SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-24389)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 90 [X]
and
REGISTRATION STATEMENT (No. 811-1352)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
Fidelity Devonshire Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-570-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b)
(x) on (June 21, 1996) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
( ) on ( ) pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
( ) on ( ) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date for a
previously filed
post-effective amendment.
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the Notice required by
such Rule before June 28, 1996.
FIDELITY MID-CAP STOCK FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C>
1................................... Cover Page
...
2a.................................. Expenses
..
b, Contents; The Funds at a Glance; Who May Want to
c............................... Invest
3a.................................. Financial Highlights
..
*
b...................................
c, d............................. Performance
4a i.............................. Charter
The Funds at a Glance; Investment Principles and
ii............................... Risks
Investment Principles and Risks
b...................................
Who May Want to Invest; Investment Principles and
c................................... Risks
5a.................................. Charter
..
b Cover Page; The Funds at a Glance; Charter; Doing
i.............................. Business with Fidelity
Charter
ii..............................
Expenses; Breakdown of Expenses
iii.............................
Charter
c..................................
Charter; Breakdown of Expenses
d..................................
Cover Page; Charter
e.................................
Expenses
f..................................
g i.............................. Charter
*
ii...............................
5A................................. Performance
.
6a Charter
i.................................
How to Buy Shares; How to Sell Shares; Transaction
ii................................ Details; Exchange Restrictions
Charter
iii................................
Charter
b..................................
Transaction Details; Exchange Restrictions
c..................................
*
d..................................
Doing Business with Fidelity; How to Buy Shares;
e.................................. How to Sell Shares; Investor Services
f, Dividends, Capital Gains, and Taxes
g..............................
7 Cover Page; Charter
a..................................
Expenses; How to Buy Shares; Transaction Details
b.................................
*
c..................................
How to Buy Shares
d..................................
*
e..................................
f................................ Breakdown of Expenses
8................................... How to Sell Shares; Investor Services; Transaction
... Details; Exchange Restrictions
9................................... *
...
</TABLE>
* Not Applicable
FIDELITY MID-CAP STOCK FUND
CROSS REFERENCE SHEET
(continued)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C>
10, Cover Page
11.............................
12.................................. Description of the Trusts
..
13a - Investment Policies and Limitations
c............................
Portfolio Transactions
d..................................
14a - Trustees and Officers
c............................
15a , *
b.............................
Trustees and Officers
c................................
16a FMR, Portfolio Transactions
i................................
Trustees and Officers
ii..............................
Management Contracts
iii..............................
Management Contracts
b.................................
c, Contracts with FMR Affiliates
d.............................
e .............................. *
Distribution and Service Plans (Mid-Cap Stock and
f................................ Large Cap Stock only)
*
g.................................
Description of the Trusts
h.................................
Contracts with FMR Affiliates
i.................................
17a - Portfolio Transactions
c............................
*
d,e..............................
18a................................ Description of the Trusts
..
*
b.................................
19a................................ Additional Purchase and Redemption Information
..
Additional Purchase and Redemption Information;
b................................ Valuation of Portfolio Securities
*
c.................................
20.................................. Distributions and Taxes
..
21a, Contracts with FMR Affiliates
b............................
*
c.................................
22.................................. Performance
..
23.................................. Financial Statements
..
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy of
each fund' s most recent financial report and portfolio
listing, or a copy of the Statement of Additional Information (SAI) dated
June 21, 1996. The SAI has been filed with the Securities and Exchange
Commission (SEC) and is available along with other related materials,
for reference on the SEC's Internet Web Site (http://www.sec.gov). The SAI
is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of any of these document s , call
Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, Federal
Reserve Board, or any other agency, and are subject to investment risks,
including possible loss of principal amount invested.
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
SML-pro-696
These funds are growth funds. They seek to increase the value of your
investment over the long term. Using a computer-aided quantitative
approach, SMALL CAP STOCK invests mainly in equity securities of companies
with small market capitalizations. MID-CAP STOCK invests mainly in equity
securities of companies with medium market capitalizations. LARGE CAP STOCK
invests mainly in equity securities of companies with large market
capitalizations.
FIDELITY
SMALL CAP STOCK
FUND
FIDELITY
MID-CAP STOCK
FUND
FIDELITY
LARGE CAP STOCK
FUND
PROSPECTUS
JUNE 21, 1996(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES Small Cap Stock's
sales charge (load) and each
fund's yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.
PERFORMANCE How each fund has
done over time.
THE FUNDS IN DETAIL CHARTER How each fund is
organized.
INVESTMENT PRINCIPLES AND RISKS
Each fund's overall approach to
investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to
help you manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS,
ACCOUNT POLICIES AND TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
SALES CHARGE REDUCTIONS AND
WAIVERS
KEY FACTS
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the management
arm of Fidelity Investments, which was established in 1946 and is now
America's largest mutual fund manager. Foreign affiliates of FMR may help
choose investments for the funds.
As with any mutual fund, there is no assurance that a fund will achieve
its goal.
SMALL CAP STOCK
GOAL: Capital appreciation (increase in the value of the fund's shares).
STRATEGY: Invests mainly in equity securities of companies with small
market capitalizations that the manager determines, through both
fundamental and technical analysis, to be undervalued compared to others in
their industries.
SIZE: As of April 30, 1996, the fund had over $554 million in
assets.
MID-CAP STOCK
GOAL: Long-term growth of capital (increase in the value of the fund's
shares).
STRATEGY: Invests mainly in equity securities of companies with medium
market capitalizations.
SIZE: As of April 30, 1996, the fund had over $ 1.4 b illion in
assets.
LARGE CAP STOCK
GOAL: Long-term growth of capital (increase in the value of the fund's
shares).
STRATEGY: Invests mainly in equity securities of companies with large
market capitalizations.
SIZE: As of April 30, 1996, the fund had over $88 million in assets.
WHO MAY WANT TO INVEST
These funds may be appropriate for investors who are willing to ride out
stock market fluctuations in pursuit of potentially high long-term returns.
The funds are designed for those who want to focus on small, medium, or
large capitalization stocks in search of above average returns. A company's
market capitalization is the total market value of its outstanding common
stock. Small Cap Stock uses a disciplined investment approach that combines
computer-aided, quantitative analysis with fundamental research.
The value of the funds' investments will vary from day to day, and
generally reflect market conditions, interest rates, and other company,
political, or economic news. In the short-term, stock prices can fluctuate
dramatically in response to these factors. The securities of small, less
well-known companies may be more volatile than those of larger companies.
Over time, however, stocks have shown greater growth potential than other
types of securities. When you sell your shares, they may be worth more or
less than what you paid for them. By themselves, the funds do not
constitute a balanced investment plan.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. The
funds in this prospectus are
in the GROWTH category.
(solid bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(solid bullet) INCOME Seeks income by
investing in bonds.
(solid bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(right arrow) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell, or
hold shares of a fund. See pages and - for an explanation of how and when
these charges apply. Lower sales charges may be available for accounts over
$250,000.
Maximum sales charge on purchases
(as a % of offering price)
for Small Cap Stock 3.00%
for Mid-Cap Stock None
for Large Cap Stock None
Maximum sales charge on reinvested distributions None
Deferred sales charge on redemptions None
Exchange fee None
Redemption fee (as a % of amount redeemed
on shares held less than 90 days)
for Small Cap Stock only 0.75%
Annual account maintenance fee
(for accounts under $2,500) $12.00
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee that varies based on its performance. It also
incurs other expenses for services such as maintaining shareholder records
and furnishing shareholder statements and financial reports. A fund's
expenses are factored into its share price or dividends and are not charged
directly to shareholder accounts (see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets. A portion of the
brokerage commissions that the funds paid was used to reduce fund expenses.
In addition, the funds have entered into arrangements with their
custodians and transfer agents whereby interest earned on uninvested cash
balances is used to reduce custodian and transfer agent expenses.
Including th ese reduction s , the total operating
expenses presented in the table would have been .99 % for Small
Cap Stock, 1.00 % for Mid-Cap Stock , and 1.30 % for
Large Cap Stock.
SMALL CAP STOCK
Management fee .58 %
12b-1 fee None
Other expenses .43 %
Total fund operating expenses 1.01
%
MID-CAP STOCK
Management fee .68 %
12b-1 fee None
Other expenses .34 %
Total fund operating expenses 1.02
%
LARGE CAP STOCK
Management fee .62 %
12b-1 fee None
Other expenses .69 %
Total fund operating expenses 1.31
%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
SMALL CAP STOCK
After 1 year $ 40
After 3 years $ 61
After 5 years $ 84
After 10 years $ 15
0
MID-CAP STOCK
After 1 year $ 10
After 3 years $ 32
After 5 years $ 56
After 10 years $ 12
5
LARGE CAP STOCK
After 1 year $ 13
After 3 years $ 42
After 5 years $ 72
After 10 years $ 15
8
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FINANCIAL HIGHLIGHTS
The tables that follow are included in each fund's Annual Report and
have been audited by Coopers & Lybrand L.L.P., independent accountants.
Their reports on the financial statements and financial highlights are
included in the Annual Reports. The financial statements and financial
highlights are incorporated by reference into (are legally a part of) the
funds' Statement of Additional Information.
SMALL CAP STOCK
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended April 30 1996 1995 1994D
Net asset value, beginning of period $ 10.93 $ 10.61 $ 10.00
Income from Investment Operations
Net investment income .07 .05 .02
Net realized and unrealized gain (loss) 3.74 .28 .65
Total from investment operations 3.81 .33 .67
Less Distributions
From net investment income (.08) (.01) --
In excess of net investment income -- -- (.02)
From net realized gain (.77) -- --
In excess of net realized gain -- -- (.04)
Total distributions (.85) (.01) (.06)
Redemption fees added to paid in capital -- -- --
Net asset value, end of period $ 13.89 $ 10.93 $ 10.61
Total returnB,C 35.72% 3.12% 6.70%
Net assets, end of period (000 omitted) $ 554,573 $ 562,736 $ 661,804
Ratio of expenses to average net assets 1.01% .97% 1.20%
A
Ratio of expenses to average net assets after .99% .90% 1.18%
expense reductions E E A,E
Ratio of net investment income to average net assets .39% .40% .03%
A
Portfolio turnover rate 192% 182% 210%
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND 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.
D FOR THE PERIOD JUNE 28, 1993 (COMMENCEMENT OF OPERATIONS) TO APRIL 30,
1994
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
MID-CAP STOCK
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended April 30 1996 1995D 1995E
Net asset value, beginning of period $ 12.01 $ 10.78 $ 10.00
Income from Investment Operations
Net investment income (loss) .11G .02 --
Net realized and unrealized gain (loss) 3.49 1.23 .92
Total from investment operations 3.60 1.25 .92
Less Distributions
From net investment income (.06) -- --
From net realized gain (.72) (.02) (.14)
Total distributions (.78) (.02) (.14)
Net asset value, end of period $ 14.83 $ 12.01 $ 10.78
Total returnB,C 30.84% 11.61% 9.27%
Net assets, end of period (000 omitted) $ 1,460,524 $ 459,019 $ 138,167
Ratio of expenses to average net assets 1.02% 1.27%A 1.63%A
Ratio of expenses to average net assets after 1.00%F 1.22%A 1.61%A
expense reductions ,F ,F
Ratio of net investment income (loss) to average 1.01% .95%A (.03)%
net assets A
Portfolio turnover rate 179% 163%A 190%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.
D FOR THE PERIOD FEBRUARY 1, 1995 TO APRIL 30, 1995
E FOR THE PERIOD MARCH 29, 1994 (COMMENCEMENT OF OPERATIONS) TO JANUARY 31,
1995
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM ADVO, INC.
WHICH AMOUNTED TO $0.04 PER SHARE.
LARGE CAP STOCK
<TABLE>
<CAPTION>
<S> <C>
Selected Per-Share Data and Ratios
Year ended April 30 1996D
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .05
Net realized and unrealized gain (loss) 1.70
Total from investment operations 1.75
Less Distributions
From net investment income (.03)
Net asset value, end of period $ 11.72
Total returnB,C 17.52%
Net assets, end of period (000 omitted) $ 88,166
Ratio of expenses to average net assets 1.31%A
Ratio of expenses to average net assets after expense reductions 1.30%A,
E
Ratio of net investment income to average net assets .70%A
Portfolio turnover rate 155%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.
D FOR THE PERIOD JUNE 22, 1995 (COMMENCEMENT OF OPERATIONS) TO APRIL 30,
1996
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes.
Each fund's fiscal year runs from May 1 through April 30. The tables
below and at right show each fund's performance over past fiscal
periods compared to the Russell 2000 Index for Small Cap
Stock , S&P MidCap 400 for Mid-Cap Stock , and the S&P 500 for
Large Cap Stock. To help you compare Small Cap Stock and Mid-Cap
Stock to other funds, the chart on page displays calendar-year
performance.
SMALL CAP STOCK
Fiscal periods ended Past 1 Life of
April 30, 1996 Year FundA
Average annual 35.72 15.14
total return % %
Average annual 31.65 13.92
total return % %
(load adj. B)
Cumulative 35.72 49.34
total return % %
Cumulative total return 31.65 44.86
(load adj.B) % %
Russell 2000 Index 32.99 17.54
(average annual) % %
Russell 2000 Index 32.99 58.36
(cumulative) % %
A FROM JUNE 28, 1993 (COMMENCEMENT OF OPERATIONS)
B LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING THE FUND'S 3% SALES
CHARGE.
MID-CAP STOCK
Fiscal periods ended Past 1 Life of
April 30, 1996 Year FundC
Average annual 30.84 25.02
total return % %
Cumulative 30.84 59.57
total return % %
S&P MidCap 400 29.81 16.74
(average annual) % %
S&P MidCap 400 29.81 38.27
(cumulative) % %
C FROM MARCH 29, 1994 (COMMENCEMENT OF OPERATIONS)
UNDERSTANDING
PERFORMANCE
Because the funds invest in
stocks, their performance is
related to that of the overall
stock market. Historically,
stock market performance
has been characterized by
volatility in the short run and
growth in the long run.
(checkmark)
LARGE CAP STOCK
Fiscal period ended Life of
April 30, 1996 FundD
Cumulative 17.52
total return %
S&P 500 22.61
(cumulative) %
D FROM JUNE 22, 1995 (COMMENCEMENT OF OPERATIONS)
EXAMPLE: Mountain charts illustrate the growth of a hypothetical
investment over time. The chart below shows the growth in value of a
$10,000 investment made in Small Cap Stock on its start date through April
30, 1996, including the effect of paying the 3% sales charge. Charts for
Mid-Cap Stock and Large Cap Stock will be included when the funds have more
performance history.
SMALL CAP STOCK
Fiscal years 1994 1995 1996
Row: 1, Col: 1, Value: 9700.0
Row: 2, Col: 1, Value: 9700.0
Row: 3, Col: 1, Value: 9767.9
Row: 4, Col: 1, Value: 10126.8
Row: 5, Col: 1, Value: 10340.2
Row: 6, Col: 1, Value: 10417.8
Row: 7, Col: 1, Value: 10126.8
Row: 8, Col: 1, Value: 10555.2
Row: 9, Col: 1, Value: 10818.6
Row: 10, Col: 1, Value: 10906.39
Row: 11, Col: 1, Value: 10184.5
Row: 12, Col: 1, Value: 10350.34
Row: 13, Col: 1, Value: 10077.19
Row: 14, Col: 1, Value: 9579.68
Row: 15, Col: 1, Value: 9657.720000000001
Row: 16, Col: 1, Value: 10340.59
Row: 17, Col: 1, Value: 10282.06
Row: 18, Col: 1, Value: 10477.16
Row: 19, Col: 1, Value: 9979.640000000001
Row: 20, Col: 1, Value: 10204.29
Row: 21, Col: 1, Value: 9823.459999999999
Row: 22, Col: 1, Value: 10165.23
Row: 23, Col: 1, Value: 10438.65
Row: 24, Col: 1, Value: 10673.01
Row: 25, Col: 1, Value: 10878.07
Row: 26, Col: 1, Value: 12085.13
Row: 27, Col: 1, Value: 13331.93
Row: 28, Col: 1, Value: 13518.46
Row: 29, Col: 1, Value: 13862.06
Row: 30, Col: 1, Value: 13145.4
Row: 31, Col: 1, Value: 13322.11
Row: 32, Col: 1, Value: 12921.5
Row: 33, Col: 1, Value: 12702.49
Row: 34, Col: 1, Value: 13004.93
Row: 35, Col: 1, Value: 13244.79
Row: 36, Col: 1, Value: 14485.84
$
$14,486
$
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results. Average annual total returns covering
periods of less than one year assume that performance will remain constant
for the rest of the year.
RUSSELL 2000 INDEX(registered trademark) is a broad index of small
capitalization stocks. The Russell 2000 figures assume reinvestment of all
dividends paid by stocks included in the index. They do not, however,
include any allowance for the brokerage commissions or other fees you would
pay if you actually invested in those stocks.
S&P MIDCAP 400(registered trademark) is the Standard & Poor's MidCap 400
Index, a widely recognized, unmanaged index of mid-cap common stock prices.
The S&P MidCap 400 figures assume reinvestment of all dividends paid by
stocks included in the index. They do not, however, include any allowance
for the brokerage commissions or other fees you would pay if you actually
invested in those stocks.
