FIDELITY DEVONSHIRE TRUST, N-30D, 1995-09-25

FIDELITY DEVONSHIRE TRUST
N-30D, 1995-09-25

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FIDELITY

(REGISTERED TRADEMARK)
UTILITIES
FUND
SEMIANNUAL REPORT
JULY 31, 1995
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 The manager's review of fund
performance, strategy and outlook.

INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.

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

FINANCIAL STATEMENTS 20 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 24 Notes to the financial statements.

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
Although there have been positive market indications so far in 1995, no one

can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE

CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND

Utilities Fund 11.28% 9.59% 78.93% 150.08%

S&P 500(registered trademark) 21.06% 26.11% 83.44% 193.99%

S&P Utilities Index 9.32% 14.43% 61.28% 153.67%

Average Utility Fund 8.88% 10.06% 60.21% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on November 27, 1987. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Standard & Poor's Composite Index of 500 Stocks, a
common proxy for the U.S. stock market, or the Standard & Poor's Utilities
Index, an unmanaged index of 48 gas, electric, and telephone stocks. To
measure how the fund's performance stacked up against its peers, you can
compare it to the average utility fund, which reflects the performance of
85 utility funds with similar objectives tracked by Lipper Analytical
Services over the past six months. All three benchmarks include reinvested
dividends and capital gains, if any.

AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Utilities Fund 9.59% 12.34% 12.67%

S&P 500(registered trademark) 26.11% 12.90% 15.07%

S&P Utilities Index 14.43% 10.03% 12.88%

Average Utility Fund 10.06% 9.85% 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 Income (31sp001 sp002
11/27/87 10000.00 10000.00 10000.00
11/30/87 10000.00 9438.58 9721.61
12/31/87 10059.80 10156.86 9827.57
01/31/88 10983.46 10584.46 10965.60
02/29/88 10873.02 11077.70 10777.00
03/31/88 10500.30 10735.40 10209.05
04/30/88 10510.44 10854.56 10223.34
05/31/88 10946.26 10949.00 10690.55
06/30/88 11087.51 11451.55 11026.23
07/31/88 10954.05 11408.04 11042.77
08/31/88 10902.71 11020.17 10887.07
09/30/88 11295.53 11489.62 11334.52
10/31/88 11534.75 11809.04 11629.22
11/30/88 11451.54 11640.17 11536.19
12/31/88 11545.15 11843.87 11607.71
01/31/89 11724.72 12710.84 12267.03
02/28/89 11502.90 12394.34 11997.16
03/31/89 11631.17 12683.13 12312.68
04/30/89 11984.27 13341.38 13082.22
05/31/89 12562.09 13881.71 13833.14
06/30/89 12820.04 13802.58 14047.56
07/31/89 13493.64 15048.96 15168.55
08/31/89 13352.40 15343.92 15074.51
09/30/89 13418.39 15281.01 15323.24
10/31/89 13462.50 14926.49 15379.93
11/30/89 13892.50 15230.99 15885.93
12/31/89 14537.88 15596.53 17042.43
01/31/90 13799.44 14550.00 15663.70
02/28/90 13834.06 14737.70 15491.40
03/31/90 13821.87 15128.25 15779.54
04/30/90 13264.25 14750.04 15167.29
05/31/90 13904.92 16188.17 16201.70
06/30/90 13964.05 16078.09 15859.84
07/31/90 13976.10 16026.64 15810.68
08/31/90 13265.25 14577.83 14553.73
09/30/90 13470.07 13867.89 15150.43
10/31/90 14290.52 13808.26 16138.24
11/30/90 14608.90 14700.27 16449.71
12/31/90 14806.40 15110.41 16592.82
01/31/91 14743.61 15769.23 16086.74
02/28/91 15271.06 16896.73 16646.56
03/31/91 15451.99 17305.63 16974.49
04/30/91 15451.99 17347.16 16702.90
05/31/91 15451.99 18096.56 16487.44
06/30/91 15336.59 17267.73 16256.61
07/31/91 15817.08 18072.41 16754.06
08/31/91 16206.66 18500.73 17186.32
09/30/91 16719.56 18191.76 17533.48
10/31/91 16930.20 18435.53 17878.89
11/30/91 17061.85 17692.58 17698.32
12/31/91 17942.75 19716.61 18995.60
01/31/92 17352.70 19349.89 17983.14
02/29/92 17285.65 19601.43 17495.79
03/31/92 17084.76 19219.21 17243.85
04/30/92 17645.14 19784.25 18354.36
05/31/92 18000.50 19881.19 18326.83
06/30/92 18179.36 19584.96 18585.23
07/31/92 19161.65 20385.99 20053.47
08/31/92 19189.32 19968.08 19903.07
09/30/92 19244.82 20203.70 20048.36
10/31/92 19216.83 20274.41 19857.90
11/30/92 19398.78 20965.77 19826.13
12/31/92 19898.62 21223.65 20535.90
01/31/93 20115.06 21401.93 20852.16
02/28/93 21182.87 21692.99 22353.51
03/31/93 21752.84 22150.72 22758.11
04/30/93 21547.76 21614.67 22277.91
05/31/93 21606.36 22193.94 22257.86
06/30/93 22623.26 22258.30 23288.40
07/31/93 22904.02 22169.27 23810.06
08/31/93 23953.17 23009.49 24960.09
09/30/93 23967.59 22832.31 24907.67
10/31/93 23773.94 23304.94 24862.84
11/30/93 22790.81 23083.54 23604.78
12/31/93 23004.26 23362.86 23479.67
01/31/94 24004.45 24157.19 23660.47
02/28/94 23019.41 23502.53 22323.65
03/31/94 22148.45 22477.82 21566.88
04/30/94 22709.17 22765.54 22099.58
05/31/94 22304.20 23138.89 21507.31
06/30/94 22128.34 22571.99 21552.48
07/31/94 22819.36 23312.35 22283.11
08/31/94 22992.12 24268.16 22222.94
09/30/94 22378.03 23673.59 21658.48
10/31/94 22362.20 24206.24 21846.91
11/30/94 21649.52 23324.65 21527.94
12/31/94 21788.06 23670.56 21637.74
01/31/95 22472.06 24284.33 23325.48
02/28/95 22789.04 25230.69 23292.82
03/31/95 22908.51 25975.25 23153.07
04/30/95 23598.62 26740.22 23993.52
05/31/95 24137.25 27809.03 24751.72
06/30/95 24293.97 28455.03 24865.58
07/31/95 25007.99 29398.60 25499.65

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Utilities Fund on November 27, 1987, when the fund started. As the chart
shows, by July 31, 1995, the value of your investment would have grown to
$25,008 - a 150.08% 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 $29,399 - a 193.99% increase. A $10,000 investment
in the S&P Utilities Index would have grown to $25,367 - a 153.67%
increase.
(checkmark)
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.
FUND TALK: THE MANAGER'S OVERVIEW

An interview with John Muresianu, Portfolio Manager of Fidelity Utilities
Fund
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. The fund's total return for the six months ended July 31, 1995, was
11.28%, compared to 8.88% for the average utility fund tracked by Lipper
Analytical Services, and 9.32% for the Standard and Poor's Utilities Index.
For the 12 months ended July 31, 1995, the fund returned 9.59%, compared to
10.06% for the average utility fund and 14.43% for the S&P Utilities Index.
Q. LOOKING AT THE SIX-MONTH NUMBERS, WHY DID THE FUND BEAT THE AVERAGE FUND
AND THE INDEX?
A. It comes down to relative weighting in telephone utility stocks. These
stocks performed better than the others in the utilities sector, and the
fund had more of a stake in them than the average fund and the index. At
the same time, I should note that I seek to diversify the portfolio by
investing in electric and natural gas utilities as well.
Q. WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE?
A. Broadly speaking, we've seen a strong six months, with the overall
market rising more than 20%. That was driven by a combination of two
factors. First, corporate earnings continued to be strong, especially in
the technology sector. Second, bond yields dropped significantly - and bond
prices rose - as it became apparent that the economy was slowing. Bond
investors often perceive a slower economy to be a positive backdrop,
because it usually is an environment in which inflation does not threaten
to erode the value of a bond's fixed-income payments. In general, the
lower bond yields, the higher the stock market, as competition from bonds
diminishes. In addition, with lower bond yields, investors are willing to
pay higher valuations - yardsticks such as price-to-earnings ratios - for
corporate earnings. Utility stocks, in particular, more closely track bonds
in price terms than the market, in general, because of their relatively
high yields and slow growth. Like bonds, utility stocks did well over the
past six months, but not as well as the broad market.
Q. HOW HAVE THE THREE MAJOR SEGMENTS OF THE UTILITIES SECTOR - GAS,
ELECTRIC AND TELEPHONE - PERFORMED?
A. In general, natural gas utility stocks started out well, and then
stumbled. They performed well initially due to the combination of lower
bond yields and the expectation that natural gas prices would rebound from
low levels seen at the beginning of the period. When gas prices did not
recover - and fell further - gas stocks suffered. Electrics did well
initially, because - historically the highest yielding of the three
industries - they are seen as most sensitive to what's going on in the bond
market. When that market gave back some of its gains toward the end of the
period, electrics were quick to do so as well. In addition, concerns about
deregulation and competition can surface from time to time, leading to some
volatility. The same is true for telephone utility stocks, which were
volatile over the period, but ended up performing better than the other
sectors.
Q. YOU'VE CONTINUED TO FOCUS MOST OF THE FUND ON TELEPHONE STOCKS . . .
A. Right. Currently, it appears that the move in the utilities sector is
toward deregulation and competition. Deregulation will bring price
competition to every local monopoly, whether it's an electric, gas or phone
utility. What I think telephone stocks have that electrics and gas don't
have is some growth potential to offset price erosion in the core business.
Cellular service is one area that can provide growth potential.
Q. YOU'VE REDUCED THE FUND'S CASH AND SHORT-TERM POSITION FROM 21.5% AS OF
JANUARY 31, 1995, TO 3.1% AT THE END OF THE PERIOD. WHY IS THAT?
A. I invested the fund more fully for two reasons. First, the economy was
slowing, with a potential for declining interest rates, providing more
opportunity for utilities to post positive returns. Second, I always invest
on a stock-by-stock basis, and I found more individual opportunities to buy
attractive stocks.
Q. WHAT STOCKS HAVE PROVIDED STRONG PERFORMANCE FOR THE FUND?
A. ENSERCH, a gas utility, broadly speaking, benefited from the
anticipation of a dramatic rise in oil production in the Gulf of Mexico,
which should lead to a significant increase in cash flow. Williams
Companies, an interstate gas pipeline company with an interest in
telecommunications, posted strong performance as its acquisition of Transco
last year was seen in a more favorable light by investors. Earnings growth
drove strong performance by several telephone companies, including
Ameritech, SBC Communications and U.S. West.
Q. AND WHICH STOCKS DIDN'T DO AS WELL AS YOU WOULD HAVE LIKED?
A. Disappointing earnings caused by a difficult regulatory environment hurt
Pacific Telesis. Regulators set a high productivity hurdle for the company,
and assumed a higher demand response that didn't materialize when the
company lowered its rates. The low level of earnings raised the specter of
a dividend reduction. El Paso Natural Gas posted disappointing earnings
caused by weak natural gas prices and unusually strong hydro-power
conditions in California that took away market share. And Niagara Mohawk
was hurt by fears that some of its high-priced contracts would be at risk
if deregulation were pursued in New York.
Q. WHAT'S YOUR OUTLOOK?
A. It's very uncertain where the market will go from here. On the one hand,
it appears to me that valuations in the market are at historically high
levels and profit margins are near the historical highs seen in the 1960s.
That might lead one to think a correction is in the cards. On the other
hand, it appears inflation is at 30-year lows and corporate earnings
continue to surprise on the upside, as companies slash costs and benefit
from the relatively weak dollar. So the market could surprise everyone
again and go up another 20%; we could stay right about where we are right
now; or it could go down. Given this uncertainty, I'm focusing on adding
value one company at a time, and having big-picture considerations weigh
less in determining how I position the portfolio.

FUND FACTS
GOAL: to seek a high total
return through a combination
of current income and capital
appreciation
START DATE: November 27,
1987
SIZE: as of July 31, 1995,
more than $1.2 billion
MANAGER: John Muresianu,
since 1992; manager,
Fidelity Select Utilities
Growth Portfolio since 1992;
analyst, natural gas
pipelines, life insurance,
service companies,
Canadian stocks, foreign
currencies, 1989 - 1992;
pension fund manager, 1987
- - 1989; joined Fidelity in
1986
(checkmark)
JOHN MURESIANU ON
DEREGULATION IN THE
TELECOMMUNICATIONS INDUSTRY:
"Right after the end of the
period, Congress started
discussing the deregulation of
the telecommunications
industry. Clearly, the type of
legislation that comes out of
the debate will have an impact
on telephone utilities. It's very
difficult to predict what
legislators will come up with.
At the moment, it appears that
local telephone providers will
benefit most from the
outcome - helped by entry
into the lucrative long
distance business - but
that outlook has switched
from positive to negative quite
a few times over the past
year.
"Once a bill comes out of
conference committee - and
a lot depends on whether the
president signs the new
legislation or not - we'll be
able to estimate the effects
better. The key question for
local telephone companies
and long distance providers is
whether they'll be able to get
into each other's business or
not. And the sequencing of
changes is crucial, too. For
example, if long distance
providers can enter local
provider markets before local
companies can get into the
long distance business, long
distance companies would
have the advantage.
"At this point, it's too hard to
say what will happen and who
will come out ahead. We
won't know until it's over."
INVESTMENT CHANGES

TOP TEN STOCKS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

Ameritech Corp. 5.2 4.7

SBC Communications, Inc. 5.0 4.0

NYNEX Corp. 4.9 3.9

GTE Corp. 4.9 3.6

BellSouth Corp. 4.5 3.6

Bell Atlantic 4.3 2.4

U.S. West, Inc. 4.2 3.1

ENSERCH Corp. 2.4 1.6

Williams Companies, Inc. 2.3 2.2

AirTouch Communications, Inc. 2.3 0.0

TOP MARKET SECTORS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO

Telephone Services 38.3 29.7

Electric Utility 29.9 18.3

Gas 17.7 16.8

ASSET ALLOCATION
AS OF JULY 31, 1995* AS OF JANUARY 31, 1995**
95
Row: 1, Col: 1, Value: 3.1
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 50.0
Row: 1, Col: 4, Value: 45.9
Row: 1, Col: 1, Value: 21.5
Row: 1, Col: 2, Value: 7.8
Row: 1, Col: 3, Value: 70.7
Row: 1, Col: 4, Value: 0.0
Stocks 95.9%
Bonds 1.0%
Short-term
investments 3.1%
FOREIGN
INVESTMENTS 12.1%
Stocks 70.7%
Bonds 7.8%
Short-term
investments 21.5%
FOREIGN
INVESTMENTS 7.9%

*
**
INVESTMENTS JULY 31, 1995 (UNAUDITED)

