted U.S. stocks during the
12 months ended January 31,
1994. The Standard &
Poor's 500 stock index rose
12.88%, slightly ahead of the
market's long-term annual
average return. The technology
sector excelled, and
communication stocks soared as
telephone utilities, cellular
companies, and entertainment
firms formed strategic alliances.
Other top performers were
economically sensitive sectors,
like autos and steel; heavy
machinery; and precious metals,
all up in the second half of the
year. Some tobacco, drug, and
brand name consumer products
stocks picked up by year-end, but
had weak returns for the year
overall. Conversely, financial
stocks did well the first half of the
year, but gave back some of their
gains in the second half. The
NASDAQ Composite Index -
which tracks over-the-counter
stocks - rose 14.95% for the
year, but was outpaced by the
Dow Jones Industrial Average -
an index of 30 blue-chip stocks -
which rose 23.61%. On January
21, the Dow broke the 3900
barrier for the first time, and
finished the month at 3978.
Returns in most international
markets easily outpaced those in
the U.S., with Hong Kong
remaining the big winner even
after a correction in January. The
Morgan Stanley EAFE (Europe,
Australia, Far East) index rose
43.79%, while the Morgan
Stanley Emerging Markets Index
was up 75.51% for the year
ended January 31, 1994.
An interview with John Muresianu, Portfolio Manager of Fidelity
Utilities Income Fund
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. It's been a good year. The fund's total return for the 12 months through
January 31 was 19.34%. The average utility fund had a total return of
11.78% during the period, according to Lipper Analytical Services, and the
S&P Utilities Index returned 13.41%. (photo_of_portfolio_manager)
Q. WHAT DROVE THE SECTOR'S PERFORMANCE?
A. The first three quarters of 1993 were sensational for gas, electric and
telephone utility stocks. As interest rates fell, investors looked to
utilities to boost their income. Moreover, utility companies generally
carry a lot of debt, so their interest expenses decline significantly as
rates fall. That in turn boosts their earnings prospects. But during the
past several months, utilities stocks declined from their peaks.
Q. FOR THE YEAR THE FUND CAME OUT FAR AHEAD OF BOTH THE INDEX AND THE
AVERAGE UTILITY FUND. WHAT MADE THE DIFFERENCE?
A. A couple factors. First, early in the year, I increased the percentage
of the fund in gas and telephone utilities compared to electric utilities;
both outperformed electrics in 1993. Second, I shifted some assets to
non-utilities later in the period, which helped the fund continue to
outperform both the utilities index and the average.
Q. LET'S START WITH GAS UTILITIES. WHAT WAS THE STORY THERE?
A. Gas utilities as a group did better than electric utilities because they
benefited not only from a decline in interest rates but also from a tighter
supply/demand balance for natural gas. On the demand side, federal policy
is promoting the use of this clean, abundant, domestic fuel. On the supply
side, drilling had declined to historic lows in 1992, reducing supply and
pushing up prices. In particular, the fund benefited from owning some gas
stocks that did exceptionally well. For example, the fund's largest natural
gas investments, Enron and Sonat, did much better than the average gas
utility during the year.
Q. WHAT ABOUT TELEPHONE UTILITIES?
A. They did better than electrics because of their prospects for superior
revenue and earnings growth. For example, growth of new telephone lines
helps drive telephone revenues. And line growth at the regional bell
companies has been up 2 - 4%, while call volumes have been up 5 - 8% over
the past year. The companies have also profited from adding new services
for existing customers, such as call waiting, at little additional cost.
Plus, the growth of cellular profits has been explosive. Finally, a big
positive has been the cost reduction story. Telephone companies have (and
are continuing) to cut headcount. They're also seeing the prices of key
components of their capital spending budgets - such as fiber - come down.
Even after dividends and capital spending, the companies still have had
leftover cash. At the end of January, eight of my top 10 investments were
telephone stocks, including Southwestern Bell, Bell Atlantic, and
Ameritech.
Q. HOW DID THE FUND'S INVESTMENT IN OVERSEAS UTILITIES WORK OUT?
A. Very well. At the end of January, the fund had about a 15% stake in
overseas utilities. Some of the largest investments in 1993 were in Hong
Kong, where the fund owned China Light and Power, and Hong Kong Electric;
Latin America, where our investments included telephone utilities like
Telefonos de Mexico and Telebras; and Europe, where we owned electric
utilities like Empresa Nacional De Electricidad (known as Endesa),
Iberdrola, Powergen, and National Power. Hong Kong's electric utilities
have vastly superior sales growth prospects compared to U.S. electric
utilities, even without considering the upside potential from power
projects in mainland China. In Latin America, utilities also have superior
growth prospects and are in many instances benefiting from favorable
regulatory changes. Finally, European utilities have benefited from an even
sharper drop in interest rates than we've seen here in the United States.
My focus has been on foreign utilities that are cheaper than their U.S.
counterparts.
Q. LOOKING BACK, WERE THERE ANY
DISAPPOINTMENTS?
A. Yes. First, I very much wish I'd been quicker in reducing the percentage
of the fund in utilities in general when the stocks peaked in September.
Second, more specifically, I would have been wise to reduce the fund's
stake in gas last summer when the stocks reached rather expensive levels.
Third, several stocks didn't do as well as I'd anticipated. For example,
ENSERCH in the gas group, NYNEX in the telephone group, and Commonwealth
Edison in the electric utility sector. In each instance, however, the
stocks are very cheap, turnaround stories which should do well long term.
Despite these disappointments, 1993's performance was beyond my
expectations and is unlikely to repeat itself.
Q. WHAT'S THE OUTLOOK FOR UTILITIES OVERALL FROM HERE?
A. With U.S. stock prices near historic highs, a correction is a
significant risk. During such a correction, utilities would probably
outperform the market because of their high yields - unless inflation were
accelerating dramatically, which I don't think is likely to happen soon.
Still, it's worth bearing in mind that utilities will underperform other
stocks if the stock market and interest rates both continue to rise.
Q. SO HOW WILL THIS AFFECT YOUR
STRATEGY?
A. Given the possibility of a market correction and the fact that utilities
have lagged the market recently, I'll probably begin to boost the fund's
stake in the sector, keeping my focus on gas and telephones. Longer term, I
expect domestic telephone and gas utilities to continue to outperform
domestic electric utilities. Not only do telephone and gas utilities have
higher revenue and earnings growth, but electrics are just beginning the
process of deregulation, which adds a greater degree of unpredictability to
their earnings prospects. Since no one knows for sure where the market or
interest rates are headed, I'll probably also continue to own some stocks
in other sectors.
Q. WHEN DID YOU START ADDING NON-UTILITIES TO THE FUND?
A. I began late last summer, after all the utility sectors had
significantly outperformed the market and no longer seemed as attractively
priced compared to other sectors in the market. I was also concerned that
interest rates were nearing a bottom, and that the market was entering a
phase less favorable to interest-
sensitive stocks in general.
Q. WHAT DID YOU BUY?
A. My focus was on non-utility stocks that had done relatively poorly over
the last 10 years but were now experiencing a turnaround in their earnings
prospects. Examples were Citicorp, whose earnings have benefited from a
sharp improvement in credit quality, and General Motors, which has
benefited from both an upturn in auto sales related to the economy's
recovery as well as from cost containment. At the end of January, the
percentage of the fund in non-utilities was about 27%. This figure will
vary with prospects for utilities, the outlook for interest rates, and
market conditions.

FUND FACTS
GOAL: to seek high current
income; may also consider
growth potential
START DATE: November 27, 1987
SIZE: as of January 31,
1994, over $1.4 billion
MANAGER: John Muresianu,
since January 1993; analyst,
natural gas pipelines, life
insurance, service
companies, Canadian
stocks, foreign currencies,
1989-1992; pension fund
manager, 1987-1989
(checkmark)
JOHN MURESIANU ON HIS
INVESTMENT STRATEGY:
"I try to buy stocks that are
cheap with superior prospects
for growing earnings. When
one utility sector becomes
expensive compared to its
earnings, I'll reduce the
percentage of the fund
invested in that sector relative
to other sectors. When the
earnings prospects of a
particular sector or stock
improves compared to market
expectations, I'll tend to add
to investments in that stock or
sector. The fund's stake in
non-
utilities will vary with changes
in the earnings prospects and
valuations - yardsticks like
price-to-earnings - of
utilities, as well as changing
interest rates and stock
market conditions."
(bullet) As of January 31, 1994,
telephone utilities accounted
for 27.6% of the fund's
investments, followed by
electric utilities at 25.8% and
gas utilities at 19%.
(bullet) The fund must hold at least
65% of its assets in stocks of
public utility companies.
Recently, that figure stood at
70%.
DISTRIBUTIONS
The Board of Trustees of
Fidelity Utilities Income Fund
voted to pay on March 7,
1994, to shareholders of
record at the opening of
business on March 4, 1994, a
distribution of $.31 derived
from capital gains realized
from sales of portfolio
securities and a dividend of
$.10 from net investment
income.

INVESTMENT CHANGES

TOP TEN STOCKS AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
SIX MONTHS AGO

Southwestern Bell Corp. 3.0 3.1

Bell Atlantic Corp. 2.9 3.1

Ameritech Corp. 2.8 3.0

BellSouth Corp. 2.7 2.0

Entergy Corp. 2.7 1.7

GTE Corp. 2.6 2.0

Pacific Telesis Group 2.6 2.5

U.S. West, Inc. 2.6 2.8

NYNEX Corp. 2.4 2.8

Enron Corp. 2.1 3.1

TOP INDUSTRIES AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE INDUSTRIES
SIX MONTHS AGO

Telephone Services 27.6 23.5

Electric Utilities 25.8 36.2

Gas 19.0 21.6

ASSET ALLOCATION
AS OF JANUARY 31, 1994 * AS OF JULY 31, 1993 **
Row: 1, Col: 1, Value: 3.2
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 35.9
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 20.0
Row: 1, Col: 6, Value: 20.0
Stocks 88.3%
Bonds 4.4%
Short-term
Investments 7.3%
Stocks 95.9%
Bonds 0.9%
Short-term
Investments 3.2%
Row: 1, Col: 1, Value: 7.3
Row: 1, Col: 2, Value: 4.4
Row: 1, Col: 3, Value: 28.3
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 20.0
Row: 1, Col: 6, Value: 20.0
* FOREIGN
INVESTMENTS 19.2%
** FOREIGN
INVESTMENTS 5.8%
INVESTMENTS JANUARY 31, 1994

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 93.1%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.1%
Boeing Co. 20,000 $ 865 09702310
BASIC INDUSTRIES - 1.6%
CHEMICALS & PLASTICS - 0.4%
Eastman Chemical Co. 14,850 650 27743210
NOVA Corp. of Alberta Class A 339,000 2,455 66977110
Union Carbide Corp. 116,600 2,973 90558110
6,078
METALS & MINING - 0.5%
Aluminum Co. of America 60,000 4,747 02224910
Phelps Dodge Corp. 28,000 1,519 71726510
Reynolds Metals Co. 34,300 1,831 76176310
8,097
PAPER & FOREST PRODUCTS - 0.7%
Stone Container Corp. (a) 127,500 2,104 86158910
Temple-Inland, Inc. 53,200 2,793 87986810
Weyerhaeuser Co. 111,500 5,450 96216610
10,347
TOTAL BASIC INDUSTRIES 24,522
CONGLOMERATES - 0.2%
Canadian Pacific Ltd. Ord. 105,000 1,916 13644030
Grupo Carso SA de CV Class A-1 (a) 146,000 1,688 40099594
3,604
CONSTRUCTION & REAL ESTATE - 2.8%
BUILDING MATERIALS - 0.4%
Armstrong World Industries, Inc. 10,000 563 04247610
Cemex SA, Series B (a) 130,000 4,157 15299293
Lafarge Corp. 10,000 250 50586210
Medusa Corp. 15,300 497 58507230
5,467
CONSTRUCTION - 0.2%
Bufete Industrial SA sponsored ADR representing 3
ordinary certificates Banco 11,100 561 11942H10
Hopewell Holdings Ltd. 877,000 999 44099999
Pulte Corp. 5,000 174 74586710
YTL Corporation (a) 250,000 1,273 98799092
3,007
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - 2.2%
Associated Estates Realty Corp. 20,000 $ 435 04560410
Capstead Mortgage Corp. 186,300 7,778 14067E10
Centerpoint Properties Corp. 20,000 372 15189510
Chateau Properties, Inc. 10,000 213 16173910
Crown American Realty Trust (SBI) 20,000 285 22818610
Developers Diversified Realty 56,000 1,589 25159110
Equity Residential Properties Trust (SBI) 35,000 1,019 29476L10
Federal Realty Investment Trust 50,000 1,206 31374720
G&L Realty Corp. (a) 60,000 1,013 36127110
Haagen Alexander Properties, Inc. 167,000 2,818 40443E10
Kimco Realty Corporation 74,600 2,667 49446R10
LTC Properties, Inc. 68,700 910 50217510
Manufactured Home Community 11,300 489 56468210
McArthur/Glen Realty Corp. (a) 10,000 275 57918810
Simon Properties Group, Inc. (a) 135,000 3,308 82880510
Taubman Centers, Inc. 230,000 2,645 87666410
Vornado Realty Trust 55,600 1,946 92904210
Weingarten Realty Investors (SBI) 84,400 3,144 94874110
32,112
TOTAL CONSTRUCTION & REAL ESTATE 40,586
DURABLES - 2.6%
AUTOS, TIRES, & ACCESSORIES - 2.4%
Chrysler Corp. 176,900 10,879 17119610
Ford Motor Co. 60,000 4,020 34537010
General Motors Corp. 290,100 17,805 37044210
Toyota Motor Corporation 190,000 3,426 89399999
36,130
CONSUMER ELECTRONICS - 0.2%
Matsushita Electric Industrial Co. Ltd. 70,000 1,114 57687910
Sony Corp. 28,000 1,641 83569999
2,755
TEXTILES & APPAREL - 0.0%
Fruit of the Loom, Inc. Class A (a) 10,000 253 35941610
TOTAL DURABLES 39,138
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 4.0%
COAL - 0.0%
Pittston Co. Minerals Group 4,100 $ 112 72570120
ENERGY SERVICES - 0.3%
Halliburton Co. 116,500 3,757 40621610
Schlumberger Ltd. 10,000 594 80685710
4,351
INDEPENDENT POWER - 0.4%
California Energy Co., Inc. (a) 19,400 361 13019010
Magma Power Co. (a) 152,100 5,209 55919410
Thermo Electron Corp. 10,000 429 88355610
5,999
OIL & GAS - 3.3%
British Petroleum PLC ADR 167,500 11,432 11088940
Chevron Corp. 58,100 5,425 16675110
Exxon Corp. 24,500 1,629 30229010
Nuevo Energy Corporation (a) 14,500 315 67050910
Occidental Petroleum Corp. 96,900 1,744 67459910
Petroleum Heat & Power, Inc. Class A 182,000 1,684 71660030
Phillips Petroleum Co. 166,500 4,912 71850710
Royal Dutch Petroleum Co. 125,900 13,849 78025770
Texaco, Inc. 63,200 4,274 88169410
Woodside Petroleum Ltd. 347,000 1,044 98022810
YPF Sociedad Anonima sponsored ADR representing
Class D shares 96,900 2,798 98424510
49,106
TOTAL ENERGY 59,568
FINANCE - 3.0%
BANKS - 1.7%
Banacci SA de CV:
Class C 28,000 270 06399893
Class L (a) 1,400 12
Banc One Corp. 10,000 375 05943810
Citicorp (a) 530,000 23,188 17303410
Grupo Financiero Bancomer Class B (a) 130,000 208 40048694
Mellon Bank Corp. 19,541 1,092 58550910
25,145
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.2%
Beneficial Corp. 800 $ 32
Burgenland Holding 14,000 529 12099A22
Dean Witter Discover & Co. 15,112 580 24240V10
Household International, Inc. 56,007 1,855 44181510
2,996
FEDERAL SPONSORED CREDIT - 0.5%
Federal Home Loan Mortgage Corporation 6,900 402 31340030
Federal National Mortgage Association 73,200 6,396 31358610
6,798
INSURANCE - 0.0%
American General Corp. 21,000 601 02635110
SAVINGS & LOANS - 0.1%
Ahmanson (H.F.) & Co. 30,000 563 00867710
Great Western Financial Corp. 30,387 589 39144210
1,152
SECURITIES INDUSTRY - 0.5%
Merrill Lynch & Co., Inc. 69,000 3,088 59018810
Nomura Securities Co. Ltd. 180,000 3,842 65536130
6,930
TOTAL FINANCE 43,622
HEALTH - 1.0%
DRUGS & PHARMACEUTICALS - 0.8%
Amgen, Inc. (a) 10,000 488 03116210
Bristol-Myers Squibb Co. 14,600 845 11012210
Lilly (Eli) & Co. 25,200 1,509 53245710
Merck & Co., Inc. 118,500 4,325 58933110
Pfizer, Inc. 18,800 1,215 71708110
Schering-Plough Corp. 18,800 1,184 80660510
Warner-Lambert Co. 23,700 1,543 93448810
11,109
MEDICAL FACILITIES MANAGEMENT - 0.2%
U.S. Healthcare, Inc. 52,500 3,491 91191010
TOTAL HEALTH 14,600
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
ELECTRICAL EQUIPMENT - 0.7%
Alcatel Alsthom CGE 15,600 $ 2,077 01390492
General Electric Co. 45,200 4,870 36960410
Philips NV (a) 109,700 2,770 71833750
9,717
INDUSTRIAL MACHINERY & EQUIPMENT - 1.0%
Caterpillar, Inc. 79,700 8,299 14912310
Deere & Co. 25,200 2,029 24419910
Kenetech Corp. (a) 5,000 130 48887810
Tenneco, Inc. 86,600 4,979 88037010
15,437
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 25,154
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.1%
Tele-Communications, Inc. Class A (a) 19,400 529 87924010
Time Warner, Inc. 6,111 244 88731510
773
LODGING & GAMING - 0.0%
Promus Companies, Inc. (a) 4,000 203 74342A10
PUBLISHING - 0.0%
Times Mirror Co., Series A 11,300 410 88736010
RESTAURANTS - 0.1%
McDonald's Corp. 20,000 1,215 58013510
TOTAL MEDIA & LEISURE 2,601
NONDURABLES - 1.1%
TOBACCO - 1.1%
Philip Morris Companies, Inc. 225,500 13,586 71815410
RJR Nabisco Holdings Corp. (a) 300,000 2,250 74960K10
UST, Inc. 10,000 285 90291110
16,121
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 1.1%
APPAREL STORES - 0.1%
Charming Shoppes, Inc. 11,800 $ 136 16113310
Limited, Inc. (The) 30,000 533 53271610
669
GENERAL MERCHANDISE STORES - 1.0%
Sears, Roebuck & Co. 270,000 14,816 81238710
Wal-Mart Stores, Inc. 10,000 265 93114210
Woolworth Corp. 10,000 260 98088310
15,341
TOTAL RETAIL & WHOLESALE 16,010
SERVICES - 0.3%
ADVERTISING - 0.0%
Foote Cone & Belding Communications, Inc. 300 14
SERVICES - 0.3%
ADT Ltd. 47,200 472 00091530
Block (H&R), Inc. 26,600 1,167 09367110
Chemed Corp. 102,300 3,261 16359610
Jostens, Inc. 10,000 178 48108810
5,078
TOTAL SERVICES 5,092
TECHNOLOGY - 1.8%
COMMUNICATIONS EQUIPMENT - 0.2%
Cisco Systems, Inc. (a) 10,000 725 17275R10
DSC Communications Corp. (a) 33,000 1,984 23331110
Wellfleet Communications, Inc. (a) 10,000 743 94949710
3,452
COMPUTER SERVICES & SOFTWARE - 0.1%
Microsoft Corp. (a) 10,000 851 59491810
COMPUTERS & OFFICE EQUIPMENT - 0.8%
International Business Machines Corp. 200,000 11,350 45920010
Itron, Inc. (a) 4,000 72
46574110
Xerox Corp. 10,000 981 98412110
12,403
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - 0.0%
Applied Materials, Inc. (a) 7,600 $ 335 03822210
ELECTRONICS - 0.5%
Augat, Inc. (a) 3,200 66
Hitachi, Ltd. 392,000 3,264 43357810
Intel Corp. 10,000 652 45814010
Texas Instruments, Inc. 49,776 3,497 88250810
7,479
PHOTOGRAPHIC EQUIPMENT - 0.2%
Eastman Kodak Co. 59,400 2,621 27746110
TOTAL TECHNOLOGY 27,141
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.3%
AMR Corp. (a) 14,500 1,042 00176510
UAL Corp. (a) 21,800 3,205 90254910
USAir Group, Inc. (a) 18,100 267 91190510
4,514
RAILROADS - 0.6%
CSX Corp. 95,400 8,753 12640810
TOTAL TRANSPORTATION 13,267
UTILITIES - 70.7%
CELLULAR - 0.1%
IDB Communications Group, Inc. (a) 23,000 1,256 44935510
ELECTRIC UTILITY - 24.1%
AES Corp. 268,432 6,375 00130H10
Allegheny Power System, Inc. 5,100 128 01741110
American Electric Power Co., Inc. 128,200 4,631 02553710
Boston Edison Co. 179,600 5,029 10059910
CMS Energy Corp. 637,400 15,457 12589610
Carolina Power & Light Co. 10,000 298 14414110
Centerior Energy Corp. 105,700 1,387 15188310
Central & South West Corp. 70,500 2,097 15235710
Central Costanera SA ADR (b) 2,800 104 15324M10
Central Hudson Gas & Electric Corp. 70,300 2,118 15360910
Central Louisiana Electric Co., Inc. 112,600 2,745 15389760
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Central Puerto SA ADR (b) 23,400 $ 1,018 15503810
China Light & Power Co. Ltd. 2,452,800 15,085 16940010
Cincinnati Gas & Electric Co. 142,750 3,783 17207010
Commonwealth Edison Co. 620,700 17,612 20279510
Commonwealth Energy Systems (SBI) 1,000 45
20280010
Consolidated Edison Co. of New York, Inc. 20,000 622 20911110
Consolidated Electric Power Asia Ltd. sponsored ADR (b) 72,100 1,100
20855210
DPL, Inc. 242,050 5,143 23329310
DQE, Inc. 167,200 5,559 23329J10
Destec Energy, Inc. (a) 9,700 146 25063N10
Detroit Edison Company 132,700 3,931 25084710
Dominion Resources, Inc. (Va.) 11,400 493 25747010
Duke Power Co. 30,000 1,260 26439910
EVN (Energie-Versor Nieder) 7,500 1,038 30099292
Eastern Utilities Associates 203,742 5,610 27717310
Electrobras PN B (a) 36,153,690 8,828 69699993
Empresa Nacional De Electricidad SA:
Ord. 12,500 698 29244710
sponsored ADR 161,400 8,978 29244720
Enersis SA sponsored ADR (a) 75,000 1,763 29274F10
Entergy Corp. 1,072,561 39,953 29364G10
FECSA (Fuerzas Elec Cat) Class A 375,000 2,917 35899E22
FPL Group, Inc. 16,000 590 30257110
General Public Utilities Corp. 83,500 2,547 37055010
Hawaiian Electric Industries, Inc. 14,500 513 41987010
Hidro Cantabrico 5,000 163 42899999
Hong Kong Electric Holdings Ord 4,526,000 17,170 43858010
Houston Industries, Inc. 167,000 7,619 44216110
IES Industries, Inc. 74,600 2,285 44949M10
Iberdrola SA 1,620,500 13,822 45499892
Illinois Power Co. 360,400 7,839 45209210
Korea Electric Power Corp. 14,000 541 50099B92
Light (Servicos de Electric) SA Ord. (a) 5,000,000 1,482 53299892
London Electricity PLC 193,700 2,071 54181095
Long Island Lighting Co. 165,300 3,885 54267110
Montana Power Co. 71,600 1,790 61208510
NIPSCO Industries, Inc. 347,100 11,107 62914010
National Power PLC (b) 513,700 3,732 63719496
New England Electric Systems 155,600 5,971 64400110
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Niagara Mohawk Power Corp. 452,500 $ 9,163 65352210
Northeast Utilities 230,600 5,823 66439710
Northern Electricity PLC 363,400 4,142 68499B92
Nova Scotia Power, Inc. 193,700 1,913 66981610
Ohio Edison Co. 50,000 1,094 67734710
PSI Resources, Inc. 310,600 7,959 69363210
Pacific Gas & Electric Co. 68,800 2,331 69430810
PacifiCorp. 68,100 1,277 69511410
Peco Energy Co. 79,200 2,287 69330410
Pinnacle West Capital Corp. (a) 405,400 9,071 72348410
Portland General Corp. 41,500 825 73650610
Powergen PLC Ord. 635,594 5,379 73890594
Public Service Co. of Colorado 208,515 6,542 74444810
Public Service Co. of New Mexico (a) 526,000 6,970 74449910
Public Service Enterprise Group, Inc. 156,400 4,946 74457310
Regional Electricity Companies England & Wales ADR (b) 10,000 985
75901J40
Rochester Gas & Electric Corp. 41,000 1,056 77136710
SCEcorp 18,400 359 78388210
Sevillana de Electricidad 285,000 1,636 81806599
Sithe Energies, Inc. (a) 154,000 2,021 82990410
Southern Co. (a) 183,800 7,995 84258710
Tenega Nasional BHD 160,000 1,006 92099992
Texas Utilities Co. 154,680 5,975 88284810
Union Electrica Fenosa 885,200 4,645 90659510
United Illuminating Co. 69,200 2,578 91063710
Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. 21,700 6,425
92239110
Verbund Gesellschaft 26,600 1,629 92299999
355,110
GAS - 18.5%
Aquila Gas Pipeline Corp. (a) 46,000 604 03839B10
Arkla, Inc. 9,700 82
Brooklyn Union Gas Co. (The) 300,300 8,221 11425910
Coastal Corp. (The) 76,200 2,353 19044110
Columbia Gas System, Inc. (The) (a) 323,700 8,133 19764810
Consolidated Natural Gas Co. 223,200 10,267 20961510
ENSERCH Corp. 1,365,600 24,751 29356710
El Paso Natural Gas Co. 149,800 5,655 28369587
Energen Corp. 104,700 2,421 29265N10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - CONTINUED
Enron Corp. 951,300 $ 31,274 29356110
Equitable Resources, Inc. 16,200 616 29454910
Hong Kong & China Gas Co. Ltd. 1,542,000 4,292 43855010
MCN Corp. 388,700 14,333 55267J10
MDU Resources Group, Inc. 44,500 1,368 55269010
NICOR, Inc. 95,000 2,731 65408610
ONEOK, Inc. 336,300 6,642 68267810
Pacific Enterprises 785,700 17,678 69423210
Panhandle Eastern Corp. 581,300 14,605 69846210
Piedmont Natural Gas, Inc. 7,046 154 72018610
Questar Corp. 435,900 14,112 74835610
Sonat, Inc. 945,500 29,429 83541510
Southern Union Company 10,350 340 84403010
Tejas Gas Corp. (Del.) (a) 54,000 2,970 87907510
Tejas Power Corp. (a) 223,600 2,348 87907910
Transco Energy Co. 55,000 853 89353210
TransCanada PipeLines Ltd. 575,400 8,767 89352610
Trident NGL Holdings (a) 100,000 1,075 89592610
UGI Corporation 246,331 5,696 90268110
WICOR, Inc. 127,700 4,006 92925310
Washington Gas Light Co. 93,400 3,876 93883710
Westcoat Energy, Inc. 866,100 15,559 95751D10
Western Resources, Inc. 54,600 1,822 95942510
Williams Companies, Inc. 950,200 24,824 96945710
Yankee Energy System, Inc. 62,600 1,510 98477910
273,367
TELEPHONE SERVICES - 27.4%
American Telephone & Telegraph Co. 11,900 675 03017710
Ameritech Corp. 971,400 40,799 03095410
ALC Communications Corp. (a) 10,000 320 00157530
ALLTEL Corp. 30,900 861 02003910
BCE, Inc. 125,300 4,537 05534B10
Bell Atlantic Corp. 759,800 43,119 07785310
BellSouth Corp. 657,400 40,430 07986010
GTE Corp. 1,119,700 38,490 36232010
Hong Kong Telecommunication Ltd.:
ADR 29,100 1,815 43857920
Ord. 494,800 1,031 43857991
LCI International, Inc. (a) 20,000 745 50181310
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
NYNEX Corp. 857,600 $ 35,162 67076810
Nippon Telegraph & Telephone Ord. (a) 186 1,673 65462492
Pacific Telesis Group 666,800 38,424 69489010
SIP Spa 5,200,000 13,330 78401792
Southwestern Bell Corp. 1,065,600 44,622 84533310
Sprint Corporation 35,400 1,283 85206110
Telebras:
ON 61,300,000 2,432 95499795
PN 378,026,000 17,968 95499792
Telecom Argentina Stet France 306,600 2,211 90899992
Telefonica Argentina Class B (a) 96,000 760 87999D92
Telefonica de Espana SA sponsored ADR 189,700 8,181 87938220
Telefonos de Mexico SA sponsored ADR representing
shares Ord. Class L 336,000 24,822 87940378
Telesp PN 4,519,000 1,872 87999B93
U.S. West, Inc. 872,700 38,181 91288910
403,743
WATER - 0.6%
American Water Works, Inc. 103,499 3,208 03041110
Generale des Eaux 10,821 5,359 37099210
8,567
TOTAL UTILITIES 1,042,043
TOTAL COMMON STOCKS
(Cost $1,160,921) 1,373,934
PREFERRED STOCKS - 2.8%