S&P 500(registered trademark) is the Standard & Poor's 500 Index , a
widely recognized, unmanaged index of common stock prices. The S&P 500
figures assume reinvestment of all dividends paid by stocks included in the
index. They do not, however, include any allowance for the brokerage
commissions or other fees you would pay if you actually invested in those
stocks.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES, which assume reinvestment of distributions,
are published by Lipper Analytical Services, Inc. Small Cap Stock compares
its performance to the Lipper Small Company Growth Funds Average ,
Mid-Cap Stock compares to the Lipper Mid-Cap Funds Average, and Large
Cap Stock compares to the Lipper Growth Funds Average . These
averages currently reflect the performance of over 382, 147, and 649 mutual
funds with similar objectives, respectively.
Other illustrations of fund performance may show moving averages over
specified periods.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF FUTURE
PERFORMANCE.
SMALL CAP STOCK
Calendar year total returns 1994 1995
Small Cap Stock -3.32% 26.6
3%
Lipper Small Company Growth Funds Average
- -0.72% 31.54%
Consumer Price Index 2.67 % 2.54
%
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: -3.32
Row: 9, Col: 2, Value: -0.7200000000000001
Row: 10, Col: 1, Value: 26.63
Row: 10, Col: 2, Value: 31.54
(large solid box) Small Cap
Stock
(large hollow box) Lipper Small
Company
Growth
Funds
Average
MID-CAP STOCK
Calendar year total returns 1995
Mid-Cap Stock 33.92
%
Lipper Mid-Cap Funds Average
32.17%
Consumer Price Index 2.54
%
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: nil
Row: 9, Col: 2, Value: nil
Row: 10, Col: 1, Value: 33.92
Row: 10, Col: 2, Value: 32.17
(large solid box) Mid-Cap
Stock
(large hollow box) Lipper
Mid-Cap
Funds
Average
LARGE CAP STOCK IS NOT INCLUDED BECAUSE IT HAS NOT COMPLETED ONE FULL
CALENDAR YEAR OF OPERATIONS.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it towards a specified goal. and Large Cap Stock are
diversified funds of Fidelity Commonwealth Trust and Mid-Cap Stock is a
diversified fund of Fidelity Devonshire Trust. Both trusts are open-end
management investment companies. Fidelity Commonwealth Trust was organized
as a Massachusetts business trust on November 8, 1974. Fidelity Devonshire
Trust was organized as a Massachusetts business trust on March 4, 1985.
There is a remote possibility that one fund might become liable for a
misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. The number of votes you are
entitled to is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which chooses their investments and handles
their business affairs. Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, and Fidelity Management & Research (Far East)
Inc. (FMR Far East), in Tokyo, Japan, assist FMR with foreign investments.
Bradford Lewis is manager and vice president of Small Cap Stock, which he
has managed since June 1993. Mr. Lewis also manages Disciplined Equity and
Stock Selector as well as portfolios for Fidelity Investments Canada.
Previously, he managed Select Air Transportation, Select Defense and
Aerospace, and Select Medical Delivery. Mr. Lewis joined Fidelity in 1985.
Jennifer Uhrig manages Mid-Cap Stock, which she has managed since March
1994. Previously, Ms. Uhrig managed Select Retaili ng , Select
Developing Communication s , and Select Telecommunications. Ms. Uhrig
joined Fidelity in 1987.
Thomas Sprague is manager of Large Cap Stock, which he has managed since
March 1996. He also manages Advisor Large Cap Stock. Previously, he managed
Select Environmental Services, Select Electronics, Select Software and
Computer Services, and accounts for Fidelity Management Trust Company. Mr.
Sprague joined Fidelity in 1989.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Service Co. (FSC) performs transfer agent
servicing functions for the funds.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant owners
of a class of shares of common stock representing approximately 49% of the
voting power of FMR Corp. Under the Investment Company Act of 1940 (the
1940 Act), control of a company is presumed where one individual or group
of individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
FMR may use its broker-dealer affiliates and other firms that sell fund
shares to carry out a fund's transactions, provided that the fund receives
brokerage services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
EACH FUND'S INVESTMENT APPROACH
SMALL CAP STOCK seeks capital appreciation by investing primarily in equity
securities of companies that have small market capitalizations. FMR
normally invests at least 65% of the fund's total assets in these
securities. The fund has the flexibility, however, to invest the balance in
other market capitalizations and security types.
Small market capitalization companies are those with market capitalizations
of $ 1 billion or less at the time of the fund's investment.
Companies whose capitalization falls outside this range after purchase
continue to be considered small-capitalized for purposes of the 65% policy.
In selecting the fund's investments, FMR uses a disciplined approach which
involves computer-aided quantitative analysis supported by fundamental
research. FMR's computer model systematically reviews thousands of stocks,
using historical earnings, dividend yield, earnings per share, and many
other factors. Then, potential investments are analyzed further using
fundamental criteria, such as a company's growth potential and estimates of
current earnings.
Investing in small capitalization stocks may involve greater risk than
investing in medium and large capitalization stocks, since they can be
subject to more abrupt or erratic movements. Small capitalization companies
may have more limited product lines, markets, or financial resources.
MID-CAP STOCK seeks long-term growth of capital by investing primarily in
equity securities of companies with medium market capitalizations. FMR
normally invests at least 65% of the fund's total assets in these
securities. The fund has the flexibility, however, to invest the balance in
other market capitalizations and security types.
Medium market capitalization companies are those whose market
capitalization falls within the capitalization range of the S&P MidCap 400
at the time of the fund's investment. Companies whose capitalization falls
outside this range after purchase continue to be considered
medium-capitalized for purposes of the 65% policy. As of April 30, 1996,
the S&P MidCap 400 included companies with capitalizations of between
$ 158 million and $ 6.6 billion.
Investing in medium capitalization stocks may involve greater risk than
investing in large capitalization stocks, since they can be subject to more
abrupt or erratic movements. However, they tend to involve less risk than
stocks of small capitalization companies.
LARGE CAP STOCK seeks long-term growth of capital by investing primarily in
equity securities of companies with large market capitalizations. FMR
normally invests at least 65% of the fund's total assets in these
securities. The fund has the flexibility, however, to invest the balance in
other market capitalizations and security types.
FMR defines large market capitalization companies as those with market
capitalizations of $1 billion or more at the time of the fund's investment.
Companies whose capitalization falls below this level after purchase
continue to be considered large-capitalized for purposes of the 65% policy.
Companies with large market capitalizations typically have a large number
of publicly held shares and a high trading volume, resulting in a high
degree of liquidity. These tend to be quality companies with strong
management organizations. However, large capitalization companies may have
less growth potential than smaller companies and may be able to react less
quickly to changes in the marketplace.
The value of the funds' domestic and foreign investments varies in response
to many factors. Stock values fluctuate in response to the activities of
individual companies, and general market and economic conditions.
Investments in foreign securities may involve risks in addition to those of
U.S. investments, including increased political and economic risk, as well
as exposure to currency fluctuations.
FMR may use various investment techniques to hedge a portion of the funds'
risks, but there is no guarantee that these strategies will work as FMR
intends. Also, as mutual funds, each fund seeks to spread investment risk
by diversifying its holdings among many companies and industries. Of
course, when you sell your shares of a fund, they may be worth more or less
than what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy. Each fund also reserves the right to invest without limitation in
preferred stocks and investment-grade debt instruments for temporary,
defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about fund investments are contained in the funds' SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Fund holdings and recent investment strategies are detailed in each fund's
financial reports, which are sent to shareholders twice a year. For a free
SAI or financial report, call 1-800-544-8888.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity securities
have a history of long-term growth in value, their prices fluctuate based
on changes in a company's financial condition and on overall market and
economic conditions. Smaller companies are especially sensitive to these
factors.
RESTRICTIONS: With respect to 75% of total assets, a fund may not
purchase more than 10% of the outstanding voting securities of a single
issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Investment-grade debt securities are medium- and high-quality securities.
Some, however, may possess speculative characteristics and may be more
sensitive to economic changes and to changes in the financial condition of
issuers.
Lower-quality debt securities (sometimes called "junk bonds") are
considered to have speculative characteristics, and involve greater risk of
default or price changes due to changes in the issuer's creditworthiness,
or they may already be in default. The market prices of these securities
may fluctuate more than higher-quality securities and may decline
significantly in periods of general economic difficulty.
The table on page provides a summary of ratings assigned to debt holdings
(not including money market instruments) in Mid-Cap Stock's portfolio.
Because Large Cap Stock had not been in operation for a full fiscal year as
of April 30, 1996, its debt holding table is not included. These figures
are dollar-weighted averages of month-end portfolio holdings during the
fiscal period ended April 30, 1996, and are presented as a percentage of
total security investments. These percentages are historical and do not
necessarily indicate the fund's current or future debt holdings.
MID-CAP STOCK
Fiscal 1996 Debt Holdings, by Rating MOODY'S
INVESTORS SERVICE, INC. STANDARD & POOR'S
(AS A % OF INVESTMENTS) (AS A % OF
INVESTMENTS)
Rating Average A Rating Average
A
INVESTMENT GRADE
Highest quality Aaa 1.81 % AAA 1.81 %
High quality Aa -- AA --
Upper-medium grade A -- A --
Medium grade Baa -- BBB --
LOWER QUALITY
Moderately speculative Ba -- BB --
Speculative B -- B --
Highly speculative Caa -- CCC --
Poor quality Ca -- CC --
Lowest quality, no interest C -- C
In default, in arrears -- D --
1.81 % 1.81 %
(AS A % OF INVESTMENTS)
SECURITIES NOT RATED BY MOODY'S OR S&P (dagger)
Investment Grade (double dagger) --
Lower Quality (double dagger) --
Total --
A FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR ASSIGNS THE RATINGS OF
THE
SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
(dagger) THE DOLLAR-WEIGHTED AVERAGE PERCENTAGES REFLECTED IN THE TABLE MAY
INCLUDE SECURITIES RATED BY NATIONALLY RECOGNIZED RATING SERVICES, AS WELL
AS UNRATED SECURITIES.
(double dagger) AS DETERMINED BY FMR
RESTRICTIONS: Purchase of a debt security is consistent with a fund's debt
quality policy if it is rated at or above the stated level by Moody's or
rated in the equivalent categories by S&P, or is unrated but judged to be
of equivalent quality by FMR. Small Cap Stock currently intends to limit
its investments in lower than Baa-quality debt securities to 5% of its
assets. Mid-Cap Stock and Large Cap Stock currently intend to limit their
investments in lower than Baa-quality debt securities to less than 35% of
their assets.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign debt securities may be unwilling to repay
principal and interest when due and may require that the conditions for
payment be renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile than U.S.
investments.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of a fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for a fund, or there may be a requirement
that the fund supply additional cash to a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities and some other securities may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
OTHER INSTRUMENTS may include securities of closed-end investment companies
and real estate-related investments.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, a fund may not invest
more than 5% of its total assets in any one issuer. A fund may not invest
more than 25% of its total assets in any one industry. These limitations do
not apply to U.S. Government securities.
BORROWING. A fund may borrow from banks or from other funds advised
by FMR, or through reverse repurchase agreements. If a fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If a fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a means of earning
income. This practice could result in a loss or a delay in recovering a
fund's securities. A fund may also lend money to other funds advised by
FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
FIDELITY SMALL CAP STOCK seeks capital appreciation.
FIDELITY MID-CAP STOCK seeks long-term growth of capital.
FIDELITY LARGE CAP STOCK seeks long-term growth of capital.
EACH FUND, with respect to 75% of total assets, may not invest more than 5%
of its total assets in any one issuer and may not own more than 10% of the
outstanding voting securities of a single issuer. Each fund may not invest
more than 25% of its total assets in any one industry. Each fund may borrow
only for temporary or emergency purposes, but not in an amount exceeding
33% of its total assets. Loans, in the aggregate, may not exceed 33% of a
fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained on page .
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The amount of
the fee is determined by taking a BASIC FEE and then applying a PERFORMANCE
ADJUSTMENT. The performance adjustment either increases or decreases the
management fee, depending on how well a fund has performed relative to its
comparative index.
Manage = Ba +/- Performa
ment sic nce
fee fee adjustme
nt
THE BASIC FEE (calculated monthly) is calculated by adding a group fee rate
to an individual fund fee rate, and multiplying the result by a fund's
average net assets. The group fee rate is based on the average net assets
of all the mutual funds advised by FMR. This rate cannot rise above .52%,
and it drops as total assets under management increase.
For April 1996, the group fee rate was .3066 %. The individual fund
fee rate is .35% for Small Cap Stock, .30% for Mid-Cap Stock , and
.30% for Large Cap Stock. The basic fee rate for fiscal 1996 was
.66 % for Small Cap Stock, .61 % for Mid-Cap Stock , and
.62 % (annualized) for Large Cap Stock.
THE PERFORMANCE ADJUSTMENT rate is calculated monthly by comparing each
fund's performance to that of the Russell 2000 for Small Cap Stock, the S&P
MidCap 400 for Mid-Cap Stock, and the S&P 500 for Large Cap Stock over the
most recent 36-month period. For Large Cap Stock, the performance period
began on July 1, 1995 and will eventually span 36 months, but the
performance adjustment did not take effect until June 1, 1996. The
difference is translated into a dollar amount that is added to or
subtracted from the basic fee. The maximum annualized performance
adjustment rate is ".20%.
The total management fee rate for fiscal 1996 was .58 % for Small Cap
Stock, .68 % for Mid-Cap Stock , and .62 % (annualized)
for Large Cap Stock.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on issuers
based outside the United States. Under the sub-advisory agreements, FMR
pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively,
of the costs of providing these services.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K. and FMR Far East a fee equal to 50% of its
management fee rate with respect to a fund's investments that the
sub-adviser manages on a discretionary basis.
UNDERSTANDING THE
MANAGEMENT FEE
The basic fee FMR receives
is designed to be responsive
to changes in FMR's total
assets under management.
Building this variable into the
fee calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
Another variable, the
performance adjustment,
rewards FMR when the fund
outperforms the Russell 2000
Index established index of
stock market performance
and reduces FMR's fee when
the fund underperforms this
index.
(checkmark)
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
The funds contract with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing each fund's investments, and handling securities loans. In fiscal
1996, Small Cap Stock , Mid-Cap Stock, and Large Cap Stock paid FSC fees
equal to .39%, .28%, and .38 % (annualized), respectively, of
their average net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity. A broker-dealer may use a portion of the
commissions paid by a fund to reduce the fund's custodian or transfer agent
fees.
Mid-Cap Stock and Large Cap Stock have each adopted a Distribution and
Service Plan. These plans recognize that FMR may use its resources,
including management fees, to pay expenses associated with the sale of fund
shares. This may include payments to third parties, such as banks or
broker-dealers, that provide shareholder support services or engage in the
sale of fund shares. It is important to note, however, that the funds do
not pay FMR any separate fees for this service.
For fiscal 1996, the portfolio turnover rates for Small Cap Stock,
Mid-Cap Stock , and Large Cap Stock were 192 %, 179 %,
and 155 % (annualized), respectively. These rates vary from year to
year. High turnover rates increase transaction costs and may increase
taxable capital gains. FMR considers these effects when evaluating the
anticipated benefits of short-term investing.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, FBSI. Fidelity is also a leader
in providing tax-sheltered retirement plans for individuals investing on
their own or through their employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(small solid bullet) For mutual funds, 1-800-544-8888
(small solid bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 80 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed in the table at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers a fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(solid bullet) Number of Fidelity mutual
funds: over 215
(solid bullet) Assets in Fidelity mutual
funds: over $ 386 billion
(solid bullet) Number of shareholder
accounts: over 26 million
(solid bullet) Number of investment
analysts and portfolio
managers: over 225
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION
PLANS allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(solid bullet) 401(K) PROGRAMS allow employees of corporations of all sizes
to contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
ONCE EACH BUSINESS DAY, TWO SHARE PRICES ARE CALCULATED FOR SMALL
CAP STOCK: the offering price and the net asset value (NAV). If you
qualify for a sales charge waiver when purchasing shares of Small Cap Stock
as described on page , your share price will be the NAV. If you pay a sales
charge as described on page , your share price will be the offering price.
When you buy shares of Small Cap Stock at the offering price, Fidelity
deducts the appropriate sales charge and invests the rest in the fund.
Shares of Mid-Cap Stock and Large Cap Stock are sold without a sales
charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail in an application with a check, or
(small solid bullet) Open your account by exchanging from another Fidelity
fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
These minimums may vary for investments through Fidelity Portfolio
Advisory Services. Refer to the program materials for details.
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (small solid bullet) Exchange from another (small solid bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(small solid bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
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Mail (mail_graphic) (small solid bullet) Complete and sign the (small solid bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund.
complete name of the Indicate your fund
fund of your choice. account number on
Mail to the address your check and mail to
indicated on the the address printed on
application. your account statement.
(small solid bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
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In Person (hand_graphic) (small solid bullet) Bring your application (small solid bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
<TABLE>
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Wire (wire_graphic) (small solid bullet) Call 1-800-544-7777 to (small solid bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (small solid bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(small solid bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.
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<TABLE>
<CAPTION>
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Automatically (automatic_graphic) (small solid bullet) Not available. (small solid bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.
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<TABLE>
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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of shares,
(small solid bullet) Your account registration has changed within the last
30 days,
(small solid bullet) The check is being mailed to a different address than
the one on your account (record address),
(small solid bullet) The check is being made payable to someone other than
the account owner, or
(small solid bullet) The redemption proceeds are being transferred to a
Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be redeemed,
and
(small solid bullet) Any other applicable requirements listed in the table
at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
ACCOUNT TYPE SPECIAL REQUIREMENTS
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IF YOU SELL SHARES OF SMALL CAP STOCK AFTER HOLDING THEM LESS THAN 90 DAYS, THE FUND
WILL DEDUCT A REDEMPTION FEE EQUAL TO 0.75% OF THE VALUE OF THOSE SHARES.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (small solid bullet) Maximum check request:
except retirement $100,000.