Showing Percentage of Total Value of Investments in Securities

COMMON STOCKS - 94.6%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Cameco, Inc. 10,000 $ 301
Viag AG 3,200 1,333
TOTAL BASIC INDUSTRIES 1,634
CONSTRUCTION & REAL ESTATE - 0.5%
CONSTRUCTION - 0.0%
YTL Corp. BHD 80,500 459
REAL ESTATE INVESTMENT TRUSTS - 0.5%
Associated Estates Realty Corp. 22,500 458
Bay Apartment Community 48,900 972
CBL & Associates Properties 23,300 480
Camden Property Trust (SBI) 26,400 551
Crown American Realty Trust (SBI) 43,300 547
Developers Diversified Realty 21,300 647
Equity Residential Property Trust (SBI) 34,000 1,003
LTC Properties, Inc. 67,200 941
Oasis Residential, Inc. 8,000 180
Realty Income Corp. 14,700 320
Summit Property Trust 16,900 294
6,393
TOTAL CONSTRUCTION & REAL ESTATE 6,852
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
General Motors Corp. 10,000 487
ENERGY - 2.9%
COAL - 0.0%
Eastern Enterprises Co. 9,800 296
ENERGY SERVICES - 0.0%
Sonat Offshore Drilling, Inc. 12,000 402
INDEPENDENT POWER - 0.1%
California Energy Co., Inc. (a) 54,500 1,042
Trigen Energy Corp. 30,300 667
1,709
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - 2.8%
Coastal Corp. (The) 838,500 $ 26,098
Exxon Corp. 9,800 711
NGC Corp. 141,435 1,414
Norsk Hydro AS ADR 9,800 431
Nuevo Energy Corp. (a) 14,200 339
Occidental Petroleum Corp. 94,700 2,131
Pennzoil Co. 9,800 459
Petroleum Heat & Power, Inc. Class A 158,400 1,346
Petronas Gas BHD 132,000 428
Texaco, Inc. 9,800 652
Total SA Class B 5,000 303
34,312
TOTAL ENERGY 36,719
FINANCE - 0.1%
BANKS - 0.1%
Banc One Corp. 10,000 318
Deutsche Bank AG 20,000 986
TOTAL FINANCE 1,304
HOLDING COMPANIES - 1.4%
CINergy Corp. 580,379 15,090
Citicorp Equity Inv. Class B 150,000 540
Iven SA (a) 3,500,000 2,171
17,801
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
ELECTRICAL EQUIPMENT - 0.2%
Glenayre Technologies, Inc. 39,465 2,467
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Tenneco, Inc. 46,411 2,297
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 1.5%
Sanifill, Inc. (a) 7,000 $ 230
WMX Technologies, Inc. 611,000 19,094
19,324
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 24,088
MEDIA & LEISURE - 0.0%
BROADCASTING - 0.0%
People's Choice TV Corp. (a) 9,800 242
PRECIOUS METALS - 0.1%
Barrick Gold Corp. 30,000 748
Newmont Mining Corp. 9,800 419
1,167
SERVICES - 0.4%
SERVICES - 0.4%
Block (H & R), Inc. 24,100 904
Chemed Corp. 100,000 3,375
4,279
TECHNOLOGY - 0.6%
COMMUNICATIONS EQUIPMENT - 0.5%
Nokia Corp. AB sponsored ADR 96,000 6,312
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Itron, Inc. (a) 38,500 885
TOTAL TECHNOLOGY 7,197
UTILITIES - 86.6%
CELLULAR - 2.3%
AirTouch Communications, Inc. (a) 899,200 28,325
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - 28.1%
AES Corp. (a) 250,684 $ 4,732
AES China Generating Co. Class A (a) 17,000 166
Allegheny Power System, Inc. 19,600 470
American Electric Power Co., Inc. 782,000 26,979
Boston Edison Co. 229,600 5,740
CIPSCO, Inc. 29,300 861
CMS Energy Corp. Class G 56,000 1,001
Carolina Power & Light Co. 45,100 1,370
Centerior Energy Corp. 1,014,100 10,521
Central Hudson Gas & Electric Corp. 68,700 1,820
Central Louisiana Electric Co., Inc. 119,700 2,813
Central & South West Corp. 9,800 250
CESC Ltd. GDR (warrants) (a)(b) 37,000 -
Chilgener SA sponsored ADR 9,800 278
Consolidated Electric Power Asia Ltd. 2,774,000 6,471
Consolidated Edison Co. of New York, Inc. 58,400 1,694
DPL, Inc. 292,700 6,513
DQE, Inc. 509,950 12,239
Detroit Edison Company 466,900 13,774
Dominion Resources, Inc. (Va.) 19,600 698
Eastern Utilities Associates 217,034 4,720
Electricidad de Caracas 558,528 449
Eletrobras PN Class B 72,700,000 19,593
Empresa Nacional de Electricidad SA 48,900 1,149
Enersis SA sponsored ADR 41,400 1,061
Entergy Corp. 1,164,661 27,661
EVN (Energie-Versor Nieder) 3,100 434
FPL Group, Inc. 262,200 10,029
Florida Progress Corp. 9,800 301
General Public Utilities Corp. 115,900 3,347
Hawaiian Electric Industries, Inc. 14,200 511
IES Industries, Inc. 72,900 1,595
Illinova Corp. 407,500 10,187
Interstate Power Co. (Del.) 9,800 233
LG&E Energy Corp. 29,300 1,132
Long Island Lighting Co. 193,700 3,099
Montana Power Co. 70,000 1,505
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
NIPSCO Industries, Inc. 404,900 $ 13,210
National Power PLC (b) 565,000 4,431
New England Electric Systems 112,400 3,779
New York State Electric & Gas Corp. 9,800 229
Niagara Mohawk Power Corp. 349,800 4,897
Northeast Utilities 330,900 7,445
Northern States Power Co. (Minn.) 9,800 434
Nova Scotia Power, Inc. 193,700 1,686
Ohio Edison Co. 430,100 9,462
Peco Energy Co. 267,800 7,666
Pacific Gas & Electric Co. 194,300 5,732
PacifiCorp. 481,700 8,851
Pinnacle West Capital Corp. 522,500 12,736
Portland General Corp. 261,800 6,021
Potomac Electric Power Co. 19,600 407
Powergen PLC Ord. (a) 375,000 3,222
Public Service Co. of Colorado 441,075 13,949
Public Service Co. of New Mexico (a) 778,800 11,195
Rochester Gas & Electric Corp. 30,300 614
SCE Corp 335,600 5,747
Scottish Hydro-Electric PLC Ord. 170,000 871
Scottish Power PLC ADR 750,000 3,763
Sithe Energies, Inc. (a) 150,500 1,355
South Western Electricity PLC ADR (a)(b) 570 82
Southern Co. 300,000 6,600
TECO Energy, Inc. 9,800 211
Texas Utilities Co. 58,700 1,988
Unicom Corp. 142,000 3,940
United Illuminating Co. 57,900 1,889
Veba AG Ord. 534,000 22,159
Verbund Gesellschaft 11,600 852
350,819
GAS - 17.5%
Aquila Gas Pipeline Corp. 42,800 353
Atlanta Gas Light Co. 4,400 154
British Gas PLC Ord. 468,000 2,177
Brooklyn Union Gas Co. (The) 293,600 7,157
Columbia Gas System, Inc. (The) (a) 237,700 8,320
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - CONTINUED
Consolidated Natural Gas Co. 91,100 $ 3,416
El Paso Natural Gas Co. 169,300 4,296
Energen Corp. 102,400 2,253
Enron Corp. 359,600 12,496
Enron Global Power & Pipelines 102,600 2,385
ENSERCH Corp. 1,661,700 29,703
Equitable Resources, Inc. 58,800 1,632
Hong Kong & China Gas Co. Ltd. (warrants) (a) 109,000 16
MCN Corp. 493,900 9,384
MDU Resources Group, Inc. 43,500 1,294
National Fuel Gas Co. 9,800 274
NICOR, Inc. 83,100 2,109
Noram Energy Corp. 97,500 670
Nova Corp. 1,157,400 10,076
ONEOK, Inc. 260,300 6,052
Pacific Enterprises 910,300 21,961
Panhandle Eastern Corp. 380,200 9,267
Peoples Energy Corp. 27,200 714
Questar Corp. 328,900 9,456
Sonat, Inc. 347,300 10,419
Southern Union Company 15,901 278
Tejas Gas Corp. (Del.) (a) 57,530 3,020
Tejas Power Corp. (a) 218,600 2,159
TransCanada PipeLines Ltd. 343,300 4,687
UGI Corp. 216,299 4,299
WICOR, Inc. 125,800 3,554
Washington Gas Light Co. 184,100 3,360
Westcoat Energy, Inc. 653,800 9,946
Western Resources, Inc. 33,800 1,031
Williams Companies, Inc. 770,500 28,508
Yankee Energy System, Inc. 61,200 1,300
218,176
TELEPHONE SERVICES - 38.2%
ALC Communications Corp. 80,400 4,251
Ameritech Corp. 1,333,000 64,484
BCE, Inc. 93,800 2,931
Bell Atlantic Corp. 945,200 54,113
BellSouth Corp. 834,800 56,558
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Cincinnati Bell, Inc. 9,800 $ 261
Frontier Corp. 256,100 6,883
GTE Corp. 1,729,400 61,394
Hong Kong Telecommunication Ltd. ADR 87,300 1,593
LCI International, Inc. (a) 78,200 2,678
Nippon Telegraph & Telephone Corp. Ord. 112 953
NYNEX Corp. 1,490,200 61,471
Pacific Telesis Group 83,200 2,350
Koninklijke PPT Nederland 4,084 153
Koninklijke PPT Nederland (a)(b) 77,200 2,887
SBC Communications, Inc. 1,289,800 62,072
Sprint Corp. 142,100 4,867
Telebras PN (Pfd. Reg.) 742,000,000 26,703
Telecom Argentina sponsored ADR Class B 45,000 2,233
Telecom Italia Ord. 390,000 673
Telecom Italia Mobile SPA 390,000 490
Telefonica de Argentina SA sponsored ADR 80,000 2,160
Telefonica del Peru (CPT) Class B 160,000 298
Telefonos de Mexico SA sponsored ADR representing
shares Ord. Class L 10,000 330
Telepar PN 331,200 100
Telesp PN (Pfd. Reg.) (a) 2,000,000 289
U.S. West, Inc. 1,237,424 53,054
WorldCom, Inc. (a) 24,900 744
476,973
WATER - 0.5%
American Water Works, Inc. 117,989 3,613
E Town Corp. 23,500 629
Generale des Eaux 12,542 1,483
5,725
TOTAL UTILITIES 1,080,018
TOTAL COMMON STOCKS
(Cost $1,032,172) 1,181,788
PREFERRED STOCKS - 1.3%
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - 0.2%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Cyprus Amax Minerals Co., Series A, $4.00 (a) 18,733 $ 1,152
ENERGY - 0.1%
OIL & GAS - 0.1%
Valero Energy Corp. $3.125 16,000 790
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Kenetech Corp. 8 1/4% (a) 49,000 744
TOTAL CONVERTIBLE PREFERRED STOCKS 2,686
NONCONVERTIBLE PREFERRED STOCKS - 1.1%
UTILITIES - 1.1%
ELECTRIC UTILITY - 1.0%
Alabama Power Co. Class A, 7.60% 116,200 2,890
Cleveland Electric Illuminating Co., Series L adj. rate 7,700 560
Gulf Power Co. Class A, 7.30% 120,000 2,670
Mississippi Power Co. depository shares
representing 1/4 share 7 1/4% 135,600 3,187
Public Service Co. of New Hampshire Co., Series A (a) 77,500 2,044
Texas Utilities Electric Co., Series A adj. rate 7,700 674
Texas Utilities Electric Co., Series B adj. rate 4,175 396
12,421
TELEPHONE SERVICES - 0.1%
GTE North, Inc. $7.60 (a) 6,800 677
Stet (Societa Finanziaria Telefonica) Spa 300,000 750
1,427
TOTAL NONCONVERTIBLE PREFERRED STOCKS 13,848
TOTAL PREFERRED STOCKS
(Cost $16,350) 16,534
CORPORATE BONDS - 1.0%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (000S) (000S)
CONVERTIBLE BONDS - 0.2%
UTILITIES - 0.2%
GAS - 0.2%
Consolidated Natural Gas Co.
7 1/4%, 12/15/15 A2 $ 2,250 $ 2,301
NONCONVERTIBLE BONDS - 0.8%
UTILITIES - 0.8%
ELECTRIC UTILITY - 0.8%
Georgia Power Co. 1st mortgage
6 7/8%, 9/01/02 A1 10,000 9,890
TOTAL CORPORATE BONDS
(Cost $11,698) 12,191
REPURCHASE AGREEMENTS - 3.1%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 5.82%,
dated 7/31/95 due 8/1/95 $ 39,180 39,174
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $1,099,394) $ 1,249,687
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 $7,400,000 or 0.6% of net
assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 87.9%
Brazil 3.9
Canada 2.4
Germany 2.0
United Kingdom 1.1
Others (individually less than 1%) 2.7
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31,1995, the aggregate cost of invest-
ment securities for income tax purposes was $1,100,898,000. Net unrealized
apprecia-
tion aggregated $148,789,000, of which $163,013,000 related to appreciated
invest-
ment securities and $14,224,000 related to depreciated investment
securities.
On December 31,1991, the fund acquired substantially all the assets of the
Fidelity Corporate Trust: Adjustable Rate Preferred Portfolio in a tax-free
exchange for the shares of Fidelity Utilities Fund; Fidelity Corporate
Trust: Adjustable Rate Preferred Portfolio had a capital loss carryover of
approximately $25,514,000 (subject to certain limitations) available to
offset future capital gains in Fidelity Utilities Fund, to the extent
provided by regulations.
The fund intends to elect to defer to its fiscal year ending January
31,1996 $7,864,000 of losses recognized during the period November 1, 1994
to January 31, 1995.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JULY 31, 1995 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 1,249,687
agreements of $39,174) (cost $1,099,394) - See
accompanying schedule

Cash 775

Receivable for investments sold 8,852

Receivable for fund shares sold 3,482

Dividends receivable 7,246

Interest receivable 305

Other receivables 77

TOTAL ASSETS 1,270,424

LIABILITIES

Payable for investments purchased $ 10,160

Payable for fund shares redeemed 4,295

Accrued management fee 554

Other payables and accrued expenses 385

Collateral on securities loaned, at value 10,005

TOTAL LIABILITIES 25,399

NET ASSETS $ 1,245,025

Net Assets consist of:

Paid in capital $ 1,085,889

Undistributed net investment income 7,221

Accumulated undistributed net realized gain (loss) on 1,621
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 150,294
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 84,628 shares outstanding $ 1,245,025

NET ASSET VALUE, offering price and redemption price per $14.71
share ($1,245,025 (divided by) 84,628 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)

INVESTMENT INCOME $ 23,435
Dividends

Interest (including income on securities loaned of $42) 8,419

TOTAL INCOME 31,854

EXPENSES

Management fee $ 3,244
Basic fee

Performance adjustment 57

Transfer agent fees 1,523

Accounting and security lending fees 267

Non-interested trustees' compensation 3

Custodian fees and expenses 33

Registration fees 74

Audit 13

Legal 3

Miscellaneous 10

Total expenses before reductions 5,227

Expense reductions (182) 5,045

NET INVESTMENT INCOME 26,809

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

Investment securities 13,544

Foreign currency transactions (247) 13,297

Change in net unrealized appreciation (depreciation) on:

Investment securities 96,448

Assets and liabilities in foreign currencies 2 96,450

NET GAIN (LOSS) 109,747

NET INCREASE (DECREASE) IN NET ASSETS $ 136,556
RESULTING FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JULY 31, JANUARY 31,
1995 1995
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 26,809 $ 47,069
Net investment income

Net realized gain (loss) 13,297 28,774

Change in net unrealized appreciation (depreciation) 96,450 (168,504)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 136,556 (92,661)
FROM OPERATIONS

Distributions to shareholders (23,154) (45,266)
From net investment income

From net realized gain - (56,109)

In excess of net realized gain - (10,257)

TOTAL DISTRIBUTIONS (23,154) (111,632)

Share transactions 494,399 620,983
Net proceeds from sales of shares

Reinvestment of distributions 20,113 97,934

Cost of shares redeemed (554,071) (799,857)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (39,559) (80,940)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 73,843 (285,233)

NET ASSETS

Beginning of period 1,171,182 1,456,415

End of period (including undistributed net investment $ 1,245,025 $ 1,171,182
income of $7,221 and $3,566, respectively)

OTHER INFORMATION
Shares

Sold 35,694 43,901

Issued in reinvestment of distributions 1,465 7,136

Redeemed (39,508) (56,033)

Net increase (decrease) (2,349) (4,996)

</TABLE>

FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JANUARY 31,
ENDED
JULY 31, 1995

(UNAUDITED) 1995 1994 D 1993 1992 1991

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

Net asset value, $ 13.47 $ 15.84 $ 13.94 $ 12.94 $ 11.74 $ 11.96
beginning of period

Income from
Investment
Operations

Net investment .30 .55 .50 .61 .63 .67
income

Net realized and 1.20 (1.58) 2.14 1.37 1.38 .10
unrealized gain
(loss)

Total from investment 1.50 (1.03) 2.64 1.98 2.01 .77

operations

Less Distributions (.26) (.54) (.52) (.60) (.63) (.69)
From net investment
income

From net - (.68) (.22) (.38) (.18) (.30)
realized gain

In excess of net - (.12) - - - -
realized gain

Total distributions (.26) (1.34) (.74) (.98) (.81) (.99)

Net asset value, end $ 14.71 $ 13.47 $ 15.84 $ 13.94 $ 12.94 $ 11.74
of period

TOTAL RETURN B, C 11.28% (6.38) 19.34% 15.92% 17.70% 6.84%
%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 1,245 $ 1,171 $ 1,456 $ 1,002 $ 647 $ 220
period (in millions)

Ratio of expenses to .81% .87% .86% .87% .95% .94%
average net assets A

Ratio of expenses to .84% .88% .87% .87% .95% .94%
average net assets A
before expense
reductions

Ratio of net investment 4.31% 3.87% 3.39% 4.57% 5.11% 5.93%
income to average A
net assets

Portfolio turnover rate 126% 98% 47% 73% 39% 43%
A

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
D 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1995 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Utilities 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 of
their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year.
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 funds are 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 withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, non-taxable dividends and losses deferred
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
due to wash sales. The fund also utilized earnings and profits distributed
to shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
at least equal to the repurchase price. The fund's investment adviser,
Fidelity Management & Research Company (FMR), is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $831,049,000 and $651,244,000, respectively, of which U.S.
government and government agency obligations aggregated $178,211,000 and
$263,946,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2700% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .20%. The
basic fee is subject to a performance adjustment (up to a maximum of
(plus/minus) .15%) based on the fund's investment performance as compared
to the appropriate index over a specified period of time. The fund's
performance adjustment took effect in November 1994. For the period, the
management fee was equivalent to an annualized rate of .53% of average net
assets .
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
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 $296,000 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 $9,506,000 and
$10,005,000, respectively.
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
$182,000 under this arrangement.

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)(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)(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.
TO WRITE FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East 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
6300 Canoga Avenue
Woodland Hills, 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
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
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
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, 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
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, 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
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State 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
511 Pine Street
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
Arthur S. Loring, Secretary
William J. Hayes, Vice President
John Muresianu, Vice President
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
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 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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

SPARTAN(REGISTERED TRADEMARK)

(REGISTERED TRADEMARK)
LONG-TERM GOVERNMENT BOND
FUND
SEMIANNUAL REPORT
JULY 31, 1995
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

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

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

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

FINANCIAL STATEMENTS 12 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 16 Notes to the financial statements.