CONVERTIBLE PREFERRED STOCKS - 1.3%
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.0%
Olin Corp., Series A 19,200 921 68066530
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 0.3%
Alumax, Inc., Series A, $4.00 9,366 $ 1,124 02219720
Cyprus Amax Minerals Co., Series A, $4.00 18,733 1,335 23280920
Reynolds Metals Co. $3.31 42,000 2,310 76176350
4,769
TOTAL BASIC INDUSTRIES 5,690
DURABLES - 0.8%
AUTOS, TIRES, & ACCESSORIES - 0.8%
Ford Motor Co. (Del.), Series A, $4.20 101,700 11,378 34537020
ENERGY - 0.1%
OIL & GAS - 0.1%
Tosco Corp., Series F, $4.375 16,500 1,140 89149040
SERVICES - 0.1%
Pittston Co. $3.125 (b) 21,000 1,103 72570140
TOTAL CONVERTIBLE PREFERRED STOCKS 19,311
NONCONVERTIBLE PREFERRED STOCKS - 1.5%
UTILITIES - 1.5%
ELECTRIC UTILITY - 1.0%
Alabama Power Co. Class A 7.60% 116,200 3,036 01039271
Cleveland Electric Illuminating Co., Series L adj. rate 7,700 720
18610850
Gulf Power Co. Class A 7.30% 120,000 3,030 40247984
Mississippi Power Co. depository shares
representing 1/4 share 7 1/4% 135,600 3,475 60541786
Northern Indiana Public Service Co., Series A adj. rate 29,100 1,375
66526287
Public Service Co. of New Hampshire Co., Series A 77,500 2,150 74448283
Texas Utilities Electric Co.:
Series A adj. rate 7,700 745 88285059
Series B adj. rate 4,175 414 88285061
14,945
GAS - 0.3%
ENSERCH Corp., Series D adj. rate 75,500 3,794 29356730
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - 0.2%
GTE North, Inc. $7.60 6,800 $ 687 36233750
SIP (Societa Ital Per L'Eser) Spa Di Risp Ord. 600,000 1,314 78401796
Stet Societa Finanziaria Telefonica Spa 500,000 1,134 85982592
3,135
TOTAL Utilities 21,874
TOTAL NONCONVERTIBLE PREFERRED STOCKS 21,874
TOTAL PREFERRED STOCKS
(Cost $33,001) 41,185
CORPORATE BONDS - 0.9%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - 0.2%
UTILITIES - 0.2%
GAS - 0.2%
Consolidated Natural Gas Co. 7 1/4%, 12/15/15 A2 $ 2,250 2,559 209615BL
NONCONVERTIBLE BONDS - 0.7%
UTILITIES - 0.7%
ELECTRIC UTILITY - 0.7%
Georgia Power Co. 1st mtg. 6 7/8%, 9/1/02 A3 10,000 10,299 373334DV
TOTAL CORPORATE BONDS
(Cost $11,698) 12,858
REPURCHASE AGREEMENTS - 3.2%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 3.11% dated
1/31/94 due 2/1/94 $46,885 46,881
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,252,501) $ 1,474,858
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE VALUE GAIN/(LOSS)
CONTRACTS TO SELL
1,361 GBP 4/25/94 $ 2,039 $ (9)
(Receivable amount $2,030)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.1%
CURRENCY ABBREVIATION
GBP - British pound
LEGEND
1. Non-income producing
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 $8,042,000 or 0.6% of net
assets.
OTHER INFORMATION
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 80.8%
Hong Kong 2.7
Spain 2.7
Canada 2.4
Brazil 2.2
Mexico 2.2
United Kingdom 1.9
Netherlands 1.2
Japan 1.0
Others (individually less than 1%) 2.9
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1994, the aggregate cost of investment securities for income
tax purposes was $1,252,754,000. Net unrealized appreciation aggregated
$222,104,000, of which $236,142,000 related to appreciated investment
securities and $14,038,000 related to depreciated investment securities.
The fund hereby designates $8,577,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
On December 31, 1991, the fund acquired substantially all of the assets of
Fidelity Corporate Trust: Adjustable Rate Preferred Portfolio in a tax-free
exchange for shares of Fidelity Utilities Income Fund; Fidelity Corporate
Trust: Adjustable Rate Preferred Portfolio had a capital loss carryover of
approximately $26,645,000 (subject to certain limitations) available to
offset future capital gains in Fidelity Utilities Income Fund, to the
extent provided by regulations.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JANUARY 31, 1994

ASSETS 3. 4.

5.Investment in securities, at value (including 6. $ 1,474,858
repurchase agreements of $46,881) (cost $1,252,501)
(Notes 1 and 2) - See accompanying schedule

7.Short foreign currency contracts (Note 2) $ (2,039) 8.
Contracts held, at value

9. Receivable for contracts held 2,030 (9)

10.Cash 11. 19

12.Receivable for investments sold 13. 37,244

14.Receivable for fund shares sold 15. 13,407

16.Dividends receivable 17. 5,670

18.Interest receivable 19. 305

20.Other receivables 21. 50

22. TOTAL ASSETS 23. 1,531,544

LIABILITIES 24. 25.

26.Payable for investments purchased 53,833 27.

28.Payable for fund shares redeemed 20,166 29.

30.Accrued management fee 622 31.

32.Other payables and accrued expenses 508 33.

34. TOTAL LIABILITIES 35. 75,129

36.NET ASSETS 37. $ 1,456,415

38.Net Assets consist of (Note 1): 39. 40.

41.Paid in capital 42. $ 1,195,503

43.Undistributed net investment income 44. 2,616

45.Accumulated undistributed net realized gain (loss) on 46. 35,948
investments

47.Net unrealized appreciation (depreciation) on: 48. 49.

50. Investment securities 51. 222,357

52. Foreign currency contracts 53. (9)

54.NET ASSETS, for 91,973 shares outstanding 55. $ 1,456,415

56.NET ASSET VALUE, offering price and redemption price 57. $15.84
per share ($1,456,415 (divided by) 91,973 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JANUARY 31, 1994

INVESTMENT INCOME 59. $ 53,276
58.Dividends

60.Interest (including security lending fees of $12) (Note 61. 6,047
5)

62. TOTAL INCOME 63. 59,323

EXPENSES 64. 65.

66.Management fee (Note 4) $ 7,340 67.

68.Transfer agent fees (Note 4) 3,679 69.

70.Accounting fees and expenses (Note 4) 574 71.

72.Non-interested trustees' compensation 8 73.

74.Custodian fees and expenses 102 75.

76.Registration fees 186 77.

78.Audit 39 79.

80.Legal 14 81.

82.Miscellaneous 130 83.

84. Total expenses before reductions 12,072 85.

86. Expense reductions (Note 7) (63) 12,009

87. NET INVESTMENT INCOME 88. 47,314

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 90. 91.
(NOTES 1 AND 3)
89.Net realized gain (loss) on:

92. Investment securities 47,696 93.

94. Foreign currency contracts (59) 47,637

95.Change in net unrealized appreciation (depreciation) 96. 97.
on:

98. Investment securities 122,736 99.

100. Foreign currency contracts (9) 122,727

101.NET GAIN (LOSS) 102. 170,364

103.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 104. $ 217,678
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JANUARY 31, 1994 JANUARY 31, 1993

INCREASE (DECREASE) IN NET ASSETS

105.Operations $ 47,314 $ 36,001
Net investment income

106. Net realized gain (loss) on investments 47,637 30,318

107. Change in net unrealized appreciation 122,727 50,886
(depreciation) on
investments

108. 217,678 117,205
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS

109.Distributions to shareholders: (47,168) (34,459)
From net investment income

110. From net realized gain (19,433) (23,858)

111. (66,601) (58,317)
TOTAL DISTRIBUTIONS

112.Share transactions 1,145,727 697,327
Net proceeds from sales of shares

113. Reinvestment of distributions from: 40,925 29,792
Net investment income

114. 17,591 21,637
Net realized gain

115. Cost of shares redeemed (901,215) (452,505)

116. 303,028 296,251
Net increase (decrease) in net assets resulting from
share transactions

117. 454,105 355,139
TOTAL INCREASE (DECREASE) IN NET ASSETS

NET ASSETS 118. 119.

120. Beginning of period 1,002,310 647,171

121. $ 1,456,415 $ 1,002,310
End of period (including undistributed net investment
income of $2,616 and $4,171, respectively)

OTHER INFORMATION 123. 124.
122.Shares

125. Sold 75,304 51,961

126. Issued in reinvestment of distributions from: 2,702 2,252
Net investment income

127. 1,187 1,618
Net realized gain

128. Redeemed (59,108) (33,959)

129. Net increase (decrease) 20,085 21,872

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
130. YEARS ENDED JANUARY 31,

131. 1994 1993 1992 1991 1990

132.SELECTED PER-SHARE
DATA

133.Net asset value, $ 13.94 $ 12.94 $ 11.74 $ 11.96 $ 11.10
beginning of period

134.Income from Investment
Operations

135. Net investment income .50 .61 .63 .67 .72

136. Net realized and 2.14 1.37 1.38 .10 1.21
unrealized
gain (loss) on investments

137. Total from investment 2.64 1.98 2.01 .77 1.93
operations

138.Less Distributions

139. From net investment (.52) (.60) (.63) (.69) (.76)
income

140. From net realized gain (.22) (.38) (.18) (.30) (.31)

141. Total distributions (.74) (.98) (.81) (.99) (1.07)

142.Net asset value, end of $ 15.84 $ 13.94 $ 12.94 $ 11.74 $ 11.96
period

143.TOTAL RETURN (dagger) 19.34% 15.92% 17.70% 6.84% 17.70%

144.RATIOS AND
SUPPLEMENTAL DATA

145.Net assets, end of period $ 1,456 $ 1,002 $ 647 $ 220 $ 157
(in millions)

146.Ratio of expenses to .86% .87% .95% .94% 1.02%
average net assets *

147.Ratio of expenses to .87% .87% .95% .94% 1.02%
average net assets before *
expense reductions

148.Ratio of net investment 3.39% 4.57% 5.11% 5.93% 6.19%
income to average net
assets

149.Portfolio turnover rate 47% 73% 39% 43% 61%

</TABLE>

(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
* SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Utilities Income Fund (the fund) is a fund of Fidelity Devonshire
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 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 (including restricted 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 maturing within sixty days
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 current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
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 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. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, partnerships, non-taxable dividends, and
losses deferred due to wash sales and excise tax regulations. 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.
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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective February
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,
the fund changed the classification of distributions to share
holders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax
regulations. Accordingly, amounts as of January 31, 1993 have been
reclassified to reflect an increase in paid in capital of $3,481,000, a
decrease in undistributed net investment income of $740,000 and a decrease
in accumulated net realized gain on investments of $2,741,000.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $898,401,000 and $575,861,000, respectively, of which sales of
U.S. government and government agency obligations aggregated $42,745,000.
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 ranging from
.30% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .20%.
For the period, the management fee was equivalent to an annual rate of .53%
of average net assets.
On November 17, 1993, the shareholders of the fund approved a new
management contract which took effect on December 1, 1993. The new
management contract implements a performance adjustment (up to a maximum of
+ or - .15%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time and revises the group fee
rate schedule since it resulted in the same or lower management fee. The
performance adjustment will not take effect until the new contract has been
in effect for twelve months.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEE - CONTINUED
FSC pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting
records and administers the security lending program. The security lending
fee is based on the number and duration of lending transactions. The
accounting fee is based on the level of average net assets for the month
plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $427,000 for the period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, there were no
loans outstanding.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $2,157,000 and $2,157,000,
respectively. The weighted average interest rate was 3.56%.
7. 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
$63,000 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Devonshire Street Trust and the Shareholders of
Fidelity Utilities Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Devonshire Street Trust: Fidelity Utilities Income Fund, including
the schedule of portfolio investments, as of January 31, 1994, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of January 31, 1994 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Devonshire Street Trust: Fidelity Utilities Income Fund as of
January 31, 1994, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
March 4, 1994
TO CALL FIDELITY

FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.

(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO WRITE FIDELITY

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. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
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 *
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 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 Fund
Real Estate Investment Portfolio
Utilities Income Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
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)

* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(2)

FIDELITY
EQUITY-INCOME
FUND

(Registered trademark)
ANNUAL REPORT
JANUARY 31, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 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 last six
months.