(small solid bullet) For Money Line transfers to
All account types your bank account; minimum:
$10; maximum: $100,000.
(small solid bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (small solid bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Retirement account names appear on the
account.
(small solid bullet) The account owner should
Trust complete a retirement
distribution form. Call
1-800-544-6666 to request
one.
Business or (small solid bullet) The trustee must sign the
Organization letter indicating capacity as
trustee. If the trustee's name
is not in the account
registration, provide a copy of
the trust document certified
Executor, within the last 60 days.
Administrator, (small solid bullet) At least one person
Conservator, authorized by corporate
Guardian resolution to act on the
account must sign the letter.
(small solid bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(small solid bullet) Call 1-800-544-6666 for
instructions.
Wire (wire_graphic) All account types (small solid bullet) You must sign up for the wire
except retirement feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(small solid bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
</TABLE>
<TABLE>
<CAPTION>
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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(small solid bullet) Confirmation statements (after every transaction,
except reinvestments, that affects your account balance or your account
registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more than
one account in a fund. Call 1-800-544-6666 if you need copies of
financial reports, prospectuses, or historical account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing. The shares you exchange will
carry credit for any sales charge you previously paid in connection with
their purchase.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from your
account. Because of Small Cap Stock's sales charge, you may not want to set
up a systematic withdrawal plan during a period when you are buying shares
on a regular basis.
FIDELITY MONEY LINE(registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (small solid bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(small solid bullet) For existing accounts, call
1-800-544-6666 for an application.
(small solid bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.
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<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (small solid bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(small solid bullet) Changes require a new authorization
form.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (small solid bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (small solid bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.
</TABLE>
A BECAUSE THEIR SHARE PRICES FLUCTUATE, THESE FUNDS MAY NOT BE APPROPRIATE
CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital gains
to shareholders each year. Normally, dividends and capital gains are
distributed in June and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
SHARES PURCHASED THROUGH REINVESTMENT of dividend and capital gain
distributions are not subject to Small Cap Stock's 3% sales charge.
Likewise, if you direct distributions from Small Cap Stock to a fund with a
sales charge, you will not pay a sales charge on those purchases.
When a fund deducts a distribution from its NAV, the reinvestment price is
the fund's NAV at the close of business that day. Cash distribution checks
will be mailed within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns dividends
from stocks and interest from
bond, money market, and
other investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund
realizes capital gains
whenever it sells securities
for a higher price than it paid
for them. These are passed
along as CAPITAL GAIN
DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a fund and
its investments and these taxes generally will reduce the fund's
distributions. However, an offsetting tax credit or deduction may be
available to you. If so, your tax statement will show more taxable income
or capital gains than were actually distributed by the fund, but will also
show the amount of the available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV and offering price as
of the close of business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency
into U.S. dollars using current exchange rates. If quotations are not
readily available, or if the values have been materially affected by events
occurring after the closing of a foreign market, assets are valued by a
method that the Board of Trustees believes accurately reflects fair value.
THE OFFERING PRICE (price to buy one share) is the fund's NAV
divided by the result of one minus the applicable sales charge percentage,
if any. Small Cap Stock has a maximum sales charge of 3% of the offering
price. The REDEMPTION PRICE (price to sell one share) is the fund's
NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does not
follow reasonable procedures designed to verify the identity of the caller.
Fidelity will request personalized security codes or other information, and
may also record calls. You should verify the accuracy of your confirmation
statements immediately after you receive them. If you do not want the
ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
cancelled and you could be liable for any losses or fees a fund or its
transfer agent has incurred.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY SHARES OF THE FUNDS (AT THE OFFERING PRICE) OR SELL THEM
THROUGH AN INVESTMENT PROFESSIONAL, INCLUDING A BROKER, who may charge
you a transaction fee for this service. If you invest through an investment
professional, read your investment professional's program materials for any
additional service features or fees that may apply. Certain features of the
fund, such as the minimum initial or subsequent investment amounts, may be
modified.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when a fund is priced on the
following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(small solid bullet) Normally, redemption proceeds will be mailed to you on
the next business day, but if making immediate payment could adversely
affect a fund, it may take up to seven days to pay you.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day after
your phone call.
(small solid bullet) Each fund may hold payment on redemptions until it is
reasonably satisfied that investments made by check or Fidelity Money Line
have been collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays), when
trading on the NYSE is restricted, or as permitted by the SEC.
THE REDEMPTION FEE for Small Cap Stock, if applicable, will be
deducted from the amount of your redemption. This fee is paid to the fund
rather than FMR, and it does not apply to shares that were acquired through
reinvestment of distributions. If shares you are redeeming were not all
held for the same length of time, those shares you held longest will be
redeemed first for purposes of determining whether the fee applies.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of $12.00
from accounts with a value of less than $2,500 (including any amount paid
as a sales charge), subject to an annual maximum charge of $60.00 per
shareholder. It is expected that accounts will be valued on the second
Friday in November of each year. Accounts opened after September 30 will
not be subject to the fee for that year. The fee, which is payable to the
transfer agent, is designed to offset in part the relatively higher costs
of servicing smaller accounts. The fee will not be deducted from retirement
accounts (except non-prototype retirement accounts), accounts using regular
investment plans, or if total assets in Fidelity funds exceed $50,000.
Eligibility for the $50,000 waiver is determined by aggregating Fidelity
mutual fund accounts maintained by FSC or FBSI which are registered under
the same social security number or which list the same social security
number for the custodian of a Uniform Gifts/Transfers to Minors Act
account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC collects the proceeds from Small Cap Stock's 3% sales charge and may
pay a portion of them to securities dealers who have sold the fund's
shares, or to others, including banks and other financial institutions
(qualified recipients), under special arrangements in connection with FDC's
sales activities. The sales charge paid to qualified recipients is 2.25% of
the fund's offering price.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. In some instances, these incentives may be
offered only to certain institutions whose representatives provide services
in connection with the sale or expected sale of significant amounts of
shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) If you exchange into a fund with a sales charge, you
pay the percentage-point difference between that fund's sales charge and
any sales charge you have previously paid in connection with the shares you
are exchanging. For example, if you had already paid a sales charge of 2%
on your shares and you exchange them into a fund with a 3% sales charge,
you would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund performance
and shareholders, each fund reserves the right to temporarily or
permanently terminate the exchange privilege of any investor who makes more
than four exchanges out of the fund per calendar year. Accounts under
common ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(small solid bullet) The exchange limit may be modified for accounts in
certain institutional retirement plans to conform to plan exchange limits
and Department of Labor regulations. See your plan materials for further
information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCTIONS. Small Cap Stock's sales charge may be reduced if you invest
directly with Fidelity or through prototype or prototype-like retirement
plans sponsored by FMR or FMR Corp. The amount you invest, plus the value
of your account, must fall within the ranges shown below. However,
purchases made with assistance or intervention from a financial
intermediary are not eligible. Call Fidelity to see if your purchase
qualifies.
Sales Charge
Ranges As a % of Offering Price As an approximate % of
net amount invested
$0 - 249,999 3% 3.09%
$250,000 - 499,999 2% 2.04%
$500,000 - 999,999 1% 1.01%
$1,000,000 or more none none
The sales charge will also be reduced by the percentage of any sales charge
you previously paid on investments in other Fidelity funds (not including
Fidelity's Foreign Currency Funds). Similarly, your shares carry credit for
any sales charge you would have paid if the reductions in the table above
had not existed. These sales charge credits only apply to purchases made in
one of the ways listed below, and only if you continuously owned Fidelity
fund shares or a Fidelity brokerage core account, or participated in The
CORPORATEplan for Retirement Program.
1. By exchange from another Fidelity fund.
2. With proceeds of a transaction within a Fidelity brokerage core account,
including any free credit balance, core money market fund, or margin
availability, to the extent such proceeds were derived from redemption
proceeds from another Fidelity fund.
3. With redemption proceeds from one of Fidelity's Foreign Currency
Portfolios, if the Foreign Currency Portfolio shares were originally
purchased with redemption proceeds from a Fidelity fund.
4. Through the Directed Dividends Option (see page ).
5. By participants in The CORPORATEplan for Retirement Program when shares
are purchased through plan-qualified loan repayments, and for exchanges
into and out of the Managed Income Portfolio.
WAIVERS. Small Cap Stock's sales charge will not apply:
1. If you buy shares as part of an employee benefit plan having more than
200 eligible employees or a minimum of $3 million in plan assets invested
in Fidelity mutual funds.
2. To shares in a Fidelity Rollover IRA account purchased with the proceeds
of a distribution from an employee benefit plan, provided that at the time
of the distribution, the employer or its affiliate maintained a plan that
both qualified for waiver (1) above and had at least some of its assets
invested in Fidelity-managed products.
3. If you are a charitable organization (as defined in Section 501(c)(3) of
the Internal Revenue Code) investing $100,000 or more.
4. If you purchase shares for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as defined
by Section 501(c)(3) of the Internal Revenue Code).
5. If you are an investor participating in the Fidelity Trust Portfolios
program.
6. To shares purchased through Portfolio Advisory Services or Fidelity
Charitable Advisory Services .
7. To shares purchased by a mutual fund for which FMR or an affiliate
serves as investment advisor.
8. If you are a current or former trustee or officer of a Fidelity fund
or a current or retired officer, director, or regular employee of FMR Corp.
or its direct or indirect subsidiaries (a Fidelity trustee or employee),
the spouse of a Fidelity trustee or employee, a Fidelity trustee or
employee acting as custodian for a minor child, or a person acting as
trustee of a trust for the sole benefit of the minor child of a Fidelity
trustee or employee.
9. If you are a bank trust officer, registered representative, or
other employee of a qualified recipient, as defined on page .
10. To contributions and exchanges to a prototype or prototype-like
retirement plan sponsored by FMR Corp. or FMR and which is marketed and
distributed directly to plan sponsors or participants without any
assistance or intervention from any intermediary distribution channel.
11. If you invest through a non-prototype pension or profit-sharing
plan that maintains all of its mutual fund assets in Fidelity mutual funds,
provided the plan executes a Fidelity non-prototype sales charge waiver
request form confirming its qualification.
12. If you are a registered investment adviser (RIA) purchasing for
your discretionary accounts, provided you execute a Fidelity RIA load
waiver agreement which specifies certain aggregate minimum and operating
provisions. Except for correspondents of National Financial Services
Corporation, this waiver is available only for shares purchased directly
from Fidelity, and is unavailable if the RIA is part of an organization
principally engaged in the brokerage business.
13. If you are a trust institution or bank trust department
purchasing for your non-discretionary, non-retirement fiduciary accounts,
provided you execute a Fidelity Trust load waiver agreement which specifies
certain aggregate minimum and operating provisions. This waiver is
available only for shares purchased either directly from Fidelity or
through a bank-affiliated broker, and is unavailable if the trust
department or institution is part of an organization not principally
engaged in banking or trust activities.
These waivers must be qualified through FDC in advance. More detailed
information about waivers (1), (2), (5), ( 10 ), and ( 12 ) is
contained in the Statement of Additional Information. A representative of
your plan or organization should call Fidelity for more information.
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY SMALL CAP STOCK FUND
FIDELITY LARGE CAP STOCK FUND
FUNDS OF FIDELITY COMMONWEALTH TRUST
FIDELITY MID-CAP STOCK FUND
A FUND OF FIDELITY DEVONSHIRE TRUST
STATEMENT OF ADDITIONAL INFORMATION
JUNE 21, 1996
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated June 21, 1996). Please retain this
document for future reference. The funds' financial statements and
financial highlights, included in the Annual Reports for the fiscal year
ended April 30, 1996 are incorporated herein by reference. To obtain an
additional copy of the Prospectus or an Annual Report, please call Fidelity
Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans (Mid-Cap Stock and Large Cap Stock)
Contracts with FMR Affiliates
Description of the Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
SML -ptb- 696
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
Each fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations listed below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF SMALL CAP STOCK FUND
THE FOLLOWING ARE SMALL CAP STOCK FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to purchase interests in real estate
investment trusts that are not readily marketable or interests in real
estate limited partnerships that are not listed on an exchange or traded on
the NASDAQ National Market System if, as a result, the sum of such
interests and other investments considered illiquid under limitation (iv)
would exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (viii), pass-through entities and other
special purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
INVESTMENT LIMITATIONS OF MID-CAP STOCK FUND
THE FOLLOWING ARE MID-CAP STOCK FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
investment objectives, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to purchase interests in real estate
investment trusts that are not readily marketable or interests in real
estate limited partnerships that are not listed on an exchange or traded on
the NASDAQ National Market System if, as a result, the sum of such
interests and other investments considered illiquid under limitation (iv)
would exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Warrants
acquired by the fund in units or attached to securities are not subject to
this restriction.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (viii), pass-through entities and other
special purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
INVESTMENT LIMITATIONS OF LARGE CAP STOCK FUND
THE FOLLOWING ARE LARGE CAP STOCK FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by Fidelity Management &
Research Company or an affiliate or successor with substantially the same
investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to purchase interests in real estate
investment trusts that are not readily marketable or interests in real
estate limited partnerships that are not listed on an exchange or traded on
the NASDAQ National Market System if, as a result, the sum of such
interests and other investments considered illiquid under limitation (iv)
would exceed 10% of the fund's net assets.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Warrants
acquired by the fund in units or attached to securities are not subject to
these restrictions.
(x) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company managed by
Fidelity Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (x), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
For the funds' limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" on page
.
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission (SEC), the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
CLOSED-END INVESTMENT COMPANIES Each fund may purchase the shares
of closed-end investment companies to facilitate investment in certain
countries. Shares of closed-end investment companies may trade at a premium
or a discount to their net asset value.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in foreign currencies and
of dividends and interest paid with respect to such securities will
fluctuate based on the relative strength of the U.S. dollar.
Foreign investments involve a risk of local political, economic, or social
instability, military action or unrest, or adverse diplomatic developments,
and may be affected by actions of foreign governments adverse to the
interests of U.S. investors. Such actions may include the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
is no assurance that FMR will be able to anticipate these potential events
or counter their effects. These risks are magnified for investments in
developing countries, which may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade
a small number of securities.
Economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the United States. Foreign
markets may offer less protection to investors than U.S. markets. It is
anticipated that in most cases the best available market for foreign
securities will be on an exchange or in over-the-counter markets located
outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where fund assets may be
released prior to receipt of payment, may result in increased risk in the
event of a failed trade or the insolvency of a foreign broker-dealer, and
may involve substantial delays. In addition, the costs of foreign
investing, including withholding taxes, brokerage commissions and custodial
costs, are generally higher than for U.S. investors. In general, there is
less overall governmental supervision and regulation of securities
exchanges, brokers, and listed companies than in the United States. It may
also be difficult to enforce legal rights in foreign countries. Foreign
issuers are generally not bound by uniform accounting, auditing, and
financial reporting requirements and standards of practice comparable to
those applicable to U.S. issuers.
Some foreign securities impose restrictions on transfer within the United
States or to U.S. persons. Although securities subject to such transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
American Depository Receipts (ADR's) as well as other "hybrid" forms of
ADRs including European Depository Receipts (EDRs) and Global Depository
Receipts (GDRs), are certificates evidencing ownership of shares of a
foreign issuer. These certificates are issued by depository banks and
generally trade on an established market in the United States or elsewhere.
The underlying shares are held in trust by a custodian bank or similar
financial institution in the issuer's home country. The depository bank may
not have physical custody of the underlying securities at all times and may
charge fees for various services, including forwarding dividends and
interest and corporate actions. ADRs are an alternative to directly
purchasing the underlying foreign securities in their national markets and
currencies. However, ADRs continue to be subject to many of the risks
associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks
of the underlying issuer's country.
FOREIGN CURRENCY TRANSACTIONS. The funds may conduct foreign currency
transactions on a spot (i.e., cash) basis or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. The funds will convert currency on a spot basis from time to time,
and investors should be aware of the costs of currency conversion. Although
foreign exchange dealers generally do not charge a fee for conversion, they
do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a foreign currency to the fund at one rate, while offering a lesser
rate of exchange should the fund desire to resell that currency to the
dealer. Forward contracts are generally traded in an interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange.
Each fund may use currency forward contracts for any purpose consistent
with its investment objective. The following discussion summarizes the
principal currency management strategies involving forward contracts that
could be used by each fund. The funds may also use swap agreements, indexed
securities, and options and futures contracts relating to foreign
currencies for the same purposes.
When a fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
By entering into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency involved in the
underlying security transaction, the fund will be able to protect itself
against an adverse change in foreign currency values between the date the
security is purchased or sold and the date on which payment is made or
received. This technique is sometimes referred to as a "settlement hedge"
or "transaction hedge." The funds may also enter into forward contracts to
purchase or sell a foreign currency in anticipation of future purchases or
sales of securities denominated in foreign currency, even if the specific
investments have not yet been selected by FMR.