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
Although there have been positive market indications so far in 1995, no one
can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in 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 to measure
performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND

Spartan Long-Term Government Bond 12.98% 13.38% 65.72%

Lehman Brothers Long-Term Government Bond 13.19% 13.59% n/a
Index

Salomon Brothers Treasury/Agency 10+ Year Index 13.15% 13.87% n/a

Average General U.S. Government Bond Fund 8.04% 8.48% n/a

Consumer Price Index 1.46% 2.76% 14.92%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on September 28, 1990. For example, if you invested $1,000 in a
fund that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the Lehman Brothers
Long-Term Government Bond Index or the Salomon Brothers Treasury/Agency
Year 10+ Year Index - both broad measures of the performance of long-term
government bonds. To measure how the fund's performance stacked up against
its peers, you can compare it to the average general U.S. government bond
fund, which reflects the performance of 185 funds with similar objectives
tracked by Lipper Analytical Services over the past six months. These
benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index (CPI) helps
show how your fund did compared to inflation. (The CPI returns begin on the
month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 1 LIFE OF
YEAR FUND

Spartan Long-Term Government Bond 13.38% 10.99%

Lehman Brothers Long-Term Government Bond Index 13.59% n/a

Salomon Brothers Treasury/Agency 10+ Year Index 13.87% n/a

Average General U.S. Government Bond Fund 8.48% n/a

Consumer Price Index 2.76% 2.92%

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
Spartan Long-Term Gsb029
09/30/90 10000.00 10000.00
10/31/90 10380.00 10239.00
11/30/90 10820.00 10653.68
12/31/90 11019.82 10871.01
01/31/91 11140.91 11001.47
02/28/91 11161.10 11030.07
03/31/91 11182.92 11071.98
04/30/91 11367.26 11233.64
05/31/91 11377.50 11220.16
06/30/91 11297.11 11152.83
07/31/91 11484.53 11330.16
08/31/91 11901.01 11708.59
09/30/91 12162.30 12089.12
10/31/91 12151.72 12091.54
11/30/91 12299.79 12162.88
12/31/91 12934.78 12899.95
01/31/92 12587.54 12502.63
02/29/92 12674.35 12577.65
03/31/92 12576.86 12439.29
04/30/92 12631.97 12445.51
05/31/92 12940.61 12774.07
06/30/92 13117.73 12959.30
07/31/92 13543.77 13489.33
08/31/92 13577.41 13598.60
09/30/92 13745.03 13791.70
10/31/92 13505.68 13508.97
11/30/92 13653.85 13572.46
12/31/92 13976.82 13937.56
01/31/93 14343.38 14365.44
02/28/93 14780.90 14850.99
03/31/93 14944.93 14856.93
04/30/93 15017.02 14989.16
05/31/93 15065.07 15031.13
06/30/93 15588.43 15672.96
07/31/93 15893.60 15933.13
08/31/93 16394.09 16576.83
09/30/93 16563.72 16648.11
10/31/93 16737.16 16736.34
11/30/93 16192.06 16301.20
12/31/93 16304.32 16376.19
01/31/94 16751.37 16764.30
02/28/94 15725.78 16095.41
03/31/94 14897.33 15371.11
04/30/94 14586.69 15192.81
05/31/94 14262.54 15097.09
06/30/94 14166.33 14961.22
07/31/94 14616.27 15435.49
08/31/94 14493.56 15322.81
09/30/94 14029.85 14847.80
10/31/94 13974.78 14778.02
11/30/94 14057.38 14862.25
12/31/94 14305.54 15113.43
01/31/95 14667.70 15532.07
02/28/95 15057.73 15963.86
03/31/95 15159.52 16081.99
04/30/95 15428.71 16363.43
05/31/95 16632.97 17661.05
06/30/95 16846.58 17855.32
07/31/95 16573.24 17574.99

$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 July 31, 1995, the value of your
investment, with dividends reinvested would have grown to $16,573 - a
65.73% increase on your initial investment. This assumes you still owned
the fund on July 31, 1995 and therefore does not include the effect of the
$5 account closeout fee. For comparison, look at how the Salomon Brothers
Treasury/Agency 10+ Year Index did over the same period. With dividends
reinvested, the same $10,000 investment would have grown to $17,575 - a
75.75% increase. Beginning with this report the fund will compare its
performance to the Salomon Brothers Treasury/Agency 10+ Year Index rather
than the Lehman Brothers Long-Term Government Bond Index. Although the
difference in performance between the two indices is small, the Salomon
Brothers Index includes fewer securities and is more straightforward to
monitor on a daily basis. For comparison purposes, both indices are shown
on page 4.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED JANUARY 31, FROM SEPTEMBER
ENDED 28, 1990 TO
JULY 31,

1995 1995 1994 1993 1992 JANUARY 31, 1991

</TABLE>

Dividend return 3.59% 4.13% 7.14% 7.69% 7.15% 1.01%

Capital appreciation 9.39% -16.58% 9.63% 6.24% 5.82% 10.38%
return

Total return 12.98% -12.45% 16.77% 13.93% 12.97% 11.39%

DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee on an average sized account.
DIVIDENDS AND YIELD
PERIODS ENDED JULY 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR

Dividends per share - 36.00(cents) 58.00(cents)

Annualized dividend rate - 6.52% 5.41%

30-day annualized yield 6.30% - -

DIVIDENDS per share show the income paid by the fund for a set period and
do not reflect any tax reclassifications. If you annualize this number,
based on an average share price of $11.17 over the past six months and
$10.73 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

An interview with Curt Hollingsworth, Portfolio Manager of Spartan
Long-Term Government Bond Fund
Q. CURT, HOW HAS THE FUND PERFORMED?
A. For the six months ended July 31, 1995, the fund had a total return of
12.98%, compared to 8.04% for the average general U.S. government bond fund
tracked by Lipper Analytical Services, and 13.15% for the Salomon Brothers
Treasury/Agency 10+ Year Index. For the 12 months ended July 31, 1995, the
fund returned 13.38%, compared to 8.48% for the average general U.S.
government bond fund, and 13.87% for the Salomon Brothers index.
Q. WHAT IS MEANT BY TOTAL RETURN?
A. Risk and return are two of the most important aspects of an investment's
performance. When it comes to measuring return, in my opinion total return
is the best figure to look at. Instead of merely watching a fund's share
price - and assuming, for example, that they've lost 5% of their money if
the share price is down 5% over a year - investors are beginning to realize
that they need to take into account the monthly dividends they receive that
offset much of the price decline. Interest income is the main source of
return for a bond fund over the long term. Fortunately, total return is
easy to explain by using a "dollars in, dollars out" example. If someone
invested $100 in this bond fund a year ago and reinvested all dividends and
capital gains, then the investment would be worth $113.38 today. That is
what is meant by a cumulative total return of 13.38%.
Q. WHAT HELPED THE FUND PERFORM
BETTER THAN THE AVERAGE FUND?
A. The funds included in Lipper's U.S. government bond fund category have
an average duration that is much shorter than the duration of this fund.
Duration is a measure of a fund's sensitivity to changes in interest rates.
The longer the duration, the more sensitive a fund is to interest rate
changes. Since many of the funds in the Lipper category aren't focused on
longer-term bonds, their average duration is around five years. However,
this fund, with its long-term focus, has a duration closer to 10 years.
That means the fund is about twice as interest rate-sensitive as many of
the funds it is compared to.
Q. AND INTEREST RATES FELL OVER THE PERIOD?
A. Right. The bond market rallied during the past six months - with yields
falling and prices rising - as it became apparent that the economy was
slowing. Bond investors often perceive a slower economy to be a positive
backdrop, because it usually is an environment in which inflation does not
threaten to erode the value of a bond's fixed-income payments. Looking at
the long end of the yield curve - where you find bonds with 10- to 30-year
maturities - rates dropped as well, but not as much as they did in the one-
to 10-year range. As a result, at the end of July, the yield spread between
10-year and 30-year Treasuries had widened to 0.42% from 0.12% on January
31, 1995. That suggests there was good value in longer-term securities at
the end of the period. An investor was being paid more for assuming the
greater price volatility of longer-term bonds.
Q. HOW ARE YOU POSITIONING THE FUND?
A. The fund continues to be invested in Treasury securities. Most of the
fund's investments are bulleted, or focused, on the highest yielding part
of the yield curve, currently in the 20- to 25-year range. These
investments have benefited the fund in two ways. First, it's intuitively
appealing to own the highest yielding available Treasury issues. Second, if
the yield curve changes shape, it most likely will reshape in such a way
that other issues will increase in yield - and drop in price - to come
closer to these issues. If that happens, the fund should benefit. This part
of the curve will shift at some point, and in a few months perhaps bonds
with maturities a few months shorter or longer will become the highest
yielding issues. When that happens, I'll most likely swap the fund's
investments into those new high-yielding issues.
Q. WHAT ABOUT INVESTMENTS WITH MATURITIES LONGER THAN 25 YEARS?
A. I've underweighted this area, because it typically trades rich, or high
in price in terms of historical levels. In particular, I've not invested in
what are known as "current" 30-year Treasury bonds. These are bonds that
have been on the market for no more than three months. These current bonds
typically trade at lower yields - and higher prices - than 30-year bonds
that have been on the market longer. That's because they're more easily
tradable, making bond traders - who earn money simply by buying and selling
securities - more willing to pay a premium for them. Over the past several
years, as current long bonds have become older, the yields they offer have
grown and their prices have fallen.
Q. WHAT DO YOU SEE LOOKING OUT OVER THE NEXT SIX MONTHS?
A. It's very difficult to predict the direction of interest rates. As a
result, I don't intend to actively manage the fund's duration in
anticipation of interest rate changes. Instead, I will try to manage the
fund so that it will have approximately the same duration as the Salomon
Brothers Treasury/Agency 10+ Year Index. Duration is an estimate of how
sensitive the fund's share price is to a change in comparable interest
rates. Over the next six months, I may add some more bonds to the fund, in
particular long-term federal agency issues. By doing so, I hope to add a
little extra yield to the fund.
NOTE TO SHAREHOLDERS:
On October 1, 1995, Robert Ives will become portfolio manager of Spartan
Long-Term Government Bond Fund. He also manages the Fidelity Advisor
Government Investment, Fidelity Government Securities and Fidelity Advisor
Annuity Government Investment funds - which he has managed since February
1995 - and Spartan Government Income Fund, which he has managed since 1993.
Mr. Ives previously managed Fidelity Mortgage Securities Portfolio,
Fidelity Ginnie Mae Portfolio and Spartan Ginnie Mae Fund. He joined
Fidelity in 1991.
FUND FACTS
GOAL: to provide income
and growth of capital by
investing mainly in securities
issued and guaranteed by
the U.S. government or its
agencies while maintaining
an average maturity of at
least 10 years
START DATE: September
28,1990
SIZE: as of July 31, 1995,
more than $73 million
MANAGER: Curt
Hollingsworth, since 1993;
manager Spartan Limited
Maturity Government Bond
Fund, since 1988; Spartan
Short-Intermediate Government
Fund, since 1992; Fidelity
Short-Intermediate Government
Fund, since 1991;
Fidelity Institutional
Short-Intermediate
Government Portfolio, since
1987; joined Fidelity in 1983
(checkmark)
CURT HOLLINGSWORTH ON
INVESTING IN A LONG-TERM BOND
FUND:
"At the end of July,
shareholders were being
rewarded more for investing
further out on the yield curve
than they were six months ago.
On July 31, 1995, someone
investing in a 30-year Treasury
bond received a 0.42% yield
advantage over someone
investing in a 10-year Treasury
bond. On January 31, 1995,
that yield advantage was only
0.12%.
"At the same time, it's
important to stress that this
fund can have more volatility
than shorter-term bond funds.
The fund has a duration of
about 10 years. That means
- - other things being equal -
if rates rose 1%, the fund's
share price would probably
drop approximately 10%.
"It's crucial for investors in this
fund to have a longer-term
investing horizon. Investors
with a long-term horizon
actually may be exposed to a
different type of risk in a
shorter-term fund -
reinvestment risk, which is the
risk that an investor may not
be able to reinvest short-term
returns at attractive rates.
"This is a long-term
government bond fund. As a
result, its share price is
especially sensitive to interest
rate changes. Investors in the
fund should be clear about
that, and should invest in the
fund for the long haul."
INVESTMENT CHANGES

TOP ISSUERS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO

U.S. Treasury 99.5 98.1

Tennessee Valley Authority 0.0 0.9
(U.S. Government Agency)

EXCLUDING REPURCHASE AGREEMENTS.
AVERAGE YEARS TO MATURITY AS OF JULY 31, 1995
6 MONTHS AGO

Years 23.5 22.2

AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF JULY 31, 1995
6 MONTHS AGO

Years 10.3 9.7

DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF JULY 31, 1995 AS OF JANUARY 31, 1995
Row: 1, Col: 1, Value: 3.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 47.0
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 1, Value: 3.0
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 45.0
Row: 1, Col: 4, Value: 40.0
U.S. Treasury
obligations 99.5%
U.S. government
agency obligations 0.0%
Short-term
investments 0.5%
U.S. Treasury
obligations 98.1%
U.S. government
agency obligations 0.9%
Short-term
investments 1.0%
INVESTMENTS JULY 31, 1995 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

U.S. TREASURY OBLIGATIONS - 99.5%
PRINCIPAL VALUE
AMOUNT (NOTE 1)

12 3/4%, 11/15/10 $ 3,400,000 $ 4,936,358
9%, 11/15/18 3,000,000 3,709,680
8 3/4%, 8/15/20 46,025,000 55,783,681
12%, 8/15/23 4,700,000 6,810,582
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $67,248,126) 71,240,301
REPURCHASE AGREEMENTS - 0.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 5.82%
dated 7/31/95 due 8/1/95 $ 364,059 364,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $67,612,126) $ 71,604,301
INCOME TAX INFORMATION
At July 31, 1995, the aggregate cost of investment securities for income
tax purposes was $67,612,126. Net unrealized appreciation aggregated
$3,992,175, of which $4,100,633 related to appreciated investment
securities and $108,458 related to depreciated investment securities.
At January 31, 1995, the fund had a capital loss carryforward of
approximately $3,935,000 which will expire on January 31, 2003.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS JULY 31, 1995 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 71,604,301
agreements of $364,000) (cost $67,612,126) - See
accompanying schedule

Cash 578

Interest receivable 2,252,551

TOTAL ASSETS 73,857,430

LIABILITIES

Payable for fund shares redeemed $ 472,733

Distributions payable 278

Accrued management fee 41,506

TOTAL LIABILITIES 514,517

NET ASSETS $ 73,342,913

Net Assets consist of:

Paid in capital $ 71,018,225

Undistributed net investment income 625,968

Accumulated undistributed net realized gain (loss) (2,296,258)
on investments

Net unrealized appreciation (depreciation) on 3,994,978
investments

NET ASSETS, for 6,367,020 shares outstanding $ 73,342,913

NET ASSET VALUE, offering price and redemption price per $11.52
share ($73,342,913 (divided by) 6,367,020 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)

INVESTMENT INCOME $ 2,843,337
Interest

EXPENSES

Management fee $ 244,657

Non-interested trustees' compensation 188

Interest 3,595

TOTAL EXPENSES 248,440

NET INVESTMENT INCOME 2,594,897

REALIZED AND UNREALIZED GAIN (LOSS) 1,890,728
Net realized gain (loss) on investment securities

Change in net unrealized appreciation (depreciation) on 4,373,702
investment securities

NET GAIN (LOSS) 6,264,430

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 8,859,327
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED JANUARY 31,
JULY 31,1995 1995
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 2,594,897 $ 3,750,291
Net investment income

Net realized gain (loss) 1,890,728 (4,829,840)

Change in net unrealized appreciation (depreciation) 4,373,702 (6,957,059)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 8,859,327 (8,036,608)
FROM OPERATIONS

Distributions to shareholders (2,536,892) (3,025,880)
From net investment income

From net realized gain - (538,147)

TOTAL DISTRIBUTIONS (2,536,892) (3,564,027)

Share transactions 80,964,620 165,444,920
Net proceeds from sales of shares

Reinvestment of distributions 2,400,228 3,354,463

Cost of shares redeemed (93,825,570) (147,021,095)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (10,460,722) 21,778,288
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS (4,138,287) 10,177,653

NET ASSETS

Beginning of period 77,481,200 67,303,547

End of period (including undistributed net investment $ 73,342,913 $ 77,481,200
income of $625,968 and $567,963, respectively)

OTHER INFORMATION
Shares

Sold 7,132,808 15,527,302

Issued in reinvestment of distributions 217,349 311,436

Redeemed (8,341,230) (13,764,302)

Net increase (decrease) (991,073) 2,074,436

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED JANUARY 31, SEPTEMBER 28,
ENDED 1990
JULY 31, 1995 (COMMENCEMENT
OF
OPERATIONS) TO
JANUARY 31,

(UNAUDITED) 1995 1994 C 1993 1992 1991

</TABLE>

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

Net asset value, $ 10.530 $ 12.740 $ 12.130 $ 11.600 $ 11.040 $ 10.000
beginning of
period

Income from .381 D .513 .847 .847 .776 .144
Investment
Operations
Net investment
income

Net realized and .969 (2.093) 1.123 .703 .604 .996
unrealized
gain (loss)

Total from 1.350 (1.580) 1.970 1.550 1.380 1.140
investment
operations

Less Distributions (.360) (.530) (.840) (.840) (.740) (.100)
From net invest-
ment income

From net real- - (.100) (.520) (.180) (.080) -
ized gain on
investments

Total distributions (.360) (.630) (1.360) (1.020) (.820) (.100)

Net asset value, $ 11.520 $ 10.530 $ 12.740 $ 12.130 $ 11.600 $ 11.040
end of period

TOTAL RETURN B 12.99% (12.44) 16.79% 13.95% 12.98 11.41%
% %

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 73,343 $ 77,481 $ 67,304 $ 83,009 $ 62,992 $ 33,833
period (000
omitted)

Ratio of expenses .66% .65% .65% .65% .65 .65%
to average net A, E % A
assets

Ratio of net invest- 6.91% A 5.95% 6.41% 7.35% 7.30 7.26%
ment income to % A
average net
assets

Portfolio turnover 364% A 422% 153% 135% 335 256%
rate % A

</TABLE>

A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D INCLUDES INTEREST EXPENSE OF $.001 PER SHARE.
E INCLUDES INTEREST EXPENSE OF .01% OF AVERAGE NET ASSETS.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1995 (Unaudited)

7. 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 of their purchase date 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.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for paydown
gains/losses on certain securities, market discount, foreign currency
transactions 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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
8. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. The fund's investment adviser, FMR, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
9. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $132,710,438 and $141,460,107, respectively.
10. 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. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$3,377 for the period.
11. 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 $2,218,000 and $1,434,286,
respectively. The weighted average interest rate was 6.45%.
TO CALL FIDELITY

If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING
CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR
NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR
RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Curtis Hollingsworth, Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
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(registered trademark) 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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

FIDELITY

(REGISTERED TRADEMARK)
REAL ESTATE INVESTMENT
PORTFOLIO
SEMIANNUAL REPORT
JULY 31, 1995
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 The manager's review of fund
performance, strategy and outlook.

INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.

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

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

NOTES 19 Notes to the financial statements.

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT
AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
Although there have been positive market indications so far in 1995, no one

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND

Real Estate Investment 8.12% 3.17% 83.64% 107.68%

S&P 500(registered trademark) 21.06% 26.11% 83.44% 203.03%

Average Real Estate 9.24% 4.99% 51.48% n/a
Fund

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on November 17, 1986. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Standard & Poor's Composite Index of 500 Stocks - a
common proxy for the U.S. stock market. To measure how the fund's
performance stacked up against its peers, you can compare it to the average
real estate fund, which reflects the performance of 24 real estate funds
with similar objectives tracked by Lipper Analytical Services over the past
six months. Both benchmarks include reinvested dividends and capital gains,
if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Real Estate Investment 3.17% 12.93% 8.75%

S&P 500(registered trademark) 26.11% 12.90% 13.57%

Average Real Estate Fund 4.99% 8.54% 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
Real Estate (303) Standard & Poor's
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 10549.92 12676.51
07/31/87 10509.11 13319.21
08/31/87 10305.05 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 10105.17 11803.90
07/31/88 10149.15 11759.05
08/31/88 10050.19 11359.24
09/30/88 10204.86 11843.14
10/31/88 10115.44 12172.38
11/30/88 9970.14 11998.32
12/31/88 10127.86 12208.29
01/31/89 10230.04 13101.93
02/28/89 10264.10 12775.70
03/31/89 10343.05 13073.37
04/30/89 10619.79 13751.88
05/31/89 10815.81 14308.83
06/30/89 11186.67 14227.27
07/31/89 11748.35 15511.99
08/31/89 11912.17 15816.03
09/30/89 11771.59 15751.18
10/31/89 11332.53 15385.75
11/30/89 11474.92 15699.62
12/31/89 11522.84 16076.41
01/31/90 11270.51 14997.69
02/28/90 11198.42 15191.16
03/31/90 11258.50 15593.72
04/30/90 11112.44 15203.88
05/31/90 11063.76 16686.26
06/30/90 11234.64 16572.79
07/31/90 11308.63 16519.76
08/31/90 10507.04 15026.37
09/30/90 9982.02 14294.59
10/31/90 9694.32 14233.12
11/30/90 10307.25 15152.58
12/31/90 10520.81 15575.34
01/31/91 11501.57 16254.42
02/28/91 11858.20 17416.61
03/31/91 12642.52 17838.09
04/30/91 12990.83 17880.91
05/31/91 13300.45 18653.36
06/30/91 12872.41 17799.04
07/31/91 13146.57 18628.47
08/31/91 13211.84 19069.97
09/30/91 13595.15 18751.50
10/31/91 13370.55 19002.77
11/30/91 13238.43 18236.96
12/31/91 14643.73 20323.26
01/31/92 15527.17 19945.25
02/29/92 15192.53 20204.54
03/31/92 15099.41 19810.55
04/30/92 14882.93 20392.98
05/31/92 15329.42 20492.91
06/30/92 15153.05 20187.56
07/31/92 15820.76 21013.23
08/31/92 15861.64 20582.46
09/30/92 16299.66 20825.34
10/31/92 16478.03 20898.23
11/30/92 16779.87 21610.85
12/31/92 17500.60 21876.67
01/31/93 18361.74 22060.43
02/28/93 18806.20 22360.45
03/31/93 20160.56 22832.26
04/30/93 19251.16 22279.72
05/31/93 19013.32 22876.82
06/30/93 19508.26 22943.16
07/31/93 19635.30 22851.39
08/31/93 19945.85 23717.45
09/30/93 20866.93 23534.83
10/31/93 20525.32 24022.00
11/30/93 19329.67 23793.79
12/31/93 19690.21 24081.70
01/31/94 19849.82 24900.47
02/28/94 20822.00 24225.67
03/31/94 20077.29 23169.43
04/30/94 20355.33 23466.00
05/31/94 20794.34 23850.84
06/30/94 20173.01 23266.50
07/31/94 20128.70 24029.64
08/31/94 20040.10 25014.85
09/30/94 19801.81 24401.99
10/31/94 19011.52 24951.03
11/30/94 18340.53 24042.32
12/31/94 20091.55 24398.86
01/31/95 19208.74 25031.53
02/28/95 19513.16 26007.01
03/31/95 19590.41 26774.47
04/30/95 19282.15 27562.98
05/31/95 19991.16 28664.67
06/30/95 20408.84 29330.55
07/31/95 20767.71 30303.15

$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 July 31, 1995, the value of your investment would have
grown to $20,768 - a 107.68% 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
$30,303 - a 203.03% 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 Barry Greenfield Portfolio Manager of Fidelity Real
Estate Investment Portfolio
Q. BARRY, HOW DID THE FUND PERFORM?
A. For six months ended July 31, 1995, the fund returned 8.12% while the
average real estate fund returned 9.24%, according to Lipper Analytical
Services. For the 12 months ended July 31, 1995, the fund returned 3.17%,
versus the average real estate fund which returned 4.99% for the same time
period.
Q. WHAT'S HAPPENED IN THE REAL ESTATE MARKET SECTOR DURING THE PAST SIX
MONTHS?
A. Overall, the real estate market has shown slow, steady improvement
during the past six months. So far in 1995, rents have increased 3% to 5%
and occupancy rates have risen 1% to 2%. Real estate is usually on a nine
year cycle, and it's only the third year of recovery after the real estate
depression of 1989-1992. Many property types, such as central business
district office buildings, are just beginning to recover. The most positive
sign, however, is the fact that there's been very little new construction
to compete with existing commercial real estate. The biggest threat to real
estate isn't the stock market, or interest rates, but excessive building.
Q. WHAT ABOUT REAL ESTATE STOCKS?
A. Real estate stocks tend to rise and fall before the actual real estate
prices do. What I just described as happening in real estate currently is
the reason that real estate stocks went up in 1991 and 1992. More recently,
real estate stocks haven't caught up to the strong current business
prospects of the real estate industry. The stocks are inexpensive on both a
value basis and a price-earnings basis. Though the companies are performing
well, they are considered by many to be unattractive relative to other
investments. Real estate stocks are, for the most part, small-cap value
stocks, and thus far in 1995, many investors have preferred large-cap
growth stocks and technology stocks. The more aggressive investors in the
market have been ignoring real estate investment trusts, or REITs. The
stocks are at historically cheap levels versus the S&P and U.S. Treasuries,
and this relative underperformance shouldn't go on forever.
Q. WHAT'S YOUR STRATEGY IN THIS TYPE OF INVESTING ENVIRONMENT?
A. Within the REIT market there are several sectors or property types. I
attempt to be invested in the right sectors at the right time. If the
overall economic slowdown we've seen recently leads to recovery, the
slowdown will not have been strong enough or long enough to slow the
industrial cyclical REITs. Property types such as industrial parks, storage
facilities, suburban office buildings and hotels have historically improved
performance with the economy. However, if we're headed for more difficult
economic times, I may decide to emphasize REITs such as health care
facilities, apartment buildings and strip malls. My strategy has been to
reduce exposure to more conservative REITs, such as retailing and
apartments, and keep the fund more cyclically exposed to the recovering
economy.
Q. WHAT NEW TRENDS HAVE EMERGED IN THE REIT MARKET?
A. In 1993 and 1994, more than 100 real estate companies went public. So
far in 1995, only a handful have. Most of the financing this year has been
secondary offerings of the stronger, existing companies. Since there are
not many new names to buy, I've increased the fund's holdings in some of my
favorite stocks on the secondary offerings.
Q. WHAT REITS HAVE YOU FOUND ATTRACTIVE DURING THE PAST SIX MONTHS?
A. The fund's holdings in hotels has more than doubled during the past six
months. Starwood Lodging was a private company that merged with an existing
REIT called Hotel Properties. As a rule, REITs are only allowed to have
passive income, collecting rents. This REIT, however, can operate bars,
restaurants, and shops inside its hotels and include that income in the
operating profits. Therefore, I think Starwood has the potential to grow
faster than the REIT industry. It is good-sized, has strong management, and
access to capital to invest.
Q. IT LOOKS LIKE INDUSTRIAL AND OFFICE BUILDINGS HAVE INCREASED AS A
PERCENTAGE OF THE PORTFOLIO . . .
A. Yes. Again, this is part of my strategy to stay exposed to the cyclical
real estate trends. Highwoods Properties is a combination of office
buildings for the Research Triangle in Raleigh-Durham, North Carolina, with
some properties in Charlotte and Richmond, Virginia. It is the dominant
player in that section of the country with well-managed buildings and high
occupancy rates. Another holding is Duke Realty which builds in its own
industrial office parks in Indianapolis, Columbus and St. Louis where the
market for build-to-suit properties is exploding. I've held Cali Realty
Corp. for almost a year. Cali is located right across the Hudson River from
New York City, where many companies have relocated their back offices. I've
also added Beacon Properties to the fund during the past year. Beacon is
located in Boston, where the real estate market for first-class space
continues to tighten and there are no new structures being built.
Q. WHAT INVESTMENTS HAVE BEEN DISAPPOINTING DURING THE PAST SIX MONTHS?
A. The biggest letdown has been the fund's position in regional malls. Many
pension funds buy actual malls, rather than mall stocks, for their
portfolios. Recently, however, mall stocks have been relatively cheap, and
I thought there would be a higher demand for the stocks than for the actual
real estate. While the stocks haven't shown much change, they really
haven't performed as well as I'd hoped they would during the past six
months.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I think the business prospects for real estate stocks have the potential
to continue to improve in the next six months just as they have during the
past six months. I'm not sure when relative demand will shift from
large-cap growth stocks back into the small-cap value stocks. I think the
relative performance of REITs versus the S&P will begin to narrow, but it's
hard to know when. In the meantime, I'll continue to keep the fund
positioned to take advantage of the growing strength in the economy and the
real estate market.
FUND FACTS
GOAL: To provide
above-average income and
increase the value of the
fund's shares by investing
mainly in the
equity securities of
companies in the real estate
industry
START DATE: November 17,
1986
SIZE: as of July 31, 1995,
more than $516 million
MANAGER: Barry Greenfield,
since 1986; manager Fidelity
Fund, 1982-1993; joined
Fidelity in 1968
(checkmark)
BARRY GREENFIELD ON MERGER
AND ACQUISITION ACTIVITY IN THE
REIT MARKET:
"Since there have been few
initial public offerings this
year, the army of existing
investment bankers has been
engaged in substantial merger
and acquisition activity. Some
poorly financed or weaker
REITs have been acquired by
larger, more successful
REITs. Others have been
acquired by private investors
such as Crocker by Apollo
Partnership, and Hotel
Properties by Starwood
Investment Partners. In
addition, some other portfolio
REITs such as Bradley and
Storage Equities have or are
acquiring their advisors.
Merger and acquisition
activity should continue as the
industry consolidates into
fewer, larger and
better-managed REITs. I
applaud this trend as it should
lead to more efficient
companies and higher
profits."
INVESTMENT CHANGES

TOP TEN STOCKS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

Developers Diversified Realty 5.4 6.3
Corp.

Kimco Realty Corp. 5.1 5.0

Duke Realty Investors, Inc. 4.9 4.2

Equity Residential Property Trust 4.6 5.5
(SBI)

Trinet Corporate Realty Trust, Inc. 2.9 2.5

Storage USA, Inc. 2.7 2.5

Post Properties, Inc. 2.5 3.6

Highwoods Properties, Inc. 2.5 0.6

HGI Realty, Inc. 2.3 0.0

Simon Properties Group, Inc. 2.3 3.9

TOP FIVE REIT SECTORS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO

Industrial Buildings 21.9 14.9

Shopping Centers 18.2 20.3

Apartments 17.0 28.3

Malls 6.8 11.1

Factory Outlets 6.1 6.1

ASSET ALLOCATION
AS OF JULY 31, 1995 AS OF JANUARY 31, 1995
Row: 1, Col: 1, Value: 6.5
Row: 1, Col: 2, Value: 2.4
Row: 1, Col: 3, Value: 50.0
Row: 1, Col: 4, Value: 41.1
Row: 1, Col: 1, Value: 3.6
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 50.0
Row: 1, Col: 4, Value: 44.4
Stocks 91.1%
Convertibles 2.4%
Short-term
Investments 6.5%
Stocks 94.4%
Convertibles 2.0%
Short-term
Investments 3.6%
INVESTMENTS JULY 31, 1995 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 91.1%
SHARES VALUE (NOTE 1)
(000S)
REAL ESTATE INVESTMENT TRUSTS (REITS) - 89.9%
REITS - APARTMENTS - 16.0%
Apartment Investment & Management Co. Class A 125,000 $ 2,531,250
Associated Estates Realty Corp. 144,100 2,936,038
Avalon Properties, Inc. 380,000 7,600,000
Bay Apartment Communities, Inc. 228,500 4,541,429
Colonial Properties Trust (SBI) 265,400 6,435,950
Equity Residential Properties Trust (SBI) 830,300 24,493,850
Evans Withycombe Residential, Inc. 534,600 10,291,050
Gables Residential Trust (SBI) 58,000 1,276,000
Home Properties of NY, Inc. 234,300 4,188,113
Merry Land & Investment Co., Inc. 1,305 28,058
Post Properties, Inc. 435,000 13,213,125
Property Capital Trust 11,100 88,800
Security Capital Pacific Trust 110,000 1,993,750
Smith (Charles E.) Residential Realty, Inc. 29,500 678,500
United Dominion Realty Trust, Inc. 295,000 4,203,750
84,499,663
REITS - FACTORY OUTLETS - 6.1%
Chelsea GCA Realty, Inc. 281,400 7,808,850
HGI Realty, Inc. 491,584 12,228,152
Mills Corp. 50,800 990,600
Tanger Factory Outlet Centers, Inc. (b) 413,500 11,164,500
32,192,102
REITS - HEALTH CARE FACILITIES - 2.5%
LTC Properties, Inc. 604,800 8,467,200
Nationwide Health Properties, Inc. 50,400 1,997,100
Omega Healthcare Investors, Inc. 97,100 2,524,600
12,988,900
REITS - HOTELS - 5.4%
Equity Inns, Inc. 140,000 1,505,000
Felcor Suite Hotels, Inc. 364,300 9,790,563
Innkeepers USA Trust 226,800 2,012,850
RFS Hotel Investors, Inc. 536,500 7,712,188
Starwood Lodging Trust combined certificate (SBI) (a) 295,999 7,695,974
28,716,575
REITS - INDUSTRIAL BUILDINGS - 21.5%
Bedford Property Investors, Inc. (b) 357,800 2,236,250
Cali Realty Corp. 276,500 5,357,188
CenterPoint Properties Corp. 336,200 6,892,100
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
REAL ESTATE INVESTMENT TRUSTS (REITS) - CONTINUED
REITS - INDUSTRIAL BUILDINGS - CONTINUED
Duke Realty Investors, Inc. 898,809 $ 25,728,408
EastGroup Properties (SBI) 79,300 1,506,700
Liberty Property Trust (SBI) 270,000 5,400,000
MGI Properties, Inc. 137,000 2,003,625
Security Capital Industrial Trust, Inc. 332,083 5,313,328
Shurgard Storage Centers, Inc. 205,300 4,850,213
Speiker Properties, Inc. 300,000 6,787,500
Storage Equities, Inc. 137,900 2,361,538
Storage Trust Realty (SBI) 210,900 4,428,900
Storage USA, Inc. 495,000 14,231,250
Trinet Corporate Realty Trust, Inc. (b) 556,700 15,448,425
Weeks Corp. (b) 492,500 11,450,625
113,996,050
REITS - LEISURE - 2.8%
Franchise Finance Corp. of America 572,200 11,944,675
National Golf Properties, Inc. 140,700 2,901,938
14,846,613
REITS - MALLS - 6.8%
CBL & Associates Properties, Inc. 398,100 8,210,813
DeBartolo Realty Corp. 543,800 7,817,125
Macerich Co. 244,700 5,016,350
Simon Properties Group, Inc. 494,734 12,120,983
Urban Shopping Centers, Inc. 140,200 3,031,825
36,197,096
REITS - MOBILE HOME PARKS - 3.2%
Chateau Properties, Inc. 244,100 5,217,638
ROC Communities, Inc. 150,000 3,150,000
Sun Communities, Inc. 341,300 8,489,838
16,857,476
REITS - MORTGAGE - 2.0%
CWM Mortgage Holdings, Inc. 121,800 1,552,950
Capstead Mortgage Corp. 157,968 4,265,136
Realty Income Corp. 215,800 4,693,650
10,511,736
REITS - OFFICE BUILDINGS - 5.8%
Beacon Properties Corp. 291,200 6,151,600
Cousins Properties, Inc. 269,300 4,813,738
Crescent Real Estate Equities, Inc. 102,800 3,212,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
REAL ESTATE INVESTMENT TRUSTS (REITS) - CONTINUED
REITS - OFFICE BUILDINGS - CONTINUED
Crocker Realty Investors, Inc. (a)(b) 91,000 $ 659,750
Highwoods Properties, Inc. 520,400 13,140,100
JDN Realty Corp. 136,000 2,958,000
30,935,688
REITS - SHOPPING CENTERS - 17.8%
Bradley Real Estate Trust (SBI) (b) 553,450 8,924,381
Developers Diversified Realty Corp. 933,900 28,367,213
Excel Realty Trust, Inc. 415,400 8,308,000
Federal Realty Investment Trust (SBI) 113,000 2,457,750
Glimcher Realty Trust (SBI) 298,400 6,378,300
Haagen Alexander Properties, Inc. 270,100 3,308,725
IRT Property Co. 49,691 503,121
Kimco Realty Corp. 671,400 26,772,075
Kranzco Realty Trust (SBI) 85,000 1,572,500
Lexington Corporate Properties, Inc. 38,500 423,500
Malan Realty Investors, Inc. 87,100 1,284,725
Pennsylvania Real Estate Investment Trust (SBI) 21,600 448,200
Regency Realty Group 129,300 2,181,938
Weingarten Realty Investors (SBI) 86,000 3,063,750
93,994,178
TOTAL real estate investment trusts 475,736,077
CONSTRUCTION & REAL ESTATE - 0.2%
REAL ESTATE - SHOPPING CENTERS - 0.2%
Rouse Co. (The) 50,000 1,050,000
FINANCE - 0.3%
CREDIT & OTHER FINANCE - 0.0%
Jayhawk Acceptance Corp. 500 5,000
SAVINGS BANKS & SAVINGS & LOANS - 0.3%
Charter One Financial Corp. 68,300 1,767,263
TOTAL FINANCE 1,772,263
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
LODGING & GAMING - 0.7%
HOTELS, MOTELS, & TOURIST COURTS - 0.7%
Red Lion Inns LP 159,000 $ 3,557,629
Resort Hotels PLC (a) 200,000 -
3,557,629
TOTAL COMMON STOCKS
(Cost $457,147,857) 482,115,969
CONVERTIBLE PREFERRED STOCKS - 1.6%
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.4%
REITS - APARTMENTS - 1.0%
Oasis Residential, Inc. $0.75 200,000 5,125,000
REITS - INDUSTRIAL BUILDINGS - 0.4%
Storage Equities, Inc. $2.0625 70,000 2,082,500
TOTAL real estate investment trusts 7,207,500
CONSTRUCTION & REAL ESTATE - 0.2%
REAL ESTATE - SHOPPING CENTERS - 0.2%
Rouse Co., Series A 25,000 1,312,500
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $8,316,471) 8,520,000
CONVERTIBLE BONDS - 0.8%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT
REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.4%
REITS - SHOPPING CENTERS - 0.4%
Malan Realty Investors 9 1/2%, 7/15/04 - $ 2,500,000 2,200,000
MEDIA & LEISURE - 0.4%
HOTELS - 0.4%
Prime Hospitality 7%, 4/15/02 B2 2,000,000 2,055,000
TOTAL CONVERTIBLE BONDS
(Cost $4,441,250) 4,255,000
REPURCHASE AGREEMENTS - 6.5%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 5.82%
dated 7/31/95 due 8/1/95 $ 34,110,514 $ 34,105,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $504,010,578) $ 528,995,969
LEGEND
1. Non-income producing
2. Affiliated company (see Note 7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At July 31, 1995 the aggregate cost of investment securities for income tax
purposes was $504,299,094. Net unrealized appre-
ciation aggregated $24,696,875, of which $24,697,075 related to appreciated
investment securities and $200 related to depreciated investment
securities.
At January 31, 1995, the fund had a capital loss carryforward of
approximately $9,422,000 all of which expire on January 31, 2003.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS JULY 31, 1995 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 528,995,969
agreements of $34,105,000) (cost $504,010,578) -
See accompanying schedule