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

FINANCIAL STATEMENTS 42 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 46 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 52 The auditor's opinion.
ACCOUNTANTS

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage of change in value, the average annual
percentage change, or the growth of a hypothetical $10,000 investment. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
Equity-Income has a 2% sales charge, which has been waived through December
31, 1995.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Equity-Income 22.52% 79.53% 271.02%

Equity-Income (incl. 2% sales charge) 20.07% 75.94% 263.60%

S&P 500 12.88% 90.05% 318.37%

Average Equity Income Fund 15.04% 74.57% 237.91%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. For example, if
you had invested $1,000 in a fund that had a 5% return over the past year,
you would have $1,050. You can compare these figures to the performance of
the Standard & Poor's 500 Composite Stock Price Index - a common proxy
for the U.S. stock market. You can also compare them to the average equity
income fund, which reflects the performance of 97 funds tracked by Lipper
Analytical Services. Both benchmarks include reinvested dividends and
capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Equity-Income 22.52% 12.42% 14.01%

Equity-Income (incl. 2% sales charge) 20.07% 11.96% 13.78%

S&P 500 12.88% 13.70% 15.39%

Average Equity Income Fund 15.04% 11.70% 12.61%

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 TEN YEARS
Equity Income (023) s&p 500
01/31/84 9800.00 10000.00
02/29/84 9394.60 9648.00
03/31/84 9471.26 9814.91
04/30/84 9458.48 9908.15
05/31/84 9062.44 9359.24
06/30/84 9231.30 9562.34
07/31/84 9213.98 9443.76
08/31/84 9954.67 10487.30
09/30/84 10205.30 10489.40
10/31/84 10394.37 10530.30
11/30/84 10504.29 10412.37
12/31/84 10791.46 10687.25
01/31/85 11602.51 11519.79
02/28/85 11611.52 11661.48
03/31/85 11572.23 11669.65
04/30/85 11567.56 11659.14
05/31/85 12183.26 12333.04
06/30/85 12352.25 12526.67
07/31/85 12413.71 12507.88
08/31/85 12427.89 12401.56
09/30/85 12121.46 12013.39
10/31/85 12519.12 12568.41
11/30/85 13050.93 13430.61
12/31/85 13495.72 14080.65
01/31/86 13790.06 14159.50
02/28/86 14668.19 15218.63
03/31/86 15486.06 16067.83
04/30/86 15412.17 15886.26
05/31/86 15459.67 16731.41
06/30/86 15670.37 17014.17
07/31/86 15104.04 16063.08
08/31/86 15958.88 17254.96
09/30/86 15209.64 15827.98
10/31/86 15863.87 16741.25
11/30/86 16026.08 17148.06
12/31/86 15799.65 16710.79
01/31/87 17328.09 18961.73
02/28/87 17837.57 19710.72
03/31/87 18151.25 20280.36
04/30/87 17921.25 20099.86
05/31/87 17815.57 20274.73
06/30/87 18312.54 21298.60
07/31/87 18859.27 22378.44
08/31/87 19393.44 23213.16
09/30/87 18962.42 22704.79
10/31/87 15633.67 17814.18
11/30/87 14941.24 16346.29
12/31/87 15540.99 17590.24
01/31/88 16579.42 18330.79
02/29/88 17354.70 19185.01
03/31/88 17145.34 18592.19
04/30/88 17382.97 18798.56
05/31/88 17584.60 18962.11
06/30/88 18581.16 19832.47
07/31/88 18544.73 19757.11
08/31/88 18173.10 19085.37
09/30/88 18708.45 19898.40
10/31/88 19040.29 20451.58
11/30/88 18855.93 20159.12
12/31/88 19036.33 20511.91
01/31/89 20252.54 22013.38
02/28/89 20071.24 21465.25
03/31/89 20460.66 21965.39
04/30/89 21223.65 23105.39
05/31/89 21729.72 24041.16
06/30/89 21796.47 23904.12
07/31/89 23212.84 26062.67
08/31/89 23496.12 26573.49
09/30/89 23210.35 26464.54
10/31/89 21978.29 25850.57
11/30/89 22272.40 26377.92
12/31/89 22590.49 27010.99
01/31/90 21204.82 25198.55
02/28/90 21238.42 25523.61
03/31/90 21252.92 26199.99
04/30/90 20454.13 25544.99
05/31/90 21771.29 28035.62
06/30/90 21683.12 27844.98
07/31/90 21373.61 27755.88
08/31/90 19714.27 25246.75
09/30/90 18287.81 24017.23
10/31/90 17921.88 23913.96
11/30/90 19045.81 25458.80
12/31/90 19423.18 26169.10
01/31/91 20369.76 27310.07
02/28/91 21798.74 29262.74
03/31/91 22115.95 29970.90
04/30/91 22226.53 30042.83
05/31/91 23387.62 31340.68
06/30/91 22364.83 29905.28
07/31/91 23558.61 31298.86
08/31/91 24090.22 32040.64
09/30/91 23972.44 31505.57
10/31/91 24340.52 31927.74
11/30/91 23377.85 30641.05
12/31/91 25134.23 34146.39
01/31/92 25382.61 33511.27
02/29/92 26156.42 33946.91
03/31/92 25803.81 33284.95
04/30/92 26673.28 34263.52
05/31/92 26934.12 34431.42
06/30/92 26623.78 33918.39
07/31/92 27286.94 35305.65
08/31/92 26740.81 34581.88
09/30/92 26956.18 34989.95
10/31/92 27231.85 35112.42
11/30/92 28127.76 36309.75
12/31/92 28822.80 36756.36
01/31/93 29677.25 37065.11
02/28/93 30392.60 37569.20
03/31/93 31392.22 38361.91
04/30/93 31332.10 37433.55
05/31/93 31893.21 38436.77
06/30/93 32278.61 38548.24
07/31/93 32773.65 38394.04
08/31/93 33874.86 39849.18
09/30/93 33826.27 39542.34
10/31/93 34406.67 40360.86
11/30/93 33856.81 39977.44
12/31/93 34964.77 40461.16
01/31/94 36359.65 41836.84

$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity
Equity-Income Fund on January 31, 1984, and paid a 2% sales charge. As the
chart shows, by January 31, 1994, the value of your investment would have
grown to $36,360 - a 263.60% increase on your 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
$41,837 - a 318.37% 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 Stephen Petersen, Portfolio Manager of Fidelity
Equity-Income Fund
MARKET RECAP
Low inflation, falling interest rates
and an improving economy
boosted U.S. stocks during the
12 months ended January 31,
1994. The Standard &
Poor's 500 stock index rose
12.88%, slightly ahead of the
market's long-term annual
average return. The technology
sector excelled, and
communication stocks soared as
telephone utilities, cellular
companies, and entertainment
firms formed strategic alliances.
Other top performers were
economically sensitive sectors,
like autos and steel; heavy
machinery; and precious metals,
all up in the second half of the
year. Some tobacco, drug, and
brand name consumer products
stocks picked up by year-end, but
had weak returns for the year
overall. Conversely, financial
stocks did well the first half of the
year, but gave back some of their
gains in the second half. The
NASDAQ Composite Index -
which tracks over-the-counter
stocks - rose 14.95% for the
year, but was outpaced by the
Dow Jones Industrial Average -
an index of 30 blue-chip stocks -
which rose 23.61%. On January
21, the Dow broke the 3900
barrier for the first time, and
finished the month at 3978.
Returns in most international
markets easily outpaced those in
the U.S., with Hong Kong
remaining the big winner even
after a correction in January. The
Morgan Stanley EAFE (Europe,
Australia, Far East) index rose
43.79%, while the Morgan
Stanley Emerging Markets Index
was up 75.51% for the year
ended January 31, 1994.
Q. STEVE, HOW DID THE FUND DO?
A. The fund had a good year. Its total return for the 12 months ended
January 31, 1994 was 22.52%. The average equity income fund tracked by
Lipper Analytical Services returned 15.04% during the same period.
Q. HOW DID THE FUND BEAT THE AVERAGE BY SUCH A WIDE MARGIN?
A. Many of the fund's best performing stocks over the last six months were
cyclicals - those that rise and fall in tandem with the economy. The stocks
of many industrial machinery and equipment companies - 5.9% of the fund on
January 31 - are good examples. Farm equipment manufacturers Deere and
Tenneco were among the fund's top performers. The fund's second largest
investment, conglomerate General Electric, owns several businesses that
tend to prosper along with the economy; so it also performed well. In
addition, the fund had 5.4% stake in consumer cyclicals, or durable goods,
on January 31. I also increased the fund's investment in the so-called deep
cyclicals, or basic industries - those companies that provide raw materials
for consumer products - from 7.4% to 8.8% over the last six months.
Q. LET'S BEGIN WITH THE CONSUMER CYCLICALS. WHICH WERE THE WINNERS?
A. Among the biggest were the U.S. auto manufacturers; Detroit roared down
Wall Street in 1993. A combination of strong domestic sales and a
relatively weak dollar versus the Japanese yen - which made the Japanese
producers less competitive - triggered a strong rise in corporate profits
at the Big Three. During the six months ended January 31, Chrysler's stock
rose 40%, Ford was up 27% and General Motors, 26%. To a lesser extent, the
fund benefited from investing in foreign auto companies based in countries
with improving economies. Examples included Volkswagen and Fiat.
Q. HOW ABOUT THE DEEP CYCLICALS?
A. To build all of those cars, you need plenty of steel. An increasing
demand for steel domestically helped drive up prices. Add to that a weaker
dollar, and U.S. steel companies suddenly improved their standing among
rivals in Europe and Japan. The stocks of Bethlehem Steel - up 61% over the
last six months - U.S. Steel (up 46%) and Inland Steel (up 37%) all helped
the fund. Companies that produce other basic commodities like aluminum,
paper products and chemicals also were strong performers. In hindsight, I
wish I had invested more heavily in these areas. Last fall, I wasn't
enthusiastic about the outlook of commodity prices and their effect on the
earnings of these companies. It turned out the market was more optimistic
than I was. Not taking better advantage of the run-up among these stocks
was a disappointment.
Q. OVER THE PAST SIX MONTHS, THE FUND HAD AT LEAST 19% OF ITS INVESTMENTS
IN FINANCIAL STOCKS. HOW DID THEY DO?
A. On the whole, quite well, but it wasn't easy. Over the past three years,
you almost could have thrown darts at a list of financial stocks and landed
on winners. The profit margins of banks, especially, benefited from falling
interest rates, and the prices of these stocks rose to high levels. But
everything changed last fall when interest rates appeared to have bottomed
out. Investors quickly began taking profits, which sent some of these
stocks reeling. The fund took some lumps, which I regret, but it's helped
to stay focused on specific types of financial stocks.
Q. WHICH WERE THOSE?
A. In a period of stable or rising interest rates, some banks will have the
ability to sustain earnings growth. Others will have trouble. I zeroed in
on two types of banks: those that might still see earnings improvement from
declining non-performing loans, and those that are beginning to see loan
growth. Among the first batch, Citicorp - the fund's largest investment -
performed well. The fund's stake in Citicorp is in convertible preferred
stock, which tends to pay better than average yields. First Chicago and
First Interstate also held up well, and I expect them to improve in '94.
The second group included some of the better regional banks, mainly those
in the Midwest: Banc One, Firstar and Mercantile Bank, among them. I expect
stronger performance from these names in the months ahead.
Q. YOU MAINTAINED AT LEAST AN 8% STAKE IN ENERGY OVER THE PAST SIX MONTHS.
DID THE FUND'S ENERGY STOCKS STUMBLE WHEN OIL PRICES FELL LAST FALL?
A. No, because I kept most of the fund's energy investments in the large
multinational companies like British Petroleum, Exxon and Mobil. These
companies were able to offset the impact of slumping oil prices through
their strong refining and marketing businesses. When crude prices fall,
these companies don't reduce their prices at the gas pump quite as quickly,
which helps earnings. I think a shrinking demand from some of the more
sluggish economies around the world helped trigger the lower prices. As
these economies pick up, I think demand will too. Plus, these multinational
companies have large dividend yields and dramatically improved balance
sheets after years of restructuring. Given all these factors, I recently
increased the fund's investments in companies like Exxon, Mobil and
Chevron.
Q. OVER THE PAST SIX MONTHS, THE FUND HAS KEPT ABOUT A 20% STAKE IN
FOREIGN INVESTMENTS. HAVE YOU MADE ANY CHANGES?
A. Yes. I cut back on the fund's investments in Hong Kong, which had a wild
ride in '93, up 117% in U.S. dollars. Hong Kong attracted my attention more
than other booming Asian markets because - being a part of the British
Commonwealth - companies there have adopted a U.K. style of management and
structure. That often includes paying high dividends. Also, as Hong Kong
prepares to become a part of China in 1997, some companies have begun
securing joint business ventures with the Chinese. That's given investors
reason for optimism about the future. A couple of large conglomerates,
Hutchison Whampoa and Citic Pacific, helped the fund, as did property
companies Hang Lung and Amoy, and hotel builder Shangri-La, among others. I
reduced my Hong Kong investments by about two-thirds late in the period
because valuations - stock prices compared to other measures like earnings
- - were so high. In some cases, I didn't move quickly enough, because the
Hong Kong market saw a sudden correction in January. I kept intact,
however, most of the fund's investment in Germany, my other main focus
overseas.
Q. WHAT OPPORTUNITIES DID YOU FIND THERE?
A. Germany is a traditional economic recovery story. After a prolonged
recession, the government began stimulating the economy by dropping
interest rates. That helped German financial stocks like Deutsche Bank. In
addition, German manufacturers who cut costs and restructured during the
bad times are bouncing back now. I already mentioned Volkswagen. Mannesmann
- - a large German industrial and engineering firm - and Siemens - an
electronics company - have also done well.
Q. WHAT'S AHEAD FOR THE FUND?
A. Many investors are concerned about high valuations in the U.S. stock
market. What makes me more uncomfortable is how long we've gone - more than
three years - without a market correction of at least 10%. Usually, that
period is more along the order of 18 to 24 months. But there is an up side.
The improving economy and stabilizing interest rates have changed the stock
investing landscape from a market driven by falling rates to a market
driven by stronger corporate earnings, which creates some interesting
investing opportunities. As long as inflation and interest rates remain
low, and we're able to find companies well-
positioned to grow earnings, I'll stay optimistic. Plus, a market
correction would probably provide more chances to buy attractive stocks at
reasonable prices.

FUND FACTS
GOAL: to increase the value
of the fund's shares over the
long term by investing mainly
in
income-producing equities
START DATE: May 16, 1966
SIZE: as of January 31,
1994, over $6.9 billion
MANAGER: Stephen
Petersen, since August
1993; manager, various
institutional accounts, since
1987
(checkmark)
STEPHEN PETERSEN ON
INDUSTRIAL AMERICA:
"The last 10 to 15 years have
been volatile for most major
American corporations. To
survive, many have undergone
significant restructuring and
cost cutting. Those that did the
best job have benefited most
as the economy has shown
vibrant signs of life over the
past year. The combination of
a strengthening economy and
a devalued dollar has made
American corporations more
competitive worldwide. Stock
prices have reflected this
improvement, and I expect the
resurgence of industrial
America to be a major
investment theme for the fund
for some time to come."
(bullet) The fund had a 12.9%
investment in bonds on
January 31. The bulk of these
investments were in high-yield
issues in the United States -
which benefited from a better
economy - and the foreign
debt of governments in
emerging nations. These
bonds are dollar-denominated,
and don't carry the currency
risk of non-dollar denominated
bonds.
DISTRIBUTIONS
The Board of Trustees of
Fidelity Equity-Income Fund
voted to pay on March 7,
1994, to shareholders of
record at the opening of
business on March 4, 1994, a
distribution of $1.03 derived
from capital gains realized
from sales of portfolio
securities and a dividend of
$.26 from net investment
income.
INVESTMENT CHANGES

TOP TEN STOCKS AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Citicorp 2.7 3.1

General Electric Co. 2.1 2.2

Entergy Corp. 1.1 1.3

NationsBank Corp. 1.0 0.6

Grace (W.R.) & Co. 1.0 0.8

International Business Machines 0.9 0.0
Corp.

First Fidelity Bancorporation 0.9 1.3

CSX Corp. 0.9 0.9

Caterpillar, Inc. 0.8 0.7

Xerox Corp. 0.8 0.7

TOP FIVE INDUSTRIES AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Finance 21.3 21.8

Utilities 12.1 12.9

Basic Industries 8.8 7.4

Energy 8.7 8.3

Industrial Machinery and 6.1 7.6
Equipment

ASSET ALLOCATION
AS OF JANUARY 31, 1994* AS OF JULY 31, 1993**
Row: 1, Col: 1, Value: 6.1
Row: 1, Col: 2, Value: 15.1
Row: 1, Col: 3, Value: 7.2
Row: 1, Col: 4, Value: 31.6
Row: 1, Col: 5, Value: 20.0
Row: 1, Col: 6, Value: 20.0
Stocks 75.6%
Bonds 6.4%
Convertible
securities 14.0%
Other securities
and short-term
investments 4.0%
Stocks 71.6%
Bonds 7.2%
Convertible
securities 15.1%
Other securities
and short-term
investments 6.1%
Row: 1, Col: 1, Value: 4.0
Row: 1, Col: 2, Value: 14.0
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 35.6
Row: 1, Col: 5, Value: 20.0
Row: 1, Col: 6, Value: 20.0
* FOREIGN
INVESTMENTS 21.5%
** FOREIGN
INVESTMENTS 19.5%
INVESTMENTS JANUARY 31, 1994