The funds may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example,
if a fund owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars
to hedge against possible declines in the pound's value. Such a hedge,
sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes
in security values caused by other factors. A fund could also hedge the
position by selling another currency expected to perform similarly to the
pound sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
Each fund may enter into forward contracts to shift its investment exposure
from one currency into another. This may include shifting exposure from
U.S. dollars to a foreign currency, or from one foreign currency to another
foreign currency. For example, if a fund held investments denominated in
Deutschemarks, the fund could enter into forward contracts to sell
Deutschemarks and purchase Swiss Francs. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to the
currency that is sold, and increase exposure to the currency that is
purchased, much as if the fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the hedged
currency, but will cause the fund to assume the risk of fluctuations in the
value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the funds will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The funds will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of currency management strategies will depend on FMR's skill
in analyzing and predicting currency values. Currency management strategies
may substantially change a fund's investment exposure to changes in
currency exchange rates, and could result in losses to the fund if
currencies do not perform as FMR anticipates. For example, if a currency's
value rose at a time when FMR had hedged a fund by selling that currency in
exchange for dollars, the fund would be unable to participate in the
currency's appreciation. If FMR hedges currency exposure through proxy
hedges, a fund could realize currency losses from the hedge and the
security position at the same time if the two currencies do not move in
tandem. Similarly, if FMR increases a fund's exposure to a foreign
currency, and that currency's value declines, the fund will realize a loss.
There is no assurance that FMR's use of currency management strategies will
be advantageous to the funds or that it will hedge at an appropriate time.
FUNDS' RIGHTS AS A SHAREHOLDER. The funds do not intend to direct or
administer the day-to-day operations of any company. Each fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the fund's investment in the company.
The activities that a fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is increasingly
prone to litigation and it is possible that a fund could be involved in
lawsuits related to such activities. FMR will monitor such activities with
a view to mitigating, to the extent possible, the risk of litigation
against a fund and the risk of actual liability if a fund is involved in
litigation. No guarantee can be made, however, that litigation against a
fund will not be undertaken or liabilities incurred.
FUTURES AND OPTIONS. The following sections pertain to futures and options:
Asset Coverage for Futures and Options Positions, Combined Positions,
Correlation of Price Changes, Futures Contracts, Futures Margin Payments,
Limitations on Futures and Options Transactions, Liquidity of Options and
Futures Contracts, Options and Futures Relating to Foreign Currencies, OTC
Options, Purchasing Put and Call Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of a
fund's assets could impede portfolio management or the fund's ability to
meet redemption requests or other current obligations.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. The funds may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which they typically
invest, which involves a risk that the options or futures position will not
track the performance of a fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's 500 Index
(S&P 500). Futures can be held until their delivery dates, or can be closed
out before then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The funds intend to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the funds can
commit assets to initial margin deposits and option premiums.
In addition, each fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, may be
changed as regulatory agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, a
fund's access to other assets held to cover its options or futures
positions could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
funds may purchase and sell currency futures and may purchase and write
currency options to increase or decrease their exposure to different
foreign currencies. A fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
a fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a
fund against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a fund's foreign-denominated
investments changes in response to many factors other than exchange rates,
it may not be possible to match the amount of currency options and futures
to the value of the fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter (OTC) options (options not
traded on exchanges) generally are established through negotiation with the
other party to the option contract. While this type of arrangement allows
the funds greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund obtains
the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing it out in
the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the
option chooses to exercise it. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the funds to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days, over-the-counter options, and non-government
stripped fixed-rate mortgage-backed securities. Also, FMR may determine
some restricted securities, government-stripped fixed-rate mortgage-backed
securities, loans and other direct debt instruments, emerging market
securities, and swap agreements to be illiquid. However, with respect to
over-the-counter options a fund writes, all or a portion of the value of
the underlying instrument may be illiquid depending on the assets held to
cover the option and the nature and terms of any agreement the fund may
have to close out the option before expiration.
In the absence of market quotations, illiquid investments are priced at
fair value as determined in good faith by a committee appointed by the
Board of Trustees. If through a change in values, net assets, or other
circumstances, a fund were in a position where more than 10% of its net
assets was invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
United States and abroad. At the same time, indexed securities are subject
to the credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates. Recent issuers of indexed securities have included banks,
corporations, and certain U.S. government agencies. Indexed securities may
be more volatile than the underlying instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive order
issued by the SEC, each fund has received permission to lend money to, and
borrow money from, other funds advised by FMR or its affiliates. Interfund
loans and borrowings normally extend overnight, but can have a maximum
duration of seven days. Loans may be called on one day's notice. A fund
will lend through the program only when the returns are higher than those
available from other short-term instruments (such as repurchase
agreements), and will borrow through the program only when the costs are
equal to or lower than the cost of bank loans. A fund may have to borrow
from a bank at a higher interest rate if an interfund loan is called or not
renewed. Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to each fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If a fund does not receive scheduled interest or
principal payments on such indebtedness, the fund's share price and yield
could be adversely affected. Loans that are fully secured offer a fund more
protections than an unsecured loan in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the liquidation
of collateral from a secured loan would satisfy the borrower's obligation,
or that the collateral could be liquidated. Indebtedness of borrowers whose
creditworthiness is poor involves substantially greater risks and may be
highly speculative. Borrowers that are in bankruptcy or restructuring may
never pay off their indebtedness, or may pay only a small fraction of the
amount owed. Direct indebtedness of developing countries also involves a
risk that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal when
due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a fund.
For example, if a loan is foreclosed, the fund could become part owner of
any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, the fund could be held
liable as a co-lender. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary. Direct debt
instruments that are not in the form of securities may offer less legal
protection to a fund in the event of fraud or misrepresentation. In the
absence of definitive regulatory guidance, each fund relies on FMR's
research in an attempt to avoid situations where fraud or misrepresentation
could adversely affect the fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, each fund has direct recourse against the borrower, it
may have to rely on the agent to apply appropriate credit remedies against
a borrower. If assets held by the agent for the benefit of a fund were
determined to be subject to the claims of the agent's general creditors,
the fund might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by each fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring the fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be repaid.
Each fund will set aside appropriate liquid assets in a segregated
custodial account to cover its potential obligations under standby
financing commitments.
Each fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations 1 and 5 for
each fund). For purposes of these limitations, each fund generally will
treat the borrower as the "issuer" of indebtedness held by the fund. In the
case of loan participations where a bank or other lending institution
serves as financial intermediary between each fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict a fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
LOWER-QUALITY DEBT SECURITIES. While the market for high-yield corporate
debt securities has been in existence for many years and has weathered
previous economic downturns, the 1980s brought a dramatic increase in the
use of such securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
the future performance of the high-yield bond market, especially during
periods of economic recession.
The market for lower-quality debt securities may be thinner and less active
than that for higher-quality debt securities, which can adversely affect
the prices at which the former are sold. If market quotations are not
available, lower-quality debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-quality debt
securities and a fund's ability to dispose of these securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by a fund. In considering investments
for the fund, FMR will attempt to identify those issuers of high-yielding
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the fund's shareholders.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such
as real estate values and property taxes, interest rates, cash flow of
underlying real estate assets, overbuilding, and the management skill and
creditworthiness of the issuer. Real estate-related instruments may also be
affected by tax and regulatory requirements, such as those relating to the
environment.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
that the value of the underlying security will be less than the resale
price, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. A
fund will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of the fund's assets and may be
viewed as a form of leverage.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may be
delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which a fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SHORT SALES "AGAINST THE BOX." If a fund enters into a short sale against
the box, it will be required to set aside securities equivalent in kind and
amount to the securities sold short (or securities convertible or
exchangeable into such securities) and will be required to hold such
securities while the short sale is outstanding. The fund will incur
transaction costs, including interest expenses, in connection with opening,
maintaining, and closing short sales against the box.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long- or
short-term interest rates (in the United States or abroad), foreign
currency values, mortgage securities, corporate borrowing rates, or other
factors such as security prices or inflation rates. Swap agreements can
take many different forms and are known by a variety of names. A fund is
not limited to any particular form of swap agreement if FMR determines it
is consistent with the fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if the fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a fund's investments and its share price.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from a fund. If a swap
agreement calls for payments by the fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's creditworthiness
declined, the value of a swap agreement would be likely to decline,
potentially resulting in losses. Each fund expects to be able to eliminate
its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
Each fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If a fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If a fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the fund's accrued obligations under the
agreement.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in the
management contract. If FMR grants investment management authority to the
sub-advisers (see the section entitled "Management Contracts"), the
sub-advisers are authorized to place orders for the purchase and sale of
portfolio securities, and will do so in accordance with the policies
described below. FMR is also responsible for the placement of transaction
orders for other investment companies and accounts for which it or its
affiliates act as investment adviser. In selecting broker-dealers, subject
to applicable limitations of the federal securities laws, FMR considers
various relevant factors, including, but not limited to: the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions; and arrangements for payment of fund
expenses. Generally, commissions for investments traded on foreign
exchanges will be higher than for investments traded on U.S. exchanges and
may not be subject to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; and the availability of
securities or the purchasers or sellers of securities. In addition, such
broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
and performance of accounts; effect securities transactions, and perform
functions incidental thereto (such as clearance and settlement). The
selection of such broker-dealers generally is made by FMR (to the extent
possible consistent with execution considerations) in accordance with a
ranking of broker-dealers determined periodically by FMR's investment staff
based upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
each fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services (FBS), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. From September 1992 through December 1994, FBS operated
under the name Fidelity Brokerage Services Limited, Inc. (FBSL). As of
January 1995, FBSL was converted to an unlimited liability company and
assumed the name FBS. Prior to September 4, 1992, FBSL operated under the
name Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary
of Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman
of FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family own, directly or indirectly, more than 25% of
the voting common stock of FIL.
FMR may allocate brokerage transactions to broker-dealers who have entered
into arrangements with FMR under which the broker-dealer allocates a
portion of the commissions paid by each fund toward payment of the fund's
expenses, such as transfer agent fees or custodian fees. The transaction
quality must, however, be comparable to those of other qualified
broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
For the fiscal periods ended April 30, 1996 and 1995, the portfolio
turnover rates were 192 % and 182 %, respectively for Small Cap
Stock and 179 % and 163 %, respectively for Mid-Cap Stock.
Large Cap Stock's annualized portfolio turnover rate for the fiscal period
June 22, 1995 (commencement of operations) through April 30, 1996 was
155 % . Because a high turnover rate increases transaction
costs and may increase taxable gains, FMR carefully weighs the anticipated
benefits of short-term investing against these consequences.
Each fund pays both commissions and spreads in connection with the
placement of portfolio transactions. FBSI is paid on a commission basis.
The table on page lists each fund's total brokerage commissions,
the total commissions and the percentage of brokerage commissions paid to
brokerage firms that provided research services, and the dollar amount of
commissions paid to FBSI during each fund's respective fiscal periods. The
table also lists the percentages of each fund's aggregate brokerage
commissions paid to FBSI during their respective fiscal periods, as well as
the percentages of each fund's aggregate dollar amount of transactions
effected through FBSI during the same periods. The difference between the
percentage of brokerage commissions paid to and the percentage of the
dollar amount of transactions effected through FBSI is a result of the low
commission rates charged by FBSI.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Fiscal Period Total Total % Paid to Commissions % of % of
Ended April 30 Commissions Firms Paid Commissions Transactions
Paid to Firms Providing To FBSI Paid to FBSI Effected
Providing Research Through FBSI
Research
Small Cap Stock
1996 $ 821,475 $ 650,458 79.2 % $ 55,409 6.7 % 7.0 %
1995 1,991,619 1,700,334 85.4 144,241 7.2 7.2
1994* 1,648,301 938,302 57.0 178,800 11.0 7.4
Mid-Cap Stock
1996 2,788,301 2,712,150 97.3 1,000,145 35.9 46.3
1995** 478,966 455,987 95.0 145,249 30.0 43.0
1995*** 251,433 241,388 96.0 123,577 49.0 57.0
Large Cap Stock
1996**** 117,355 73,275 62.4 44,036 37.5 54.5
</TABLE>
* From June 28, 1993 (commencement of operations) to April 30, 1994.
** From February 1, 1995 to April 30, 1995.
*** From March 29, 1994 (commencement of operations) to January 31, 1995.
**** From June 22, 1995 (commencement of operations) to April 30,
1996.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Portfolio securities are valued by various methods depending on the primary
market or exchange on which they trade. Most equity securities for which
the primary market is the U.S. are valued at last sale price or, if no sale
has occurred, at the closing bid price. Most equity securities for which
the primary market is outside the U.S. are valued using the official
closing price or the last sale price in the principal market where they are
traded. If the last sale price (on the local exchange) is unavailable, the
last evaluated quote or last bid price is normally used. Short-term
securities are valued either at amortized cost or at original cost plus
accrued interest, both of which approximate current value. Convertible
securities and fixed-income securities are valued primarily by a pricing
service that uses a vendor security valuation matrix which incorporates
both dealer-supplied valuations and electronic data processing techniques.
This two-fold approach is believed to more accurately reflect fair value
because it takes into account appropriate factors such as institutional
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics, and other market data,
without exclusive reliance upon quoted, exchange, or over-the counter
prices. Use of pricing services has been approved by the Board of Trustees.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as well
as corporate bonds, U.S. government securities, money market instruments,
and repurchase agreements, is substantially completed each day at the close
of the NYSE. The values of any such securities held by a fund are
determined as of such time for the purpose of computing the fund's net
asset value. Foreign security prices are furnished by independent brokers
or quotation services which express the value of securities in their local
currency. FSC gathers all exchange rates daily at the close of the NYSE
using the last quoted price on the local currency and then translates the
value of foreign securities from their local currency into U.S. dollars.
Any changes in the value of forward contracts due to exchange rate
fluctuations and days to maturity are included in the calculation of net
asset value. If an extraordinary event that is expected to materially
affect the value of a portfolio security occurs after the close of an
exchange on which that security is traded, then the security will be valued
as determined in good faith by a committee appointed by the Board of
Trustees.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's share price, yield, and
total return fluctuate in response to market conditions and other factors,
and the value of fund shares when redeemed may be more or less than their
original cost.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's net asset
value (NAV) over a stated period. Average annual total returns are
calculated by determining the growth or decline in value of a hypothetical
historical investment in a fund over a stated period, and then calculating
the annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative total return of 100% over ten years would
produce an average annual total return of 7.18%, which is the steady annual
rate of return that would equal 100% growth on a compounded basis in ten
years. Average annual total returns covering periods of less than one year
are calculated by determining a fund's total return for the period,
extending that return for a full year (assuming that return remains
constant over the year), and quoting the result as an annual return. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis and, for Small Cap Stock, may be quoted with
or without taking the fund's 3% maximum sales charge into account and may
or may not include the effect of the fund's .75% redemption fee on shares
held less than 90 days. Excluding a fund's sales charge or redemption fee
from a total return calculation produces a higher total return figure.
Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by a fund and
reflects all elements of its return. Unless otherwise indicated, a fund's
adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. A fund may illustrate performance using moving averages. A
long-term moving average is the average of each week's adjusted closing NAV
for a specified period. A short-term moving average is the average of each
day's adjusted closing NAV for a specified period. Moving Average Activity
Indicators combine adjusted closing NAVs from the last business day of each
week with moving averages for a specified period to produce indicators
showing when an NAV has crossed, stayed above, or stayed below its moving
average. On April 26, 1996, the 13-week and 39-week long-term moving
averages were $ 12.69 and $12.70, respectively, for Small Cap Stock;
$14.32 and $13.60, respectively, for Mid-Cap Stock; and $11.62 and $11.01,
respectively, for Large Cap Stock.
HISTORICAL FUND RESULTS. The following table shows the funds' total returns
for periods ended April 30, 1996. Total return figures for Small Cap
Stock include the effect of the fund's 3% sales charge, but do not
include the effect of the fund's .75% redemption fee, applicable to
shares held less than 90 days.
SMALL CAP STOCK
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
One Life of One Life of
Year Fund* Year Fund*
31.65 % 13.92 % 31.65 % 44.86 %
</TABLE>
* From June 28, 1993 (commencement of operations).
MID-CAP STOCK
Average Annual Total Returns Cumulative Total Returns
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
One Life of One Life of
Year Fund** Year Fund**
30.84 % 25.02 % 30.84 % 59.57 %
</TABLE>
** From March 29, 1994 (commencement of operations).
LARGE CAP STOCK
Cumulative Total Returns
Life of
Fund***
17.52 %
*** From June 22, 1995 (commencement of operations).
The following tables shows the income and capital elements of each fund's
cumulative total return. The table compares each fund's return to the
record of the Standard and Poor's 500 Index (S&P
500(registered trademark)), the Dow Jones Industrial Average (DJIA), and
the cost of living (measured by the Consumer Price Index, or CPI) over the
same period. The CPI information is as of the month end closest to the
initial investment date for each fund. In addition, Small Cap Stock's table
compares the fund's returns to the Russell 2000 Index (Russell 2000) and
Mid-Cap Stock's table compares the fund's returns to the Standard & Poor's
MidCap 400 Index (S&P MidCap 400(registered trademark)). The S&P 500 and
the DJIA comparisons are provided to show how each fund's total return
compared to the record of a broad average of common stock prices and a
narrower set of stocks of major industrial companies, respectively, over
the same period. Each fund has the ability to invest in securities not
included in either index, and its investment portfolio may or may not be
similar in composition to the indices. Figures for the Russell 2000, S&P
MidCap 400, S&P 500 and DJIA are based on the prices of unmanaged groups of
stocks and, unlike the funds' returns, do not include the effect of paying
brokerage commissions and other costs of investing.
During the period June 28, 1993 (commencement of operations) to April 30,
1996, a hypothetical $10,000 investment in Small Cap Stock would have grown
to $ 14,486 , assuming all distributions were reinvested and including
the effect of the 3% sales charge. This was a period of fluctuating stock
prices and the figures that follow should not be considered representative
of the dividend income or capital gain or loss that could be realized from
an investment in the fund today.