Cash 414

Receivable for investments sold 8,652,806

Receivable for fund shares sold 2,207,307

Dividends receivable 1,594,696

Interest receivable 164,463

Other receivables 66,355

TOTAL ASSETS 541,682,010

LIABILITIES

Payable for investments purchased $ 18,248,909

Payable for fund shares redeemed 6,839,042

Accrued management fee 264,961

Other payables and accrued expenses 165,235

TOTAL LIABILITIES 25,518,147

NET ASSETS $ 516,163,863

Net Assets consist of:

Paid in capital $ 504,150,678

Undistributed net investment income 5,711,786

Accumulated undistributed net realized gain (loss) (18,684,163)
on investments

Net unrealized appreciation (depreciation) 24,985,562
on investments

NET ASSETS, for 38,782,746 shares outstanding $ 516,163,863

NET ASSET VALUE, offering price and redemption price per $13.31
share ($516,163,863 (divided by) 38,782,746 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)

INVESTMENT INCOME $ 16,713,137
Dividends (including $2,902,579 received from
affiliated issuers)

Interest 1,212,479

TOTAL INCOME 17,925,616

EXPENSES

Management fee $ 1,550,155

Transfer agent fees 661,027

Accounting fees and expenses 150,305

Non-interested trustees' compensation 1,306

Custodian fees and expenses 9,450

Registration fees 45,619

Audit 19,518

Legal 1,200

Interest 9,410

Miscellaneous 4,213

Total expenses before reductions 2,452,203

Expense reductions (84,050) 2,368,153

NET INVESTMENT INCOME 15,557,463

REALIZED AND UNREALIZED GAIN (LOSS) (6,796,838)
Net realized gain (loss) on investment securities
(including realized loss of $497,059 on sales of
investments in affiliated issuers)

Change in net unrealized appreciation (depreciation) on 31,333,382
investment securities

NET GAIN (LOSS) 24,536,544

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 40,094,007
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED JULY 31, JANUARY 31,
1995 1995
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 15,557,463 $ 28,442,526
Net investment income

Net realized gain (loss) (6,796,838) (15,433,711)

Change in net unrealized appreciation (depreciation) 31,333,382 (32,916,815)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 40,094,007 (19,908,000)
FROM OPERATIONS

Distributions to shareholders from net investment income (12,542,364) (22,873,604)

Share transactions 374,390,797 755,295,760
Net proceeds from sales of shares

Reinvestment of distributions 11,389,084 20,522,128

Cost of shares redeemed (387,250,941) (673,557,549)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (1,471,060) 102,260,339
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 26,080,583 59,478,735

NET ASSETS

Beginning of period 490,083,280 430,604,545

End of period (including undistributed net investment $ 516,163,863 $ 490,083,280
income of $5,711,786 and $2,696,687, respectively)

OTHER INFORMATION
Shares

Sold 29,053,855 55,658,988

Issued in reinvestment of distributions 887,994 1,561,556

Redeemed (29,979,328) (49,888,097)

Net increase (decrease) (37,479) 7,332,447

</TABLE>

FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JANUARY 31,
ENDED
JULY 31, 1995

(UNAUDITED) 1995 1994 E 1993 1992 1991

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

Net asset value, $ 12.62 $ 13.68 $ 13.22 $ 11.60 $ 9.03 $ 9.38
beginning of period

Income from
Investment
Operations

Net investment .40 .67 .54 .68 D .43 .77
income

Net realized and .61 (1.10) .52 1.37 2.63 (.61)
unrealized gain
(loss)

Total from 1.01 (.43) 1.06 2.05 3.06 .16
investment
operations

Less Distributions (.32) (.63) (.60) (.43) (.49) (.51)
From net investment
income

Net asset value, end $ 13.31 $ 12.62 $ 13.68 $ 13.22 $ 11.60 $ 9.03
of period

TOTAL RETURN B, C 8.12% (3.23) 8.10% 18.26% 35.00% 2.05%
%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 516 $ 490 $ 431 $ 247 $ 76 $ 45
period (in millions)

Ratio of expenses to .95% 1.03% 1.13% 1.16% 1.24% 1.47%
average net assets A

Ratio of expenses to .98% 1.06% 1.17% 1.16% 1.24% 1.47%
average net assets A
before expense
reductions

Ratio of net investment 6.25% 5.67% 4.34% 5.81% 5.84% 8.45%
income to average
net assets

Portfolio turnover rate 96% 75% 110% 82% 84% 49%
A

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
E 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, NET
INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1995 (Unaudited)

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 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 of their purchase date are
valued at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for market
discount, partnerships, non-taxable dividends, capital loss carryforwards
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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments may
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and
maintained at a value at least equal to the repurchase price. FMR, the
fund's investment adviser, is responsible for determining that the value of
the underlying securities remains in accordance with the market value
requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $225,570,460 and $224,716,716, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2700% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. For
the period, the management fee was equivalent to an annualized rate of .62%
of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $277,820 for the period.
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 $10,101,000 and $4,793,545,
respectively. The weighted average interest rate was 6.4%.
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
$84,050 under this arrangement.
7. 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 during the period 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
Bedford Property Investors, Inc. $ - $ 526,959 $ 78,685 $ 2,236,250
Bradley Real Estate Trust (SBI) 722,061 - 338,877 8,924,381
Crocker Realty Investors, Inc. (a) - 36,000 - 659,750
Developers Diversified Realty Corp. 549,920 5,079,981 1,114,290 -
Tanger Factory Outlet Centers, Inc. 2,132,038 450,720 379,600
11,164,500
Trinet Corporate Realty Trust, Inc. 280,500 - 619,089 15,448,425
Weeks Corp. 3,118,656 675,945 372,038 11,450,625
TOTALS $ 6,803,175 $ 6,769,605 $ 2,902,579 $ 49,883,931
(a) NON-INCOME PRODUCING.
TO CALL FIDELITY

INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Barry Greenfield, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
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 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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

FIDELITY

(REGISTERED TRADEMARK)
EQUITY-INCOME
FUND
SEMIANNUAL REPORT
JULY 31, 1995
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 The manager's review of fund
performance, strategy and outlook.

INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.

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

FINANCIAL STATEMENTS 37 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 41 Notes to the financial statements.

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
Although there have been positive market indications so far in 1995, no one

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. A
fund's total return 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 JULY 31, 1995 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS

Equity-Income 19.20% 18.36% 96.67% 238.63%

Equity-Income (incl. 2% sales 16.81% 15.99% 92.74% 231.86%
charge)

S&P 500 21.06% 26.11% 83.44% 307.06%

Average Equity Income Fund 15.61% 16.18% 71.72% 207.34%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or 10
years. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, the value of your investment would be $1,050. You can
compare the fund's returns to the performance of the Standard & Poor's
Composite Index of 500 Stocks - a common proxy for the U.S. stock market.
To measure how the fund's performance stacked up against its peers, you can
compare it to the average equity income fund, which reflects the
performance of 141 funds with similar objectives tracked by Lipper
Analytical Services over the past six months. Both benchmarks include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Equity-Income 18.36% 14.49% 12.97%

Equity-Income (incl. 2% sales charge) 15.99% 14.02% 12.74%

S&P 500 26.11% 12.90% 15.07%

Average Equity Income Fund 16.18% 11.30% 11.56%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
Equity Income (023)Standard & Poor's 5
07/31/85 9800.00 10000.00
08/31/85 9811.20 9915.00
09/30/85 9569.28 9604.66
10/31/85 9883.21 10048.40
11/30/85 10303.05 10737.72
12/31/85 10654.19 11257.42
01/31/86 10886.56 11320.46
02/28/86 11579.80 12167.23
03/31/86 12225.47 12846.17
04/30/86 12167.13 12701.00
05/31/86 12204.63 13376.70
06/30/86 12370.97 13602.76
07/31/86 11923.87 12842.37
08/31/86 12598.73 13795.27
09/30/86 12007.23 12654.40
10/31/86 12523.72 13384.56
11/30/86 12651.77 13709.81
12/31/86 12473.02 13360.21
01/31/87 13679.65 15159.83
02/28/87 14081.85 15758.64
03/31/87 14329.48 16214.06
04/30/87 14147.91 16069.76
05/31/87 14064.49 16209.57
06/30/87 14456.80 17028.15
07/31/87 14888.43 17891.48
08/31/87 15310.12 18558.83
09/30/87 14969.85 18152.39
10/31/87 12341.98 14242.37
11/30/87 11795.34 13068.79
12/31/87 12268.81 14063.33
01/31/88 13088.61 14655.40
02/29/88 13700.64 15338.34
03/31/88 13535.37 14864.38
04/30/88 13722.96 15029.38
05/31/88 13882.14 15160.13
06/30/88 14668.87 15855.98
07/31/88 14640.10 15795.73
08/31/88 14346.73 15258.68
09/30/88 14769.35 15908.70
10/31/88 15031.32 16350.96
11/30/88 14885.78 16117.14
12/31/88 15028.20 16399.19
01/31/89 15988.33 17599.61
02/28/89 15845.21 17161.38
03/31/89 16152.64 17561.24
04/30/89 16754.98 18472.67
05/31/89 17154.50 19220.81
06/30/89 17207.19 19111.25
07/31/89 18325.35 20837.00
08/31/89 18548.98 21245.40
09/30/89 18323.39 21158.30
10/31/89 17350.74 20667.42
11/30/89 17582.92 21089.04
12/31/89 17834.04 21595.18
01/31/90 16740.13 20146.14
02/28/90 16766.65 20406.03
03/31/90 16778.09 20946.78
04/30/90 16147.49 20423.12
05/31/90 17187.32 22414.37
06/30/90 17117.71 22261.95
07/31/90 16873.36 22190.71
08/31/90 15563.40 20184.67
09/30/90 14437.29 19201.68
10/31/90 14148.41 19119.11
11/30/90 15035.69 20354.21
12/31/90 15333.60 20922.09
01/31/91 16080.88 21834.29
02/28/91 17208.99 23395.44
03/31/91 17459.40 23961.61
04/30/91 17546.70 24019.12
05/31/91 18463.32 25056.75
06/30/91 17655.88 23909.15
07/31/91 18598.31 25023.31
08/31/91 19017.99 25616.37
09/30/91 18925.00 25188.57
10/31/91 19215.59 25526.10
11/30/91 18455.60 24497.40
12/31/91 19842.18 27299.90
01/31/92 20038.27 26792.12
02/29/92 20649.15 27140.42
03/31/92 20370.78 26611.18
04/30/92 21057.18 27393.55
05/31/92 21263.10 27527.78
06/30/92 21018.11 27117.62
07/31/92 21541.64 28226.73
08/31/92 21110.50 27648.08
09/30/92 21280.53 27974.33
10/31/92 21498.16 28072.24
11/30/92 22205.44 29029.50
12/31/92 22754.13 29386.56
01/31/93 23428.67 29633.41
02/28/93 23993.41 30036.42
03/31/93 24782.56 30670.19
04/30/93 24735.10 29927.97
05/31/93 25178.07 30730.04
06/30/93 25482.32 30819.16
07/31/93 25873.13 30695.88
08/31/93 26742.48 31859.26
09/30/93 26704.11 31613.94
10/31/93 27162.31 32268.35
11/30/93 26728.23 31961.80
12/31/93 27602.90 32348.54
01/31/94 28704.08 33448.39
02/28/94 27921.02 32541.94
03/31/94 26706.88 31123.11
04/30/94 27291.89 31521.48
05/31/94 27639.51 32038.44
06/30/94 27270.75 31253.50
07/31/94 28038.45 32278.61
08/31/94 29019.42 33602.03
09/30/94 28342.99 32778.78
10/31/94 28609.00 33516.31
11/30/94 27433.41 32295.64
12/31/94 27670.03 32774.59
01/31/95 27841.28 33624.43
02/28/95 28877.78 34934.78
03/31/95 29604.24 35965.70
04/30/95 30576.07 37024.89
05/31/95 31575.41 38504.78
06/30/95 32049.27 39399.24
07/31/95 33185.64 40705.72