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 69.9%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.8%
DEFENSE ELECTRONICS - 0.8%
E-Systems, Inc. 193,700 $ 8,717 26915730
General Motors Corp. Class H 159,700 6,268 37044250
Raytheon Co. 565,500 38,312 75511110
53,297
BASIC INDUSTRIES - 6.6%
CHEMICALS & PLASTICS - 3.4%
Akzo NV:
Ord. 45,000 4,875 01019910
sponsored ADR 115,700 6,262 01019930
Betz Laboratories, Inc. 168,300 8,478 08777910
du Pont (E.I.) de Nemours & Co. 248,800 13,933 26353410
Eastman Chemical Co. 110,175 4,820 27743210
Goodrich (B.F.) Company 372,200 15,539 38238810
Grace (W.R.) & Co. 1,446,200 65,983 38388310
Imperial Chemical Industries:
Ord 1,828,600 21,864 45270440
PLC ADR 223,600 10,901 45270450
Lyondell Petrochemical Co. 743,500 16,915 55207810
PPG Industries, Inc. 100,700 7,943 69350610
Potash Corp. of Saskatchewan 559,100 15,933 73755L10
Union Carbide Corp. 960,800 24,500 90558110
Vigoro Corp. 284,900 8,974 92675410
Witco Corp. 237,900 7,821 97738510
234,741
IRON & STEEL - 1.1%
British Steel PLC:
ADR 330,700 7,110 11101530
Ord. 5,641,600 12,170 11101510
Compania Siderurgica Nacional (b) 228,000,000 6,760 24499523
LTV Corp. (b) 463,300 8,166 50192110
Mannesmann AG Ord. 160,900 38,205 56377510
USX-U.S. Steel Group 142,000 6,248 90337T10
78,659
METALS & MINING - 1.4%
Alumax, Inc. 213,500 5,711 02219710
Aluminum Co. of America 385,674 30,516 02224910
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
De Beers Consolidated Mines Ltd. ADR 732,200 $ 16,749 24025330
Noranda, Inc. 379,500 7,603 65542210
Preussag AG 36,500 9,755 74137599
Reynolds Metals Co. 478,000 25,513 76176310
95,847
PAPER & FOREST PRODUCTS - 0.7%
Champion International Corp. 86,800 2,897 15852510
Georgia-Pacific Corp. 113,300 8,526 37329810
International Paper Co. 273,100 20,516 46014610
Union Camp Corp. 71,000 3,488 90553010
Weyerhaeuser Co. 332,500 16,251 96216610
51,678
TOTAL BASIC INDUSTRIES 460,925
CONGLOMERATES - 4.4%
Alexander & Baldwin, Inc. 200,200 5,305 01448210
Allied-Signal, Inc. 580,600 45,650 01951210
Brascan Ltd. Class A 1,148,300 15,660 10550240
Canadian Pacific Ltd. Ord. 1,223,900 22,331 13644030
Crane Co. 63,500 1,699 22439910
Dial Corp. (The) 755,700 32,967 25247010
Hanson Trust PLC:
Ord. 2,443,600 10,616 41135210
sponsored ADR 989,500 21,398 41135230
ITT Corp. 484,100 47,623 45067910
Penn Central Corp. 265,600 8,068 70727110
Teledyne, Inc. 5,500 128 87933510
Textron, Inc. 679,500 40,175 88320310
United Technologies Corp. 785,200 52,903 91301710
304,523
CONSTRUCTION & REAL ESTATE - 2.0%
BUILDING MATERIALS - 0.5%
Armstrong World Industries, Inc. 543,000 30,544 04247610
CONSTRUCTION - 0.1%
Hopewell Holdings Ltd. 8,708,000 9,922 44099999
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
ENGINEERING - 0.1%
EG&G, Inc. 298,700 $ 5,675 26845710
REAL ESTATE INVESTMENT TRUSTS - 1.3%
Carr Realty Corp. 120,400 2,829 14441K10
Crown American Realty Trust (SBI) 412,100 5,872 22818610
Equity Residential Property Trust (SBI) 379,800 11,062 29476L10
Federal Realty Investment Trust (SBI) 530,800 12,805 31374720
General Growth Properties, Inc. 21,800 469 37002110
Haagen Alexander Properties, Inc. 180,200 3,041 40443E10
Health Care Property Investors, Inc. 65,000 1,869 42191510
Meditrust (SBI) 67,450 2,201 58501T10
Merry Land & Investment Co., Inc. 253,200 5,570 59043810
Nationwide Health Properties, Inc. 481,800 17,344 63862010
Property Trust of America (SBI) 3,292 63 74344510
Regency Realty Group 40,000 715 75893910
Simon Properties Group, Inc. (b) 371,100 9,092 82880510
Taubman Centers, Inc. 310,600 3,572 87666410
Vornado Realty Trust 114,000 3,990 92904210
Weingarten Realty Investors (SBI) 257,900 9,607 94874110
Western Investment Real Estate Trust (SBI) 118,400 1,510 95846810
91,611
TOTAL CONSTRUCTION & REAL ESTATE 137,752
DURABLES - 3.6%
AUTOS, TIRES, & ACCESSORIES - 2.7%
Dana Corp. 168,700 9,848 23581110
Echlin, Inc. 486,300 16,899 27874910
Fiat Spa 3,504,700 10,085 31562110
General Motors Corp. 621,800 38,163 37044210
Genuine Parts Company 411,800 15,957 37246010
Johnson Controls, Inc. 357,600 21,009 47836610
Snap-on Tools Corp. 312,800 13,411 83303410
TRW, Inc. 327,400 24,473 87264910
Toyota Motor Corporation 436,000 7,862 89399999
Volkswagen AG 98,600 25,146 92866210
182,853
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.7%
Matsushita Electric Industrial Co. Ltd. 663,000 $ 10,552 57687910
Sony Corp. 131,100 7,683 83569999
Whirlpool Corp. 423,400 28,632 96332010
46,867
TEXTILES & APPAREL - 0.2%
Guilford Mills, Inc. 141,450 3,147 40179410
Unifi, Inc. 253,300 6,269 90467710
VF Corp. 92,700 4,299 91820410
13,715
TOTAL DURABLES 243,435
ENERGY - 7.4%
COAL - 0.0%
Eastern Enterprises Co. 88,600 2,304 27637F10
ENERGY SERVICES - 1.7%
Baker Hughes, Inc. 1,593,500 32,069 05722410
Halliburton Co. 987,500 31,847 40621610
McDermott International, Inc. 506,100 11,957 58003710
Schlumberger Ltd. 632,400 37,549 80685710
Smith International, Inc. (b) 219,262 2,165 83211010
115,587
OIL & GAS - 5.7%
Amoco Corp. 288,700 15,518 03190510
British Petroleum PLC:
ADR 765,600 52,252 11088940
Ord. 6,308,500 35,908 11088910
Chevron Corp. 378,100 35,304 16675110
Exxon Corp. 413,100 27,471 30229010
Imperial Oil Ltd. 545,000 19,068 45303840
Kerr-McGee Corp. 525,600 24,178 49238610
Louisiana Land & Exploration Co. 98,500 4,100 54626810
Mobil Corp. 183,500 14,864 60705910
Murphy Oil Corp. 498,600 20,630 62671710
Occidental Petroleum Corp. 1,438,000 25,884 67459910
Pennzoil Co. 103,200 5,702 70990310
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Phillips Petroleum Co. 741,600 $ 21,877 71850710
Royal Dutch Petroleum Co. 275,400 30,294 78025770
Total Compagnie Francaise des Petroles Class B 457,850 25,336 20434510
Total SA sponsored ADR (b) 142,500 3,919 89151E10
Unocal Corp. 826,700 24,284 91528910
Woodside Petroleum Ltd. 3,085,800 9,281 98022810
YPF Sociedad Anonima sponsored ADR representing
Class D shares 70,300 2,030 98424510
397,900
TOTAL ENERGY 515,791
FINANCE - 15.0%
BANKS - 8.7%
Banc One Corp. 490,200 18,383 05943810
Banco Central SA (Reg.) 229,300 5,229 05947010
Bank of New York Co., Inc. 840,947 47,408 06405710
Bank of Nova Scotia, Halifax 267,200 6,534 06414910
BankAmerica Corp. 244,800 11,383 06605010
Bayerische Vereinsbank AG:
Ord. 69,700 21,943 07276110
(rights) (b) 69,700 402 07276192
Boatmen's Bancshares, Inc. 423,700 12,393 09665010
Chemical Banking Corp. 187,800 7,418 16372210
Comerica, Inc. 643,826 18,108 20034010
Commerzbank AG 74,600 16,152 20259710
Commerzbank AG (rights) (b) 74,600 215 20299027
Crestar Financial Corp. 217,769 9,282 22609110
Deutsche Bank AG 55,700 26,914 25152592
Dresdner Bank AG Ord. 61,500 15,443 26156110
First Chicago Corp. 674,800 31,716 31945510
First Fidelity Bancorporation 1,429,781 63,089 32019510
First Interstate Bancorp 708,663 49,696 32054810
First Union Corp. 348,139 15,144 33735810
Firstar Corp. 183,200 5,725 33761C10
KeyCorp. 560,000 20,720 49326310
Mellon Bank Corp. 869,436 48,580 58550910
Mercantile Bancorporation, Inc. 374,700 18,360 58734210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Morgan (J.P.) & Co., Inc. 126,172 $ 9,053 61688010
NationsBank Corp. 1,313,720 66,671 63858510
Royal Bank of Canada 561,400 13,306 78008710
Signet Banking Corp. 513,411 19,702 82668110
Wells Fargo & Co. 178,100 24,422 94974010
Westpac Banking Corp. sponsored ADR 85,100 1,670 96121430
605,061
CLOSED END INVESTMENT COMPANY - 0.2%
Jardine Strategic Holdings Ord. 1,466,500 6,456 47199020
Latin American Investment Fund, Inc. 138,000 4,675 51827910
11,131
CREDIT & OTHER FINANCE - 2.5%
American Express Co. 801,900 26,262 02581610
Argentaria Corp. Bancaria de Esp 353,600 16,809 21991392
Beneficial Corp. 1,135,800 45,006 08172110
Brierley Investments Ltd. 4,345,600 3,531 10901410
Citic Pacific Ltd. Ord. 3,692,000 11,903 45299792
GFC Financial Corp. 487,950 15,126 36160910
Household International, Inc. 1,433,208 47,475 44181510
Jardine Matheson & Co. Ltd. Ord. 898,400 9,131 47111510
175,243
INSURANCE - 2.3%
ACE Ltd. 180,000 5,085 00499G92
Allstate Corp. 304,200 8,670 02000210
American Bankers Insurance Group, Inc. 471,620 12,439 02445610
American General Corp. 1,079,300 30,895 02635110
CIGNA Corp. 290,100 20,053 12550910
Continental Corp. 76,800 2,170 21132710
Exel Ltd. 37,400 1,632 30161610
NWNL Companies, Inc. 345,800 10,849 62945T10
Paul Revere Corp. (b) 83,500 2,119 70355910
SAFECO Corp. 328,800 19,399 78642910
St. Paul Companies, Inc. (The) 284,900 25,178 79286010
Travelers, Inc. (The) 489,500 20,620 89419010
159,109
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - 0.8%
Ahmanson (H.F.) & Co. 1,671,300 $ 31,337 00867710
Great Western Financial Corp. 1,040,733 20,164 39144210
51,501
SECURITIES INDUSTRY - 0.5%
Bear Stearns Companies, Inc. 509,215 12,412 07390210
First Marathon, Inc. Class A 146,300 1,953 32076L20
Nomura Securities Co. Ltd. 396,000 8,452 65536130
PaineWebber Group, Inc. 411,900 12,203 69562910
35,020
TOTAL FINANCE 1,037,065
HEALTH - 2.4%
DRUGS & PHARMACEUTICALS - 1.4%
IMCERA Group, Inc. 942,500 35,697 45245410
Pfizer, Inc. 471,600 30,477 71708110
Schering-Plough Corp. 127,400 8,026 80660510
SmithKline Beecham PLC ADR 309,700 9,136 83237840
Upjohn Co. 74,700 2,241 91530210
Warner-Lambert Co. 172,800 11,254 93448810
96,831
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
Bergen Brunswig Corp. Class A 101,600 1,892 08373910
Johnson & Johnson 798,500 33,837 47816010
35,729
MEDICAL FACILITIES MANAGEMENT - 0.5%
HCA - Hospital Corporation of America Class A (b) 870,200 33,829
40412010
TOTAL HEALTH 166,389
INDUSTRIAL MACHINERY & EQUIPMENT - 5.9%
ELECTRICAL EQUIPMENT - 3.9%
General Electric Co. 1,331,800 143,501 36960410
General Signal Corp. 902,400 32,825 37083810
Hutchison Whampoa Ltd. Ord. 4,561,000 23,917 44841510
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Philips Electronics 1,287,300 $ 32,466 71833799
Philips NV (b) 736,900 18,607 71833750
Siemens AG 47,600 19,838 82619710
271,154
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
Caterpillar, Inc. 554,400 57,727 14912310
Deere & Co. 214,600 17,275 24419910
Duriron Company, Inc. 231,100 5,778 26684910
Mitsubishi Heavy Industry 2,179,000 14,253 60699310
Parker-Hannifin Corp. 133,600 5,110 70109410
Tenneco, Inc. 543,800 31,269 88037010
131,412
POLLUTION CONTROL - 0.1%
Ogden Corp. 382,900 8,902 67634610
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 411,468
MEDIA & LEISURE - 1.2%
BROADCASTING - 0.0%
SCI Television, Inc. (b) 120,933 1,451 78389520
SCI Television, Inc. Class B (warrants) (b) 31,312 6 78389513
Time Warner, Inc. 620 25 88731510
1,482
ENTERTAINMENT - 0.1%
Cedar Fair LP (depositary units) 270,100 9,825 15018510
LODGING & GAMING - 0.0%
Bally Gaming International, Inc. (g) 10,738 150 05873195
Bally Gaming International, Inc. (warrants) (b)(g) 225,000 1,688
05873194
Bally's Grand, Inc. 30,351 372 05873J10
2,210
PUBLISHING - 1.0%
Commerce Clearing House, Inc. Class B 7,900 144 20059720
Gannett Co., Inc. 187,800 10,705 36473010
Houghton Mifflin Co. 173,100 7,790 44156010
MaClean Hunter Ltd. 1,409,400 14,979 55474980
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - CONTINUED
McGraw-Hill, Inc. 3,000 $ 208 58064510
Reader's Digest Association, Inc. (The) Class A (non-vtg.) 167,300 7,779
75526710
Times Mirror Co. Series A 651,700 23,624 88736010
Torstar Corp. Class B 128,900 2,667 89147420
67,896
RESTAURANTS - 0.1%
Cafe De Coral Holdings Ltd. 5,834,400 3,626 12799092
TOTAL MEDIA & LEISURE 85,039
NONDURABLES - 1.9%
BEVERAGES - 0.6%
Anheuser-Busch Companies, Inc. 388,100 19,017 03522910
Heileman G Class 1 Unit (g) 100 2,000 42288492
Seagram Co. Ltd. 543,000 16,598 81185010
37,615
FOODS - 0.3%
Borden, Inc. 162,800 2,503 09959910
CPC International, Inc. 90,900 4,443 12614910
Heinz (H.J.) Co. 252,800 8,784 42307410
Pokphand CP Co. (Hong Kong Reg.) Ord. (b) 100,000 37 73299893
Ralston Purina Co. 114,900 5,056 75127730
20,823
HOUSEHOLD PRODUCTS - 0.3%
Avon Products, Inc. 437,952 23,923 05430310
TOBACCO - 0.7%
Philip Morris Companies, Inc. 821,700 49,507 71815410
TOTAL NONDURABLES 131,868
RETAIL & WHOLESALE - 2.9%
APPAREL STORES - 0.6%
Charming Shoppes, Inc. 817,500 9,401 16113310
Edison Brothers Stores, Inc. 383,000 11,538 28087510
United States Shoe Corp. 1,402,400 17,705 91260510
38,644
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
DRUG STORES - 0.1%
Rite Aid Corporation 357,400 $ 6,657 76775410
GENERAL MERCHANDISE STORES - 1.3%
Bradlees, Inc. 136,200 1,754 10449910
Federated Department Stores, Inc. (b) 223,394 4,887 31410J10
K mart Corp. 212,300 4,166 48258410
May Department Stores Co. (The) 51,700 2,042 57777810
Penney (J.C.) Co., Inc. 1,014,300 53,124 70816010
Sears, Roebuck & Co. 392,200 21,522 81238710
87,495
GROCERY STORES - 0.7%
Grand Union Capital Corp. Class B (b)(f) 6,979 4,746 40099B92
Grand Union Co. (warrants) (b) 1,749 1,224 38653295
Great Atlantic & Pacific Tea Co., Inc. 669,100 15,891 39006410
Supervalue, Inc. 767,400 29,929 86853610
51,790
RETAIL & WHOLESALE, MISCELLANEOUS- 0.2%
International Semi-Tech Microelectronics, Inc. 480,000 2,618 46031K50
Sotheby's Holdings, Inc. Class A 646,900 10,674 83589810
13,292
TRADING COMPANIES - 0.0%
Li & Fung Ltd. 919,000 690 51899592
TOTAL RETAIL & WHOLESALE 198,568
SERVICES - 0.8%
ADVERTISING - 0.1%
Omnicom Group, Inc. 150,000 7,350 68191910
LEASING & RENTAL - 0.2%
GATX Corp. 181,400 7,732 36144810
Ryder Systems, Inc. 328,500 8,828 78354910
16,560
PRINTING - 0.3%
Harland (John H.) Co. 128,500 2,956 41269310
Moore Corporation Ltd. 713,500 14,629 61578510
Standard Register Co. 19,500 434 85388710
18,019
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - 0.2%
National Service Industries, Inc. 444,100 $ 11,991 63765710
ServiceMaster LP 63,600 1,749 81761510
13,740
TOTAL SERVICES 55,669
TECHNOLOGY - 2.7%
COMMUNICATIONS - 0.0%
Digital Link 9,500 133
COMPUTER SERVICES & SOFTWARE - 0.1%
Sterling Software, Inc. (b) 118,677 4,005 85954710
COMPUTERS & OFFICE EQUIPMENT - 1.8%
International Business Machines Corp. 1,135,400 64,434 45920010
Semi-tech Microelectronics 3,120,700 5,980 81699192
Xerox Corp. 575,181 56,440 98412110
126,854
ELECTRONICS - 0.6%
Astrex, Inc. 615,723 77 04635720
Texas Instruments, Inc. 224,572 15,777 88250810
Thomas & Betts Corp. 157,900 9,987 88431510
Toshiba Corp. 1,935,000 12,959 89149310
38,800
PHOTOGRAPHIC EQUIPMENT - 0.2%
Eastman Kodak Co. 336,200 14,835 27746110
TOTAL TECHNOLOGY 184,627
TRANSPORTATION - 1.1%
AIR TRANSPORTATION - 0.1%
Swire Pacific Class A 564,000 4,637 87079410
RAILROADS - 0.9%
CSX Corp. 680,300 62,418 12640810
SHIPPING - 0.1%
Shun Tak Holdings Ltd. 6,618,000 7,883 82799192
TOTAL TRANSPORTATION 74,938
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 11.2%
CELLULAR - 0.0%
Pactel Corp. (b) 87,400 $ 2,207 69525210
ELECTRIC UTILITY - 5.1%
Baltimore Gas & Electric Co. 277,200 6,895 05916510
Cincinnati Gas & Electric Co. 116,800 3,095 17207010
Commonwealth Edison Co. 490,800 13,926 20279510
Consolidated Electric Power Asia Ltd. (b) 65,473 102 20855292
DPL, Inc. 1,044,150 22,188 23329310
DQE, Inc. 162,000 5,387 23329J10
EUA Power Corp. contingent int. ctf. (b) 8,140 8 26926020
Entergy Corp. 2,044,400 76,154 29364G10
Hong Kong Electric Holdings Ord. 3,582,000 13,589 43858010
Houston Industries, Inc. 594,100 27,106 44216110
Illinois Power Co. 1,306,300 28,412 45209210
Korea Electric Power Corp. 825,000 31,895 50099B92
Niagara Mohawk Power Corp. 516,400 10,457 65352210
PSI Resources, Inc. 234,700 6,014 69363210
Pacific Gas & Electric Co. 217,500 7,368 69430810
PacifiCorp. 663,300 12,437 69511410
Peco Energy Co. 670,100 19,349 69330410
Pinnacle West Capital Corp. (b) 776,300 17,370 72348410
Portland General Corp. 308,900 6,139 73650610
Texas Utilities Co. 155,730 6,015 88284810
United Illuminating Co. 53,800 2,004 91063710
Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. 120,400 35,649
92239110
351,559
GAS - 2.0%
Consolidated Natural Gas Co. 362,700 16,684 20961510
El Paso Natural Gas Co. 235,872 8,904 28369587
Energen Corp. 150,900 3,490 29265N10
Enron Corp. 828,300 27,230 29356110
MCN Corp. 216,300 7,976 55267J10
Pacific Enterprises 393,800 8,861 69423210
Panhandle Eastern Corp. 1,346,600 33,833 69846210
TransCanada PipeLines Ltd. 981,200 14,950 89352610
Williams Companies, Inc. 705,400 18,429 96945710
140,357
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 4.1%
ALLTEL Corp. 1,143,200 $ 31,867 02003910
Ameritech Corp. 753,400 31,643 03095410
Bell Atlantic Corp. 671,200 38,091 07785310
BellSouth Corp. 367,900 22,626 07986010
Comsat Corp. Series 1 142,300 3,860 20564D10
GTE Corp. 618,600 21,264 36232010
NYNEX Corp. 264,000 10,824 67076810
Pacific Telesis Group 431,600 24,871 69489010
Southwestern Bell Corp. 683,600 28,626 84533310
Sprint Corporation 871,700 31,599 85206110
U.S. West, Inc. 911,700 39,886 91288910
285,157
TOTAL UTILITIES 779,280
TOTAL COMMON STOCKS
(Cost $3,766,811) 4,840,634
PREFERRED STOCKS - 12.3%
CONVERTIBLE PREFERRED STOCKS - 10.6%
BASIC INDUSTRIES - 1.3%
IRON & STEEL - 0.4%
Armco, Inc. Class A $3.625 147,200 8,538 04217040
Bethlehem Steel Corp.:
$3.00 (b)(h) 226,800 15,195 08750950
$5.00 75,100 4,149 08750930
Inland Steel Industries, Inc. Series G, $4.625 exch. 66,700 4,336
45747250
32,218
METALS & MINING - 0.8%
Alumax, Inc. Series A, $4.00 238,266 28,592 02219720
Cyprus Amax Minerals Co. Series A, $4.00 221,033 15,749 23280920
Reynolds Metals Co. $3.31 146,600 8,063 76176350
52,404
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
PACKAGING & CONTAINERS - 0.1%
Sonoco Series A, $2.25 149,000 $ 8,381 83549520
TOTAL BASIC INDUSTRIES 93,003
CONSTRUCTION & REAL ESTATE - 0.2%
REAL ESTATE - 0.2%
Amoy Properties Ltd. 5 1/2% (h) 40,000 4,880 03189292
Rouse Co. Series A 166,000 8,549 77927320
13,429
DURABLES - 1.5%
AUTOS, TIRES, & ACCESSORIES - 1.5%
Chrysler Corp. Series A, $4.625 (h) 327,500 56,330 17119670
Federal Mogul Corp. $1.9375 (h) 47,000 4,982 31354920
Ford Motor Co. (Del.) Series A, $4.20 385,100 43,083 34537020
104,395
ENERGY - 0.9%
ENERGY SERVICES - 0.0%
Reading & Bates Corp. $1.625 150,400 4,004 75528188
OIL & GAS - 0.9%
Maxus Energy Corp. $4.00 137,100 6,152 57773020
Occidental Petroleum Corp. $3.00 651,500 32,331 67459979
Unocal Corp. $3.50 (b)(h) 373,900 22,341 91528920
60,824
TOTAL ENERGY 64,828
FINANCE - 3.6%
BANKS - 3.1%
Citicorp $5.375 (h) 1,491,900 184,622 17303451
Norwest Corp. Series B, $3.50 398,100 30,853 66938080
215,475
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.1%
American Express Co. 6 1/4% 212,700 $ 9,226 02581613
INSURANCE - 0.3%
I.C.H. Corp. Series 1986 A, $1.75 exch. 23,400 445 44926430
USF&G Corp. Series C, $5.00 297,600 19,381 90329030
19,826
SAVINGS & LOANS - 0.1%
Glendale Federal Bank Series E, $2.1875 280,100 7,038 37850740
TOTAL FINANCE 251,565
HEALTH - 0.0%
MEDICAL FACILITIES MANAGEMENT - 0.0%
Beverly Enterprises, Inc. $2.75 31,000 1,821 08785120
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Cooper Industries, Inc. $8.00 exch. (b) 64,700 1,674 21666950
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.3%
CBS, Inc. Series B, $10.00 50,000 11,050 12484593
Evergreen Media Corp. $3.00 exch. 241,500 11,743 30024820
22,793
PUBLISHING - 0.0%
Taylor, J.N. Holdings Ltd. 9 1/2% (b) 956,400 6 87799010
TOTAL MEDIA & LEISURE 22,799
NONDURABLES - 0.2%
TOBACCO - 0.2%
RJR Nabisco Holdings Corp. Series A, depositary
shares representing 1/4 share 1,407,600 11,085 74960K40
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SERVICES - 0.3%
LEASING & RENTAL - 0.2%
GATX Corp. $3.875 exch. 250,000 $ 14,031 36144840
SERVICES - 0.1%
Pittston Co. $3.125 (h) 94,000 4,935 72570140
TOTAL SERVICES 18,966
TECHNOLOGY - 0.4%
COMPUTER SERVICES & SOFTWARE - 0.1%
Ceridian Corp. (b) 141,100 8,201 15677T40
COMPUTERS & OFFICE EQUIPMENT - 0.2%
Unisys Corp. Series A, $3.75 (b) 168,300 8,415 90921420
ELECTRONICS - 0.1%
National Semiconductor Corp. $3.25 64,700 4,666 63764050
TOTAL TECHNOLOGY 21,282
TRANSPORTATION - 1.7%
AIR TRANSPORTATION - 1.4%
AMR Corp. $3.00 (b)(h) 955,700 51,608 00176588
UAL, Inc. 6 1/4% (h) 400,800 40,882 90254930
92,490
RAILROADS - 0.2%
Burlington Northern Railroad Co. 6.20% 212,700 15,793 12189760
TRUCKING & FREIGHT - 0.1%
TNT Ltd. 8% 3,862,300 7,123 93599293
TOTAL TRANSPORTATION 115,406
UTILITIES - 0.2%
GAS - 0.2%
Enron Corp. Series J, $10.50 31,800 14,310 29356160
Tejas Gas Corp. Delaware $2.625 49,100 2,504 87907550
16,814
TOTAL CONVERTIBLE PREFERRED STOCKS 737,067
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - 1.7%
FINANCE - 1.4%
BANKS - 1.4%
Chase Manhattan Corp. Series F adj. rate 105,942 $ 5,337 16161060
Continental Bank Corp.:
Series 1 262,564 13,259 21111320
Series 2, adj. rate (b) 148,680 4,070 21111340
First Bank Systems, Inc. Series 1989 B, adj. rate 35,500 1,842 31927940
First Chicago Corp.:
adj. rate 166,630 8,394 31945530
Series C, adj. rate 57,218 5,629 31945550
First Fidelity Bancorporation Series D, adj. rate (b) 41,570 4,188
32019550
First Interstate Bancorp depositary shares representing
1/8th share:
Series F 449,200 12,690 32054887
Series G, 9% 178,200 4,967 32054884
First Union Corp. Series 1990, adj. rate (b) 19,500 1,046 33735820
Marine Midland Banks, Inc. Series A, adj. rate (b) 271,000 13,008
56828730
Mellon Bank Corp. 320,000 8,880 58550986
Shawmut National Corp.:
adj. rate 92,965 4,369 82048420
9.30%, depositary shares representing 1/10th share 194,350 5,393
82048440
UJB Financial Corp. Series B, adj. rate. 100,000 4,900 90276020
97,972
MEDIA & LEISURE - 0.0%
ENTERTAINMENT - 0.0%
Live Entertainment, Inc. Series B, pay-in-kind (b) 129,225 969 53803230
UTILITIES - 0.3%
ELECTRIC UTILITY - 0.1%
Gulf States Utilities Co. Series B, adj. rate 19,829 1,001 40255075
Louisiana Power & Light Co. 9.68% 50,300 1,396 54638777
Niagara Mohawk Power Corp. Series A, adj. rate 104,595 2,576 65352285
4,973
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - CONTINUED
GAS - 0.2%
ENSERCH Corp.:
Series D, adj. rate (b) 111,400 $ 5,599 29356730
Series E, adj. rate 78,500 7,889 29356750
13,488
TOTAL UTILITIES 18,461
TOTAL NONCONVERTIBLE PREFERRED STOCKS 117,402
TOTAL PREFERRED STOCKS
(Cost $664,076) 854,469
CORPORATE BONDS - 7.5%
MOODY'S RATINGS (E) PRINCIPAL
(UNAUDITED) AMOUNT (A)
(000S)
CONVERTIBLE BONDS - 4.5%
BASIC INDUSTRIES - 0.5%
CHEMICALS & PLASTICS - 0.3%
Hercules, Inc. 8%, 8/15/10 A3 $ 9,340 22,984 427056AK
PACKAGING & CONTAINERS - 0.1%
International Container Term Services, Inc.
unsecured 6%, 2/19/00 (h) - 2,100 3,024 459360AA
PAPER & FOREST PRODUCTS - 0.1%
Stone Container Corp. 8 7/8%,
7/15/00 (h) B2 4,690 7,809 861589AL
TOTAL BASIC INDUSTRIES 33,817
CONGLOMERATES - 0.1%
Mark IV Industries, Inc. 6 1/4%, 2/15/07 B1 5,840 8,293 570387AF
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.1%
CONSTRUCTION - 0.0%
Continental Homes Holding Corp. 6 7/8%,
3/15/02 B3 $ 3,900 $ 3,920 21148CAB
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Centerpoint Properties 8.22%, 1/15/04 - 1,374 1,381 151895AA
Meditrust 9%, 1/1/02 Ba2 3,250 3,867 58501TAA
5,248
TOTAL CONSTRUCTION & REAL ESTATE 9,168
DURABLES - 0.1%
CONSUMER ELECTRONICS - 0.1%
Whirlpool Corp. liquid yield option note
0%, 5/14/11 Baa1 7,290 3,581 963320AJ
ENERGY - 0.3%
ENERGY SERVICES - 0.1%
Lone Star Technologies, Inc. euro 8%,
8/27/02 - 6,285 5,468 5423129A
OIL & GAS - 0.2%
Cross Timbers Oil Co. 5 1/4%, 11/1/03 B2 3,310 3,029 227573AA
Oryx Energy Co. 7 1/2%, 5/15/14 B1 12,040 11,618 68763FAD
USX-Marathon Group 7%, 6/15/17 BB- 221 211 902905AF
14,858
TOTAL ENERGY 20,326
FINANCE - 0.5%
BANKS - 0.2%
Bank of Boston Corp. 7 3/4%, 6/15/11 Baa2 4,182 4,684 060716AF
Bank of New York Co., Inc. 7 1/2%,
8/15/01 Baa1 6,370 9,714 064057AK
14,398
CREDIT & OTHER FINANCE - 0.0%
Siderurgica Brasileiras SA inflation
indexed 6%, 8/15/99 - BRC 15,062 2,339 82599PAA
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
INSURANCE - 0.3%
Fremont General Corp. 0%, 10/12/13 Ba2 $ 46,800 $ 16,965 357288AF
NAC RE Corp. 5 1/4%, 12/15/02 Baa3 1,410 1,364 628907AC
18,329
TOTAL FINANCE 35,066
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Alcatel Alsthom 6 1/2%, 1/1/00 - FRF 64 9,359 20436392
MEDIA & LEISURE - 0.8%
BROADCASTING - 0.5%
Comcast Corp. 1 1/8%, 4/15/07 B1 27,170 13,992 200300AR
Time Warner, Inc. 8 3/4%, 1/10/15 Ba3 12,987 13,701 887315AQ
Time Warner, Inc. liquid yield option note
0%, 6/22/13 Ba1 22,000 8,718 887315AS
36,411
ENTERTAINMENT - 0.1%
RHI Entertainment 6 1/2%, 6/1/03 (h) - 3,830 6,511 749559AA
LEISURE DURABLES & TOYS - 0.1%
Outboard Marine Corp. 7%, 8/1/02 B1 5,790 6,716 690020AD
LODGING & GAMING - 0.1%
Shangri-La Asia Cap Ltd. euro 2 7/8%,
12/16/00 (h) - 5,060 4,744 819426AA
RESTAURANTS - 0.0%
Flagstar Corp. 10%, 11/1/14 B2 2,030 1,939 338473AC
TOTAL MEDIA & LEISURE 56,321
RETAIL & WHOLESALE - 0.4%
APPAREL STORES - 0.1%
Petrie Stores Corp. sinking fund 8%, 12/15/10 Ba2 8,510 10,808
716434AC
GENERAL MERCHANDISE STORES - 0.2%
Federated Department Stores, Inc. 0%, 2/15/04 Ba3 11,790 11,053
31410JAC
Parisian, Inc. 9 7/8%, 7/15/03 B3 2,000 2,000 700147AB
13,053
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Tiffany & Company euro 6 3/8%, 3/15/01 Baa1 $ 4,230 $ 4,230 8865479B
Waban, Inc. 6 1/2%, 7/1/02 Ba3 2,510 2,359 929394AA
6,589
TOTAL RETAIL & WHOLESALE 30,450
SERVICES - 0.3%
ADVERTISING - 0.1%
Omnicom Group, Inc. 4 1/2%, 9/1/00 (h) Baa3 4,910 5,303 681919AB
SERVICES - 0.2%
ADT Ltd. euro 6%, 10/3/02 - 10,060 13,732 001999AD
TOTAL SERVICES 19,035
TECHNOLOGY - 0.9%
COMPUTER SERVICES & SOFTWARE - 0.2%
Sterling Software, Inc. 5 3/4%, 2/1/03 B1 7,384 9,895 859547AD
COMPUTERS & OFFICE EQUIPMENT - 0.4%
AST Research, Inc. 0%, 12/14/13 B2 12,730 5,569 001907AB
IBM France 5 3/4%, 1/1/98 (b) - FRF 285 21,028 45499D22
Quantum Corp. 6 3/8%, 4/1/02 B2 2,750 2,915 747906AA
29,512
ELECTRONICS - 0.1%
Storage Technology Corp. 8%, 5/31/15 B2 8,550 9,362 862111AG
PHOTOGRAPHIC EQUIPMENT - 0.2%
Eastman Kodak Co. liquid yield option note
0%, 10/15/11 Baa1 50,910 16,673 277461BA
TOTAL TECHNOLOGY 65,442
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.1%
Delta Air Lines, Inc. 3.23%, 6/15/03 Ba3 7,110 5,901 247361YA
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - CONTINUED
TRUCKING & FREIGHT - 0.1%
Greyhound Lines, Inc. 8 1/2%, 3/31/07 B3 $ 5,160 $ 5,908 398048AD
TOTAL TRANSPORTATION 11,809
UTILITIES - 0.2%
CELLULAR - 0.1%
Cellular Communications, Inc. 0%, 7/27/99 B1 5,430 4,073 150917AA
Rogers Communications, Inc. liquid yield
option note 0%, 5/20/13 Ba3 10,730 4,399 775109AD
8,472
TELEPHONE SERVICES - 0.1%
CAM-NET Communications Network
10%, 8/15/97 (h) - 3,250 3,185 13173M9A
TOTAL UTILITIES 11,657
TOTAL CONVERTIBLE BONDS 314,324
NONCONVERTIBLE BONDS - 3.0%
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.1%
American Pacific Corp. 11%, 12/15/02 (h) - 3,000 3,000 0287409C
IMC Fertilizer Group, Inc. 10 3/4%, 6/15/03 B3 1,000 1,080 449669AG
Methanex Corp. 8 7/8%, 11/15/01 Ba3 6,000 6,285 59151KAA
10,365
IRON & STEEL - 0.1%
Acindar Industria Argentina De Aceros
10 1/2%, 12/10/94 (h) - 1,200 1,176 004514AA
Hylsa de CV 11%, 2/23/98 (h) - 5,000 5,463 449086AA
6,639
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 0.0%
Kaiser Aluminum & Chemical Corp.
12 3/4%, 2/1/03 B2 $ 2,000 $ 2,160 483008AD
PACKAGING & CONTAINERS - 0.1%
Owens Illinois, Inc. 10 1/4%, 4/1/99 B2 4,230 4,505 690768AG
TOTAL BASIC INDUSTRIES 23,669
CONGLOMERATES - 0.2%
Coltec Industries, Inc. 10 1/4%, 4/1/02 Ba2 11,410 12,294 196879AB
CONSTRUCTION & REAL ESTATE - 0.2%
BUILDING MATERIALS - 0.1%
PT Semen Cibinong 9%, 12/15/98 (h) - 2,000 2,033 69364UAA
Tolmex SA de CV 8 3/8%, 11/1/03 Ba2 1,000 1,055 889557AA
USG Corp.:
10 1/4%, 12/15/02 B2 2,403 2,463 903293AK
Series B, 10 1/4%, 12/15/02 B2 924 956 903293AL
6,507
CONSTRUCTION - 0.1%
Hillsborough/Jim Walter Corp. 17%, 1/1/96 (c) Ca 1,430 1,216 373280AE
Ryland Group, Inc. 9 5/8%, 6/1/04 Ba3 1,500 1,541 783764AC
Tribasa Toll Road Trust 10 1/2%, 12/1/11 (h) - 2,500 2,650 896015AA
5,407
TOTAL CONSTRUCTION & REAL ESTATE 11,914
DURABLES - 0.2%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Consorcio G Grupo Dina 10 1/2%,
11/18/97 (h) - 5,000 5,537 210996AA
Grupo Imsa SA de CV euro 8 3/4%, 7/7/98 (h) - 2,000 2,063 40048TAA
7,600
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
TEXTILES & APPAREL - 0.1%
Fieldcrest Cannon, Inc. 11 1/4%, 6/15/04 B2 $ 5,500 $ 6,064 316549AC
TOTAL DURABLES 13,664
ENERGY - 0.1%
OIL & GAS - 0.1%
Mesa Capital Corp. secured 12 3/4%,
6/30/98 (d) - 2,000 1,813 590910AF
Petrolera Argentina San Jorge SA, secured
negotiable obligation 11%, 2/9/98 (h) - 1,900 1,985 71654PAA
3,798
FINANCE - 0.8%
BANKS - 0.3%
Bancomer SA 9%, 6/1/00 (h) - 11,250 12,262 059682AA
Bank of Boston Corp. euro 6%, 9/12/00 (i) Baa1 2,800 2,797 060716AD
Nigeria Brady 5 1/2%, 11/15/20 - 5,250 3,130 997999AC
18,189
CREDIT & OTHER FINANCE - 0.5%
Chrysler Financial Corp. 9 1/2%, 12/15/99 Baa2 11,710 13,753 171205CY
GPA Delaware, Inc. gtd. 8 3/4%, 12/15/98 Caa 140 119 361928AA
GPA Group 8.28% 12/13/97 (h) - 120 106 396994CN
General Electric Capital Corp. peso linked
11.09%, 10/29/96 (i) Aaa 2,000 2,005 36962FPE
Offshore Mexican Bond Ltd. inflation indexed jr.
secured 0%, 7/20/94 (h) - 10,000 13,800 676257AA
Third Mexican Acceptance Corp. coll. notes gtd.
by Grupo Sidek SA and Grupo Situr SA
10 1/2%, 3/15/98 (h) - 4,000 4,183 884149AB
33,966
INSURANCE - 0.0%
Penncorp Financial Group, Inc. 9 1/4%,
12/15/03 B1 2,050 2,101 708094AA
SAVINGS & LOANS - 0.0%
Chevy Chase Savings Bank 9 1/4%, 12/1/05 B2 500 520 166784AE
TOTAL FINANCE 54,776
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 0.1%
MEDICAL FACILITIES MANAGEMENT - 0.1%
Hallmark Healthcare Corp. 10 5/8%, 11/15/03 B3 $ 3,500 $ 3,649 40624GAA
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Welbilt Corp. 12 1/4%, 11/1/99 Ba3 1,400 1,593 949085AC
MEDIA & LEISURE - 0.5%
BROADCASTING - 0.2%
Jones Intercable, Inc. 11 1/2%, 7/15/04 B2 2,000 2,320 480206AG
New City 11 3/8%, 11/1/03 B3 3,250 3,387 651086AB
SCI Television, Inc.:
secured 7 1/2%, 6/30/98 (i) - 2,261 2,210 783895AK
secured 11%, 6/30/05 - 3,488 3,663 783895AJ
Turner Broadcasting System, Inc. 12%,
10/15/01 B1 3,120 3,381 900262AN
14,961
ENTERTAINMENT - 0.0%
Kloster Cruise, Ltd, 13%, 5/1/03 B2 2,000 2,233 498760AC
Live Entertainment, Inc. 10%, 9/1/98 - 861 788 538032AC
3,021
LODGING & GAMING - 0.2%
Bally Gaming International, Inc. 10 3/8%,
7/29/98 - 7,500 7,500 0587319C
Embassy Suites, Inc. gtd 8 3/4%, 3/15/00 (h) B1 4,500 4,680 290807AH
12,180
PUBLISHING - 0.1%
Enquirer/Star Group, Inc. Unit 0%, 5/15/97 Ba3 4,080 3,356 293554AA
TOTAL MEDIA & LEISURE 33,518
NONDURABLES - 0.3%
BEVERAGES - 0.0%
Dr. Pepper/Seven-Up Companies, Inc.
11 1/2%, 11/1/02 (d) B3 3,000 2,400 256131AD
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.3%
Revlon Consumer Products Corp.
9 3/8%, 4/1/01 B2 $ 15,000 $ 14,625 761519AF
Revlon World Wide secured 0%, 3/15/98 B3 6,000 3,105 76154KAB
17,730
TOTAL NONDURABLES 20,130
RETAIL & WHOLESALE - 0.0%
APPAREL STORES - 0.0%
Apparel Retailers, Inc. 12 3/4%, 8/15/05 Caa 570 353 037795AB
SERVICES - 0.1%
ADT Operations, Inc. gtd. 9 1/4%, 8/1/03 B2 10,000 10,350 000945AB
TRANSPORTATION - 0.0%
SHIPPING - 0.0%
Eletson Holdings, Inc. 9 1/4%, 11/15/03 Ba2 400 414 286204AA
UTILITIES - 0.2%
ELECTRIC UTILITY - 0.0%
Del Norte Funding Corp. 9.05%, 1/2/99 (c) Ca 2,364 1,938 245279AA
EUA Power Corp. secured, pay-in-kind:
Series B, 17 1/2%, 5/15/93 (c) - 7,390 1,035 269260AC
Series C, 17 1/2%, 11/15/99 (c)(h) - 2,265 317 269260AB
El Paso Funding Corp. lease oblig.
10 3/4%, 4/1/13 (c) Ca 1,000 850 283681AC
4,140
GAS - 0.2%
Columbia Gas System, Inc.:
9%, 8/1/95 (c) Caa 1,000 1,180 197648BT
9 1/2%, 10/10/19 (c) B1 1,500 1,830 19765AAT
10 1/4%, 8/1/11 (c) Caa 150 187 197648BU
10.15%, 11/1/13 (c) Caa 500 608 197648BW
9.91%, 5/28/20 (c) - 1,590 1,852 19765ABN
Ferrellgas, Inc. 12%, 8/1/96 - 2,350 2,591 315290AD
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
GAS - CONTINUED
SFP Pipeline Holdings, Inc. exch.
0%, 8/15/10 (i) Baa3 $ 3,690 $ 4,797 784163AA
13,045
TOTAL UTILITIES 17,185
TOTAL NONCONVERTIBLE BONDS 207,307
TOTAL CORPORATE BONDS
(Cost $491,874) 521,631
FOREIGN GOVERNMENT OBLIGATIONS - 4.8%
Argentina Republic:
BOCON:
Peso:
3.9775%, 4/1/07 (i) - ARP 9,723 7,039 039995AW
3.9775%, 9/1/02 (i) - ARP 13,339 10,122 039995AJ
3.9775%, 4/1/01 (i) - ARP 5,705 4,624 039995AH
3.3125%, 4/1/01 (i) B1 25,772 22,285 039995AF
3.3125%, 9/1/02 (i) - 644 531 039995AM
Brady:
euro:
4%, 3/31/23 B1 89,000 62,410 039995AD
4 1/4%, 3/31/23 B1 500 435 039995AL
4%, 3/31/23 (h) - 10,626 7,451 0401149Y
4%, 3/31/23 (h) - 41,250 28,927 0401149G
BOTE:
2.0588%, 4/1/96 (i) - 950 592 0401149N
3.1225%, 4/3/00 (i) - 8,534 7,514 0401149W
4.1875%, 3/31/05 (h) (i) - 1,075 947 039995AT
euro 4.1875%, 3/31/05 (i) BB- 22,750 20,048 039995AU
Brazilian Government euro
4.3125%, 1/1/01 (i) B2 15,939 13,708 1057569E
Ecuador Republic 0%, 8/15/06 - 4,500 2,925 88399HAA
French Government:
OAT 8 1/2%, 4/25/03 Aaa FRF 66,580 13,546 351996AQ
OAT 8 1/2%, 4/25/23 Aaa FRF 155,630 34,073 351996AC
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
Mexican Adjustabanos:
5.30%, 7/14/94 AA- MXN 8,410 $ 3,603 597998SV
7 1/4%, 2/17/94 AA- MXN 3,700 1,675 597998SA
Mexican Brady discount:
4.3125%, 12/31/19 (i) Ba3 12,650 11,780 597998RJ
4.3125%, 12/31/19 (i) Ba3 5,500 5,122 597998MN
Mexican Bondes:
10 3/4%, 11/10/94 (i) AA- MXN 19,100 6,154 597998TD
10.31%, 9/22/94 (i) - MXN 24,700 7,957 597998TE
Mexican Government Cetes 0%, 3/17/94 - MXN 18,500 5,880 597998TU
Mexican Government Brady:
6 1/4%, 12/31/19 Ba3 13,500 11,154 597998MM
6 1/4%, 12/31/19 Ba3 16,250 13,427 597998PF
6.63%, 12/31/19 Ba2 FRF 15,000 2,064 597998VQ
Mexico Value Recovery (rights) (b) - 54,417 1 59304893
Morocco Trust:
4 1/2%, 1/3/09 (h)(i) - 25,250 21,052 617727AA
(A) 8.5175%, 1/1/09 (i) - JPY 384,301 2,948 6177279C
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS (Cost $277,833) 329,994
OTHER SECURITIES - 0.6%
INDEXED SECURITIES - 0.0%
Morgan Guaranty Trust Co. cert. of dep. 0%,
8/22/94 (indexed to $481 par of Westport
Investments Ltd. sr. notes, collateralized by
Mexican gov't. securities per $100 par) 355 345 61799FAF
PURCHASED BANK DEBT - 0.6%
El Paso Electric Co. (c):
unsecured term loan:
0%, 1/3/95 (i) 667 584 2836779H
0%, 4/1/95 (i) 147 129 2836779L
unsecured 0%,12/1/95 (i) 118 103 2836779K
term loan:
7%, 10/26/94 (i) 2,571 2,610 2836779F
0%, 1/4/95 (i) 508 515 2836779J
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S)
(000S)
PURCHASED BANK DEBT - CONTINUED
Macy (R.H.) & Co. (c):
aquisition letter of credit:
5/27/94 $ 2,303 $ 2,142 556994BN
7/10/94 6,166 5,735 556994AF
facility letter of credit 7/10/94 30 28 556994AG
funded letter of credit 0%, 5/27/95 1,724 1,603 556994CJ
mortgage loan participation 5/27/94 16,000 14,560 556994BK
revolver loan:
5/27/94 752 699 556994BM
7/10/94 1,712 1,592 556994AE
5/27/95 550 511 556994CH
Special Real Estate Cap:
0%, 5/27/94 3,305 3,073 556993BC
0%, 9/30/95 1,715 1,594 557991AA
term loan:
0%, 5/27/95 2,148 1,998 556994CN
0%, 5/27/95 726 675 556994CG
0%, 5/27/96 1,713 1,594 556993BD
0%, 5/27/96 707 657 556993BE
term loan note :
5/27/94 975 907 556994BL
7/10/94 2,259 2,101 556994AC
43,410
TOTAL OTHER SECURITIES
(Cost $31,138) 43,755
COMMERCIAL PAPER - 0.5%