FIDELITY SMALL CAP STOCK FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Period Initial Reinvested Reinvested
Ended $10,000 Dividend Capital Gain Total Russell
April 30 Investment Distributions Distributions Value 2000 S&P 500 DJIA CPI**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $ 13,473 $ 134 $ 879 $ 14,486 $ 15,836 $ 15,749 $ 17,154 $ 10,824
1995 10,602 31 40 10,673 11,908 12,095 13,013 10,519
1994* 10,292 19 39 10,350 11,105 10,297 10,793 10,208
</TABLE>
* From June 28, 1993 (commencement of operations).
** From month-end closest to initial investment.
Explanatory Notes: With an initial investment of $10,000 made on June 28,
1993, the net amount invested in fund shares was $9,700 (assuming the
fund's 3% sales charge). The cost of the initial investment ($10,000),
together with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time they
were reinvested), amounted to $ 10,902 . If distributions had not been
reinvested the amount of distributions earned from the fund over time would
have been smaller and cash payments for the period would have amounted to
$ 107 for dividends and $ 786 for capital gain distributions.
Tax consequences of different investments have not been factored into the
above figures. The figures in the table do not include the effect of the
fund's 0.75% redemption fee applicable to shares held less than 90
days.
During the period March 29, 1994 (commencement of operations) through April
30, 1996, a hypothetical $10,000 investment in Mid-Cap Stock would have
grown to $ 15,957 , assuming all distributions were reinvested. This
was a period of fluctuating stock prices and the figures that follow should
not be considered representative of the dividend income or capital gain or
loss that could be realized from an investment in the fund today.
FIDELITY MID-CAP STOCK FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Period Initial Reinvested Reinvested
Ended $10,000 Dividend Capital Gain Total S&P Mid-
April 30 Investment Distributions Distributions Value Cap 400 S&P 500 DJIA CPI**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $ 14,830 $ 69 $ 1,058 $ 15,957 $ 13,827 $ 15,015 $ 15,592 $ 10,618
1995 12,010 0 186 12,196 10,652 11,531 11,827 10,319
1994* 9,840 0 0 9,840 9,702 9,817 9,810 10,014
</TABLE>
* From March 29, 1994 (commencement of operations).
** From month-end closest to initial investment.
Explanatory Notes: With an initial investment of $10,000 made on March 29,
1994, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 10,961 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 60 for
dividends and $ 880 for capital gain distributions. Tax consequences
of different investments have not been factored into the above figures.
During the period June 22, 1995 (commencement of operations) through
April 30, 1996, a hypothetical $10,000 investment in Large Cap Stock would
have grown to $11,752, assuming all distributions were reinvested. This was
a period of fluctuating stock prices and the figures that follow should not
be considered representative of the dividend income or capital gain or loss
that could be realized from an investment in the fund today.
FIDELITY LARGE CAP STOCK FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Period Initial Reinvested Reinvested
Ended $10,000 Dividend Capital Gain Total
April 30 Investment Distributions Distributions Value S&P 500 DJIA CPI**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1996* $ 11,720 $ 32 $ 0 $ 11,752 $ 12,261 $ 12,486 $ 10,249
</TABLE>
* From June 22, 1995 (commencement of operations).
** From month-end closest to initial investment.
Explanatory Notes: With an initial investment of $10,000 made on June 22,
1995, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to $10,030.
If distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash payments
for the period would have amounted to $30 for dividends and $0 for capital
gain distributions. Tax consequences of different investments have not been
factored into the above figures.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as
mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper),
an independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Lipper rankings are based on total return,
assume reinvestment of distributions, do not take sales charges or
redemption fees into consideration, and are prepared without regard to tax
consequences. In addition to the mutual fund rankings, a fund's
performance may be compared to stock, bond, and money market mutual fund
performance indices prepared by Lipper or other organizations. When
comparing these indices, it is important to remember the risk and return
characteristics of each type of investment. For example, while stock mutual
funds may offer higher potential returns, they also carry the highest
degree of share price volatility. Likewise, money market funds may offer
greater stability of principal, but generally do not offer the higher
potential returns available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include other Fidelity funds; retirement investing;
brokerage products and services; model portfolios or allocations; saving
for college or other goals; charitable giving; and the Fidelity credit
card. In addition, Fidelity may quote or reprint financial or business
publications and periodicals as they relate to current economic and
political conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a particular
mutual fund, and Fidelity services and products. Fidelity may also reprint,
and use as advertising and sales literature, articles from Fidelity
Focus(registered trademark), a quarterly magazine provided free of charge
to Fidelity fund shareholders.
A fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, the fund may compare these
measures to those of other funds. Measures of volatility seek to compare
the fund's historical share price fluctuations or total returns to those of
a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
MOMENTUM INDICATORS indicate a fund's price movements over specific periods
of time. Each point on the momentum indicator represents the fund's
percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of April 30, 1996, FMR advised over $ 25.5 billion in tax-free
fund assets, $ 82 billion in money market fund assets, $ 271
billion in equity fund assets, $ 53 billion in international fund
assets, and $ 23 billion in Spartan fund assets. The funds may
reference the growth and variety of money market mutual funds and the
adviser's innovation and participation in the industry. The equity funds
under management figure represents the largest amount of equity fund assets
under management by a mutual fund investment adviser in the United States,
making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Pursuant to Rule 22d-1 under the Investment Company Act of 1940 (the 1940
Act), FDC exercises its right to waive Small Cap Stock's front-end sales
charge on shares acquired through reinvestment of dividends and capital
gain distributions or in connection with the fund's merger with or
acquisition of any investment company or trust. In addition, FDC has chosen
to waive the fund's sales charge in certain instances because of
efficiencies involved in those sales of shares. The sales charge will not
apply:
(1) to shares purchased in connection with an employee benefit plan
(including the Fidelity-sponsored 403(b) and corporate IRA programs but
otherwise as defined in the Employee Retirement Income Security Act)
maintained by a U.S. employer and having more than 200 eligible employees,
or a minimum of $3,000,000 in plan assets invested in Fidelity mutual
funds, or as part of an employee benefit plan maintained by a U.S. employer
that is a member of a parent-subsidiary group of corporations (within the
meaning of Section 1563(a)(1) of the Internal Revenue Code, with "50%"
substituted for "80%") any member of which maintains an employee benefit
plan having more than 200 eligible employees, or a minimum of $3,000,000 in
plan assets invested in Fidelity mutual funds, or as part of an employee
benefit plan maintained by a non-U.S. employer having 200 or more eligible
employees, or a minimum of $3,000,000 in assets invested in Fidelity mutual
funds, the assets of which are held in a bona fide trust for the exclusive
benefit of employees participating therein;
(2) to shares purchased by an insurance company separate account used to
fund annuity contracts purchased by employee benefit plans (including
403(b) programs, but otherwise as defined in the Employee Retirement Income
Security Act), which, in the aggregate, have either more than 200 eligible
employees or a minimum of $3,000,000 in assets invested in Fidelity funds;
(3) to shares in a Fidelity IRA account purchased (including purchases by
exchange) with the proceeds of a distribution from an employee benefit plan
provided that: (i) at the time of the distribution, the employer, or an
affiliate (as described in exemption (1) above) of such employer,
maintained at least one employee benefit plan that qualified for exemption
(1) and that had at least some portion of its assets invested in one or
more mutual funds advised by FMR, or in one or more accounts or pools
advised by Fidelity Management Trust Company; and (ii) the distribution is
transferred from the plan to a Fidelity Rollover IRA account within 60 days
from the date of the distribution;
(4) to shares purchased by a charitable organization (as defined in Section
501(c)(3) of the Internal Revenue Code) investing $100,000 or more;
(5) to shares purchased for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as defined
by Section 501(c)(3) of the Internal Revenue Code);
(6) to shares purchased by an investor participating in the Fidelity Trust
Portfolios program (these investors must make initial investments of
$100,000 or more in the Trust Portfolios funds and must, during the initial
six-month period, reach and maintain an aggregate balance of at least
$500,000 in all accounts and subaccounts purchased through the Trust
Portfolios program);
(7) to shares purchased through Portfolio Advisory Services or Fidelity
Charitable Advisory Services;
(8) to shares purchased by a mutual fund for which FMR or an affiliate
serve as investment manager;
( 9 ) to shares purchased by a current or former Trustee or officer of
a Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or its direct or indirect subsidiaries (a Fidelity
Trustee or employee), the spouse of a Fidelity Trustee or employee, a
Fidelity Trustee or employee acting as custodian for a minor child, or a
person acting as trustee of a trust for the sole benefit of the minor child
of a Fidelity Trustee or employee;
( 10 ) to shares purchased by a bank trust officer, registered
representative, or other employee of a qualified recipient. Qualified
recipients are securities dealers or other entities, including banks and
other financial institutions, who have sold the fund's shares under special
arrangements in connection with FDC's sales activities;
(1 1 ) to shares purchased by contributions and exchanges to the
following prototype or prototype-like retirement plans sponsored by FMR
Corp. or FMR and that are marketed and distributed directly to plan
sponsors or participants without any intervention or assistance from any
intermediary distribution channel: The Fidelity IRA, the Fidelity Rollover
IRA, The Fidelity SEP-IRA and SARSEP, The Fidelity Retirement Plan,
Fidelity Defined Benefit Plan, The Fidelity Group IRA, The Fidelity 403(b)
Program, The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt
Employers, and The CORPORATEplan for Retirement (Profit Sharing and Money
Purchase Plan);
(1 2 ) to shares purchased as part of a pension or profit-sharing plan
as defined in Section 401(a) of the Internal Revenue Code that maintains
all of its mutual fund assets in Fidelity mutual funds, provided the plan
executes a Fidelity non-prototype sales charge waiver request form
confirming its qualification;
(1 3 ) to shares purchased by a registered investment adviser (RIA)
for his or her discretionary accounts, provided he or she executes a
Fidelity RIA load waiver agreement which specifies certain aggregate
minimum and operating provisions. This waiver is available only for shares
purchased directly from Fidelity, without a broker, unless purchased
through a brokerage firm which is a correspondent of National Financial
Services Corporation (NFSC). The waiver is unavailable, however, if the RIA
is part of an organization principally engaged in the brokerage business,
unless the brokerage firm in the organization is an NFSC correspondent; or
(1 4 ) to shares purchased by a trust institution or bank trust
department for its non-discretionary, non-retirement fiduciary accounts,
provided it executes a Fidelity Trust load waiver agreement which specifies
certain aggregate minimum and operating provisions. This waiver is
available only for shares purchased either directly from Fidelity or
through a bank-affiliated broker, and is unavailable if the trust
department or institution is part of an organization not principally
engaged in banking or trust activities.
Small Cap Stock's sales charge may be reduced to reflect sales charges
previously paid, or that would have been paid absent a reduction for some
purchases made directly with Fidelity as noted in the prospectus, in
connection with investments in other Fidelity funds. This includes
reductions for investments in prototype-like retirement plans sponsored by
FMR or FMR Corp., which are listed above.
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1996: New Year's
Day, Presidents' Day (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Although
FMR expects the same holiday schedule to be observed in the future, the
NYSE may modify its holiday schedule at any time. In addition, the funds
will not process wire purchases and redemptions on days when the Federal
Reserve Wire System is closed.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the Securities and
Exchange Commission (SEC). To the extent that portfolio securities are
traded in other markets on days when the NYSE is closed, a fund's NAV may
be affected on days when investors do not have access to the fund to
purchase or redeem shares. In addition, trading in some of a fund's
portfolio securities may not occur on days when the fund is open for
business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. A portion of each fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that each fund's income is derived from qualifying dividends.
Because each fund may earn other types of income, such as interest, income
from securities loans, non-qualifying dividends, and short-term capital
gains, the percentage of dividends from the fund that qualifies for the
deduction generally will be less than 100%. Each fund will notify corporate
shareholders annually of the percentage of fund dividends that qualifies
for the dividends-received deduction. A portion of each fund's dividends
derived from certain U.S. government obligations may be exempt from state
and local taxation. Gains (losses) attributable to foreign currency
fluctuations are generally taxable as ordinary income, and therefore will
increase (decrease) dividend distributions. Short-term capital gains are
distributed as dividend income. Each fund will send each shareholder a
notice in January describing the tax status of dividends and capital gain
distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by each fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund, and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes. Short-term capital gains distributed by
each fund are taxable to shareholders as dividends, not as capital gains.
As of April 30 , 1996, Small Cap Stock hereby designates
approximately $26,468,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of April 30 , 1996, Mid-Cap Stock hereby designates approximately
$10,398,000 as a capital gain dividend for the purpose of the dividend-paid
deduction.
As of April 30 , 1996, Large Cap Stock hereby designates
approximately $604,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total assets are invested in securities of foreign issuers, the fund may
elect to pass through foreign taxes paid and thereby allow shareholders to
take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis. Each fund intends to comply with other tax rules
applicable to regulated investment companies, including a requirement that
capital gains from the sale of securities held less than three months
constitute less than 30% of the fund's gross income for each fiscal year.
Gains from some forward currency contracts, futures contracts, and options
are included in this 30% calculation, which may limit a fund's investments
in such instruments.
If a fund purchases shares in certain foreign investment entities, defined
as passive foreign investment companies (PFICs) in the Internal Revenue
Code, it may be subject to U.S. federal income tax on a portion of any
excess distribution or gain from the disposition of such shares. Interest
charges may also be imposed on a fund with respect to deferred taxes
arising from such distributions or gains. Generally, each fund will elect
to mark-to-market any PFIC shares. Unrealized gains will be recognized as
income for tax purposes and must be distributed to shareholders as
dividends.
For tax purposes, Small Cap Stock, Mid-Cap Stock, and Large Cap Stock are
treated as separate entities from the other funds of their trusts. Small
Cap Stock and Large Cap Stock are funds of Fidelity Commonwealth Trust and
Mid-Cap Stock is a fund of Fidelity Devonshire Trust.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the Investment Company Act of 1940 (1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company.
Therefore, through their ownership of voting common stock and the execution
of the shareholders' voting agreement, members of the Johnson family may be
deemed, under the 1940 Act, to form a controlling group with respect to FMR
Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
Fidelity Investments Institutional Operations Company, which performs
shareholder servicing functions for institutional customers and funds sold
through intermediaries; and Fidelity Investments Retail Marketing Company,
which provides marketing services to various companies within the Fidelity
organization.
Fidelity investment personnel may invest in securities for their own
account s pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees , Members of the Advisory Board, and executive officers
of each trust are listed below. Except as indicated, each individual
has held the office shown or other offices in the same company for the last
five years. All persons named as Trustees and Members of the Advisory
Board also serve in similar capacities for other funds advised by FMR.
The business address of each Trustee and officer who is an "interested
person" (as defined in the 1940 Act ) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The business
address of all the other Trustees and Members of the Advisory Board
is Fidelity Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235.
Those Trustees who are "interested persons" by virtue of their affiliation
with either the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (65), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (54), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (63), Trustee (1991), is a consultant to Western Mining
Corporation (1994). Prior to February 1994, he was President of Greenhill
Petroleum Corporation (petroleum exploration and production). Until March
1990, Mr. Cox was President and Chief Operating Officer of Union Pacific
Resources Company (exploration and production). He is a Director of
Sanifill Corporation (non-hazardous waste, 1993) and CH2M Hill Companies
(engineering). In addition, he serves on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (64), Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of BellSouth
Corporation (telecommunications), Eaton Corporation (manufacturing, 1991),
and the TJX Companies, Inc. (retail stores), and she previously served as a
Director of Hallmark Cards, Inc. (1985-1991) and Nabisco Brands, Inc. In
addition, she is a member of the President's Advisory Council of The
University of Vermont School of Business Administration.
RICHARD J. FLYNN (72), Trustee and Chairman of the non-interested
Trustees, is a financial consultant. Prior to September 1986, Mr. Flynn
was Vice Chairman and a Director of the Norton Company (manufacturer of
industrial devices). He is currently a Trustee of College of the Holy Cross
and Old Sturbridge Village, Inc., and he previously served as a Director of
Mechanics Bank (1971-1995).
E. BRADLEY JONES (68), Trustee. Prior to his retirement in 1984, Mr. Jones
was Chairman and Chief Executive Officer of LTV Steel Company. He is a
Director of TRW Inc. (original equipment and replacement products),
Cleveland-Cliffs Inc. (mining), Consolidated Rail Corporation, Birmingham
Steel Corporation, and RPM, Inc. (manufacturer of chemical products), and
he previously served as a Director of NACCO Industries, Inc. (mining and
marketing, 1985-1995) and Hyster-Yale Materials Handling, Inc.(1985-1995).
In addition, he serves as a Trustee of First Union Real Estate Investments,
a Trustee and member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (63), Trustee, is Executive-in-Residence (1995) at Columbia
University Graduate School of Business and a financial consultant. From
1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Chairman of the Board of Directors of the National
Arts Stabilization Fund, Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, a Member of the Public Oversight Board of
the American Institute of Certified Public Accountants' SEC Practice
Section (1995), and as a Public Governor of the National Association of
Securities Dealers, Inc. (1996).
*PETER S. LYNCH (53), Trustee, is Vice Chairman of FMR (1992). Prior to May
31, 1990, he was a Director of FMR and Executive Vice President of FMR (a
position he held until March 31, 1991); Vice President of Fidelity Magellan
Fund and FMR Growth Group Leader; and Managing Director of FMR Corp. Mr.
Lynch was also Vice President of Fidelity Investments Corporate Services
(1991-1992). He is a Director of W.R. Grace & Co. (chemicals) and Morrison
Knudsen Corporation (engineering and construction). In addition, he serves
as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic
Deerfield and Society for the Preservation of New England Antiquities, and
as an Overseer of the Museum of Fine Arts of Boston.