$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity
Equity-Income Fund on July 31, 1985, and paid a 2% sales charge. As the
chart shows, by July 31, 1995, the value of your investment would have
grown to $33,186 - a 231.86% 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
$40,706 - a 307.06% 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
Q. HOW HAS THE FUND PERFORMED, STEVE?
A. Very well. For the six months and 12 months ended July 31, 1995, the
fund returned 19.20% and 18.36%, respectively. That beat the average equity
income fund which returned 15.61%, for six months and 16.18% for the 12
months ended July 31, 1995, according to Lipper Analytical Services.
Q. HOW DID THE FUND MANAGE TO OUTPERFORM MANY OF ITS PEERS?
A. I think a primary reason for the fund's strong performance is the fact
that the fund continues to have a high exposure to common stocks versus
convertible securities and bonds. The fund has maintained an 80% to 85%
holding in common stocks, and many of the fund's largest positions have
performed well. Some of the fund's larger-cap, growth-oriented holdings,
such as Philip Morris, American Express, IBM and Fannie Mae in particular,
have done well during the past six months and have positively contributed
to performance.
Q. YOU'VE MADE VERY FEW CHANGES TO THE FUND'S TOP HOLDINGS AND MARKET
WEIGHTINGS DURING THE PAST SIX MONTHS. WHY?
A. The market has been strong, due to both declining interest rates and
strong corporate earnings. At the same time, there's a fair degree of
suspicion among many stock market participants that since the market cycle
is fairly mature, the quality, steady-growth areas are good places to
invest. The market's had very few themes - other than technology - so
there's been no incentive for me to change the fund's holdings. The
underlying fundamentals of many of the fund's top holdings were stronger at
the end of July than they were six or 12 months ago. In many circumstances,
the stocks I liked a year ago are the same ones I own in the portfolio
today, so I added to them.
Q. HAS THE FUND BENEFITED FROM THE STRONG PERFORMANCE OF TECHNOLOGY SECTOR
STOCKS?
A. Traditionally, the concept of Equity Income Fund is to provide a level
of income or yield that's greater than the market on average. Technology as
a market sector often features companies that are fast-growing and
non-dividend paying. That said, the fund has about a 5% holding in more
established technology companies such as IBM, Xerox and Digital Equipment.
Q. WHAT ABOUT THE DECLINE IN INTEREST RATES? HAS THAT HAD AN IMPACT ON YOUR
INVESTMENT DECISIONS?
A. Everything else held equal, when interest rates decline it can mean that
demand in the economy is weaker than it was previously. For that reason, I
started to look at cyclical parts of the economy. For some sectors, like
autos and appliances, the decline in interest rates should have a favorable
impact because I still see relatively good growth in the economy. During
the past six months I increased the fund's holdings in both Chrysler and
General Motors to try to take advantage of the drop in interest rates.
Q. FINANCIAL STOCKS CONTINUE TO BE THE FUNDS LARGEST MARKET SECTOR . . .
A. Yes, that's right. Lower interest rates have had a beneficial impact on
financial companies - particularly banks. I've been adding to the fund's
holdings in bank stocks, especially money center banks, where I think low
interest rates will help to bolster earnings. Also on the financial side,
Allstate has become a larger holding of the fund. That happened because
Sears spun off Allstate and, as a result, shareholders of Sears also became
shareholders of Allstate Insurance. Allstate is a very attractive stock and
has performed well lately. I continue to hold the stock because I think the
insurance operation should begin to show dramatic improvement after the
losses it suffered last year.
Q. WHAT DID THE FUND'S FOREIGN INVESTMENTS LOOK LIKE AS OF JULY 31, 1995?
A. Approximately 15% of the fund's holdings is foreign, including ADRs,
emerging market debt and foreign stocks or bonds in the local currency.
ADRs, or American Depository Receipts, are a way to own foreign stocks like
British Petroleum or Schlumerger that trade in dollars on the New York
Stock Exchange. The fund's emerging market debt has been trimmed since the
devaluation of the Mexican peso last December and the subsequent decline in
all emerging markets. Finally, the fund owns some stocks in Germany and
Japan, countries where we're looking for the economy to improve.
Q. WHAT INVESTMENTS DIDN'T PERFORM AS WELL AS YOU WOULD HAVE LIKED?
A. During the past six months, some of the fund's foreign holdings have
been disappointing. The Japanese market declined in the aftermath of the
Kobe earthquake and was hurt by the relative strength of its currency
against the dollar. In Germany, the stock market didn't perform as well as
we'd hoped because the reduction in interest rates we'd anticipated didn't
happen. Interestingly, in each of these markets, the underlying earnings
growth I anticipated from the individual companies that the fund owned in
Japan and Germany came through as expected. Unfortunately, with the markets
themselves performing poorly, stock prices weren't as strong as I'd hoped.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I think that corporate earnings look strong going forward, while
inflationary tendencies and the risk of significantly increasing interest
rates seems slight. But do I think there's a risk of some kind or
correction - 5% to 10% - in the foreseeable future? Absolutely. From my
perspective the outlook is good, but a market that's up 20% every six
months is difficult to sustain. I'll probably keep emphasizing quality
companies while continuing to look for companies whose underlying
fundamentals are improving.
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 July 31, 1995,
more than $9.1 billion
MANAGER: Stephen
Petersen, since August
1993; manager, various
institutional accounts, since
1987; joined Fidelity in 1980
(checkmark)
STEPHEN PETERSEN ON AUTO
STOCKS:
"When interest rates were
rising in 1994, the immediate
reaction by investors was that
it was a bad sign for large,
durable goods-oriented
companies such as
automobile manufacturers.
The common belief was that
autos are one of the first
things that people begin to cut
out of their spending plans.
As a result, auto stocks
traded down during late 1994
and early 1995.
"The fund had sold much of its
auto holdings earlier in 1994
in profit taking. Recently, I've
begun buying auto stocks
again. If the auto cycle, which
began in 1992, indeed has
peaked, it will be one of the
shortest-lived auto cycles
since World War II.
"I don't believe that the cycle
is over. I think the reason
sales slowed was because of
interest rates. Meanwhile, the
entire industry continued to
cut costs and is in good
financial shape. It looks to me
like General Motors and
Chrysler are in the best
position to prosper as interest
rates stay low."
INVESTMENT CHANGES

TOP TEN STOCKS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

Philip Morris Companies, Inc. 2.5 2.3

General Electric Co. 2.3 2.4

British Petroleum PLC ADR 1.8 1.0

Federal National Mortgage 1.8 1.5
Association

American Express Co. 1.8 1.8

International Business Machines 1.8 1.4
Corp.

General Motors Corp. 1.4 0.6

Chrysler Corp. 1.3 0.0

RJR Nabisco Holdings Corp. 1.1 1.1

Allstate Corp. 1.1 0.3

TOP FIVE MARKET SECTORS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO

Finance 17.2 16.7

Basic Undustries 10.9 11.3

Energy 10.7 10.0

Utilities 8.8 10.3

Nondurables 7.2 6.4

ASSET ALLOCATION
AS OF JULY 31, 1995 * AS OF JANUARY 31, 1995 **
Row: 1, Col: 1, Value: 4.8
Row: 1, Col: 2, Value: 8.199999999999999
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 42.0
Row: 1, Col: 5, Value: 43.0
Row: 1, Col: 1, Value: 5.0
Row: 1, Col: 2, Value: 11.0
Row: 1, Col: 3, Value: 4.1
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 5, Value: 39.9
Stocks 85.0%
Bonds 2.0%
Convertible
Securities 8.2%
Other securities
and short-term
investments 4.8%
FOREIGN
INVESTMENTS 15.8%
Stocks 79.9%
Bonds 4.1%
Convertible
Securities 11.0%
Other securities
and short-term
investments 5.0%
FOREIGN
INVESTMENTS 16.5%
*
**
INVESTMENTS JULY 31, 1995 (UNAUDITED)