FINANCE - 0.5%
BANKS - 0.5%
Banco Nacional De Mexico SA 0%, 12/8/94
(Cost $30,645) MXN 109,020 31,960
REPURCHASE AGREEMENTS - 4.4%
MATURITY VALUE (NOTE 1)
AMOUNT (000S)
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.19% dated
1/31/94 due 2/1/94 $306,998 $ 306,971
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $5,569,348) $ 6,929,414
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
151,402 DEM 2/7/94 to 4/28/94 $ 87,052 $ 3,078
3,123,749 ESP 2/16/94 22,241 245
371,773 FRF 2/16/94 63,055 (701)
4,301,601 ITL 4/26/94 2,516 (30)
3,173,876 JPY 4/18/94 29,258 (945)
TOTAL CONTRACTS TO SELL
(Receivable amount $205,769) $ 204,122 $ 1,647
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.9%
CURRENCY TYPE ABBREVIATIONS
ARP - Argentinean peso
BRC - Brazilian cruzeiro
FRF - French franc
DEM - German Deutsche mark
ITL - Italian lira
JPY - Japanese yen
ESP - Spanish peseta
MXN - Mexican peso
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. Non-income producing
3. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
4. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
5. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
6. Affiliated company (see Note 6 of Notes to Financial Statements).
7. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Bally Gaming
International,Inc.
(warrants) 6/29/93 $ -
Bally Gaming
International, Inc. 9/29/93 157,000
Heilman G Class 1
Unit 1/21/94 2,000,000
8. 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 $533,983,000 or 7.7% of net
assets.
9. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 1.1% AAA, AA, A 1.4%
Baa 1.0% BBB 1.1%
Ba 2.1% BB 2.0%
B 3.9% B 2.1%
Caa 0.0% CCC 0.1%
Ca, C 0.1% CC, C 0.0%
D 0.1%
The percentage not rated by either S&P or Moody's amounted to 4.0%
including long-term debt categorized as other securities.
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 78.5%
Germany 3.0
United Kingdom 2.8
Canada 2.6
Argentina 2.6
Mexico 2.1
Netherlands 1.9
France 1.6
Hong Kong 1.5
Others (individually less than 1%) 3.4
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1994, the aggregate cost of investment securities for income
tax purposes was $5,579,111,000. Net unrealized appreciation aggregated
$1,350,303,000, of which $1,435,852,000 related to appreciated investment
securities and $85,549,000 related to depreciated investment securities.
The fund hereby designates $42,300,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
EXCEPT PER-SHARE AMOUNTS JANUARY 31, 1994

ASSETS 10. 11.