GERALD C. McDONOUGH (66), Trustee and Vice-Chairman of the
non-interested Trustees, is Chairman of G.M. Manag ement Group
(strategic advisory services). Prior to his retirement in July 1988, he was
Chairman and Chief Executive Officer of Leaseway Transportation Corp.
(physical distribution services). Mr. McDonough is a Director of
ACME-Cleveland Corp. (metal working, telecommunications and electronic
products), Brush-Wellman Inc. (metal refining), York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (71), Trustee. Prior to his retirement in 1985, Mr. Malone
was Chairman, General Electric Investment Corporation and a Vice President
of General Electric Company. He is a Director of Allegheny Power Systems,
Inc. (electric utility), General Re Corporation (reinsurance) and Mattel
Inc. (toy manufacturer). In addition, he serves as a Trustee of the Naples
Philharmonic Center for the Arts and Rensselaer Polytechnic Institute, and
he is a member of the Advisory Boards of Butler Capital Corporation Funds
and Warburg, Pincus Partnership Funds.
MARVIN L. MANN (63), Trustee (1993) is Chairman of the Board, President,
and Chief Executive Officer of Lexmark International, Inc. (office
machines, 1991). Prior to 1991, he held the positions of Vice President of
International Business Machines Corporation ("IBM") and President and
General Manager of various IBM divisions and subsidiaries. Mr. Mann is a
Director of M.A. Hanna Company (chemicals, 1993) and Infomart (marketing
services, 1991), a Trammell Crow Co. In addition, he serves as the Campaign
Vice Chairman of the Tri-State United Way (1993) and is a member of the
University of Alabama President's Cabinet.
THOMAS R. WILLIAMS (67), Trustee, is President of The Wales Group, Inc.
(management and financial advisory services). Prior to retiring in 1987,
Mr. Williams served as Chairman of the Board of First Wachovia Corporation
(bank holding company), and Chairman and Chief Executive Officer of The
First National Bank of Atlanta and First Atlanta Corporation (bank holding
company). He is currently a Director of BellSouth Corporation
(telecommunications), ConAgra, Inc. (agricultural products), Fisher
Business Systems, Inc. (computer software), Georgia Power Company (electric
utility), Gerber Alley & Associates, Inc. (computer software), National
Life Insurance Company of Vermont, American Software, Inc., and AppleSouth,
Inc. (restaurants, 1992).
WILLIAM O. McCOY (62), Member of the Advisory Board (1996), is the Vice
President of Finance for the University of North Carolina (16-school
system, 1995). Prior to his retirement in December 1994, Mr. McCoy was Vice
Chairman of the Board of BellSouth Corporation (telecommunications) and
President of BellSouth Enterprises. He is currently a Director of Liberty
Corporation (holding company), Weeks Corporation of Atlanta (real estate,
1994), and Carolina Power and Light Company (electric utility, 1996).
Previously, he was a Director of First American Corporation (bank holding
company, 1979-1996). In addition, Mr. McCoy serves as a member of the Board
of Visitors for the University of North Carolina at Chapel Hill (1994) and
for the Kenan Flager Business School (University of North Carolina at
Chapel Hill).
WILLIAM J. HAYES (61), Vice President (1994), is Vice President of
Fidelity's equity funds; Senior Vice President of FMR; and Managing
Director of FMR Corp.
BRADFORD LEWIS (41), is manager and Vice President of Small Cap Stock,
which he has managed since June 1993. Mr. Lewis also manages Disciplined
Equity and Stock Selector as well as portfolios for Fidelity Investments
Canada. Previously, he managed Select Air Transportation, Select Defense
and Aerospace, and Select Medical Delivery. Mr. Lewis joined Fidelity in
1985.
ARTHUR S. LORING (48), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (48), Treasurer (1995), is Treasurer of the
Fidelity funds and is an employee of FMR (1995). Before joining FMR, Mr.
Rathgeber was a Vice President of Goldman Sachs & Co. (1978-1995), where he
served in various positions, including Vice President of Proprietary
Accounting (1988-1992), Global Co-Controller (1992-1994), and Chief
Operations Officer of Goldman Sachs (Asia) LLC (1994-1 995).
ROBERT H. MORRISON (56), Manager of Security Transactions of Fidelity's
equity funds, is Vice President of FMR.
JOHN H. COSTELLO (49), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (50), Assistant Treasurer (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity funds, Mr.
Rush was Chief Compliance Officer of FMR Corp. (1993-1994) and Chief
Financial Officer of Fidelity Brokerage Services, Inc. (1990-1993).
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended April 30, 1996.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J. Gary Ralph F. Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin L. Thomas
Burkhead** Cox Burke J. Flynn Johnson 3d** Bradley J. Kirk Lynch** McDonough H. Mann R.
Davis Jones Malone Williams
Small
Cap $ 0 $ 203 $ 201 $ 251 $ 0 $ 204 $ 204 $ 0 $ 199 $ 200 $ 203 $ 203
Stock
Mid-
Cap 0 328 323 406 0 328 328 0 318 328 328 321
Stock
Large
Cap 0 22 22 27 0 22 22 0 22 22 22 22
Stock +
</TABLE>
Trustees Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as Part of Fund the Fund Complex* Complex*
Expenses from the
Fund Complex*
<TABLE>
<CAPTION>
<S> <C> <C> <C>
J. Gary Burkhead** $ 0 $ 0 $ 0
Ralph F. Cox 5,200 52,000 128,000
Phyllis Burke Davis 5,200 52,000 125,000
Richard J. Flynn 0 52,000 160,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 128,000
Donald J. Kirk 5,200 52,000 129,500
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 128,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 128,000
Thomas R. Williams 5,200 52,000 125,000
</TABLE>
* Information is as of December 31, 1995 for 219 funds in the
complex.
** Interested trustees of the funds are compensated by FMR.
+ Estimated
The non-interested Trustees may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of a Deferred
Compensation Plan (the Plan). Under the Plan, compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested and reinvested in shares of one or more funds in the complex
designated by such Trustee (designated securities). The amount paid to the
Trustee under the Plan will be determined based upon the performance of
such investments. Deferral of Trustees' fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate the fund to retain the services of
any Trustee or to pay any particular level of compensation to the Trustee.
Each fund may invest in such designated securities under the Plan without
shareholder approval. Only non-interested Trustees are eligible to
participate in the Plan.
Under a retirement program adopted in July 1988, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments is not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program.
As of April 30, 1996, the Trustees and officers of the
fund s owned, in the aggregate, less than 1 % of each fund's
total outstanding shares.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund and all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of each fund or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, each fund pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund pays for the typesetting, printing, and
mailing of its proxy materials to shareholders, legal expenses, and the
fees of the custodian, auditor and non-interested Trustees. Although each
fund's current management contract provides that each fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices, and reports to shareholders, the trust, on behalf of
each fund , has entered into a revised transfer agent agreement with
FSC, pursuant to which FSC bears the costs of providing these services to
existing shareholders. Other expenses paid by each fund include interest,
taxes, brokerage commissions, and each fund's proportionate share of
insurance premiums and Investment Company Institute dues. Each fund is also
liable for such non-recurring expenses as may arise, including costs of any
litigation to which each fund may be a party, and any obligation it may
have to indemnify its officers and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated November
1, 1994, which was approved by shareholders on October 26, 1994 for Small
Cap Stock; February 17, 1994, which was approved by FMR, then the sole
shareholder, on February 24, 1994 for Mid-Cap Stock; and May 18, 1995,
which was approved by FMR, then the sole shareholder, on June 5, 1995 for
Large Cap Stock.
For the services of FMR under the contract, each fund pays FMR a monthly
management fee composed of the sum of two elements: a basic fee and a
performance adjustment based on a comparison of each fund's performance to
the performance of its comparative index.
COMPUTING THE BASIC FEE. Each fund's basic fee rate is composed of two
elements: a group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown below on the left. The schedule below on the right shows the
effective annual group fee rate at various asset levels, which is the
result of cumulatively applying the annualized rates on the left. For
example, the effective annual fee rate at $402 billion of group net assets
- - the approximate level for April 1996 - was .3066%, which is the
weighted average of the respective fee rates for each level of group net
assets up to $402 billion.
Below is the schedule for Small Cap Stock and Large Cap Stock:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $ 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
Over 390 .2700
For Small Cap Stock, prior to November 1, 1993, the group fee rate was
based on a schedule with breakpoints ending at .3000% for average group
assets in excess of $174 billion. Additional breakpoints for average group
assets in excess of $228 billion were voluntarily adopted by FMR on
November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints for average group
assets in excess of $210 billion and under $390 billion as shown in the
schedule above. Small Cap Stock's and Large Cap Stock's current
management contracts , dated November 1, 1994 and May 18, 1995,
respectively, reflect the group fee rate schedule shown above.
Below is the schedule for Mid-Cap Stock:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
0 - $ 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3253
36 - 42 .3400 250 .3223
42 - 48 .3350 275 .3198
48 - 66 .3250 300 .3175
66 - 84 .3200 325 .3153
84 - 102 .3150 350 .3133
102 - 138 .3100
138 - 174 .3050
174 - 228 .3000
228 - 282 .2950
282 - 336 .2900
Over 336 .2850
For Mid-Cap Stock, prior to August 1, 1994, the group fee rate was based
on a schedule with breakpoints ending at .2850% for average group assets in
excess of $336 billion as shown above.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints for average group assets
in excess of $210 billion and under $390 billion as shown in the schedule
below.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
138 - $174 billion .3000% $ 150 billion .3371%
174 - 210 .2950 175 .3325
210 - 246 .2900 200 .3284
246 - 282 .2850 225 .3249
282 - 318 .2800 250 .3219
318 - 354 .2750 275 .3190
354 - 390 .2700 300 .3163
Over 390 .2500 325 .3137
350 .3113
375 .3090
400 .3067
For Small Cap Stock, Mid-Cap Stock, and Large Cap Stock, o n January
1, 1996, FMR voluntarily added new breakpoints to the revised schedule for
average group assets in excess of $390 billion, pending shareholder
approval of new management contracts reflecting the revised schedule and
additional breakpoints. The revised group fee rate schedule and its
extensions provide for lower management fee rates as FMR's assets under
management increase. For average group assets in excess of $390 billion,
the revised group fee rate schedule with additional breakpoints
voluntarily adopted by FMR is as follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
390 - 426 .2700 400 .3067
426 - 462 .2650 425 .3046
462 - 498 .2600 450 .3024
498 - 534 .2550 475 .3003
Over 534 .2500 500 .2982
525 .2962
550 .2942
The individual fund fee rates for Small Cap Stock, Mid-Cap Stock, and Large
Cap Stock are .35%, .30%, and .30%, respectively. Based on the
average group net assets of the funds advised by FMR for April 1996,
the annual basic fee rate would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
Small Cap Stock .3 0 66% + .35% = .6566%
Mid-Cap Stock .3 0 66% + .30% = .6066%
Large Cap Stock .3 0 66% + .30% = .6066%
One-twelfth of this annual basic fee rate is applied to each fund's net
assets averaged for the most recent month, giving a dollar amount, which is
the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee is subject to upward or
downward adjustment, depending upon whether, and to what extent, each
fund's investment performance for the performance period exceeds, or is
exceeded by, the record of the Russell 2000 (Small Cap Stock), the
S&P MidCap 400 (Mid-Cap Stock), or the S&P 500 (Large Cap Stock) over the
same period. The funds' performance periods commenced on July 1, 1993
(Small Cap Stock), April 1, 1994 (Mid-Cap Stock), and July 1, 1995 (Large
Cap Stock). Starting with the twelfth month, the performance adjustment
takes effect. Each month subsequent to the twelfth month, a new month is
added to the performance period until the performance period equals 36
months. Thereafter, the performance period consists of the most recent
month plus the previous 35 months. Each percentage point of difference,
calculated to the nearest 1.0% (up to a maximum difference of
(plus/minus)10.00 ) is multiplied by a performance adjustment rate of .02%.
Thus, the maximum annualized adjustment rate is (plus/minus).20%. This
performance comparison is made at the end of each month. One twelfth (1/12)
of this rate is then applied to each fund's average net assets for the
entire performance period, giving a dollar amount which will be added to
(or subtracted from) the basic fee.
Each fund's performance is calculated based on change in net asset value.
For purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by each fund are treated as if reinvested
in fund shares at the net asset value as of the record date for payment.
The record of the Index is based on change in value and is adjusted for any
cash distributions from the companies whose securities compose the Index.
Because the adjustment to the basic fee is based on each fund's performance
compared to the investment record of its comparative index, the controlling
factor is not whether each fund's performance is up or down per se, but
whether it is up or down more or less than the record of the Index.
Moreover, the comparative investment performance of each fund is based
solely on the relevant performance period without regard to the cumulative
performance over a longer or shorter period of time.
The table below shows the management fees paid to FMR (including the amount
of the performance adjustment); the dollar amount of negative or positive
performance adjustments; and the net management fee as a percentage of the
funds' average net assets for the periods ending April 30, 1996, April
30, 1995, and the period June 28, 1993 through April 30, 1994 for Small Cap
Stock, and the periods Febru ary 1, 1995 through April 30, 1995 and
March 29, 1994 through January 31, 1995 for Mid-Cap Stock, and the
period June 22, 1995 through April 30, 1996 for Large Cap Stock.
Management Fee Management Fee
Including Performance Performance as a % of
Adjustment Adjustment Average Net Assets
SMALL CAP STOCK
1996 $ 2,894,286 (396,361) .58%
1995 $ 3,575,703 (708,057) .56%
1994* $ 3,261,052 n/a .68%+
* From June 28, 1993 (commencement of operations)
+ Annualized
MID-CAP STOCK
1996 $ 7,129,455 725,221 .68%
April 30, 1995** $ 497,918 23,200 .66%+
January 31, 1995*** $ 321,245 n/a .62%+
** For the fiscal period February 1, 1995 through April 30, 1995
*** From March 29, 1994 (commencement of operations)
+ Annualized
LARGE CAP STOCK
1996* *** $ 334,620 n/a .62%+
**** From June 22, 1995 (commencement of operations)
+ Annualized
FMR may, from time to time, voluntarily reimburse all or a portion of each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase each fund's total returns and repayment of the
reimbursement by each fund will lower its total returns.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that each fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses (Mid-Cap
Stock and Large Cap Stock only) and custodian fees attributable to
investments in foreign securities.
SUB-ADVISERS. On behalf of the funds, FMR has entered into sub-advisory
agreements with FMR U.K. and FMR Far East. Pursuant to the sub-advisory
agreements, FMR may receive investment advice and research services outside
the United States from the sub-advisers. FMR may also grant the
sub-advisers investment management authority as well as the authority to
buy and sell securities if FMR believes it would be beneficial to the
funds.
Currently, FMR U.K. and FMR Far East each focus on issuers in countries
other than the United States such as those in Europe, Asia, and the Pacific
Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly owned
subsidiaries of FMR. Under the sub-advisory agreements FMR pays the fees of
FMR U.K. and FMR Far East. For providing non-discretionary investment
advice and research services, FMR pays FMR U.K. and FMR Far East fees equal
to 110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
For providing discretionary investment management and executing portfolio
transactions, FMR pays FMR U.K. and FMR Far East a fee equal to 50% of its
monthly management fee rate (including any performance adjustment) with
respect to each fund's average net assets managed by the sub-adviser on a
discretionary basis.
For providing investment advice and research services, the fees paid to the
sub-advisers for fiscal 1996, 1995, and 1994 were as follows:
SMALL CAP STOCK
Fiscal period FMR U.K. FMR Far East
1996 $ 2,057 $ 2,327
1995 $ 60 $ 50
1994* $ 12.50 $ 16.30
* From June 28, 1993 (commencement of operations)
MID-CAP STOCK
Fiscal period FMR U.K. FMR Far East
1996 $ 22,041 $ 25,351
April 30, 1995** $ 3,066 $ 2,306
January 31, 1995*** $ 119 $ 117
** From February 1, 1995
*** From March 29, 1994 (commencement of operations)
LARGE CAP STOCK
Fiscal period FMR U.K. FMR Far East
1996* *** $ 1,017 $ 1,135
**** From June 22, 1995 (commencement of operations)
DISTRIBUTION AND SERVICE PLANS (MID-CAP STOCK AND LARGE CAP STOCK)
The Trustees have approved Distribution and Service Plans on behalf of
Mid-Cap Stock and Large Cap Stock (the Plans) pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the Rule). The Rule provides in
substance that a mutual fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of a fund except pursuant to a plan approved on behalf of the fund
under the Rule. The Plans, as approved by the Trustees, allow each fund and
FMR to incur certain expenses that might be considered to constitute
indirect payment by the funds of distribution expenses.
Under each Plan, if the payment of management fees by the fund to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan also
specifically recognizes that FMR, either directly or through FDC, may use
its management fee revenue, past profits, or other resources, without
limitation, to pay promotional and administrative expenses in connection
with the offer and sale of shares of the fund. In addition, each Plan
provides that FMR may use its resources, including its management fee
revenues, to make payments to third parties that assist in selling shares
of each fund, or to third parties, including banks, that render shareholder
support services.
The Trustees have not authorized such payments to date.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of each Plan, and have
determined that there is a reasonable likelihood that the Plan will benefit
the fund and its shareholders. In particular, the Trustees noted that each
Plan does not authorize payments by the fund other than those made to FMR
under its management contract with the fund. To the extent that each Plan
gives FMR and FDC greater flexibility in connection with the distribution
of shares of the fund, additional sales of fund shares may result.
Furthermore, certain shareholder support services may be provided more
effectively under each Plan by local entities with whom shareholders have
other relationships.
Mid-Cap Stock's and Large Cap Stock's Plans were approved by FMR, the then
sole shareholder of each fund, on February 24, 1994 and June 5, 1995,
respectively.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plans.
No preference for the instruments of such depository institutions will be
shown in the selection of investments.
CONTRACTS WITH FMR AFFILIATES
FSC is transfer, dividend disbursing, and shareholder servicing agent for
each fund. FSC receives annual account fees and asset-based fees for each
retail account and certain institutional accounts based on account size. In
addition, the fees for retail accounts are subject to increase based on
postal rate changes. With respect to certain institutional retirement
accounts, FSC receives asset-based fees only. With respect to certain other
institutional retirement accounts, FSC receives annual account fees and
asset based fees based on fund type. The asset-based fees are subject to
adjustment if the year-to-date total return of the Standard & Poor's
Composite Index of 500 Stocks is greater than positive or negative 15%. FSC
also collects small account fees from certain accounts with balances of
less than $2,500.
FSC pays out-of-pocket expenses associated with providing transfer agent
services. In addition, FSC bears the expense of typesetting, printing, and
mailing prospectuses, statements of additional information, and all other
reports, notices, and statements to shareholders, with the exception of
proxy statements.
FSC also performs the calculations necessary to determine each fund's net
asset value per share and dividends, and maintains each fund's accounting
records. The annual fee rates for these pricing and bookkeeping services
are based on each fund's average net assets, specifically, .06% for the
first $500 million of average net assets and .03% for average net assets in
excess of $500 million . The fee is limited to a minimum of $60,000
and a maximum of $800,000 per year.
For Small Cap Stock, the table below shows the fees paid to FSC for pricing
and bookkeeping services, including related out- of-pocket expenses
during the fund's last three fiscal periods ended April 30, 1996, 1995, and
1994. For Mid-Cap Stock, the table shows these fees for the fiscal periods
ended April 30, 1996 and 1995 and the fiscal period ended January 31, 1995.
For Large Cap Stock, the table shows these fees for the fiscal period ended
April 30, 1996.
Pricing and Bookkeeping Fees
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1996 1995 1994
Small Cap Stock $ 290,735 $ 343,221 $ 263,768*
Mid-Cap Stock $ 465,101 $ 45,020**
$ 45,699***
Large Cap Stock $ 44,023 ****
</TABLE>
* From June 28, 1993 (commencement of operations).
** For the fiscal period February 1, 1995 through April 30, 1995.
*** For the fiscal period March 29, 1994 (commencement of operations)
through January 31, 1995.
**** From June 22, 1995 (commencement of operations).
For fiscal 1996, 1995, and 1994, there were no securities lending fees
incurred by the funds.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which, for Mid-Cap Stock and
Large Cap Stock, are continuously offered at net asset value. Promotional
and administrative expenses in connection with the offer and sale of shares
are paid by FMR for Mid-Cap Stock and Large Cap Stock and by FDC for Small
Cap Stock. The table below shows the sales charge revenue paid to FDC for
Small Cap Stock for the following fiscal periods:
Sales Charge Revenue Paid to FDC
1996 1995 1994
Small Cap Stock $ 846,604 $ 1,239,724 $ 2,299,056*
* From June 28, 1993 (commencement of operations)
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Small Cap Stock and Large Cap Stock are funds of
Fidelity Commonwealth Trust, an open-end management investment company
organized as a Massachusetts business trust on November 8, 1974. On April
11, 1975, the trust's name was changed from Fidelity Investors Trust to
Fidelity Thrift Trust. On September 1, 1987, the trust's name was changed
from Fidelity Thrift Trust to Fidelity Intermediate Bond Fund. On February
16, 1990, the trust's name was changed from Fidelity Intermediate Bond Fund
to Fidelity Commonwealth Trust. Currently, there are four funds of the
trust: Fidelity Intermediate Bond Fund, Fidelity Market Index Fund,
Fidelity Small Cap Stock Fund, and Fidelity Large Cap Stock Fund.
Fidelity Mid-Cap Stock Fund is a fund of Fidelity Devonshire Trust, an
open-end management investment company originally organized as a
Massachusetts corporation on December 16, 1965. On March 4, 1985, the trust
was reorganized as a Massachusetts business trust, at which time its name
was changed from Fidelity Equity-Income Fund, Inc. to Fidelity
Equity-Income Fund. On December 19, 1986, the Board of Trustees voted to
change the name of the trust from Fidelity Equity-Income Fund to Fidelity
Devonshire Trust. Currently, there are five funds of the trust:
Spartan Adjustable Rate Government Fund, Fidelity Equity-Income Fund,
Fidelity Real Estate Investment Portfolio, Fidelity Mid-Cap Stock
Fund, and Fidelity Utilities Fund.
Each trust's Declaration of Trust permits the Trustees to create additional
funds.
In the event that FMR ceases to be the investment adviser to a trust or a
fund, the right of a trust or fund to use the identifying name
"Fidelity" and "Spartan" may be withdrawn. There is a remote
possibility that one fund might become liable for any misstatement in its
prospectus or statement of additional information about another fund.
The assets of each trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general liabilities of its respective trust. Expenses with respect to each
trust are to be allocated in proportion to the asset value of its
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of each trust, subject to the general
supervision of the Board of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the funds of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund are entitled to receive
as a class the underlying assets of such fund available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. Each Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or its Trustees shall include a provision limiting the obligations
created thereby to the trust and its assets. Each Declaration of Trust
provides for indemnification out of each fund's property of any shareholder
held personally liable for the obligations of the fund. Each Declaration of
Trust also provides that its funds shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
Each Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declarations of Trust protect s
Trustees against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value of
net asset value you own. The shares have no preemptive or conversion
rights; the voting and dividend rights, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shares are fully
paid and nonassessable, except as set forth under the heading "Shareholder
and Trustee Liability" above. Shareholders representing 10% or more of a
trust or fund may, as set forth in the Declarations of Trust, call meetings
of a trust or fund for any purpose related to the trust or fund, as the
case may be, including, in the case of a meeting of an entire trust, the
purpose of voting on removal of one or more Trustees. Each trust or fund
may be terminated upon the sale of its assets to another open-end
management investment company, or upon liquidation and distribution of its
assets, if approved by vote of the holders of a majority of the trust or
the fund, as determined by the current value of each shareholder's
investment in the fund or trust. If not so terminated, each trust or fund
will continue indefinitely. Each fund within either trust may invest all of
its assets in another investment company.
CUSTODIANS. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of Small Cap Stock and Large Cap
Stock. The Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New
York, New York, is custodian of the assets of Mid-Cap Stock. The custodians
are responsible for the safekeeping of the funds' assets and the
appointment of the subcustodian banks and clearing agencies. The custodians
take no part in determining the investment policies of a fund or in
deciding which securities are purchased or sold by a fund. However, a fund
may invest in obligations of their respective custodians and may purchase
securities from or sell securities to their respective custodians. The Bank
of New York and Chemical Bank, each headquartered in New York, also may
serve as a special purpose custodian of certain assets in connection with
pooled repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. The Boston branch of Small Cap Stock's and Large Cap Stock's custodian
leases its office space from an affiliate of FMR at a lease payment which,
when entered into, was consistent with prevailing market rates.
Transactions that have occurred to date include mortgages and personal and
general business loans. In the judgment of FMR, the terms and conditions of
those transactions were not influenced by existing or potential custodial
or other fund relationships.
AUDITOR. Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts serves as each trust's independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
period ended April 30, 1996, are included in each fund's Annual Report,
which are separate reports supplied with this Statement of Additional
Information. Each fund's financial statements and financial highlights are
incorporated herein by reference.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
CAA - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
CA - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
short-comings.
C - Bonds which are rated C are the lowest-rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The BB rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal. The
CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating will also
be used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
Fidelity Devonshire Trust
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)(1) Financial Statements and Financial Highlights for Fidelity Utilities
Fund for the fiscal year ended January 31, 1996 are incorporated herein by
reference to the fund's Statement of Additional Information and were filed
on March 15, 1996 for Fidelity Devonshire Trust (File No. 811-1352)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and are
incorporated herein by reference.
(2) Financial Statements and Financial Highlights for Fidelity Equity
Income Fund for the fiscal year ended January 31, 1996 are incorporated
herein by reference to the fund's Statement of Additional Information and
were filed on March 15, 1996 for Fidelity Devonshire Trust (File No.
811-1352) pursuant to Rule 30d-1 under the Investment Company Act of 1940
and are incorporated herein by reference.
(3) Financial Statements and Financial Highlights for Spartan Long-Term
Government Bond Fund for the fiscal year ended January 31, 1996 are
incorporated herein by reference to the fund's Statement of Additional
Information and were filed on March 15, 1996 for Fidelity Devonshire Trust
(File No. 811-1352) pursuant to Rule 30d-1 under the Investment Company Act
of 1940 and are incorporated herein by reference.
(4) Financial Statements and Financial Highlights for Fidelity Real Estate
Investment Portfolio for the fiscal year ended January 31, 1996 are
incorporated herein by reference to the fund's Statement of Additional
Information and were filed on March 15, 1996 for Fidelity Devonshire Trust
(File No. 811-1352) pursuant to Rule 30d-1 under the Investment Company Act
of 1940 and are incorporated herein by reference.
(5) Financial Statements and Financial Highlights for Fidelity Mid-Cap
Stock Fund for the fiscal year ended April 30, 1996 are incorporated herein
by reference to the fund's Statement of Additional Information and were
filed on June 14, 1996 for Fidelity Devonshire Trust (File No. 2-24389)
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and are
incorporated herein by reference.
(b) Exhibits:
1. (a) Amended and Restated Declaration of Trust dated March 17, 1994 is
incorporated herein by reference to Exhibit 1(a) of Post-Effective
Amendment No. 83.
2. (a) Bylaws of the Trust, as amended, are incorporated herein by
reference to Exhibit 2(a) of Fidelity Union Street Trust's (File No.
2-50318) Post-Effective Amendment No. 87.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract dated September 1, 1994 between Fidelity
Utilities Fund and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit 5(a) of Post-Effective Amendment No. 86.
(b) Management Contract dated December 1, 1993 between Fidelity
Equity-Income Fund and Fidelity Management & Research Company is
incorporated by reference to Exhibit 5(b) of Post-Effective Amendment No.
81.
(c) Management Contract dated April 1, 1993 between Fidelity Real Estate
Investment Portfolio and Fidelity Management & Research Company is
incorporated by reference to Exhibit 5(c) of Post-Effective Amendment No.
81.
(d) Management Contract dated July 19, 1990 between Spartan Long-Term
Government Bond Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(d) of Post-Effective
Amendment No. 86.
(e) Management Contract dated February 17, 1994 between Fidelity Mid-Cap
Stock Fund and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit 5(f) of Post-Effective Amendment No. 85.
(f) Sub-Advisory Agreement between Fidelity Management & Research Company
and Fidelity Management & Research (U.K.) Inc., on behalf of Fidelity
Equity-Income Fund, is incorporated by reference to Exhibit 5(g) of
Post-Effective Amendment No. 81.
(g) Sub-Advisory Agreement between Fidelity Management & Research Company
and Fidelity Management & Research (Far East) Inc., on behalf of Fidelity
Equity-Income Fund, is incorporated by reference to Exhibit 5(h) of
Post-Effective Amendment No. 81.
(h) Sub-Advisory Agreement dated December 1, 1993 between Fidelity
Management & Research Company and Fidelity Management & Research (U.K.)
Inc., on behalf of Fidelity Real Estate Investment Portfolio is
incorporated by reference to Exhibit 5(i) of Post-Effective Amendment No.
81.
(i) Sub-Advisory Agreement dated December 1, 1993 between Fidelity
Management & Research Company and Fidelity Management & Research (Far East)
Inc., on behalf of Fidelity Real Estate Investment Portfolio, is
incorporated by reference to Exhibit 5(j) of Post-Effective Amendment No.
81.
(j) Sub-Advisory Agreement dated December 1, 1993 between Fidelity
Management & Research Company and Fidelity Management & Research (U.K.)
Inc., on behalf of Fidelity Utilities Fund, is incorporated by reference to
Exhibit 5(k) of Post-Effective Amendment No. 81.
(k) Sub-Advisory Agreement dated December 1, 1993 between Fidelity
Management & Research Company and Fidelity Management & Research (Far East)
Inc., on behalf of Fidelity Utilities Fund, is incorporated by reference to
Exhibit 5(l) of Post-Effective Amendment No. 81.
(l) Sub-Advisory Agreement between Fidelity Management & Research Company
and Fidelity Management & Research (U.K.) Inc., on behalf of Fidelity
Mid-Cap Stock Fund, is incorporated herein by reference to Exhibit 5(m) of
Post-Effective Amendment No. 84.
(m) Sub-Advisory Agreement between Fidelity Management & Research Company
and Fidelity Management & Research (Far East) Inc., on behalf of Fidelity
Mid-Cap Stock Fund, is incorporated herein by reference to Exhibit 5(n) of
Post-Effective Amendment No. 84.
6. (a) General Distribution Agreement dated April 1, 1987 between Fidelity
Equity-Income Fund and Fidelity Distributors Corporation is incorporated
herein by reference to Exhibit 6(a) of Post-Effective Amendment No. 86.
(b) General Distribution Agreement dated April 1, 1987 between Fidelity
Real Estate Investment Portfolio and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(b) of Post-Effective
Amendment No. 86.
(c) General Distribution Agreement dated April 1, 1987 between Fidelity
Utilities Fund and Fidelity Distributors Corporation is incorporated herein
by reference to Exhibit 6(c) of Post-Effective Amendment No. 86.
(d) General Distribution Agreement dated July 19, 1990 between Spartan
Long-Term Government Bond Fund and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(d) of Post-Effective
Amendment No. 86.
(e) Amendment to the General Distribution Agreement dated January 1, 1988
between Fidelity Utilities Fund, Fidelity Equity-Income Fund and Fidelity
Real Estate Investment Portfolio and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(e) of Post-Effective
Amendment No. 86.
(f) General Distribution Agreement dated February 17, 1994 between Fidelity
Mid-Cap Stock Fund and Fidelity Distributors Corporation is incorporated
herein by reference to Exhibit 6(h) of Post-Effective Amendment No. 85.
7. (a) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, as amended on November 16, 1995, is incorporated herein
by reference to Exhibit 7(a) of Fidelity Select Portfolio's (File No.
2-69972) Post-Effective Amendment No. 54.
(b) The Fee Deferrral Plan for Non-Interested Person Directors and Trustees
of the Fidelity Funds, effective as of December 1, 1995, is incorporated
herein by reference to Exhibit 7(b) of Fidelity School Street Trust's (File
No. 2-57167) Post-Effective Amendment No. 47.
8 (a) Custodian Agreement, Appendix A, and Appendix C, dated August 1,
1994, between The Chase Manhattan Bank, N.A. and Fidelity Devonshire Trust
on behalf of Fidelity Mid-Cap Stock Fund is incorporated herein by
reference to Exhibit 8(a) of Fidelity Investment Trust's Post-Effective
Amendment No. 59 (File No. 2-90649).
(b) Appendix B, dated September 14, 1995, to the Custodian Agreement,
dated August 1, 1994, between The Chase Manhattan Bank, N.A. and Fidelity
Devonshire Trust on behalf of Fidelity Mid-Cap Stock Fund is incorporated
herein by reference to Exhibit 8(b) of Fidelity Charles Street Trust's
Post-Effective Amendment No. 54 (File No. 2-73133).
. (c) Custodian Agreement, Appendix A, and Appendix C, dated August 1,
1994, between The Chase Manhattan Bank, N.A. and Fidelity Devonshire Trust
on behalf of Fidelity Equity-Income Fund is incorporated herein by
reference to Exhibit 8(a) of Fidelity Investment Trust's Post-Effective
Amendment No. 59 (File No. 2-90649).
(d) Appendix B, dated September 14, 1995, to the Custodian Agreement,
dated August 1, 1994, between The Chase Manhattan Bank, N.A. and Fidelity
Devonshire Trust on behalf of Fidelity Equity-Income Fund is incorporated
herein by reference to Exhibit 8(b) of Fidelity Charles Street Trust's
Post-Effective Amendment No. 54 (File No. 2-73133).
(e) Custodian Agreement and Appendix C, dated September 1, 1994, between
Brown Brothers Harriman & Company and Fidelity Devonshire Trust on behalf
of Fidelity Real Estate Investment Portfolio and Fidelity Utilities Fund is
incorporated herein by reference to Exhibit 8(a) of Fidelity Commonwealth
Trust's Post-Effective Amendment No. 56 (File No. 2-52322).
(f) Appendix A, dated January 18, 1996, to the Custodian Agreement, dated
September 1, 1994, between Brown Brothers Harriman & Company and Fidelity
Devonshire Trust on behalf of Fidelity Real Estate Investment Portfolio and
Fidelity Utilities Fund is incorporated herein by reference to Exhibit 8(d)
of Fidelity Investment Trust's Post-Effective Amendment No. 65 (File No.
2-90649).
(g) Appendix B, dated September 14, 1995, to the Custodian Agreement, dated
September 1, 1994, between Brown Brothers Harriman & Company and Fidelity
Devonshire Trust on behalf of Fidelity Real Estate Investment Portfolio and
Fidelity Utilities Fund is incorporated herein by reference to Exhibit 8(b)
of Fidelity Capital Trust's Post-Effective Amendment No. 63 (File No.
2-61760).
(h) Custodian Agreement and Appendix C, dated December 1, 1994, between The
Bank of New York and Fidelity Devonshire Trust on behalf of Spartan
Long-Term Government Bond Fund is incorporated herein by reference to
Exhibit 8(a) of Fidelity Hereford Street Trust's Post-Effective Amendment
No. 4 (File No. 33-52577).