Showing Percentage of Total Value of Investments in Securities

COMMON STOCKS - 84.8%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.4%
AEROSPACE & DEFENSE - 1.1%
General Motors Corp. Class H 345,900 $ 14,701
Lockheed Martin Corp. 1,001,600 62,976
Northrop Grumman Corp. 400,200 22,811
Thiokol Corp. 72,000 2,394
102,882
DEFENSE ELECTRONICS - 0.3%
Raytheon Co. 340,200 28,109
TOTAL AEROSPACE & DEFENSE 130,991
BASIC INDUSTRIES - 9.5%
CHEMICALS & PLASTICS - 5.1%
AKZO NV:
Ord. 45,000 5,909
sponsored ADR 115,700 7,615
Betz Laboratories, Inc. 481,800 21,741
Dow Chemical Co. 126,300 9,362
du Pont (E.I.) de Nemours & Co. 1,317,400 88,265
Eastman Chemical Co. 388,575 24,869
EVC International NV (a)(h) 207,100 9,905
Goodrich (B.F.) Company 377,000 20,452
Grace (W.R.) & Co. 563,600 34,873
Great Lakes Chemical Corp. 626,500 41,114
Hoechst, AG Ord. 86,500 20,811
Imperial Chemical Industries:
Ord. 1,335,300 16,937
PLC ADR 223,600 11,264
Lubrizol Corp. 201,500 7,078
Nalco Chemical Co. 992,000 35,340
Olin Corp. 93,100 5,388
Potash Corp. of Saskatchewan 466,400 28,038
Union Carbide Corp. 1,482,000 51,500
Witco Corp. 864,600 28,100
468,561
IRON & STEEL - 0.9%
Armco, Inc. (a) 1,150,000 7,619
Lukens, Inc. 367,200 11,521
Mannesmann AG Ord. 191,700 63,865
83,005
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 1.7%
Aluminum Co. of America 886,548 $ 50,422
De Beers Consolidated Mines Ltd. ADR 136,600 3,364
Inco Ltd. 595,000 20,229
Metallgesellschaft AG Ord. (a) 481,500 10,379
Noranda, Inc. 1,177,900 24,934
Reynolds Metals Co. 724,500 45,281
154,609
PACKAGING & CONTAINERS - 0.2%
Corning, Inc. 623,800 19,962
International Container Terminal Services (a) 199,532 132
20,094
PAPER & FOREST PRODUCTS - 1.6%
International Paper Co. 673,215 56,886
Scott Paper Co. 892,700 40,953
Westvaco Corp. 268,100 12,132
Weyerhaeuser Co. 883,400 41,299
151,270
TOTAL BASIC INDUSTRIES 877,539
CONGLOMERATES - 4.1%
Allied-Signal, Inc. 1,179,100 55,123
Brascan Ltd. Class A 1,819,600 31,515
Crane Co. 614,000 22,718
Dial Corp. (The) 1,051,400 24,708
GenCorp, Inc. 755,800 8,786
Harris Corp. 468,700 26,833
ITT Corp. 525,400 63,048
Textron, Inc. 596,200 39,647
Tyco International Ltd. 718,600 39,523
United Technologies Corp. 793,100 66,620
378,521
CONSTRUCTION & REAL ESTATE - 1.2%
BUILDING MATERIALS - 0.5%
Armstrong World Industries, Inc. 301,400 16,653
Cooper Cameron Corp. 186,363 4,170
Dexter Corp. 587,700 14,031
Masco Corp. 484,900 12,607
47,461
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 0.1%
Kaufman & Broad Home Corp. 283,000 $ 4,068
Lennar Corp. 266,800 5,136
Pulte Corp. 62,800 1,688
Walter Industries, Inc. (a) 8,348 130
11,022
REAL ESTATE - 0.0%
Southmark Corp. (a) 9 -
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Carr Realty Corp. 97,800 1,809
Crown American Realty Trust (SBI) 412,100 5,203
Equity Residential Property Trust (SBI) 777,100 22,925
Haagen Alexander Properties, Inc. 180,200 2,207
Macerich Co. 150,800 3,091
Simon Properties Group, Inc. 286,300 7,014
Speiker Properties, Inc. 80,300 1,817
Storage Equities, Inc. 328,700 5,629
49,695
TOTAL CONSTRUCTION & REAL ESTATE 108,178
DURABLES - 6.3%
AUTOS, TIRES, & ACCESSORIES - 5.5%
Bridgestone Corp. 1,199,000 17,910
Chrysler Corp. 2,538,200 123,737
Ford Motor Co. 1,214,600 35,072
General Motors Corp. 2,606,354 127,058
Genuine Parts Co. 969,800 36,610
Honda Motor Co. Ltd. 480,000 7,822
Johnson Controls, Inc. 585,100 35,252
Snap-on Tools Corp. 823,200 34,369
Suzuki Motor Corp. 1,020,000 12,466
TRW, Inc. 245,600 18,328
Toyota Motor Corp. 1,801,000 37,500
Volkswagen AG 75,000 24,391
510,515
CONSUMER ELECTRONICS - 0.6%
Matsushita Electric Industrial Co. Ltd. 1,272,000 21,159
Whirlpool Corp. 547,800 31,636
52,795
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - 0.2%
Stride Rite Corp. 168,100 $ 1,870
Unifi, Inc. 655,700 16,557
18,427
TOTAL DURABLES 581,737
ENERGY - 9.1%
ENERGY SERVICES - 1.7%
Baker Hughes, Inc. 1,259,700 27,871
Halliburton Co. 997,300 40,515
Schlumberger Ltd. 1,292,300 86,584
154,970
OIL & GAS - 7.4%
Amerada Hess Corp. 503,600 24,047
Amoco Corp. 1,012,500 68,091
Atlantic Richfield Co. 612,700 70,614
British Petroleum PLC:
ADR 1,852,951 168,153Ord. 6,457,207 48,782
Chevron Corp. 675,400 33,348
Exxon Corp. 413,100 29,950
Kerr-McGee Corp. 458,600 26,083
Mobil Corp. 521,500 50,977
Occidental Petroleum Corp. 235,700 5,318
Phillips Petroleum Co. 714,600 25,279
Royal Dutch Petroleum Co. 248,600 31,572
Texaco, Inc. 154,300 10,261
Total SA:
Class B 457,850 27,733
Class B sponsored ADR 675,215 21,016
Unocal Corp. 1,476,255 41,520
682,744
TOTAL ENERGY 837,714
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 15.8%
BANKS - 6.5%
Banc One Corp. 1,843,320 $ 58,525
Bank of Montreal 200,000 4,197
Bank of New York Co., Inc. 1,276,994 51,239
BankAmerica Corp. 421,300 22,750
Bankers Trust New York Corp. 420,900 27,148
Boatmen's Bancshares, Inc. 425,600 15,481
Chemical Banking Corp. 1,337,900 69,070
Comerica, Inc. 758,726 26,555
Deutsche Bank AG 557,000 27,473
Dresdner Bank AG Ord. 615,000 18,191
First Chicago Corp. 844,400 51,297
First Fidelity Bancorporation 608,668 38,346
First Interstate Bancorp 340,000 29,283
Firstar Corp. 348,700 12,161
Fleet Financial Group, Inc. 1,267,298 45,147
Keycorp 617,300 19,754
Mercantile Bancorporation, Inc. 72,500 3,272
NBD Bancorp, Inc. 189,800 6,453
National Bank of Canada 2,039,100 15,323
NationsBank Corp. 205,356 11,526
Norwest Corp. 266,600 7,531
Republic New York Corp. 349,600 19,578
Royal Bank of Canada 1,046,000 22,430
602,730
CLOSED END INVESTMENT COMPANY - 0.0%
Latin American Investment Fund, Inc. 138,000 2,329
CREDIT & OTHER FINANCE - 2.5%
American Express Co. 4,314,800 166,120
Beneficial Corp. 582,200 27,582
Household International, Inc. 553,300 29,048
Jayhawk Acceptance Corp. 13,000 130
Trilon Financial Corp. Class A 2,471,100 8,333
231,213
FEDERAL SPONSORED CREDIT - 1.8%
Federal National Mortgage Association 1,790,000 167,589
INSURANCE - 3.1%
ACE Ltd. 180,000 5,333
Allstate Corp. 3,134,485 97,953
American Bankers Insurance Group, Inc. 606,220 20,157
American Financial Group, Inc. 962,400 25,022
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
CIGNA Corp. 339,700 $ 27,388
Fremont General Corp. 536,840 14,428
General Re Corp. 190,900 25,318
PMI Group, Inc. 68,000 3,162
Reliastar Financial Corp. 864,300 32,951
Travelers, Inc. (The) 720,100 34,115
285,827
SAVINGS & LOANS - 0.9%
Ahmanson (H.F.) & Co. 1,179,900 26,400
Charter One Financial Corp. 74,500 1,928
Great Western Financial Corp. 603,007 12,889
Washington Mutual, Inc. 1,560,100 37,248
78,465
SECURITIES INDUSTRY - 1.0%
Bear Stearns Companies, Inc. 562,485 12,445
First Marathon, Inc. Class A (non-vtg.) 1,105,300 12,053
Lehman Brothers Holdings, Inc. 888,760 19,664
Nomura Securities Co. Ltd. 2,323,000 44,688
PaineWebber Group, Inc. 241,800 4,957
93,807
TOTAL FINANCE 1,461,960
HEALTH - 4.2%
DRUGS & PHARMACEUTICALS - 2.3%
American Home Products Corp. 498,900 39,413
Bristol-Myers Squibb Co. 823,400 57,021
Pfizer, Inc. 840,800 42,460
Schering-Plough Corp. 843,400 39,218
Warner-Lambert Co. 399,800 33,583
211,695
MEDICAL EQUIPMENT & SUPPLIES - 1.9%
Baxter International, Inc. 1,403,100 52,265
Becton, Dickinson & Co. 799,700 47,082
Bergen Brunswig Corp. Class A 394,655 8,534
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Johnson & Johnson 770,600 $ 55,291
Pall Corp. 399,200 9,132
172,304
TOTAL HEALTH 383,999
HOLDING COMPANIES - 0.5%
Brierley Investments Ltd. 15,004,300 11,342
CINergy Corp. 356,898 9,279
Jardine Strategic Holdings Ltd. Ord. 4,340,000 13,194
U.S. Industries, Inc. (a) 1,006,580 14,470
48,285
INDUSTRIAL MACHINERY & EQUIPMENT - 5.5%
ELECTRICAL EQUIPMENT - 3.4%
General Electric Co. 3,629,900 214,164
General Signal Corp. 872,300 32,166
Mitsubishi Electric Co. Ord. 2,834,000 20,942
Omron Corp. 1,018,000 23,155
Philips Electronics NV (Bearer) 385,400 18,929
309,356
INDUSTRIAL MACHINERY & EQUIPMENT - 1.1%
Caterpillar, Inc. 579,800 40,803
Cooper Industries, Inc. 350,972 13,118
Deere & Co. 213,400 19,179
Goulds Pumps, Inc. 107,200 2,358
Keystone International, Inc. 1,108,000 23,268
Mitsubishi Heavy Industries Ltd. 773,000 5,572
104,298
POLLUTION CONTROL - 1.0%
Safety Kleen Corp. 971,800 15,184
WMX Technologies, Inc. 2,246,000 70,188
Zurn Industries, Inc. 139,100 3,043
88,415
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 502,069
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 0.7%
BROADCASTING - 0.0%
United International Holdings, Inc. (warrants) (a) 4,000 $ 132
ENTERTAINMENT - 0.0%
Cedar Fair LP (depositary units) 53,100 1,633
LEISURE DURABLES & TOYS - 0.0%
IHF Capital, Inc., Series I (warrants)(a)(h) 3,000 60
PUBLISHING - 0.7%
Dow Jones & Co., Inc. 485,800 17,246
Dun & Bradstreet Corp. 193,100 10,862
Gannett Co., Inc. 429,600 23,521
McGraw-Hill, Inc. 113,900 8,756
Reader's Digest Association, Inc. (The) Class A (non-vtg.) 72,200 3,375
63,760
RESTAURANTS - 0.0%
Dave & Busters, Inc. (a) 153,980 2,444
TOTAL MEDIA & LEISURE 68,029
NONDURABLES - 6.9%
BEVERAGES - 0.7%
Anheuser-Busch Companies, Inc. 157,900 8,783
Cadbury-Schweppes PLC Ord. 1,021,828 8,005
Heileman G Brewing, Inc. Class 1 (a)(g) 100 1,600
PepsiCo, Inc. 648,500 30,399
Seagram Co. Ltd. 434,700 15,615
64,402
FOODS - 1.1%
CPC International, Inc. 176,800 10,917
Goodman Fielder Ltd. Ord. 8,288,100 6,923
Grand Metropolitan PLC 2,459,200 14,753
Kellogg Co. 293,500 21,095
Montedison SPA:
ADR (a) 73,500 560
sponsored Ord. (a) 15,963,400 12,524
RalCorp Holdings, Inc. (a) 446,200 10,263
Ralston Purina Co. 434,700 23,258
100,293
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 0.6%
Avon Products, Inc. 214,652 $ 14,596
Rubbermaid, Inc. 301,100 8,958
Tambrands, Inc. 680,500 32,069
55,623
TOBACCO - 4.5%
American Brands, Inc. 565,600 22,553
Dimon, Inc. 350,100 5,908
Imasco Ltd. 2,406,200 43,218
Philip Morris Companies, Inc. 3,237,300 231,872
RJR Nabisco Holdings Corp. 3,612,460 99,794
Universal Corp. 575,000 12,363
415,708
TOTAL NONDURABLES 636,026
RETAIL & WHOLESALE - 4.0%
APPAREL STORES - 0.7%
Charming Shoppes, Inc. 817,500 3,985
Dylex Ltd. (a) 3,456 6
Edison Brothers Stores, Inc. 769,900 7,699
Limited, Inc. (The) 1,126,200 23,087
Melville Corp. 300,500 10,818
TJX Companies, Inc. 1,018,000 14,888
60,483
GENERAL MERCHANDISE STORES - 2.4%
Dayton Hudson Corp. 320,300 24,223
Dillard Department Stores, Inc. Class A 481,700 14,933
Federated Department Stores, Inc. (a) 1,632,467 46,322
Hudsons Bay Co. Ord. 470,400 9,440
K Mart Corp. 654,000 10,301
May Department Stores Co. (The) 835,700 36,248
Sears, Roebuck & Co. 1,475,600 48,141
Wal-Mart Stores, Inc. 1,063,100 28,305
217,913
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 0.8%
Fleming Companies, Inc. 522,883 $ 13,791
Grand Union Capital Corp. Class B (a) 6,979 -
Great Atlantic & Pacific Tea Co., Inc. 889,800 24,803
Supervalu, Inc. 1,087,800 33,450
72,044
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Fingerhut Companies, Inc. 636,200 10,657
International Semi-Tech Microelectronics, Inc. 480,000 2,111
12,768
TOTAL RETAIL & WHOLESALE 363,208
SERVICES - 1.4%
LEASING & RENTAL - 0.2%
GATX Corp. 344,800 17,369
PRINTING - 0.9%
Deluxe Corp. 596,100 19,150
Harland (John H.) Co. 227,200 5,027
Moore Corporation Ltd. 1,196,800 26,322
New England Business Service, Inc. 214,700 4,589
Standard Register Co. 524,300 11,207
Wallace Computer Services, Inc. 265,000 15,469
81,764
SERVICES - 0.3%
Block (H & R), Inc. 331,200 12,420
Jostens, Inc. 789,000 17,949
Perry Capital Corp. (warrants)(a)(h) 4,300 22
30,391
TOTAL SERVICES 129,524
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - 4.5%
COMPUTERS & OFFICE EQUIPMENT - 3.2%
Apple Computer, Inc. 304,500 $ 13,703
Digital Equipment Corp. (a) 1,214,900 46,622
International Business Machines Corp. 1,523,200 165,838
Semi-Tech (Global) Ltd. 3,120,700 4,819
Xerox Corp. 527,881 62,884
293,866
ELECTRONICS - 0.9%
AMP, Inc. 308,000 13,283
Hitachi Ltd. 2,530,000 26,797
Nitto Denko Corp. 633,000 10,386
TDK Corp. 205,000 10,416
Thomas & Betts Corp. 256,800 17,366
Toshiba Corp. 1,046,000 7,280
85,528
PHOTOGRAPHIC EQUIPMENT - 0.4%
Eastman Kodak Co. 361,100 20,808
Fuji Photo Film Co. Ltd. 558,000 14,649
35,457
TOTAL TECHNOLOGY 414,851
TRANSPORTATION - 1.4%
AIR TRANSPORTATION - 0.0%
Qantas Airways Ltd. sponsored ADR (h) 149,000 2,197
RAILROADS - 1.4%
Burlington Northern, Inc. 493,200 34,154
CSX Corp. 708,900 59,459
Canadian Pacific Ltd. Ord. 2,204,400 39,392
133,005
TOTAL TRANSPORTATION 135,202
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 8.3%
CELLULAR - 0.0%
Pagemart Nationwide, Inc. (non-vtg)(a) 14,000 $ 133
ELECTRIC UTILITY - 2.7%
Baltimore Gas & Electric Co. 195,000 4,851
DPL, Inc. 729,150 16,224
DQE, Inc. 215,700 5,177
Entergy Corp. 698,000 16,578
Great Bay Power (a) 72,930 565
Illinova Corp. 1,774,000 44,348
Korea Electric Power Corp. 119,200 4,573
Niagara Mohawk Power Corp. 516,400 7,230
Pacific Gas & Electric Co. 217,500 6,416
PacifiCorp. 663,300 12,188
Peco Energy Co. 462,400 13,236
Pinnacle West Capital Corp. 914,800 22,298
Portland General Corp. 308,900 7,105
Unicom Corp. 683,300 18,962
Veba AG Ord. 1,694,000 70,295
250,046
GAS - 1.5%
Consolidated Natural Gas Co. 362,700 13,601
ENSERCH Corp. 447,700 8,003
Enron Corp. 630,300 21,903
MCN Corp. 893,000 16,967
Pacific Enterprises 1,326,200 31,995
Panhandle Eastern Corp. 1,346,600 32,823
Williams Companies, Inc. 376,300 13,923
139,215
TELEPHONE SERVICES - 4.1%
ALC Communications Corp. (a) 167,000 8,830
Ameritech Corp. 1,875,400 90,723
Bell Atlantic Corp. 967,200 55,372
BellSouth Corp. 891,200 60,379
Frontier Corp. 1,003,900 26,980
NYNEX Corp. 1,891,300 78,016
SBC Communications, Inc. 1,141,700 54,944
375,244
TOTAL UTILITIES 764,638
TOTAL COMMON STOCKS
(Cost $6,178,199) 7,822,471
PREFERRED STOCKS - 5.2%
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - 5.0%
BASIC INDUSTRIES - 1.2%
IRON & STEEL - 0.2%
Armco, Inc. Class A, $3.625 276,200 $ 14,639
METALS & MINING - 0.8%
Alumax, Inc., Series A, $4.00 (a) 370,067 53,474
Kaiser Aluminum Corp. $0.97 900,600 12,834
Reynolds Metals Co. $3.31 236,300 13,026
79,334
PAPER & FOREST PRODUCTS - 0.2%
International Paper $.6562 (a) 302,600 14,525
TOTAL BASIC INDUSTRIES 108,498
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.3%
Ford Motor Co., Series A, $4.20 239,100 22,744
ENERGY - 1.2%
ENERGY SERVICES - 0.1%
Reading & Bates Corp. $1.625 188,400 5,817
OIL & GAS - 1.1%
Atlantic Richfield Co. exchangeable $.5575 928,300 25,296
Diamond Shamrock, Inc. $2.50 (h) 159,900 8,795
Occidental Petroleum Corp. Indexed $3.00 694,900 43,170
Unocal Corp. $3.50 (h) 423,900 22,573
99,834
TOTAL ENERGY 105,651
FINANCE - 0.9%
BANKS - 0.4%
Norwest Corp., Series B, $3.50 470,400 36,515
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - CONTINUED
INSURANCE - 0.5%
Alexander & Alexander Services, Inc., Series A,
$3.625 (h) 168,500 $ 8,383
Allstate Corp. exchangeable $.575 90,000 3,825
Conseco, Inc., Series D, $3.25 232,000 10,730
St. Paul Capital LLC $0.25 162,900 8,552
Travelers, Inc. $2.75 221,800 14,805
46,295
TOTAL FINANCE 82,810
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
U.S. Surgical Corp. $2.20 (h) 477,500 12,893
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
ELECTRICAL EQUIPMENT - 0.4%
Westinghouse Electric Corp. $1.30 (a)(h) 2,554,700 34,808
POLLUTION CONTROL - 0.1%
Browning-Ferris Industries, Inc. $1.29 (a) 208,500 8,027
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 42,835
MEDIA & LEISURE - 0.1%
PUBLISHING - 0.1%
Taylor, J.N. Holdings Ltd. 9 1/2% (a) 956,400 -
Times Mirror Co., Series B, $1.374 453,587 11,226
11,226
NONDURABLES - 0.1%
FOODS - 0.1%
Chiquita Brands International, Inc. $2.875 232,600 10,554
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
RETAIL & WHOLESALE - 0.0%
GROCERY STORES - 0.0%
Supermarkets General Holdings Corp.
exchangeable pay-in-kind $3.52 (a) 100,562 $ 2,816
SERVICES - 0.1%
PRINTING - 0.1%
Alco Standard Corp. $1.26 147,900 11,980
TECHNOLOGY - 0.3%
COMPUTERS & OFFICE EQUIPMENT - 0.2%
IBM France 5 3/4% 142,300 16,792
ELECTRONICS - 0.1%
National Semiconductor Corp. $3.25 (a) 89,900 8,810
TOTAL TECHNOLOGY 25,602
UTILITIES - 0.2%
GAS - 0.2%
Enron Corp., Series J, $10.50 31,800 14,437
Tejas Gas Corp. $2.625 40,800 1,938
Williams Companies, Inc. $3.50 55,400 3,587
19,962
TELEPHONE SERVICES - 0.0%
Sprint Corp. $.6573 75,100 2,591
TOTAL UTILITIES 22,553
TOTAL CONVERTIBLE PREFERRED STOCKS 460,162
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Harvard Industries, Inc. pay-in-kind $14.25 (a) 186,911 5,257
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - 0.1%
BANKS - 0.1%
First Interstate Bancorp depositary shares representing
1/8 share, Series G, 9% 90,700 $ 2,381
Shawmut National Corp. depositary shares representing
1/10th share pref. 9.30% 194,350 5,102
7,483
SAVINGS & LOANS - 0.0%
First Nationwide Bank 11 1/2%, 18,500 2,016
TOTAL FINANCE 9,499
UTILITIES - 0.0%
ELECTRIC UTILITY - 0.0%
Gulf States Utilities Co., Series B, adj. rate 17,162 841
Niagara Mohawk Power Corp., Series A, adj. rate 104,595 2,196
3,037
TOTAL NONCONVERTIBLE PREFERRED STOCKS 17,793
TOTAL PREFERRED STOCKS
(Cost $409,480) 477,955
CORPORATE BONDS - 4.5%
MOODY'S PRINCIPAL
RATINGS (D) AMOUNT (000S)(C)
CONVERTIBLE BONDS - 3.2%
BASIC INDUSTRIES - 0.0%
IRON & STEEL - 0.0%
Allegheny Ludlum Corp. 5 7/8%, 3/15/02 Baa1 $ 3,040 3,355
CONGLOMERATES - 0.2%
Gencorp, Inc. 8%, 8/1/02 Ba3 6,990 6,850
Hanson PLC euro 9 1/2%, 1/31/06 A2 GBP 7,600 12,399
19,249
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
AMOUNT ( (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.0%
Cemex SA 4 1/4%, 11/1/97 (h) B1 $ 4,100 $ 3,342
CONSTRUCTION - 0.1%
Continental Homes Holding Corp. 6 7/8%,
3/15/02 B3 3,900 3,587
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Liberty Property exchangeable 8%, 7/1/01 - 1,358 1,375
TOTAL CONSTRUCTION & REAL ESTATE 8,304
DURABLES - 0.2%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Bridgestone 3.70%, 12/31/98 - JPY 724,000 9,380
TEXTILES & APPAREL - 0.1%
Unifi, Inc. 6%, 3/15/02 Baa1 5,460 5,440
TOTAL DURABLES 14,820
ENERGY - 0.3%
OIL & GAS - 0.3%
Apache Corp. 6%, 1/15/02 (h) Ba2 6,630 7,392
Pennzoil Co. exchangable 6 1/2%, 1/15/03 Baa2 18,345 21,831
TOTAL ENERGY 29,223
FINANCE - 0.4%
BANKS - 0.1%
Bank of New York Co., Inc. 7 1/2%,
8/15/01 A3 6,370 13,098
CREDIT & OTHER FINANCE - 0.0%
Huntingdon International Holdings PLC
euro 7 1/2%, 9/25/06 - 1,000 750
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
AMOUNT ( (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
INSURANCE - 0.3%
Fremont General Corp. liquid yield
option notes 0%, 10/12/13 Ba2 $ 33,690 $ 13,308
NAC RE Corp. 5 1/4%, 12/15/02 Baa3 5,740 5,403
USF & G Corp. 0%, 3/3/09 Baa3 15,780 8,580
27,291
TOTAL FINANCE 41,139
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.1%
Matsushita Electric Works Co. Ltd.
2.70%, 5/31/02 - JPY 761,000 9,438
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc. 2%, 1/24/05 A2 21,807 19,844
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 29,282
MEDIA & LEISURE - 0.9%
BROADCASTING - 0.6%
Comcast Corp. 1 1/8%, 4/15/07 B1 33,870 16,512
Time Warner, Inc.:
liquid yield option notes 0%, 6/22/13 Ba1 85,440 34,816
8 3/4%, 1/10/15 Ba3 3,307 3,452
54,780
LEISURE DURABLES & TOYS - 0.2%
Outboard Marine Corp. 7%, 8/1/02 B1 16,720 17,180
PUBLISHING - 0.1%
News America Holdings, Inc. liquid yield
option notes 0%, 3/11/13 Ba1 19,220 9,394
TOTAL MEDIA & LEISURE 81,354
PRECIOUS METALS - 0.1%
Pegasus Gold, Inc. 6 1/4%, 4/30/02 - 9,120 8,846
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
AMOUNT ( (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.1%
Baker (J.), Inc. 7%, 6/1/02 B2 $ 13,170 $ 11,984
GENERAL MERCHANDISE STORES - 0.1%
Federated Department Stores, Inc.
9.72%, 2/15/04 (e) Ba1 4,920 4,969
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Price Co. 5 1/2%, 2/28/12 Baa1 4,460 4,349
TOTAL RETAIL & WHOLESALE 21,302
SERVICES - 0.1%
ADT Operations, Inc. liquid yield
option notes 0%, 7/6/10 Ba3 19,295 7,754
TECHNOLOGY - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.1%
Automatic Data Processing, Inc.
0%, 2/20/12 Aa3 23,800 10,711
TRANSPORTATION - 0.1%
AIR TRANSPORTATION - 0.1%
Delta Air Lines, Inc. 3.23%, 6/15/03 Ba3 7,140 7,292
UTILITIES - 0.2%
CELLULAR - 0.1%
Cellular Communications, Inc. liquid yield
option notes 0%, 7/27/99 B1 5,430 4,466
Rogers Communications, Inc. liquid yield
option notes 0%, 5/20/13 B2 14,176 4,944
9,410
GAS - 0.1%
SFP Pipeline Holdings, Inc. 0%, 8/15/10 Baa3 3,690 4,613
TELEPHONE SERVICES - 0.0%
CAM-NET Communications Network
10%, 8/15/97(h) - 3,250 1,625
TOTAL UTILITIES 15,648
TOTAL CONVERTIBLE BONDS 298,279
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
AMOUNT ( (000S) (000S)
NONCONVERTIBLE BONDS - 1.3%
BASIC INDUSTRIES - 0.2%
CHEMICALS & PLASTICS - 0.1%
American Pacific Corp. 11%, 12/15/02 (h) - $ 3,000 $ 2,700
IMC Fertilizer Group, Inc. 10 3/4%, 6/15/03 B3 1,000 1,078
NL Industries, Inc. 0%, 10/15/05 (e) B2 5,000 3,687
7,465
IRON & STEEL - 0.0%
AK Steel Corp. 10 3/4%, 4/1/04 Ba3 1,170 1,258
PACKAGING & CONTAINERS - 0.0%
Crown Packaging Holdings Ltd. 0%,
11/1/03 (e) Caa 3,366 1,590
PAPER & FOREST PRODUCTS - 0.1%
Stone Container Corp.:
10 3/4%, 6/15/97 B2 1,150 1,196
11 7/8%, 12/1/98 B1 3,670 3,964
5,160
TOTAL BASIC INDUSTRIES 15,473
CONGLOMERATES - 0.1%
Figgie International Holdings, Inc.
9 7/8%, 10/1/99 B1 8,000 7,910
CONSTRUCTION & REAL ESTATE - 0.0%
CONSTRUCTION - 0.0%
Walter Industries, Inc., Series B, 12.19%, 3/15/00 - 48 49
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Harvard Industries, Inc. 12%, 7/15/04 B3 4,000 4,190
ENERGY - 0.1%
OIL & GAS - 0.1%
Flores & Rucks, Inc. 13 1/2%, 12/1/04 B3 6,900 7,745
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
AMOUNT ( (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 0.0%
SAVINGS & LOANS - 0.0%
Anchor Bancorp, Inc. 8 7/8%, 7/9/03 Ba3 $ 2,000 $ 1,970
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Exide Corp. 10 3/4%, 12/15/02 B1 2,250 2,408
Specialty Equipment Cos., Inc.
11 3/8%, 12/1/03 B3 4,400 4,576
6,984
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.2%
New City 11 3/8%, 11/1/03 B3 3,250 3,120
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 1,520 1,543
SCI Television, Inc. secured:
7 1/2%, 6/30/98 (j) - 1,272 1,266
11%, 6/30/05 B2 3,488 3,653
United International Holdings, Inc.
0%, 11/15/99 B3 4,000 2,390
11,972
LEISURE DURABLES & TOYS - 0.0%
ICON Health And Fitness, Inc.,
Series B, 13%, 7/15/02 B3 3,000 3,075
LODGING & GAMING - 0.1%
Bally Gaming International, Inc. 10 3/8%,
7/15/98 - 7,500 7,725
Grand Casino Resorts, Inc. gtd.
12 1/2%, 2/1/00 Ba3 3,110 3,483
11,208
PUBLISHING - 0.1%
American Media, Inc. Unit 0%, 5/15/97 B1 8,230 6,502
TOTAL MEDIA & LEISURE 32,757
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
AMOUNT ( (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - 0.2%
BEVERAGES - 0.0%
Dr. Pepper/Seven-Up Companies, Inc. 0%,
11/1/02 (e) Baa1 $ 3,000 $ 2,685
HOUSEHOLD PRODUCTS - 0.2%
Revlon Consumer Products Corp.
9 3/8%, 4/1/01 B2 5,550 5,439
Revlon Worldwide Corp. 0%, 3/15/98 B3 13,825 9,885
15,324
TOTAL NONDURABLES 18,009
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.0%
Specialty Retailers, Inc., 11%, 8/15/03 B3 1,260 1,178
GROCERY STORES - 0.1%
Pathmark Stores, Inc.:
9 5/8%, 5/1/03 B2 3,050 3,016
0%, 11/1/03 (e) B3 3,000 1,875
4,891
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Florists Transworld Delivery, Inc., Series B,
14%, 12/15/01 B3 4,300 4,128
TOTAL RETAIL & WHOLESALE 10,197
TECHNOLOGY - 0.0%
COMMUNICATIONS EQUIPMENT - 0.0%
Echostar Communications Corp. Unit
0%, 6/1/04 (e) Caa 1,500 795
TRANSPORTATION - 0.0%
RAILROADS - 0.0%
Southern Pacific Rail Corp. 9 3/8%, 8/15/05 Ba3 4,000 4,090
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
AMOUNT ( (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - 0.1%
CELLULAR - 0.0%
Pagemart Nationwide, Inc. 0%, 2/1/05 (e)(h) - $ 4,000 $ 2,375
ELECTRIC UTILITY - 0.0%
Del Norte Funding Corp. 9.05%, 1/2/95 (b) Ca 2,364 1,348
El Paso Funding Corp. lease oblig.
10 3/4%, 4/1/13 (b) Ca 870 500
1,848
GAS - 0.1%
Columbia Gas Systems, Inc. (b):
9%, 8/1/95 B3 1,000 1,425
10.15%, 11/1/13 B3 500 736
9 1/2%, 10/10/19 B1 1,500 2,190
9.91%, 5/28/20 - 1,590 2,391
6,742
TOTAL UTILITIES 10,965
TOTAL NONCONVERTIBLE BONDS 121,134
TOTAL CORPORATE BONDS
(Cost $405,170) 419,413
COMMERCIAL MORTGAGE SECURITIES - 0.2%
ACP Mortgage LP commercial floater Series F,
7.5398%, 2/28/28 (h)(j) B 3,577 2,718
Bardell Associates Note Trust
12 1/2%, 11/1/08 (g) - 2,899 2,946
CS First Boston Mortgage Securities Corp. commercial
Series 1994-M1 Class E, 12.60%, 2/15/02 (h) - 3,000 2,992
Resolution Trust Corp. commercial Series:
1994-N2 Class 5-B, 10 5/8%, 12/15/04 (e) (h) B2 2,750 2,686
1994-C2 Class G, 8%, 4/25/25 B 3,815 3,073
1994-C1 Class E, 8%, 6/25/26 BB 3,834 3,126
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $16,877) 17,541
FOREIGN GOVERNMENT OBLIGATIONS (L) - 0.7%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
AMOUNT ( (000S) (000S)
Argentina Republic, Brady euro:
5%, 3/31/23 (j) B1 $ 39,876 $ 18,492
6 7/8%, 3/31/23 (j) B1 8,500 4,856
Brazil Federative Republic par
4 1/4%, 4/15/24 - 43,500 18,978
Mexico Value Recovery (rights)(a) - 1,648 -
Republic of Bulgaria Brady discount
6 3/4%, 7/28/24 (j) - 11,375 5,460
Republic of Ecuador:
past due interest (h)(f) - 4,400 1,265
past due interest 7 1/4%, 2/28/15 (h) - 10,109 2,906
discount 7 1/4%, 2/28/25 (h) - 10,624 5,378
discount euro 7 1/4%, 2/28/25 - 5,000 2,531
par euro 3%, 2/28/95 (h) (m) - 5,000 1,588
Republic of Venezuela:
Oil Recovery (rights) (a) B+ 21 -
6 5/8%, 3/31/20 Ba3 3,000 1,530
Siderurgica Brasileiras inflation indexed 6%,
8/15/99 (k) - BRR 12,444 1,798
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $63,533) 64,782
INDEXED SECURITIES - 0.0%
OTHER - 0.0%
Merrill Lynch & Co. Inc. Japan Index equity
participation securities 0%, 1/31/00
(Cost $4,188) 5,000 4,374
PURCHASED BANK DEBT - 0.1%