12.Investment in securities, at value (including 13. $ 6,929,414
repurchase agreements of $306,971) (cost
$5,569,348) (Notes 1 and 2) - See accompanying
schedule

14.Short foreign currency contracts (Note 2) $ (204,122) 15.
Contracts held, at value

16. Receivable for contracts held 205,769 1,647

17.Cash 18. 632

19.Receivable for investments sold 20. 105,781

21.Receivable for fund shares sold 22. 18,656

23.Dividends receivable 24. 15,838

25.Interest receivable 26. 12,546

27.Other receivables 28. 3,346

29. TOTAL ASSETS 30. 7,087,860

LIABILITIES 31. 32.

33.Payable for investments purchased 125,336 34.

35.Payable for fund shares redeemed 9,395 36.

37.Accrued management fee 2,467 38.

39.Other payables and accrued expenses 1,821 40.

41.Collateral on securities loaned, at value (Note 5) 5,570 42.

43. TOTAL LIABILITIES 44. 144,589

45.NET ASSETS 46. $ 6,943,271

47.Net Assets consist of (Note 1): 48. 49.

50.Paid in capital 51. $ 5,331,522

52.Undistributed net investment income 53. 11,688

54.Accumulated undistributed net realized gain (loss) on 55. 238,348
investments

56.Net unrealized appreciation (depreciation) on: 57. 58.

59. Investment securities 60. 1,360,066

61. Foreign currency contracts 62. 1,647

63.NET ASSETS, for 197,293 shares outstanding 64. $ 6,943,271

65.NET ASSET VALUE, offering price and redemption price 66. $35.19
per share ($6,943,271 (divided by) 197,293 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JANUARY 31, 1994

INVESTMENT INCOME 68. $ 186,499
67.Dividends

69.Interest (including security lending fees of $48) (Note 70. 67,361
5)

71. TOTAL INCOME 72. 253,860

EXPENSES 73. 74.

75.Management fee (Note 4) $ 23,042 76.

77.Transfer agent fees (Note 4) 14,205 78.

79.Accounting fees and expenses (Note 4) 798 80.

81.Non-interested trustees' compensation 40 82.

83.Custodian fees and expenses 1,013 84.

85.Registration fees 303 86.

87.Legal 159 88.

89.Interest (Note 7) 7 90.

91.Miscellaneous 370 92.

93. Total expenses before reductions 39,937 94.

95. Expense reductions (Note 8) (250) 39,687

96.NET INVESTMENT INCOME 97. 214,173

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 99. 100.
(NOTES 1, 2 AND 3)
98.Net realized gain (loss) on:

101. Investment securities 493,621 102.

103. Foreign currency contracts (9,988) 104.

105. Written options 771 484,404

106.Change in net unrealized appreciation 107. 108.
(depreciation) on:

109. Investment securities 529,991 110.

111. Foreign currency contracts 1,647 112.

113. Written options (616) 531,022

114.NET GAIN (LOSS) 115. 1,015,426

116.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 117. $ 1,229,599
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED JANUARY 31,

1994 1993

INCREASE (DECREASE) IN NET ASSETS

118.Operations $ 214,173 $ 186,958
Net investment income

119. Net realized gain (loss) on investments 484,404 255,901

120. Change in net unrealized appreciation 531,022 297,462
(depreciation) on
investments

121. 1,229,599 740,321
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS

122.Distributions to shareholders: (213,298) (181,525)
From net investment income

123. From net realized gain (23,174) -

124. (236,472) (181,525)
TOTAL DISTRIBUTIONS

125.Share transactions 1,968,083 1,326,164
Net proceeds from sales of shares

126. Reinvestment of distributions from: 202,501 170,447
Net investment income

127. 22,386 -
Net realized gain

128. Cost of shares redeemed (1,365,987) (1,353,207)

129. 826,983 143,404
Net increase (decrease) in net assets resulting from
share transactions

130. 1,820,110 702,200
TOTAL INCREASE (DECREASE) IN NET ASSETS

NET ASSETS 131. 132.

133. Beginning of period 5,123,161 4,420,961

134. $ 6,943,271 $ 5,123,161
End of period (including undistributed net investment
income of $11,688 and $26,292, respectively)

OTHER INFORMATION 136. 137.
135.Shares

138. Sold 60,873 47,962

139. Issued in reinvestment of distributions from: 6,291 6,223
Net investment income

140. 672 -
Net realized gain

141. Redeemed (42,075) (49,065)

142. Net increase (decrease) 25,761 5,120

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
143. YEARS ENDED JANUARY 31,

144. 1994 1993# 1992 1991 1990

145.SELECTED PER-SHARE DATA

146.Net asset value, $ 29.87 $ 26.57 $ 22.38 $ 25.25 $ 26.81
beginning of period

147.Income from Investment
Operations

148. Net investment income 1.11 1.11** 1.18 1.46 1.71

149. Net realized and 5.48 3.27 4.21 (2.48) (.36)
unrealized
gain (loss) on investments

150. Total from investment 6.59 4.38 5.39 (1.02) 1.35
operations

151.Less Distributions

152. From net investment (1.15) (1.08) (1.20) (1.55) (1.75)
income

153. From net realized gain (.12) - - (.30) (1.16)

154. Total distributions (1.27) (1.08) (1.20) (1.85) (2.91)

155.Net asset value, end of $ 35.19 $ 29.87 $ 26.57 $ 22.38 $ 25.25
period

156.TOTAL RETURN (double dagger) 22.52% 16.92% 24.61% (3.94)% 4.70%

157.RATIOS AND SUPPLEMENTAL DATA

158.Net assets, end of period $ 6,943 $ 5,123 $ 4,421 $ 3,941 $ 4,752
(in millions)

159.Ratio of expenses to .66% .67% .68% .70% .71%
average net assets

160.Ratio of net investment 3.55% 4.02% 4.81% 6.18% 6.10%
income to average net
assets

161.Portfolio turnover rate 70% 84% 111% 107% 92%

</TABLE>

(double dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
# AS OF FEBRUARY 1, 1993 THE FUND DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
** NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Equity-Income Fund (the fund) is a fund of Fidelity Devonshire
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 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 (including restricted 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 maturing within sixty days
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 current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
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 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, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes where recovery of such taxes is not assured.
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 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 are primarily due to differing treatments for
futures and options transactions, foreign currency transactions, market
discount, partnerships, non-taxable dividends, and losses deferred due to
wash sales and futures and options. The fund also utilitized 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 differences relating to shareholder distributions will result in
reclassifications 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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective February
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,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of January 31, 1993 have been reclassified to
reflect an increase in paid in capital of $8,341,000, a decrease in
undistributed net investment income of $8,878,000 and a decrease in
accumulated net realized loss on investments of $537,000.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY
CONTRACTS. The fund may enter into forward foreign currency contracts.
These contracts involve market risk in excess of the amount reflected in
the fund's Statement of Assets and Liabilities. The face or contract amount
in U.S. dollars reflects the total exposure the fund has in that particular
currency contract. The U.S. dollar value of forward foreign currency
contracts is determined using forward currency exchange rates supplied by a
quotation service. Losses may arise due to changes in the value of the
foreign currency or if the counterparty does not perform under the
contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange 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.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities 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, restricted securities (excluding 144A issues) amounted
to $3,838,000 or .06% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $5,060,648,000 and $4,072,312,000 respectively, of which U.S.
government and government agency obligations aggregated $139,945,000 and
$681,000, respectively.
3. PURCHASES AND SALES OF INVESTMENTS - CONTINUED
SUMMARY OF WRITTEN OPTIONS
NUMBER OF AGGREGATE FACE VALUE
CONTRACTS OF CONTRACTS
Argentina Brady Put Options:
Outstanding at January 31, 1993 25,000 $ 750,000
Contracts opened - -
Contracts expired (25,000) (750,000) Contracts closed - -
Outstanding at January 31, 1994 - $ -
Venezuelan DCB Call Options:
Outstanding at January 31, 1993 - $ -
Contracts opened 1 21,000
Contracts expired (1) (21,000) Contracts closed - -
Outstanding at January 31, 1994 - $ -
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 ranging from
.30% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .12%.
For the period, the management fee was equivalent to an annual rate of .38%
of average net assets.
On November 17, 1993, the shareholders of the fund approved a new
management contract which took effect on December 1, 1993. The new
management contract increases the individual fund fee rate from .04% to
.12% and revises the new group fee rate schedule.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SALES LOAD. For the period February 1, 1993 to November 30, 1993, Fidelity
Distributors Corporation (FDC), an affiliate of FMR and the general
distributor of the fund, received sales charges of $1,297,000 on sales of
shares of the fund.
For the period December 1, 1993 through December 31, 1995, Fidelity
Distributors Corporation, an affiliate of FMR and the general distributor
of the fund, will voluntarily waive the sales charge (2% of the offering
price) on the sales of shares.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. Fidelity Service Co. (FSC), an
affiliate of FMR, maintains the fund's accounting records and administers
the security lending program. The security lending fee is based on the
number and duration of lending transactions. The accounting fee is based on
the level of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $2,077,000 for the period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, the value of the
securities loaned and the value of collateral amounted to $5,444,000 and
$5,570,000 respectively.
6. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions with companies which are or
were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Grand Union Capital Corp. Class B $ 6,530,000 $ - $ - $ 4,746,000
7. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $40,794,000 and $17,124,000,
respectively. The weighted average interest rate was 3.75%.
8. 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
$250,000 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Equity-Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Devonshire Trust: Fidelity Equity-Income Fund, including the
schedule of portfolio investments, as of January 31, 1994, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility
of the fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of January 31, 1994 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Devonshire Trust: Fidelity Equity-Income Fund as of January
31, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
March 4, 1994
TO CALL FIDELITY

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
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 *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S 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 Fund
Real Estate Investment Portfolio
Utilities Income Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
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)

* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(3)

FIDELITY
REAL ESTATE INVESTMENT
PORTFOLIO

(Registered trademark)
ANNUAL REPORT
JANUARY 31, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

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 last six
months.

INVESTMENTS 10 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 15 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 19 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 23 The auditor's opinion.
ACCOUNTANTS

Real Estate Investment 8.10% 94.03% 98.50%

S&P 500(Registered trademark) 12.88% 90.05% 149.00%

Average Real Estate Fund 19.22% 68.16% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on November 17, 1986. For example, if you had invested $1,000 in a
fund that had a 5% return over the past year, you would have $1,050. You
can compare these figures to the performance of the Standard & Poor's
500 Composite Stock Price Index - a common proxy for the U.S. stock market.
You can also compare them to the average real estate fund, which reflects
the performance of only nine real estate funds tracked by Lipper Analytical
Services. Both benchmarks include reinvested dividends and capital gains,
if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Real Estate Investment 8.10% 14.18% 9.97%

S&P 500(Registered trademark) 12.88% 13.70% 13.48%

Average Real Estate Fund 19.22% 10.74% 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
11/17/86 10000.00 10000.00
11/30/86 10040.00 10206.19
12/31/86 9940.00 9945.93
01/31/87 10380.00 11285.65
02/28/87 10550.00 11731.43
03/31/87 10750.17 12070.47
04/30/87 10398.20 11963.05
05/31/87 10207.13 12067.12
06/30/87 10549.93 12676.51
07/31/87 10509.12 13319.21
08/31/87 10305.06 13816.02
09/30/87 10057.55 13513.45
10/31/87 8700.66 10602.65
11/30/87 8938.89 9728.99
12/31/87 9176.83 10469.37
01/31/88 9773.01 10910.13
02/29/88 10092.39 11418.54
03/31/88 10005.85 11065.71
04/30/88 10016.67 11188.54
05/31/88 9778.69 11285.88
06/30/88 10105.18 11803.90
07/31/88 10149.16 11759.05
08/31/88 10050.20 11359.24
09/30/88 10204.87 11843.14
10/31/88 10115.45 12172.38
11/30/88 9970.14 11998.32
12/31/88 10127.87 12208.29
01/31/89 10230.05 13101.93
02/28/89 10264.12 12775.70
03/31/89 10343.06 13073.37
04/30/89 10619.80 13751.88
05/31/89 10815.82 14308.83
06/30/89 11186.69 14227.27
07/31/89 11748.37 15511.99
08/31/89 11912.19 15816.03
09/30/89 11771.61 15751.18
10/31/89 11332.55 15385.75
11/30/89 11474.94 15699.62
12/31/89 11522.85 16076.41
01/31/90 11270.53 14997.69
02/28/90 11198.44 15191.16
03/31/90 11258.52 15593.72
04/30/90 11112.46 15203.88
05/31/90 11063.78 16686.26
06/30/90 11234.66 16572.79
07/31/90 11308.65 16519.76
08/31/90 10507.06 15026.37
09/30/90 9982.05 14294.59
10/31/90 9694.34 14233.12
11/30/90 10307.28 15152.58
12/31/90 10520.84 15575.34
01/31/91 11501.59 16254.42
02/28/91 11858.23 17416.61
03/31/91 12642.55 17838.09
04/30/91 12990.86 17880.91
05/31/91 13300.48 18653.36
06/30/91 12872.44 17799.04
07/31/91 13146.60 18628.47
08/31/91 13211.87 19069.97
09/30/91 13595.18 18751.50
10/31/91 13370.57 19002.77
11/30/91 13238.45 18236.96
12/31/91 14643.76 20323.26
01/31/92 15527.20 19945.25
02/29/92 15192.57 20204.54
03/31/92 15099.45 19810.55
04/30/92 14882.97 20392.98
05/31/92 15329.46 20492.91
06/30/92 15153.08 20187.56
07/31/92 15820.80 21013.23
08/31/92 15861.68 20582.46
09/30/92 16299.69 20825.34
10/31/92 16478.06 20898.23
11/30/92 16779.90 21610.85
12/31/92 17500.63 21876.67
01/31/93 18361.77 22060.43
02/28/93 18806.23 22360.45
03/31/93 20160.60 22832.26
04/30/93 19251.20 22279.72
05/31/93 19013.36 22876.82
06/30/93 19508.30 22943.16
07/31/93 19635.34 22851.39
08/31/93 19945.89 23717.45
09/30/93 20866.97 23534.83
10/31/93 20525.36 24022.00
11/30/93 19329.70 23793.79
12/31/93 19690.25 24081.70
01/31/94 19849.86 24900.47

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity Real
Estate Investment Portfolio on November 17, 1986, when the fund started. As
the chart shows, by January 31, 1994, the value of your investment would
have grown to $19,850 - a 98.50% increase on your 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
$24,900 - a 149.00% increase.

MARKET RECAP
Low inflation, falling interest rates
and an improving economy
boosted U.S. stocks during the
12 months ended January 31,
1994. The Standard &
Poor's 500 stock index rose
12.88%, slightly ahead of the
market's long-term annual
average return. The technology
sector excelled, and
communication stocks soared as
telephone utilities, cellular
companies, and entertainment
firms formed strategic alliances.
Other top performers were
economically sensitive sectors,
like autos and steel;
entertainment; heavy machinery;
and precious metals, all up in the
second half of the year. Some
tobacco, drug, and brand name
consumer products stocks picked
up by year-end, but had weak
returns for the year overall.
Conversely, financial stocks did
well the first half of the year, but
gave back some of their gains in
the second half. The NASDAQ
Composite Index - which tracks
over the counter stocks - rose
14.95% for the year, but was
outpaced by the Dow Jones
Industrial Average - an index of
30 blue-chip stocks - which rose
23.61% . On January 21, the Dow
broke the 3900 barrier for the first
time, and finished the month at
3978. Returns in most
international markets easily
outpaced those in the U.S., with
Hong Kong remaining the big
winner even after a correction in
January. The Morgan Stanley
EAFE (Europe, Australia, Far
East) index rose 43.79%, while
the Morgan Stanley Emerging
Markets Index was up 75.51% for
the year ended January 31, 1994.
An interview with Barry Greenfield, Portfolio Manager of Fidelity Real
Estate Investment Portfolio
Q. BARRY, HOW DID THE FUND DO?
A. It's been a difficult year, especially the last six months. The fund's
total return for the 12 months ended January 31, 1994 was 8.10%, compared
to a 19.22% total return for the average real estate fund tracked by Lipper
Analytical Services.
Q. WHY THE SUBPAR PERFORMANCE?
A. If you divide the year down the middle, separate reasons emerge for each
six-month period. In the first half of 1993, the fund was wrestling with
enormous growth; assets went from $250 million on January 1 to $525 million
by April 30. It was very difficult putting all of that cash to work
quickly, because REITs, or real estate investment trusts - which make up
the bulk of the fund - usually trade more slowly than stocks in the S&P
500. Instead of getting higher yields in real estate investments, some of
the fund was earning about 3% in short-term instruments. The fund's cash
level reached a high of about 17% last spring, but I'd reduced it to about
8% by the end of July.
Q. WHAT ABOUT THE LAST SIX MONTHS?
A. After two and a half years of outstanding performance, the REIT market
began to cool off in March of 1993. What we saw then was very much like a
typical correction in the stock market. REIT prices had simply far exceeded
the improving business prospects of the underlying companies. A period of
generally falling REIT prices began, which may not end until later in 1994.
Q. WHAT DID THAT MEAN TO THE FUND?
A. Many of the fund's bigger, blue-chip names - those that had helped
performance in previous years - suffered, and, in hindsight, I stuck with
them too long. I've since reduced some of the fund's investments in
companies like Weingarten Realty, Meditrust and Taubman Centers. The REITs
that did well were brand new issues - of which there was an explosion in
'93. Although I should have taken better advantage of this trend, I've been
a cautious buyer because, in some cases, the quality of these new issues
was suspect. The prices of some rose mainly due to the strong market demand
for REITs, but I chose not to invest.
Q. ARE YOU MAKING CHANGES IN HOPES OF IMPROVING PERFORMANCE?
A. Yes, several. In 1991 and '92, the fund emphasized the REITs of
apartments, health-care facilities and neighborhood shopping centers, which
were safe havens in a volatile real estate market. Apartment construction
has declined to very low levels, which helps reduce vacancy rates on
existing properties, and rents are climbing, so this sector looks solid.
The latter two groups have been good, steady investments for the fund, but
there are other sectors that are looking more attractive. I'm working to
add to those groups that should benefit most from the strengthening U.S.
economy: mobile home parks, factory outlet retail centers, and especially,
industrial properties and hotels.
Q. WHY THE EMPHASIS ON THE LATTER TWO?
A. A stronger economy means people are traveling more. As occupancy rates
rise to near 70%, hotels gain the ability to raise their room rates, which
goes straight to the bottom line. As for U.S. factories, they're increasing
output these days. When production lines quicken, there's often a need to
keep more inventory close-at-hand. Plus, purchasing agents may begin to
stockpile materials as a hedge against rising commodity prices. All of this
stands to benefit industrial buildings and warehouses. As another strategic
change, I'm rotating the geographical emphasis of the REITs I'm buying for
the fund.
Q. HOW ARE YOU DOING THAT?
A. Over the past year, many of the fund's investments have been in areas of
the country that have bounced back from the recession most quickly: the
Southwest, the Southeast, Denver, Dallas, and, to a lesser extent, the
Midwest. Going forward, I'll look for opportunities in the Midwest,
Northeast and on the West Coast. I think these will be the next areas to
see recovering real estate markets. I feel that Southwest REITs may now be
overpriced, and California REITs possibly underpriced, reflecting that
state's continuing recession and recent earthquake.
Q. HOW DO YOU FEEL ABOUT THE COMING SIX MONTHS?
A. This correction we're seeing in the REIT market may have a few more
months left in it, but I think the worst is over. The underlying prospects
of these real estate companies appear to be quite good. Many of the quality
new companies and older established names gained access to new capital
during the market run-up, and have put that money to work at attractive
prices. This should produce good results going forward. I'll be looking to
trade some of the fund's older, established, weaker- performing investments
for some new, quality companies in the sectors I've discussed.
FUND FACTS
GOAL: to provide
above-average income and
increase the value of the
fund's shares by investing
primarily in the securities of
companies principally
engaged in the real estate
industry
START DATE: November 17, 1986
SIZE: as of January 31,
1994, over $430 million
MANAGER: Barry Greenfield,
since November 1986;
manager, Fidelity Fund, 1982
- - 1993
(checkmark)
BARRY GREENFIELD ON THE REIT
MARKET:
"1991 through 1993 was an
extremely strong period for
REITs. Investors searched for
high yields, and bid up prices
to very high levels. Once the
REIT market corrects, which
it's doing now, I think it'll take
on a different face. Broadly
speaking, real estate
companies have solid
business prospects, and I
think we'll see a switch to a
more earnings-driven market
in the months ahead. What
affects the real estate market
most is not interest rates, or
the economy in general. It's
overbuilding, causing a
situation where too much
space is chasing too few
people. Over the past five
years, we've seen very low
levels of new construction,
which has created an
atmosphere of low supply.
That's good for real estate
investors, and I expect this
trend will help the market for
several years to come."
(bullet) Over the past six months,
the fund's investment in
apartment REITs has
increased from 12.4% to
22.6%. Investments in mobile
home parks have jumped
from 0% to 7.0% and factory
outlets from 0.7% to 6.1%.
The improving economy has
helped real estate companies
in each of these groups.
(bullet) In January 1992, REITs
were roughly a $5 billion
industry. That figure doubled
by January 1993, and grew to
about $35 billion by the
beginning of 1994.
INVESTMENT CHANGES

TOP TEN INVESTMENTS AS OF JANUARY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Developers Diversified Realty 6.0 4.5
Corp.