(i) Appendix A, dated April 18, 1996, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and Fidelity Devonshire
Trust on behalf of Spartan Long-Term Government Bond Fund is incorporated
herein by reference to Exhibit 8(b) of Fidelity Institutional Cash
Portfolios' Post-Effective Amendment No. 31 (File No. 2-74808).
(j) Appendix B, dated September 14, 1995, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and Fidelity Devonshire
Trust on behalf of Spartan Long-Term Government Bond Fund is incorporated
herein by reference to Exhibit 8(e) of Fidelity Charles Street Trust's
Post-Effective Amendment No. 54 (File No. 2-73133).
(k) Fidelity Group Repo Custodian Agreement among The Bank of New York, J.
P. Morgan Securities, Inc., and the Registrant, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(d) of Fidelity Institutional
Cash Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(l) Schedule 1 to the Fidelity Group Repo Custodian Agreement between The
Bank of New York and the Registrant, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(e) of Fidelity Institutional
Cash Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(m) Fidelity Group Repo Custodian Agreement among Chemical Bank, Greenwich
Capital Markets, Inc., and the Registrant, dated November 13, 1995, is
incorporated herein by reference to Exhibit 8(f) of Fidelity Institutional
Cash Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(n) Schedule 1 to the Fidelity Group Repo Custodian Agreement between
Chemical Bank and the Registrant, dated November 13, 1995, is incorporated
herein by reference to Exhibit 8(g) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(o) Joint Trading Account Custody Agreement between The Bank of New York
and the Registrant, dated May 11, 1995, is incorporated herein by reference
to Exhibit 8(h) of Fidelity Institutional Cash Portfolios' (File No.
2-74808) Post-Effective Amendment No. 31.
(p) First Amendment to Joint Trading Account Custody Agreement between The
Bank of New York and the Registrant, dated July 14, 1995, is incorporated
herein by reference to Exhibit 8(i) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
9. Not applicable.
10. Not applicable.
11. Consent of Coopers & Lybrand L.L.P. is filed herein as Exhibit 11.
12. Not applicable.
13. Not applicable.
14 (a) Fidelity Individual Retirement Account Custodial Agreement and
Disclosure Statement, as currently in effect, is incorporated herein by
reference to Exhibit 14(a) of Fidelity Union Street Trust's (File No.
2-50318) Post-Effective Amendment No. 87.
(b) Fidelity Institutional Individual Retirement Account Custodial
Agreement and Disclosure Statement, as currently in effect, is incorporated
herein by reference to Exhibit 14(d) of Fidelity Union Street Trust's (File
No. 2-50318) Post-Effective Amendment No. 87.
(c) National Financial Services Corporation Individual Retirement Account
Custodial Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(h) of Fidelity Union Street
Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(d) Fidelity Portfolio Advisory Services Individual Retirement Account
Custodial Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(i) of Fidelity Union Street
Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(e) Fidelity 403(b)(7) Custodial Account Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(e) of Fidelity
Union Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(f) National Financial Services Corporation Defined Contribution
Retirement Plan and Trust Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(k) of Fidelity Union Street
Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(g) The CORPORATEplan for Retirement Profit Sharing/401K Plan, as
currently in effect, is incorporated herein by reference to Exhibit 14(l)
of Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(h) The CORPORATEplan for Retirement Money Purchase Pension Plan, as
currently in effect, is incorporated herein by reference to Exhibit 14(m)
of Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(i) Fidelity Investments Section 403(b)(7) Individual Custodial Account
Agreement and Disclosure Statement, as currently in effect, is incorporated
herein by reference to Exhibit 14(f) of Fidelity Commonwealth Trust's (File
No. 2-52322) Post Effective Amendment No. 57.
(j) Plymouth Investments Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference to
Exhibit 14(o) of Fidelity Commonwealth Trust's (File No. 2-52322) Post
Effective Amendment No. 57.
(k) The Fidelity Prototype Defined Benefit Pension Plan and Trust Basic
Plan Document and Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) of Fidelity Securities
Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(l) The Institutional Prototype Plan Basic Plan Document, Standardized
Adoption Agreement, and Non-Standardized Adoption Agreement, as currently
in effect, is incorporated herein by reference to Exhibit 14(o) of Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(m) The CORPORATEplan for Retirement 100SM Profit Sharing/401(k) Basic
Plan Document, Standardized Adoption Agreement, and Non-Standardized
Adoption Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(f) of Fidelity Securities Fund's (File No. 2-93601)
Post Effective Amendment No. 33.
(n) The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt
Employers Basic Plan Document, Standardized Profit Sharing Plan Adoption
Agreement, Non-Standardized Discretionary Contribution Plan No. 002
Adoption Agreement, and Non-Standardized Discretionary Contribution Plan
No. 003 Adoption Agreement, as currently in effect, is incorporated herein
by reference to Exhibit 14(g) of Fidelity Securities Fund's (File No.
2-93601) Post Effective Amendment No. 33.
(o) Fidelity Investments 403(b) Sample Plan Basic Plan Document and
Adoption Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(p) of Fidelity Securities Fund's (File No. 2-93601)
Post Effective Amendment No. 33.
(p) Fidelity Defined Contribution Retirement Plan and Trust Agreement, as
currently in effect, is incorporated herein by reference to Exhibit 14(c)
of Fidelity Securities Fund's (File No. 2-93601) Post Effective Amendment
No. 33.
15. (a) Distribution and Service Plan for Spartan Long-Term Government Bond
Fund is incorporated herein by reference to Exhibit 5(a) of Post-Effective
Amendment No. 86.
(b) Distribution and Service Plan for Fidelity Utilities Fund is
incorporated herein by reference to Exhibit 15(c) of Post-Effective
Amendment No. 81.
(c) Distribution and Service Plan for Fidelity Mid-Cap Stock Fund is
incorporated herein by reference to Exhibit 15(d) of Post-Effective
Amendment No. 84.
(d) Distribution and Service Plan for Fidelity Real Estate Investment
Portfolio is incorporated herein by reference to Exhibit 5(e) of
Post-Effective Amendment No. 86.
16. (a) A schedule for computation of performance quotations for Fidelity
Real Estate Investment Portfolio is incorporated herein by reference to
Exhibit 16(a) of Post-Effective Amendment No. 86.
(b) A schedule for computation of Fidelity Real Estate Investment
Portfolio's moving averages is incorporated herein by reference to Exhibit
16(b) of Post-Effective Amendment No. 86.
(c) A schedule for the computation of 30-day yields is incorporated herein
by reference to Exhibit 16(c) of Post-Effective Amendment No. 89.
17. Financial Data Schedules for the funds are filed herein as Exhibit 27.
18. Not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Board of Trustees of Fidelity Devonshire Trust is substantially the
same as the boards of other funds advised by FMR, each of which has
Fidelity Management & Research Company as its investment adviser. In
addition, the officers of these funds are substantially identical.
Nonetheless, the Registrant takes the position that it is not under common
control with these other funds since the power residing in the respective
boards and officers arises as the result of an official position with the
respective funds.
Item 26. Number of Holders of Securities January 31, 1996
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Spartan Adjustable Rate Government Fund 0
Fidelity Mid-Cap Stock Fund 83,373
Fidelity Equity-Income Fund 964,121
Fidelity Real Estate Investment Portfolio 56,212
Fidelity Utilities Fund 103,301
Spartan Long-Term Government Bond Fund 2,637
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit, or
proceeding in which he is involved by virtue of his service as a Trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any
loss, liability, claim, damages or expense arising by reason of any person
acquiring any shares, based upon the ground that the registration
statement, Prospectus, Statement of Additional Information, shareholder
reports or other information filed or made public by the Registrant
included a materially misleading statement or omission. However, the
Registrant does not agree to indemnify the Distributor or hold it harmless
to the extent that the statement or omission was made in reliance upon, and
in conformity with, information furnished to the Registrant by or on behalf
of the Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of willful
misfeasance, bad faith, gross negligence, and reckless disregard of the
obligations and duties under the Distribution Agreement.
Pursuant to the agreement by which Fidelity Service Company ("Service") is
appointed sub-transfer agent, the Transfer Agent agrees to indemnify
Service for its losses, claims, damages, liabilities and expenses to the
extent the Transfer Agent is entitled to and receives indemnification from
the Registrant for the same events. Under the Transfer Agency Agreement,
the Registrant agrees to indemnify and hold the Transfer Agent harmless
against any losses, claims, damages, liabilities, or expenses resulting
from:
(1) any claim, demand, action or suit brought by any person other than the
Registrant, which names the Transfer Agent and/or the Registrant as a party
and is not based on and does not result from the Transfer Agent's willful
misfeasance, bad faith, negligence or reckless disregard of its duties, and
arises out of or in connection with the Transfer Agent's performance under
the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent contributed to
by the Transfer Agent's willful misfeasance, bad faith, negligence or
reckless disregard of its duties) which results from the negligence of the
Registrant, or from the Transfer Agent's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of the Transfer
Agent's acting in reliance upon advice reasonably believed by the Transfer
Agent to have been given by counsel for the Registrant, or as a result of
the Transfer Agent's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR;
President and Chief Executive Officer of FMR Corp.;
Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.; President and Trustee of
funds advised by FMR.
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman and Director of FMR.
Robert Beckwitt Vice President of FMR and of funds advised by FMR.
David Breazzano Vice President of FMR (1993) and of a fund advised
by FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
William Danoff Vice President of FMR (1993) and of a fund advised
by FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised
by FMR.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund
advised by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lawrence Greenberg Vice President of FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division
Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR (1993).
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
Robert F. Hill Vice President of FMR; Director of Technical
Research.
Curtis Hollingsworth Vice President of FMR (1993).
Stephen P. Jonas Treasurer and Vice President of FMR (1993));
Treasurer of FMR Texas Inc. (1993), Fidelity
Management & Research (U.K.) Inc. (1993), and
Fidelity Management & Research (Far East) Inc.
(1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised
by FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); High Income
Division Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised
by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Malcolm W. MacNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit Vice President of FMR (1993).
Judy Pagliuca Vice President of FMR (1993).
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund advised
by FMR.
Thomas T. Soviero Vice President of FMR (1993).
Richard Spillane Vice President of FMR; Senior Vice President and
Director of Operations and Compliance of FMR U.K.
(1993).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds
advised by FMR.
Gary L. Swayze Vice President of FMR and of funds advised by FMR;
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
Beth F. Terrana Senior Vice President of FMR (1993) and of funds
advised by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised
by FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund
advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk, and General
Counsel of FMR; Vice President, Legal of FMR Corp.;
Secretary of funds advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management &
Research Company and Fidelity Management Trust Company. The directors and
officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive
Officer of FMR Corp.; Chairman of the Board and a
Director of FMR, FMR Corp., FMR Texas Inc., and
Fidelity Management & Research (Far East) Inc.;
President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR U.K.; President of
FMR; Managing Director of FMR Corp.; President and
a Director of FMR Texas Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR U.K.; Senior Vice
President of Fidelity Management & Research (Far
East) Inc.; Director of Worldwide Research of FMR.
Richard Spillane Senior Vice President and Director of Operations and
Compliance of FMR U.K. (1993).
Stephen P. Jonas Treasurer of FMR U.K. (1993), Fidelity Management
& Research (Far East) Inc. (1993), and FMR Texas
Inc. (1993); Treasurer and Vice President of FMR
(1993).
David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management &
Research (Far East) Inc.; Secretary of FMR Texas Inc.
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The directors
and officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman and Director of FMR Far East;
Chairman of the Executive Committee of FMR;
Chief Executive Officer of FMR Corp.;
Chairman of the Board and a Director of FMR,
FMR Corp., FMR Texas Inc. and Fidelity
Management & Research (U.K.) Inc.; President
and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Far East;
President of FMR; Managing Director of FMR
Corp.; President and a Director of FMR Texas
Inc. and Fidelity Management & Research
(U.K.) Inc.; Senior Vice President and Trustee
of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR Far East; Senior
Vice President of Fidelity Management &
Research (U.K.) Inc.; Director of Worldwide
Research of FMR.
William R. Ebsworth Vice President of FMR Far East.
Bill Wilder Vice President of FMR Far East (1993).
Stephen P. Jonas Treasurer of FMR Far East (1993), Fidelity
Management & Research (U.K.) Inc. (1993),
and FMR Texas Inc. (1993); Treasurer
and Vice President of FMR (1993).
David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity
Management & Research (U.K.) Inc.; Secretary
of FMR Texas Inc.
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
Mark Peterson Director None
Neal Litvak President None
Arthur S. Loring Vice President and Clerk Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity Service
Co., 82 Devonshire Street, Boston, MA 02109, or the fund['s/s']
[respective] custodian [choose only those that apply to your trust: The
Bank of New York, 110 Washington Street, New York, N.Y./ The Chase
Manhattan Bank, 1211 Avenue of the Americas, New York, N.Y./ Brown Brothers
Harriman & Co., 40 Water Street, Boston, MA./ UMB Bank, n.a., 1010 Grand
Avenue, Kansas City, MO.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant on behalf of Fidelity Equity-Income Fund, Fidelity Real
Estate Investment Portfolio, Fidelity Utilities Fund, Spartan Long-Term
Government Bond Fund, and Fidelity Mid-Cap Stock Fund, provided the
information required by Item 5A is contained in the annual report,
undertakes to furnish each person to whom a prospectus has been delivered,
upon their request and without charge, a copy of the Registrant's latest
annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 90 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and the Commonwealth of Massachusetts, on the ___
day of June 1996.
Fidelity Devonshire Trust
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee June , 1996
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Kenneth A. Rathgeber Treasurer June , 1996
Kenneth A. Rathgeber
/s/J. Gary Burkhead Trustee June , 1996
J. Gary Burkhead
/s/Ralph F. Cox * Trustee June , 1996
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee June , 1996
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee June , 1996
Richard J. Flynn
/s/E. Bradley Jones * Trustee June , 1996
E. Bradley Jones
/s/Donald J. Kirk * Trustee June , 1996
Donald J. Kirk
/s/Peter S. Lynch * Trustee June , 1996
Peter S. Lynch
/s/Edward H. Malone * Trustee June , 1996
Edward H. Malone
/s/Marvin L. Mann_____* Trustee June , 1996
Marvin L. Mann
/s/Gerald C. McDonough* Trustee June , 1996
Gerald C. McDonough
/s/Thomas R. Williams * Trustee June , 1996
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated December 15, 1994 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Annuity Fund Fidelity Income Fund
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Djinis, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this fifteenth day of December, 1994.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Annuity Fund Fidelity Institutional Trust
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series II Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Exchange Fund Fund
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned individual
serves as President and Board Member (collectively, the "Funds"), hereby
severally constitute and appoint J. Gary Burkhead, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
sign for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorney-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission. I hereby ratify
and confirm all that said attorneys-in-fact or their substitutes may do or
cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d December 15, 1994
Edward C. Johnson 3d
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Prospectus
and Statement of Additional Information in Post-Effective Amendment No. 90
to the Registration Statement on Form N-1A of Fidelity Devonshire Trust:
Fidelity Mid-Cap Stock Fund, of our report dated June 5, 1996 on the
financial statements and financial highlights included in the April 30,
1996 Annual Report to Shareholders of Fidelity Mid-Cap Stock Fund.
We also consent to the incorporation by reference in this Post-Effective
Amendment, of our reports dated June 5, 1996 on the financial statements
and financial highlights included in the Annual Reports to Shareholders of
Fidelity Commonwealth Trust: Fidelity Small Cap Stock Fund and Fidelity
Large Cap Stock Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditor" in the Statement of
Additional Information.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 19, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000035341
<NAME> Fidelity Devonshire Trust
<SERIES>
<NUMBER> 61
<NAME> Fidelity Mid-Cap Stock Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> apr-30-1996
<PERIOD-END> apr-30-1996
<INVESTMENTS-AT-COST> 1,329,029
<INVESTMENTS-AT-VALUE> 1,479,555
<RECEIVABLES> 44,770
<ASSETS-OTHER> 82
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,524,407
<PAYABLE-FOR-SECURITIES> 39,013
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,870
<TOTAL-LIABILITIES> 63,883
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,226,828
<SHARES-COMMON-STOCK> 98,512
<SHARES-COMMON-PRIOR> 38,213
<ACCUMULATED-NII-CURRENT> 6,386
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 76,784
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 150,526
<NET-ASSETS> 1,460,524
<DIVIDEND-INCOME> 12,984
<INTEREST-INCOME> 8,053
<OTHER-INCOME> 0
<EXPENSES-NET> 10,442
<NET-INVESTMENT-INCOME> 10,595
<REALIZED-GAINS-CURRENT> 126,038
<APPREC-INCREASE-CURRENT> 127,572
<NET-CHANGE-FROM-OPS> 264,205
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,823
<DISTRIBUTIONS-OF-GAINS> 56,500
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 130,754
<NUMBER-OF-SHARES-REDEEMED> 74,976
<SHARES-REINVESTED> 4,521
<NET-CHANGE-IN-ASSETS> 1,001,505
<ACCUMULATED-NII-PRIOR> 694
<ACCUMULATED-GAINS-PRIOR> 8,198
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,129
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,704
<AVERAGE-NET-ASSETS> 1,045,365
<PER-SHARE-NAV-BEGIN> 12.010
<PER-SHARE-NII> .110
<PER-SHARE-GAIN-APPREC> 3.490
<PER-SHARE-DIVIDEND> .060
<PER-SHARE-DISTRIBUTIONS> .720
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.830
<EXPENSE-RATIO> 102
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