El Paso Electric Co.:
term loan 10%, 10/26/96 (j) 2,571 2,572
unsecured term loan:
0%, 12/1/95 (j) 118 68 0%, 12/15/95 (j) 147 86
0%, 1/3/99 (j) 667 389
secured loan 0%, 1/4/99 (j) 508 508
PURCHASED BANK DEBT - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S)(C) (000S)
GPA Group PLC:
commericial credit facility (sub-part.) $ 2,226 $ 2,103
deferred amortization facility (sub-part.) 203 192
commericial credit facility 260 245
deferred amortization facility 24 22
term loan 6.40%, 11/19/98 450 369
WCI Communications LP term loan 17%,
7/24/98 (g) 1,280 1,264
TOTAL PURCHASED BANK DEBT
(Cost $7,574) 7,818
REPURCHASE AGREEMENTS - 4.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 5.82%,
dated 7/31/95 due 8/1/95 $ 412,762 412,695
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $7,497,716) $ 9,227,049
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
159,294 DEM 8/17/95 $ 114,994 $ 340
9,770,030 JPY 8/17/95 110,836 (1,363)
TOTAL CONTRACTS TO BUY
(Payable amount $226,853) $ 225,830 (1,023)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.4%
CONTRACTS TO SELL
159,294 DEM 8/17/95 $ 114,994 (4,995)
9,770,030 JPY 8/17/95 110,836 2,615
TOTAL CONTRACTS TO SELL
(Receivable amount $223,450) $ 225,830 (2,380)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.4%
$ (3,403)
CURRENCY ABBREVIATIONS
BRR - Brazilian real
GBP - British pound
DEM - German deutsche mark
JPY - Japanese yen
LEGEND
1. Non-income producing
2. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
3. Principal amount is stated in United States dollars unless otherwise
noted.
4. Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
5. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
6. Security sold on a delayed delivery basis (see Note 2 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 COST
SECURITY DATE (000S)
Bardell Associates
Note Trust
12 1/2%, 11/1/08 4/19/94 $ 2,955
Heileman G Brewing, Inc.
Class 1 1/21/94 $ 2,013
WCI Communications
LP term loan
17%, 7/24/98 7/24/95 $ 1,264
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 $136,603,000 or 1.5% of net
assets.
9. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
10. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
11. Principal amount shown is original face amount and does not reflect the
inflation adjustments.
12. Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
13. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
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 0.7% AAA, AA, A 0.5%
Baa 0.6% BBB 0.9%
Ba 1.2% BB 1.2%
B 1.9% B 1.4%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 1.1%
including long-term debt categorized as other securities.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 84.2%
Canada 3.5
Japan 3.0
United Kingdom 3.0
Germany 2.6
Others (individually less than 1%) 3.7
TOTAL 100.0%
INCOME TAX INFORMATION
At July 31, 1995, the aggregate cost of investment securities for income
tax purposes was $7,500,884,000. Net unrealized appreciation aggregated
$1,726,165,000, of which $1,846,815,000 related to appreciated investment
securities and $120,650,000 related to depreciated investment securities.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JULY 31, 1995 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 9,227,049
agreements of $412,695) (cost $7,497,716) -
See accompanying schedule

Cash 1,825

Receivable for investments sold 30,669
Regular delivery

Delayed delivery 420

Unrealized appreciation on foreign currency contracts 2,955

Receivable for fund shares sold 13,359

Dividends receivable 17,352

Interest receivable 6,741

Other receivables 664

TOTAL ASSETS 9,301,034

LIABILITIES

Payable for investments purchased $ 91,990
Regular delivery

Delayed delivery 2,243

Unrealized depreciation on foreign currency contracts 6,358

Payable for closed foreign currency contracts 44

Payable for fund shares redeemed 12,899

Accrued management fee 3,257

Other payables and accrued expenses 2,208

Collateral on securities loaned, at value 28,109

TOTAL LIABILITIES 147,108

NET ASSETS $ 9,153,926

Net Assets consist of:

Paid in capital $ 7,262,792

Undistributed net investment income 22,968

Accumulated undistributed net realized gain (loss) on 142,305
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 1,725,861
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 254,862 shares outstanding $ 9,153,926

NET ASSET VALUE, offering price and redemption price per $35.92
share ($9,153,926 (divided by) 254,862 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)

INVESTMENT INCOME $ 119,820
Dividends

Interest (including security lending fees of $127) 36,034

TOTAL INCOME 155,854

EXPENSES

Management fee $ 18,095

Transfer agent fees 9,329

Accounting fees and expenses 394

Non-interested trustees' compensation 21

Custodian fees and expenses 169

Audit 17

Legal 19

Interest 3

Miscellaneous 13

Total expenses before reductions 28,060

Expense reductions (230) 27,830

NET INVESTMENT INCOME 128,024

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

Investment securities 163,166

Foreign currency transactions (19,414) 143,752

Change in net unrealized appreciation (depreciation) on:

Investment securities 1,181,935

Assets and liabilities in foreign currencies (3,293) 1,178,642

NET GAIN (LOSS) 1,322,394

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,450,418
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED JULY 31, JANUARY 31,
1995 1995
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 128,024 $ 238,678
Net investment income

Net realized gain (loss) 143,752 367,145

Change in net unrealized appreciation (depreciation) 1,178,642 (814,494)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,450,418 (208,671)
FROM OPERATIONS

Distributions to shareholders (128,385) (211,713)
From net investment income

From net realized gain (67,781) (479,855)

TOTAL DISTRIBUTIONS (196,166) (691,568)

Share transactions 1,133,266 2,038,192
Net proceeds from sales of shares

Reinvestment of distributions 189,073 667,773

Cost of shares redeemed (862,122) (1,309,540)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 460,217 1,396,425
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 1,714,469 496,186

NET ASSETS

Beginning of period 7,439,457 6,943,271

End of period (including undistributed net investment $ 9,153,926 $ 7,439,457
income of $22,968 and $23,329, respectively)

OTHER INFORMATION
Shares

Sold 33,929 62,796

Issued in reinvestment of distributions 5,885 21,310

Redeemed (25,783) (40,568)

Net increase (decrease) 14,031 43,538

</TABLE>

FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED JANUARY 31,
ENDED
JULY 31, 1995

(UNAUDITED) 1995 1994 F 1993 D 1992 1991

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

Net asset value, $ 30.89 $ 35.19 $ 29.87 $ 26.57 $ 22.38 $ 25.25
beginning of period

Income from
Investment
Operations

Net investment .51 1.02 1.11 1.11 E 1.18 1.46
income

Net realized and 5.32 (2.12) 5.48 3.27 4.21 (2.48)
unrealized gain
(loss)

Total from investment 5.83 (1.10) 6.59 4.38 5.39 (1.02)

operations

Less Distributions (.52) (.98) (1.15) (1.08) (1.20) (1.55)
From net investment
income

From net realized (.28) (2.22) (.12) - - (.30)
gain

Total distributions (.80) (3.20) (1.27) (1.08) (1.20) (1.85)

Net asset value, end $ 35.92 $ 30.89 $ 35.19 $ 29.87 $ 26.57 $ 22.38
of period

TOTAL RETURN B, C 19.20% (3.01) 22.52 16.92 24.61 (3.94)
% % % % %

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 9,154 $ 7,439 $ 6,943 $ 5,123 $ 4,421 $ 3,941
period (in millions)

Ratio of expenses to .68% A .69 .66 .67 .68 .70%
average net assets % % % %

Ratio of expenses to .68% A .70 .66 .67 .68 .70%
average net assets % % % %
before expense
reductions

Ratio of net investment 3.12% A 3.37 3.55 4.02 4.81 6.18%
income to average % % % %
net assets

Portfolio turnover rate 44% A 50 70 84 111 107%
% % % %

F ANNUALIZED
G TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
H TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS
SHOWN.
I AS OF FEBRUARY 1, 1993 THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING.
J NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
K 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1995 (Unaudited)

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
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, foreign currency transactions, market discount,
partnerships, non-taxable dividends and losses deferred due to wash sales.
The fund also utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for income
tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income (loss) and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. These contracts
involve market risk in excess of the unrealized gain or loss reflected in
the fund's Statement of Assets and Liabilities. The U.S. dollar value of
the currencies the fund has committed to buy or sell is shown in the
schedule of investments under the caption "Forward Foreign Currency
Contracts." This amount represents the aggregate exposure to each currency
the fund has acquired or hedged through currency contracts at period end.
Losses may arise from changes in the value of the foreign currency or if
the counterparties do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of
2. OPERATING POLICIES - CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
offset; otherwise, gain (loss) is recognized on settlement date. Contracts
that have been offset with different counterparties are reflected as both a
contract to buy and a contract to sell in the schedule of investments under
the caption "Forward Foreign Currency Contracts."
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. The fund's investment adviser, Fidelity Management &
Research Company (FMR), is responsible for determining that the value of
the underlying securities remains in accordance with the market value
requirements stated above.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The
market value of the securities purchased or sold on a when-issued or
forward commitment basis are identified as such in the fund's schedule of
investments. The fund may receive compensation for interest forgone in the
purchase of a delayed delivery security. With respect to purchase
commitments, the fund identifies securities as segregated in its custodial
records with a value at least equal to the amount of the commitment. Losses
may arise due to changes in the market value of the underlying securities
or if the counterparty does not perform under the contract.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Buying futures, writing
puts, and buying calls tend to increase the fund's exposure to the
underlying instrument. Selling futures, buying puts, and writing calls tend
to decrease the fund's exposure to the underlying instrument, or hedge
other fund investments. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms.
2. OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
INDEXED SECURITIES. The fund may invest in indexed securities whose values
are linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other underlying instruments. The
fund uses these securities to increase or decrease its exposure to
different underlying instruments and to gain exposure to markets that might
be difficult to invest in through conventional securities. Indexed
securities may be more volatile than their underlying instruments, but any
loss is limited to the amount of the original investment.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) amounted to $5,810,000 or
.01% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,050,050,000 and $1,724,552,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2700% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .12%.
For the period, the management fee was equivalent to an annualized rate of
.44% of average net assets.
SALES LOAD. For the period December 31, 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.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES - CONTINUED
that vary according to account size and type of account. 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 $990,000 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 $26,980,000 and
$28,109,000, respectively.
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 during the period for which the loan was outstanding amounted
to $5,446,000. The weighted average interest rate was 6.4%.
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
$230,000 under this arrangement.
8. LITIGATION.
The fund is engaged in litigation against the obligor on the inflation
adjusted debt of Siderurgica Brasileiras SA, contesting the calculation of
the principal adjustment. The probability of success cannot be predicted
and the amount of recovery cannot be estimated. Any recovery from this
litigation would inure to the benefit of the fund.
TO CALL FIDELITY

INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Stephen Petersen, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
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 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
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(registered trademark)
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AUTOMATED LINES FOR QUICKEST SERVICE