Manufactured Home
Communities, 5.2 2.1
Inc.

Equity Residential Properties Trust 5.1 -
(SBI)

Kimco Realty Corporation 4.4 4.9

Federal Realty Investment Trust 4.4 5.4
(SBI)

Simon Properties Group, Inc. 4.3 -

Property Trust of America (SBI) 3.5 3.4

Nationwide Health Properties, Inc. 2.9 3.6

Carr Realty Corp. 2.8 3.8

Vornado Realty Trust 2.6 1.6

TOP FIVE REIT SECTORS AS OF JANUARY 31, 1994*
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Shopping Centers 26.8 39.7

Apartments 22.6 12.4

Mobile Home Parks 7.0 -

Malls 6.5 -

Factory Outlets 6.1 0.7

* EXCLUDES SECURITIES WITH MATURITIES OF LESS THAN ONE YEAR
ASSET ALLOCATION
AS OF JANUARY 31, 1994* AS OF JULY 31, 1993**
Row: 1, Col: 1, Value: 7.8
Row: 1, Col: 2, Value: 8.4
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 5, Value: 43.8
Stocks 78.7%
Bonds 1.4%
Convertibles 12.6%
Short-term
investments 7.3%
Stocks 83.8%
Bonds 0.0%
Convertibles 8.4%
Short-term
investments 7.8%
Row: 1, Col: 1, Value: 7.3
Row: 1, Col: 2, Value: 12.6
Row: 1, Col: 3, Value: 1.4
Row: 1, Col: 4, Value: 38.7
Row: 1, Col: 5, Value: 20.0
Row: 1, Col: 6, Value: 20.0
* FOREIGN
INVESTMENTS 1.0%
** FOREIGN
INVESTMENTS 2.0%
INVESTMENTS JANUARY 31, 1994

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 83.8%
SHARES VALUE (NOTE 1)
(000S)
CONGLOMERATES - 1.0%
Brierley Investments Ltd. 5,321,739 $ 4,323,668 10901410
CONSTRUCTION & REAL ESTATE - 1.9%
CONSTRUCTION - 1.5%
C Brewer Homes, Inc. (a) 25,000 400,000 10757510
Engle Homes, Inc. 30,000 495,000 29289610
Kaufman & Broad Home Corp. 90,000 2,092,500 48616810
Oriole Homes Corp.:
Class A 11,900 145,775 68626410
Class B 105,900 1,323,750 68626420
Standard Pacific Corp. 80,100 941,175 85375C10
Sundance Homes, Inc. (a) 50,000 543,750 86724Q10
UDC Homes, Inc. 30,000 288,750 90264610
Washington Homes, Inc. 46,000 442,750 93886410
6,673,450
REAL ESTATE - 0.4%
Rouse Co. (The) 100,900 1,664,850 77927310
TOTAL CONSTRUCTION & REAL ESTATE 8,338,300
REAL ESTATE INVESTMENT TRUSTS (REITS) - 78.5%
REITS - APARTMENTS - 21.4%
Avalon Properties, Inc. 153,500 3,338,625 05346910
Berkshire Realty, Inc. 573,500 6,738,625 08471010
Camden Property Trust (SBI) (a) 185,200 4,467,950 13313110
Colonial Property Trust (SBI) 230,000 5,175,000 19587210
Equity Residential Properties Trust (SBI) 755,000 21,989,375 29476L10
Holly Residential Properties, Inc. 290,400 5,263,500 43602310
Merry Land & Investment Co., Inc. 427,500 9,405,000 59043810
Oasis Residential, Inc. 310,000 7,905,000 67421610
Post Properties, Inc. (a) 266,500 7,861,750 73746410
Property Trust of America (SBI) 793,000 15,067,000 74344510
Southwestern Property Trust, Inc. 248,000 3,069,000 84573410
United Dominion Realty Trust, Inc. 160,500 2,307,188 91019710
92,588,013
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
REAL ESTATE INVESTMENT TRUSTS (REITS) - CONTINUED
REITS - FACTORY OUTLETS - 6.1%
Chelsea GCA Realty, Inc. (a) 250,000 $ 7,062,500 16326210
Factory Stores America, Inc. 285,000 7,659,375 30306910
McArthur/Glen Realty Corp. (a) 268,100 7,372,750 57918810
Tanger Factory Outlet Centers, Inc. 140,700 4,115,475 87546510
26,210,100
REITS - HEALTHCARE FACILITIES - 3.6%
LTC Properties, Inc. 250,400 3,317,800 50217510
Nationwide Health Properties, Inc. 345,000 12,420,000 63862010
15,737,800
REITS - HOTELS - 0.9%
Jameson Co. 28,000 255,500 47045710
RFS Hotel Investors, Inc. 105,000 1,548,750 74955J10
Resort Income Investors, Inc. 155,700 2,043,563 76116510
3,847,813
REITS - INDUSTRIAL BUILDINGS - 0.6%
American Industrial Properties (SBI) 197,200 419,050 02679110
Centerpoint Properties Corp. 100,500 1,871,813 15189510
Copley Properties, Inc. 18,100 181,000 21745410
2,471,863
REITS - LAND - 0.4%
Storage Equities, Inc. 125,000 1,953,125 86211010
REITS - MALLS - 6.5%
CBL & Associates Properties, Inc. 80,200 1,543,850 12483010
Crown American Realty Trust (SBI) 200,000 2,850,000 22818610
MSA Realty Corp. 115,900 767,838 55349510
Simon Properties Group, Inc. (a) 765,000 18,742,500
Urban Shopping Centers, Inc. (a) 200,000 4,425,000 82880510
28,329,188
REITS - MIXED USE - 2.7%
Bedford Property Investors, Inc. 244,000 1,433,500 07644610
Cousins Properties, Inc. 160,000 2,760,000 22279510
Duke Realty Investors, Inc. 199,810 4,595,630 26441150
EastGroup Properties (SBI) (c) 136,500 2,695,875 27727010
11,485,005
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
REAL ESTATE INVESTMENT TRUSTS (REITS) - CONTINUED
REITS - MOBILE HOME PARKS - 7.0%
Chateau Properties, Inc. 120,000 $ 2,550,000 16173910
Manufactured Home Communities, Inc. (c) 521,100 22,537,575 56468210
ROC Communities, Inc. 158,000 3,456,250 74965010
Sun Communities, Inc. 75,000 1,612,500 86667410
30,156,325
REITS - OFFICE BUILDINGS - 3.7%
Carr Realty Corp. 525,000 12,337,500 14441K10
Crocker Realty Investors, Inc. 50,000 400,000 22682410
G&L Realty Corp. (a) 200,200 3,378,375 36127110
16,115,875
REITS - SHOPPING CENTERS - 25.6%
Bradley Real Estate Trust (SBI) (c) 1,192,400 10,880,650 10458310
Burnham Pacific Properties, Inc. 375,022 6,891,029 12232C10
Developers Diversified Realty Corp. (c) 921,200 26,139,050 25159110
Dial Real Estate Investment Trust, Inc. (c) 284,300 2,949,613 25247810
Federal Realty Investment Trust (SBI) 781,700 18,858,513 31374720
Haagen Alexander Properties, Inc. 325,000 5,484,375 40443E10
Kimco Realty Corporation 527,700 18,865,275 49446R10
New Plan Realty Trust (SBI) 855 20,680 49446R10
Taubman Centers, Inc. 232,600 2,674,900 87666410
Vornado Realty Trust 323,000 11,305,000 92904210
Weingarten Realty Investors (SBI) 182,000 6,779,500 94874110
110,848,585
TOTAL REAL ESTATE INVESTMENT TRUSTS 339,743,692
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Catalina Lighting, Inc. (a) 27,700 290,850 14886510
MEDIA & LEISURE - 2.3%
LODGING & GAMING - 2.3%
La Quinta Motor Inns, Inc. 177,400 5,410,700 50419510
Red Lion Inns LP 155,800 4,420,825 75670210
Resort Hotels PLC 200,000 121,975 75499492
9,953,500
TOTAL COMMON STOCKS
(Cost $338,121,908) 362,650,010
CONVERTIBLE PREFERRED STOCKS - 3.7%
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - 2.1%
REAL ESTATE - 2.1%
Catellus Development Corp., Series A, $3.75 61,900 $ 3,621,150 14911120
Rouse Co., Series A 102,200 5,263,300 77927320
8,884,450
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.6%
REITS - APARTMENTS - 1.2%
Merry Land & Investment Co., Inc., Series A, $1.75 175,000 5,228,125
59043820
REITS - INDUSTRIAL BUILDINGS - 0.4%
Storage Equities, Inc. $2.0625 60,000 1,740,000 86211040
TOTAL REAL ESTATE INVESTMENT TRUSTS 6,968,125
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $14,467,541) 15,852,575
CONVERTIBLE BONDS - 4.7%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) (B) (AMOUNT)
CONSTRUCTION & REAL ESTATE - 1.2%
CONSTRUCTION - 0.7%
Engle Homes, Inc.:
7%, 3/1/03 - $ 1,000,000 1,240,000 292896AB
7%, 3/1/03 (e) - 1,700,000 2,006,000 292896AA
3,246,000
REAL ESTATE - 0.5%
National Health Investors, Inc. 7 3/8%,
4/1/98 (d) - 2,100,000 2,131,500 63633D9D
TOTAL CONSTRUCTION & REAL ESTATE 5,377,500
REAL ESTATE INVESTMENT TRUSTS (REITS) - 3.5%
REITS - HEALTHCARE FACILITIES - 2.3%
Burnham Pacific Properties, Inc. 8 1/2%,
7/15/02 BBB- 8,763,000 9,946,005 12232CAB
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
REAL ESTATE INVESTMENT TRUSTS (REITS) - CONTINUED
REITS - SHOPPING CENTERS - 1.2%
LTC Properties, Inc. 9 3/4%, 7/1/94 - $ 4,100,000 $ 5,309,500 502175AA
TOTAL REAL ESTATE INVESTMENT TRUSTS 15,255,505
TOTAL CONVERTIBLE BONDS
(Cost $19,977,146) 20,633,005
REPURCHASE AGREEMENTS - 7.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.19%
dated 1/31/94 due 2/1/94 $ 33,828,996 33,826,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $406,392,595) $ 432,961,590
LEGEND
1. Non-income producing
2. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
3. Affiliated company (see Note 5 of Notes to Financial Statements).
4. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
National Health
Investors, Inc.
7 3/8%, 4/1/98 3/18/93 $ 2,100,000
5. 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 $2,006,000 or 0.5% of net
assets.
INCOME TAX INFORMATION
At January 31, 1994, the aggregate cost of investment securities for income
tax purposes was $406,617,542. Net unrealized appreciation aggregated
$26,344,048, of which $36,250,101 related to appreciated investment
securities and $9,906,053 related to depreciated investment securities.
The fund hereby designates $1,009,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1994

ASSETS 6. 7.

8.Investment in securities, at value (including 9. $ 432,961,590
repurchase agreements of $33,826,000) (cost
$406,392,595) (Notes 1 and 2) - See accompanying
schedule

10.Cash 11. 956

12.Receivable for investments sold 13. 5,829,198

14.Receivable for fund shares sold 15. 1,897,022

16.Dividends receivable 17. 1,264,222

18.Interest receivable 19. 192,658

20.Other receivables 21. 6,150

22. TOTAL ASSETS 23. 442,151,796

LIABILITIES 24. 25.

26.Payable for investments purchased $ 5,798,057 27.

28.Payable for fund shares redeemed 5,258,945 29.

30.Accrued management fee 221,304 31.

32.Other payables and accrued expenses 268,945 33.

34. TOTAL LIABILITIES 35. 11,547,251

36.NET ASSETS 37. $ 430,604,545

38.Net Assets consist of (Note 1): 39. 40.

41.Paid in capital 42. $ 403,126,305

43.Undistributed net investment income 44. 932,472

45.Accumulated undistributed net realized gain (loss) on 46. (23,227)
investments

47.Net unrealized appreciation (depreciation) on 48. 26,568,995
investment securities

49.NET ASSETS, for 31,487,778 shares outstanding 50. $ 430,604,545

51.NET ASSET VALUE, offering price and redemption price 52. $13.68
per share ($430,604,545 (divided by) 31,487,778 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JANUARY 31, 1994

INVESTMENT INCOME 54. $ 19,301,782
53.Dividends (including $2,457,643 received from
affiliated issuers) (Note 5)

55.Interest 56. 3,567,676

57. TOTAL INCOME 58. 22,869,458

EXPENSES 59. 60.

61.Management fee (Note 4) $ 2,615,114 62.

63.Transfer agent fees (Note 4) 1,719,258 64.

65.Accounting fees and expenses (Note 4) 251,620 66.

67.Non-interested trustees' compensation 2,579 68.

69.Custodian fees and expenses 50,867 70.

71.Registration fees 160,680 72.

73.Audit 24,617 74.

75.Legal 3,919 76.

77.Miscellaneous 65,518 78.

79. Total expenses before reductions 4,894,172 80.

81. Expense reductions (Note 6) (152,993) 4,741,179

82.NET INVESTMENT INCOME 83. 18,128,279

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 85. 1,412,613
(NOTES 1 AND 3)
84.Net realized gain (loss) on investment securities

86.Change in net unrealized appreciation (depreciation) 87. 3,281,151
on investment securities

88.NET GAIN (LOSS) 89. 4,693,764

90.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 91. $ 22,822,043
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31,
1994 1993

INCREASE (DECREASE) IN NET ASSETS

92.Operations $ 18,128,279 $ 5,708,247
Net investment income

93. Net realized gain (loss) on investments 1,412,613 4,822,950

94. Change in net unrealized appreciation (depreciation) 3,281,151 12,474,888
on
investments

95. NET INCREASE (DECREASE) IN NET ASSETS RESULTING 22,822,043 23,006,085
FROM OPERATIONS

96.Distributions to shareholders from net investment (17,531,033) (3,648,679)
income

97.Share transactions 902,518,648 249,400,216
Net proceeds from sales of shares

98. Reinvestment of distributions from net investment 16,135,275 3,348,980
income

99. Cost of shares redeemed (739,963,733) (101,879,509)

100. 178,690,190 150,869,687
Net increase (decrease) in net assets resulting from
share transactions

101. 183,981,200 170,227,093
TOTAL INCREASE (DECREASE) IN NET ASSETS

NET ASSETS 102. 103.

104. Beginning of period 246,623,345 76,396,252

105. $ 430,604,545 $ 246,623,345
End of period (including undistributed net investment
income of $932,472 and $5,598,311, respectively)

OTHER INFORMATION 107. 108.
106.Shares

109. Sold 64,864,558 20,196,161

110. Issued in reinvestment of distributions from net 1,182,763 286,620
investment
income

111. Redeemed (53,208,850) (8,421,503)

112. Net increase (decrease) 12,838,471 12,061,278

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
113. YEARS ENDED JANUARY 31,

114. 1994 1993 1992 1991 1990

115. 116. 117. 118. 119.

120.SELECTED PER-SHARE
DATA

121.Net asset value, $ 13.22 $ 11.60 $ 9.03 $ 9.38 $ 9.01
beginning of period

122.Income from Investment
Operations

123. Net investment income .54 .68(dagger) .43 .77 .74

124. Net realized and .52 1.37 2.63 (.61) .17
unrealized
gain (loss) on investments

125. Total from investment 1.06 2.05 3.06 .16 .91
operations

126.Less Distributions

127. From net investment (.60) (.43) (.49) (.51) (.54)
income

128.Net asset value, end of $ 13.68 $ 13.22 $ 11.60 $ 9.03 $ 9.38
period

129.TOTAL RETURN 8.10% 18.26% 35.00% 2.05% 10.17%
(double dagger)

130.RATIOS AND
SUPPLEMENTAL DATA

131.Net assets, end of period $ 430,605 $ 246,623 $ 76,396 $ 44,530 $ 50,033
(000 omitted)

132.Ratio of expenses to 1.13%* 1.16% 1.24% 1.47% 1.39%
average
net assets

133.Ratio of expenses to 1.17%* 1.16% 1.24% 1.47% 1.39%
average
net assets before expense
reductions

134.Ratio of net investment 4.34% 5.81% 5.84% 8.45% 7.11%
income to average net
assets

135.Portfolio turnover rate 110% 82% 84% 49% 70%

</TABLE>

(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIOD SHOWN.
(dagger) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
* SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Real Estate Investment Portfolio (the fund) is a fund of Fidelity
Devonshire 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 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 (including restricted 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 maturing within sixty days
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 current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
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 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. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
partnerships, non-taxable dividends and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications 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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective February
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,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of January 31, 1993 have been restated to reflect
an increase in paid in capital of $84,910, a decrease in undistributed net
investment income of $3,987,411 and a decrease in accumulated net realized
loss on investments of $3,902,501.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
more repurchase agreements that are collateralized by U.S. Treasury or
Federal Agency obligations.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities 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, restricted securities (excluding 144A issues) amounted
to $2,131,500 or 0.5% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $593,566,465 and $417,241,210, respectively, of which sales of
U.S. government and government agency obligations aggregated $15,605,000.
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 ranging from
.30% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .30%.
For the period, the management fee was equivalent to an annual rate of .63%
of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. 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 $355,703 for the period.
5. TRANSACTIONS WITH
AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions with companies which are or
were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Bradley Real Estate Trust (SBI) $ 3,280,209 - $ 483,030 $ 10,880,650
Developers Diversified Realty Corp. 9,723,536 $ 29,875 916,880
26,139,050
Dial Real Estate Investment Trust, Inc. 1,689,415 1,921,715 375,760
2,949,613
EastGroup Properties (SBI) 365,725 67,295 144,782 2,695,875
Manufactured Home Communities, Inc. 5,084,033 - 537,191 22,537,575
TOTALS $ 20,142,918 $ 2,018,885 $ 2,457,643 $ 65,202,763

6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$152,993 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Real Estate Investment Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Devonshire Trust: Fidelity Real Estate Investment Portfolio,
including the schedule of portfolio investments, as of January 31, 1994,
and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of January 31, 1994, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Devonshire Trust: Fidelity Real Estate Investment Portfolio as
of January 31, 1994, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
March 4, 1994
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Barry A. Greenfield, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
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 *
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 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 Fund
Real Estate Investment Portfolio
Utilities Income Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
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)

* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(4)
SPARTAN(Registered trademark)
LONG-TERM GOVERNMENT BOND
FUND

(Registered trademark)
ANNUAL REPORT
JANUARY 31, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

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 last six
months.

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

FINANCIAL STATEMENTS 13 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 17 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 20 The auditor's opinion.
ACCOUNTANTS

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. Each figure
includes changes in a fund's 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), and the effect of the $5 account
closeout fee. You can also look at the fund's income.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 LIFE OF
YEAR FUND

Spartan Long-Term Government 16.77% 67.49%

Lehman Brothers Long-Term Government 16.90% n/a
Bond Index

Average General U.S. Government 8.66% n/a
Bond Fund

Consumer Price Index 2.52% 10.17%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
September 28, 1990. For example, if you invested $1,000 in a fund that had
a 5% return over the past year, you would end up with $1,050. You can
compare these figures to the Lehman Brothers Long-Term Government Bond
Index - a broad measure of the performance of long-term government bonds.
To measure how the fund stacked up against its peers, you can also look at
the average general U.S. government bond fund, which reflects the
performance of 142 funds tracked by Lipper Analytical Services. These
benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index helps show how
your fund did compared to inflation. (The periods covered by CPI numbers
are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 LIFE OF
YEAR FUND

Spartan Long-Term Government 16.77% 16.65%

Lehman Brothers Long-Term Government 16.90% n/a
Bond Index

Average General U.S. Government 8.66% n/a
Bond Fund

Consumer Price Index 2.52% 2.94%

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

Sp LT Gov't Bond LB Gov't Bond
09/30/90 10000.00 10000.00
10/31/90 10380.00 10232.00
11/30/90 10820.00 10663.79
12/31/90 11019.82 10876.00
01/31/91 11140.92 11006.51
02/28/91 11161.10 11059.34
03/31/91 11182.92 11102.47
04/30/91 11367.25 11243.48
05/31/91 11377.50 11234.48
06/30/91 11297.11 11150.22
07/31/91 11484.52 11325.28
08/31/91 11901.01 11718.27
09/30/91 12162.30 12088.57
10/31/91 12151.72 12107.91
11/30/91 12299.78 12173.29
12/31/91 12934.77 12909.77
01/31/92 12587.53 12504.41
02/29/92 12674.34 12580.68
03/31/92 12576.86 12444.81
04/30/92 12631.97 12431.12
05/31/92 12940.60 12784.17
06/30/92 13117.72 12964.42
07/31/92 13543.77 13507.63
08/31/92 13577.41 13600.84
09/30/92 13745.02 13806.21
10/31/92 13505.68 13516.28
11/30/92 13653.85 13578.45
12/31/92 13976.82 13954.58
01/31/93 14343.39 14352.28
02/28/93 14780.90 14840.26
03/31/93 14944.93 14875.88
04/30/93 15017.01 14985.96
05/31/93 15065.07 15035.41
06/30/93 15588.43 15675.92
07/31/93 15893.61 15939.28
08/31/93 16394.10 16594.38
09/30/93 16563.72 16649.14

10/31/93 16737.16 16772.34
11/30/93 16192.06 16337.94
12/31/93 16304.31 16388.59
01/31/94 16751.37 16780.28

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Long-Term Government Bond Fund on September 30, 1990, shortly after the
fund started. As the chart shows, by January 31, 1994, the value of your
investment, with dividends reinvested would have grown to $16,751 - a
67.51% increase on your initial investment. This assumes you still owned
the fund on January 31, 1994 and therefore does not include the effect of
the $5 account closeout fee. For comparison, look at how the Lehman
Brothers Long-Term Government Bond Index did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$16,780 - a 67.80% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, 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)
INCOME
YEARS ENDED JANUARY 31, 1994 1993 1992

Income return 7.14% 7.69% 7.15%

Capital gain return 4.62% 1.69% 0.76%
Change in share price 5.01% 4.55% 5.05%
Total return 16.77% 13.93% 12.96%
Income returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund. Change in share price and total return
figures include the effect of the $5 account closeout fee.
DIVIDENDS AND YIELD
PERIODS ENDED JANUARY 31, 1994 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 44.00(cents) 84.00(cents)

Annualized dividend rate n/a 6.65% 6.54%

Annualized yield 5.93% n/a n/a

Dividends per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $13.13 over
the past six months and $12.85 over the past year, you can compare the
fund's income over these two 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.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Bond investments overseas and in
the United States provided
historically attractive returns for the
12 months ended January 31,
1994. Here at home, falling interest
rates pushed up bond prices
steadily through mid-October,
when the yield on the benchmark
30-year Treasury bond reached a
historic low, at 5.79%. By year-end,
a strengthening economy had
fueled mild inflation fears. That
pushed up the yield on the 30-year
bond to 6.35% by December 31,
which forced bond investors to give
back some of their earlier profits.
From there, inflation jitters eased
and yields moved within a narrow
range; the yield on the 30-year
Treasury dropped to 6.23% by
January 31. Long Treasuries
returned 9.73% for the 12 months
ended January 31. Mortgage
securities continued to lag other
fixed-income investments,
reflecting the impact of refinancings
by millions of homeowners. The
Salomon Brothers Mortgage Index
rose just 6.64%. For comparison,
the Lehman Brothers Aggregate
Bond Index - a broad measure of
bond performance - returned
9.14%. The strengthening
economy boosted returns of
corporate junk bonds; the Merrill
Lynch High Yield Master Index
rose 16.69%. Globally, falling
interest rates and low inflation
drove strong returns in Europe,
Japan, and many of the emerging
markets. The Salomon Brothers
World Government Bond Index -
which includes U.S. issues - was
up 12.22% for the year, while the
J.P. Morgan Emerging Markets
Bond Index had a total return of
43.06%.
An interview with Curtis
Hollingsworth, Portfolio Manager of Spartan Long-Term Government Bond Fund
Q. HOW HAS THE FUND DONE?
A. Quite well. The best way to measure the fund's performance is by its
total return. This reflects income, or interest payments, plus capital
gains - which occur when the fund profits from selling bonds that have
grown in value - and changes in share price. The fund had a total return
of 16.77% for the year ending January 31, 1994. This return was nearly
double the 8.66% return of the average general U.S. government bond fund,
according to Lipper Analytical Services.
Q. WHAT'S BEHIND THESE OUTSTANDING NUMBERS?
A. The fund performed well because, as part of its charter, it owned more
long-term bonds - those with maturities of 10 or more years - than the
average fund in its group. Long-term bonds are extremely sensitive to
changes in interest rates. So, when interest rates decline, as they did
this past year, the fund typically does quite well. On the other hand,
when interest rates increase, the fund usually performs poorly.
Q. YOU TOOK OVER THE FUND THIS PAST
OCTOBER. HAVE YOU CHANGED ITS STRATEGY?
A. Very little. My philosophy has been, if it isn't broken, why fix it. I
have, however, made some changes to note. I sold the fund's collateralized
mortgage obligations (CMOs) at a profit. A CMO is a more complicated type
of mortgage-backed bond that funds sometimes use instead of conventional
mortgage securities. At the end of January, the fund was divided between
Treasuries and government agency bonds (81.5%), foreign government
obligations (14.1%), and cash and short-term investments (4.4%).
Q. YOU MENTIONED FOREIGN GOVERNMENT OBLIGATIONS. WHERE HAVE YOU INVESTED
OVERSEAS?
A. For the first three quarters of 1993, about 10% of the fund was in
Mexican Cetes - the Mexican equivalent of U.S. Treasury bills. The Cetes
performed very well, so, in the fourth quarter, I sold all of them at a
profit to purchase AAA government bonds issued by France and Denmark.
Yields were higher for these bonds than for comparable U.S. bonds because
interest rates have not fallen as far in Europe as they have here. In
addition, the outlook for inflation is extremely good, and Europe's
economic cycle is running slightly behind our own. So, European interest
rates may have further to fall resulting in price gains for bonds. Over the
next six months, I expect to increase the fund's investment in foreign
bonds to take advantage of the performance of these markets.
Q. WHAT OTHER CHANGES DID YOU MAKE?
A. I began using a strategy known as duration averaging. Duration is a way
to measure how sensitive a bond is to changes in interest rates. It looks
at the bond's maturity, or how much time remains until the issuer is
scheduled to pay off the principal, as well as the frequency and amount of
interest payments. The longer the average duration of a fund, the more its
share price will move up as rates fall or down as rates rise. For example,
if the fund had a duration of 10 years and interest rates rose 1%, its
share price would fall roughly 10%. Conversely, if interest rates fell 1%,
its share price would rise about 10%.
Q. SO HOW DOES DURATION AVERAGING WORK?
A. Duration averaging is a disciplined approach to managing the fund's
duration. It's similar to dollar-cost averaging in the stock market, where
you invest equal amounts of money at regular intervals. What I do is
lengthen the duration after rates rise and shorten it after they fall. To
implement this strategy, I rely on our in-house economic analyst to
forecast the average yield on the 30-year Treasury bond. Right now, the
analyst expects the average to be 5.75% over the next two years. So when
30-year Treasuries are yielding 5.75%, the fund would be at its neutral
duration of 11 years. But when 30-year Treasury yields are higher than
5.75%, the fund's duration will be longer. And when yields are lower, the
fund will be shorter.
Q. WHAT CAN SHAREHOLDERS EXPECT GOING FORWARD?
A. As I noted earlier, shareholders can expect the fund's overseas
investments to increase over the next six months to take advantage of
higher yields and anticipated declines in some foreign interest rates. In
general, I think long-term bonds will continue to perform reasonably well.
However, the really big double-digit price gains that we've seen over the
past several years are behind us. We'll probably see more modest returns
over the next year.
FUND FACTS
GOAL: to provide income and
increase the value of the
fund's shares by investing
mainly in long-term U.S.
government and government
agency securities.
START DATE: September 28,
1990
SIZE: as of January 31,
1994, about $67 million
MANAGER: Curtis
Hollingsworth, since October
1993; manager, Fidelity
Advisor Government
Investment Portfolio, since
January 1992; Spartan
Short-
Intermediate Government
Fund, since December 1992;
Fidelity Short-Intermediate
Government Fund, since
October 1991; Fidelity
Government Securities
Fund, since February 1990;
Spartan Limited Maturity
Government Fund, since
May 1988
(checkmark)
CURT HOLLINGSWORTH ON INTEREST
RATES:
"I expect interest rates to
remain fairly stable over the
next six months. I think the
Federal Reserve's move to
slightly increase interest rates
this February reflects their
resolve to hold down the
inflation rate. Contrary to what
many people have voiced, I
see this move as very good for
bonds over the long term.
There would have been cause
for concern if the Fed hadn't
reacted at all with the economy
growing as quickly as it was."
(bullet) As of January 31, the
fund's duration was 15.4
years. That means that if
interest rates rose 1%, its
share price - $12.74 on
January 31 - would have
fallen roughly 15.4% to
$10.78. Conversely, if interest
rates fell 1%, its share price
would have risen about 15.4%
to $14.70.
(bullet) Nearly 82% of the fund was
invested in U.S. government
and government agency
securities on January 31.
Foreign securities and
short-term investments made
up the rest. Six months ago
about 70% of the fund was in
U.S. government and
government agency
securities.
DISTRIBUTIONS
The Board of Trustees of
Spartan Long-Term
Government Bond Fund
voted to pay on March 7,
1994, to shareholders of
record at the opening of
business on March 4, 1994, a
distribution of $.11 derived
from capital gains realized
from sales of portfolio
securities and a dividend of
$.20 from net investment
income.
INVESTMENT CHANGES

TOP FIVE ISSUERS AS OF JANUARY 31, 1994

<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO

U.S. Treasury 45.1 29.2

Financing Corporation
(U.S. Government Agency) 27.9 19.5

French Government 7.2 0.0

Danish Government 6.8 0.0

Tennessee Valley Authority
(U.S. Government Agency) 6.0 1.9

</TABLE>

(EXCLUDING REPURCHASE AGREEMENTS)
AVERAGE YEARS TO MATURITY AS OF JANUARY 31, 1994
6 MONTHS AGO

Years 21.3 15.9

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL ON THE
FUND'S BONDS IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF JANUARY 31, 1994
6 MONTHS AGO

Years 15.4 n/a

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, A BOND WITH A FIVE-YEAR DURATION WILL
LOSE ABOUT 5% OF ITS VALUE.
ASSET ALLOCATION
AS OF JANUARY 31, 1994 AS OF JULY 31, 1993
Row: 1, Col: 1, Value: 14.1
Row: 1, Col: 2, Value: 4.4
Row: 1, Col: 3, Value: 41.5
Row: 1, Col: 4, Value: 40.0
U.S. government
and agency
obligations 70.1%
Short-term
obligations 19.6%
Foreign
investments 10.3%
U.S. government
and agency
obligations 81.5%
Short-term
obligations 4.4%
Foreign
investments 14.1%
Row: 1, Col: 1, Value: 10.3
Row: 1, Col: 2, Value: 19.6
Row: 1, Col: 3, Value: 30.1
Row: 1, Col: 4, Value: 40.0
INVESTMENTS JANUARY 31, 1994

Showing Percentage of Total Value of Investments

U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 81.5%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A)
U.S. TREASURY OBLIGATIONS - 45.1%
7 1/4%, 2/15/23 $ 1,300,000 $ 1,431,625 912810EP
Stripped Coupon Payment:
11/15/13 30,400,000 8,143,248 912833KB
8/15/17 96,000,000 19,824,960 912803AM
29,399,833
U.S. GOVERNMENT AGENCY OBLIGATIONS - 36.4%
Federal Home Loan Bank coupon strip 2/25/04 3,000,000 1,620,000 31339KBG
Financing Corporation:
10.70%, 10/6/17 2,000,000 2,947,500 317705AA
9.80%, 11/30/17 540,000 738,956 317705AC
10.35%, 8/3/18 5,000,000 7,193,750 317705AG
9.65%, 11/2/18 2,400,000 3,255,750 317705AH
Coupon Strips:
Series 7, 8/3/06 100,000 45,066 31771CPY
Series 14, 5/2/04 1,009,000 540,612 31771C6C
Series 15, 9/7/02 5,500,000 3,337,565 31771C3K
Series 19, 6/6/04 200,000 106,544 31771DJT
Tennessee Valley Authority:
8 1/4%, 4/15/42 (Callable 2012) 2,500,000 2,906,000 880591BL
7 1/4%, 7/15/43 1,000,000 1,025,313 880591BW
23,717,056
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $46,623,057) 53,116,889
FOREIGN GOVERNMENT OBLIGATIONS - 14.1%

Danish Government 8%, 5/15/03 (b) DKK 26,300 4,446,315 249998AG
French Government Oat strip 4/25/23 (b) FRF 180,000 4,702,166 351996BK
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $8,897,053) 9,148,481
REPURCHASE AGREEMENTS - 4.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.19% dated
1/31/94 due 2/1/94 $2,864,537 $ 2,864,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $58,384,110) $ 65,129,370
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE VALUE GAIN/(LOSS)
CONTRACTS TO SELL
317,227,808 BEF
(Receivable amount $8,665,769) 3/31/94 $ 8,832,694 $ (166,925)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 13.6%
CURRENCY TYPE ABBREVIATIONS
BEF - Belgian franc
DKK - Danish krone
FRF - French franc
LEGEND
7. Principal amount is stated in United States dollars unless otherwise
noted.
8. Principal amount in thousands
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 85.9%
Denmark 6.9
France 7.2
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1994, the aggregate cost of investment securities for income
tax purposes was $58,419,641. Net unrealized appreciation aggregated
$6,709,729, of which $6,743,092, related to appreciated investment
securities and $33,363 related to depreciated investment securities.
The fund hereby designates $2,580,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1994

ASSETS 9. 10.

11.Investment in securities, at value (including 12. $ 65,129,370
repurchase agreements of $2,864,000) (cost
$58,384,110) (Notes 1 and 2) - See accompanying
schedule

13.Short foreign currency contracts (Note 2) $ (8,832,694) 14.
Contracts held, at value

15. Receivable for contracts held 8,665,769 (166,925)

16.Cash 17. 585

18.Receivable for investments sold 19. 1,747,850

20.Interest receivable 21. 720,117

22. TOTAL ASSETS 23. 67,430,997

LIABILITIES 24. 25.

26.Payable for fund shares redeemed 90,542 27.

28.Accrued management fee 36,908 29.

30. TOTAL LIABILITIES 31. 127,450

32.NET ASSETS 33. $ 67,303,547

34.Net Assets consist of (Note 1): 35. 36.

37.Paid in capital 38. $ 57,980,204

39.Undistributed net investment income 40. 499,970

41.Accumulated undistributed net realized gain (loss) on 42. 2,245,038
investments

43.Net unrealized appreciation (depreciation) on: 44. 45.

46. Investment securities 47. 6,745,260

48. Foreign currency contracts 49. (166,925)

50.NET ASSETS, for 5,283,657 shares outstanding 51. $ 67,303,547

52.NET ASSET VALUE, offering price and redemption price 53. $12.74
per share ($67,303,547 (divided by) 5,283,657 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JANUARY 31, 1994

INVESTMENT INCOME 55. $ 6,051,982
54.Interest

EXPENSES 56. 57.

58.Management fee (Note 4) $ 557,381 59.

60.Non-interested trustees' compensation 597 61.

62.Interest (Note 5) 521 63.

64. TOTAL EXPENSES 65. 558,499

66.NET INVESTMENT INCOME 67. 5,493,483

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 69. 70.
(NOTES 1, 2 AND 3)
68.Net realized gain (loss) on:

71. Investment securities 5,307,672 72.

73. Foreign currency contracts 158,249 5,465,921

74.Change in net unrealized appreciation (depreciation) 75. 76.
on:

77. Investment securities 2,806,751 78.

79. Foreign currency contracts (166,925) 2,639,826

80.NET GAIN (LOSS) 81. 8,105,747

82.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 83. $ 13,599,230
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31,
1994 1993

INCREASE (DECREASE) IN NET ASSETS

84.Operations $ 5,493,483 $ 5,751,364
Net investment income

85. Net realized gain (loss) on investments 5,465,921 1,284,147

86. Change in net unrealized appreciation (depreciation) 2,639,826 2,487,103
on
investments

87. NET INCREASE (DECREASE) IN NET ASSETS RESULTING 13,599,230 9,522,614
FROM OPERATIONS

88.Distributions to shareholders: (5,701,388) (5,590,626)
From net investment income

89. From net realized gain (2,855,797) (1,265,501)

90. TOTAL DISTRIBUTIONS (8,557,185) (6,856,127)

91.Share transactions 131,601,595 195,418,482
Net proceeds from sales of shares

92. Reinvestment of distributions from: 5,450,221 5,574,135
Net investment income

93. Net realized gain 2,718,913 1,264,096

94. Cost of shares redeemed (160,517,979) (184,906,340)

95. Net increase (decrease) in net assets resulting (20,747,250) 17,350,373
from share transactions

96. TOTAL INCREASE (DECREASE) IN NET ASSETS (15,705,205) 20,016,860

NET ASSETS 97. 98.

99. Beginning of period 83,008,752 62,991,892

100. $ 67,303,547 $ 83,008,752
End of period (including undistributed net investment
income of $499,970 and $597,637, respectively)

OTHER INFORMATION 102. 103.
101.Shares

104. Sold 10,329,522 16,454,365

105. Issued in reinvestment of distributions from: 429,817 474,129
Net investment income

106. 219,444 107,766
Net realized gain

107. Redeemed (12,536,136) (15,626,855)

108. Net increase (decrease) (1,557,353) 1,409,405

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
109. YEARS ENDED JANUARY 31, SEPTEMBER 28,
1990
(COMMENCEMENT OF
OPERATIONS) TO
JANUARY 31,

110. 1994 1993 1992 1991

111.SELECTED PER-SHARE DATA

112.Net asset value, $ 12.130 $ 11.600 $ 11.040 $ 10.000
beginning of period

113.Income from Investment .847 .847 .776 .144
Operations
Net investment income

114. Net realized and 1.123 .703 .604 .996
unrealized
gain (loss) on investments

115. Total from investment 1.970 1.550 1.380 1.140
operations

116.Less Distributions (.840) (.840) (.740) (.100)
From net interest income

117. From net realized gain (.520) (.180) (.080) -
on
investments

118. Total distributions (1.360) (1.020) (.820) (.100)

119.Net asset value, end of $ 12.740 $ 12.130 $ 11.600 $ 11.040
period

120.TOTAL RETURN(dagger) 16.79% 13.95% 12.98% 11.41%

121.RATIOS AND
SUPPLEMENTAL DATA

122.Net assets, end of period $ 67,304 $ 83,009 $ 62,992 $ 33,833
(000 omitted)

123.Ratio of expenses to .65% .65% .65% .65%*
average net assets

124.Ratio of net interest 6.41% 7.35% 7.30% 7.26%*
income to average net
assets

125.Portfolio turnover rate 153% 135% 335% 256%*

</TABLE>

* ANNUALIZED
(dagger) TOTAL RETURNS DO NOT INCLUDE ACCOUNT FEES AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994

1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Long-Term Government Bond Fund (the fund) is a fund of Fidelity
Devonshire 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 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
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
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 current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
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 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.
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 are primarily due to differing treatments for
foreign currency transactions. The fund also utilized earnings and profits
distributed to shareholders on redemption of shares as a part of the
dividends paid deduction
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
for income tax purposes. Permanent book and tax basis differences relating
to shareholder distributions will result in reclassifications 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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective February
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,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of January 31, 1993 have been reclassified to
reflect an increase in paid in capital of $659,482, an increase in
undistributed net investment income of $2,164 and a decrease in accumulated
net realized gain on investments of $661,646.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
more repurchase agreements that are collateralized by U.S. Treasury or
Federal Agency obligations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $105,466,840 and $125,787,029, 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
.65% of the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $10,956.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $2,495,000 and $1,310,000,
respectively. The weighted average interest rate was 3.59%.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Spartan Long-Term Government Bond Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Devonshire Trust: Spartan Long-Term Government Bond Fund,
including the schedule of portfolio investments, as of January 31, 1994,
and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended - and for the period September 28, 1990 (commencement of
operations) to January 31, 1991. These financial statements and financial
highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of January 31, 1994 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Devonshire Trust: Spartan Long-Term Government Bond Fund, as of
January 31, 1994, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the
period then ended - and for the period September 28, 1990 (commencement of
operations) to January 31, 1991, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
March 4, 1994
TO CALL FIDELITY

INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
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*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
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
Short-Term World Income
Spartan Ginnie Mae

Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity
Government
Spartan Long-Term Government Bond
Spartan Short-Intermediate
Government
Spartan Short-Term Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
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)

* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE