(2_FIDELITY_LOGOS)FIDELITY
MID-CAP STOCK
FUND
ANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 25 Notes to the financial statements.
REPORT OF INDEPENDENT 30 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 31
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories as bonds. If you have a short investment time
horizon, you might want to consider moving some of your investment into a
money market fund, which seeks income and a stable share price by investing
in high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you the information you need
to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change or the growth of a hypothetical $10,000 investment. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Fidelity Mid-Cap Stock 5.03% 67.59%
S&P MidCap 400(registered trademark) 10.12% 52.27%
Mid-Cap Funds Average 1.10% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year or since the fund started on
March 29, 1994. For example, if you invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to the performance of the Standard &
Poor's MidCap 400 Index - a widely recognized, unmanaged index of 400
medium-capitalization stocks. To measure how the fund's performance stacked
up against its peers, you can compare it to the mid-cap funds average,
which reflects the performance of mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past one year average
represents a peer group of 180 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Fidelity Mid-Cap Stock 5.03% 18.17%
S&P MidCap 400 10.12% 14.56%
Mid-Cap Funds Average 1.10% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year. (Note: Lipper calculates average annual total returns by annualizing
each fund's total return, then taking an arithmetic average. This may
produce a slightly different figure than that obtained by averaging the
cumulative total returns and annualizing the result.)
$10,000 OVER LIFE OF FUND
Mid-Cap Stock SP MidCap 400
00337 SP004
1994/03/29 10000.00 10000.00
1994/03/31 9780.00 9631.19
1994/04/30 9840.00 9702.46
1994/05/31 9890.00 9610.29
1994/06/30 9690.00 9279.69
1994/07/31 9930.00 9594.28
1994/08/31 10740.00 10097.02
1994/09/30 10990.00 9908.20
1994/10/31 11180.00 10016.20
1994/11/30 10720.00 9564.47
1994/12/31 10846.15 9652.27
1995/01/31 10927.24 9752.75
1995/02/28 11464.48 10263.99
1995/03/31 11860.51 10442.07
1995/04/30 12195.61 10651.75
1995/05/31 12378.39 10908.78
1995/06/30 12984.78 11352.87
1995/07/31 13715.88 11945.15
1995/08/31 14004.20 12166.02
1995/09/30 14302.82 12460.92
1995/10/31 14014.50 12140.30
1995/11/30 14539.66 12670.47
1995/12/31 14525.66 12638.92
1996/01/31 14977.57 12822.31
1996/02/29 15397.20 13258.14
1996/03/31 15386.44 13416.97
1996/04/30 15956.71 13826.73
1996/05/31 16666.85 14013.66
1996/06/30 16158.58 13803.32
1996/07/31 15221.85 12869.52
1996/08/31 16080.52 13611.71
1996/09/30 17073.01 14205.18
1996/10/31 16638.10 14246.52
1996/11/30 17429.86 15049.02
1996/12/31 17157.68 15065.73
1997/01/31 17731.94 15631.30
1997/02/28 17274.87 15502.81
1997/03/31 16325.58 14841.92
1997/04/30 16759.21 15226.77
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Mid-Cap Stock Fund on March 29, 1994, when the fund
started. As the chart shows, by April 30, 1997, the value of the investment
would have grown to $16,759 - a 67.59% increase on the initial investment.
For comparison, look at how the S&P MidCap 400 Index did over the same
period. With dividends and capital gains, if any, reinvested the same
$10,000 investment would have grown to $15,227 - a 52.27% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn,
the share price and return of
a fund that invests in stocks
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups
and downs, you may have a
gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Concerns in March and April over
higher interest rates and the
possibility of weaker corporate
earnings provided the only
significant pause in the U.S. stock
market's upward climb during the
12 months that ended April 30,
1997. The Standard & Poor's 500
Index returned 25.13% during the
period - well above its long-term
average of about 11%. The stock
market spent much of the period
breaking price and trading
volume records. Solid corporate
earnings, large inflows into mutual
funds, widespread optimism,
moderate economic growth, low
inflation and a generally favorable
interest rate environment
propelled share prices higher. In
February, however, Federal
Reserve Board Chairman Alan
Greenspan indicated the Fed's
inclination to raise short-term
interest rates to head off inflation
that might be caused by a tight
labor market. Because higher
interest rates tend to slow
economic growth and increase
borrowing costs, the stock market
faltered as the Fed's March 25
Open Market Committee
approached. At that meeting, the
Fed raised a key short-term
interest rate. The stock market,
already at historically high
valuations following sizable gains,
reacted coolly. It sold off sharply
through mid-April, when positive
news on the inflation front
emerged. The market recovered
from that point, almost regaining
the peak it had reached in March,
when the Dow Jones Industrial
Average closed above 7000 for
the first time.
NOTE TO SHAREHOLDERS: Katherine Collins became Portfolio Manager of
Fidelity Mid-Cap Stock Fund on January 7, 1997.
Q. HOW DID THE FUND PERFORM, KATHERINE?
A. During the 12 months that ended April 30, 1997, the fund had a total
return of 5.03%, compared to a 10.12% return for the Standard & Poor's
MidCap 400 Index and a 1.10% return for the mid-cap funds average monitored
by Lipper Analytical Services.
Q. WHAT WERE THE KEY FACTORS AFFECTING THE FUND'S PERFORMANCE?
A. In general, mid-cap stocks underperformed large-cap stocks, reflecting
uncertainty about the direction of the economy and a subsequent flight to
large, high-quality companies, with more investment activity centering
around "S&P 500"-type index funds. In addition, mid-cap companies' earnings
growth was not as good as that of large-cap companies during the last two
quarters.
Q. WHICH STOCKS PERFORMED WELL?
A. For the year, contributors to the fund's performance included Cytec
Industries and Wisconsin Central Transportation. Cytec is a specialty
chemical producer spun off from American Cyanamid several years ago. This
company is an example of what I consider to be an overlooked, undervalued
company that has continued to grow earnings consistently and has produced
excellent cash flows. Wisconsin Central is a regional railroad operator in
the U.S. that has made several attractive acquisitions in the United
Kingdom, New Zealand and the U.S.
Q. TECHNOLOGY IS STILL THE LARGEST SECTOR IN THE PORTFOLIO. WHAT'S BEEN
HAPPENING THERE?
A. Technology represents the largest portion of companies in the mid-cap
universe. Still, I cut the percentage held by the fund down a bit. As the
period was winding down, we were heading into a seasonally weak time for
technology stocks, so I positioned the fund somewhat more conservatively by
buying more technical service companies and companies with recurring
revenue streams. For example, Keane, the fund's largest holding as of April
30, 1997, is a company based in Massachusetts that does outsourcing of
computer systems-related work. One part of Keane's business that has grown
rapidly has been its work with client firms to eliminate "Year 2000"
computer problems.
Q. WHAT WERE THE DISAPPOINTMENTS DURING THE PERIOD?
A. Toward the end of 1996, casinos and wireless telecommunications were
disappointments, and in the beginning of 1997 many technology and financial
stocks performed poorly. Several gaming companies experienced disruptions
due to building new facilities, and earnings fell short of investors'
expectations. In the wireless companies, increased competition and lower
pricing resulted in poor financial performance. Specific stocks that were
disappointing during the year included Sun International, a casino company
with several facilities, including an island in the Caribbean, and Sitel
Corp., a company that does teleservice outsourcing - call centers - for
other companies. After Sitel's competitor had prices reduced by a key
customer, some observers concluded that the entire industry's pricing was
going to fall, which hurt Sitel. But Sitel has much less customer
concentration than its competitors, and it has expanded overseas as well.
Pricing is an issue to watch, but I believe that it's much less important
than the expansion and diversified growth of the company.
Q. KATHERINE, WHAT'S YOUR OUTLOOK?
A. I'm very optimistic in my outlook for this market. The mid-cap stock
universe offers many opportunities for growth, and as a group these stocks
look inexpensive compared to large-cap companies. This
universe is truly designed for stock picking; no matter what the universe
does as a whole, there are great opportunities to make money.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: long-term growth of
capital by investing mainly in
equity securities of
companies with
medium-sized market
capitalizations
FUND NUMBER: 337
TRADING SYMBOL: FMCSX
START DATE: March 29, 1994
SIZE: as of April 30, 1997,
more than $1.1 billion
MANAGER: Katherine Collins,
since January 1997; manager,
Fidelity Advisor Mid Cap
Fund, since January 1997;
Fidelity Select Leisure
Portfolio, Fidelity Select
Consumer Industries
Portfolio and Fidelity Advisor
Consumer Industries
Portfolio, 1996 - January
1997; Fidelity Select
Construction and Housing
Portfolio, 1992-1994; joined
Fidelity in 1990
(checkmark)
KATHERINE COLLINS ON WHY
INVESTING IN MID-CAP FUNDS CAN
MAKE SENSE IN A
LARGE-CAP-LED MARKET:
"First, it's good diversification.
Second, the stocks are very
attractive relative to
large-cap stocks on a variety
of valuation measures. Third,
this is a dynamic, exciting part
of the market; these
companies often are the
innovators, the ones that are
inventing new products and
services in order to become
the market leaders of
tomorrow. Fourth, and most
importantly, this fund is
especially well-suited to take
advantage of Fidelity's
internal research capabilities.
The average mid-cap stock has
less than half as many Wall
Street analysts covering it as a
large-cap stock, so there are
many more inefficiencies and
knowledge gaps in the mid-cap
market to be exploited. With
over 3000 companies to
explore in this universe,
Fidelity's combination of
analytical, technical and
human resources is an
enormous advantage."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Keane, Inc. 1.4 0.4
Cytec Industries, Inc. 1.3 2.5
Flores & Rucks, Inc. 1.3 0.4
Evergreen Media Corp. Class A 1.3 0.0
Wisconsin Central Transportation Corp. 1.3 1.6
CVS Corp. 1.2 0.0
TJX Companies, Inc. 1.2 0.0
USA Waste Services, Inc. 1.2 0.0
Tosco Corp. 1.2 0.0
Safeway, Inc. 1.2 0.0
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Technology 14.0 19.9
Media & Leisure 12.2 7.7
Retail & Wholesale 9.6 9.9
Health 9.4 6.1
Finance 9.2 10.3
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997 * AS OF OCTOBER 31, 1996 **
Row: 1, Col: 1, Value: 4.6
Row: 1, Col: 2, Value: 95.40000000000001
Stocks 93.9%
Bonds 1.2%
Short-term
investments 4.9%
FOREIGN
INVESTMENTS 3.0%
Stocks 95.4%
Bonds 0.0%
Short-term
investments 4.6%
FOREIGN
INVESTMENTS 1.6%
Row: 1, Col: 1, Value: 4.9
Row: 1, Col: 2, Value: 1.7
Row: 1, Col: 3, Value: 93.40000000000001
*
**
INVESTMENTS APRIL 30, 1997
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 3.8%
AEROSPACE & DEFENSE - 2.9%
BE Aerospace, Inc. (a) 230,700 $ 5,681
Doncasters PLC sponsored ADR 62,300 1,402
Gulfstream Aerospace Corp. (a) 196,600 5,013
Harsco Corp. 163,300 6,022
Rohr Industries, Inc. (a) 242,500 3,789
Sundstrand Corp. 22,900 1,116
Thiokol Corp. 69,500 4,535
Wyman-Gordon Co. (a) 202,400 4,250
31,808
DEFENSE ELECTRONICS - 0.6%
Litton Industries, Inc. (a) 146,600 6,212
SHIP BUILDING & REPAIR - 0.3%
Avondale Industries, Inc. (a) 217,400 3,859
TOTAL AEROSPACE & DEFENSE 41,879
BASIC INDUSTRIES - 5.8%
CHEMICALS & PLASTICS - 2.5%
Cytec Industries, Inc. (a) 375,500 14,128
Goodrich (B.F.) Co. 19,400 774
Praxair, Inc. 39,400 2,034
Sealed Air Corp. (a) 115,500 5,342
Valspar Corp. 180,000 5,130
27,408
IRON & STEEL - 1.1%
Hexcel Corp. (a) 407,100 7,277
SPS Technologies, Inc. (a) 76,200 5,144
12,421
METALS & MINING - 0.8%
IMCO Recycling, Inc. 263,100 3,947
Superior Telecom, Inc. (a) 196,700 4,229
8,176
PACKAGING & CONTAINERS - 0.3%
Owens-Illinois, Inc. (a) 102,900 2,778
Silgan Holdings, Inc. 500 13
2,791
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - 1.1%
Chesapeake Corp. 153,500 $ 5,238
Georgia-Pacific Corp. 38,900 3,034
Mead Corp. 15,500 870
Mercer International, Inc. (SBI) 284,100 2,344
Willamette Industries, Inc. 15,500 988
12,474
TOTAL BASIC INDUSTRIES 63,270
CONSTRUCTION & REAL ESTATE - 2.9%
BUILDING MATERIALS - 2.6%
Carlisle Companies, Inc. 181,400 5,102
Elcor Corp. 223,300 5,834
Masco Corp. 267,300 10,091
Sherwin-Williams Co. 252,100 7,626
28,653
CONSTRUCTION - 0.3%
Lennar Corp. 115,600 3,107
TOTAL CONSTRUCTION & REAL ESTATE 31,760
DURABLES - 3.5%
AUTOS, TIRES, & ACCESSORIES - 0.6%
Danaher Corp. 7,700 348
Gentex Corp. (a) 78,900 1,420
Intermet Corp. 352,500 4,362
6,130
HOME FURNISHINGS - 2.0%
Haverty Furniture Companies, Inc. 78,300 862
Leggett & Platt, Inc. 305,300 10,609
Miller (Herman), Inc. 214,400 6,941
Stanley Furniture Co, Inc. (a) 188,300 3,766
22,178
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - 0.9%
Liz Claiborne, Inc. 138,500 $ 6,267
Reebok International Ltd. 94,200 3,603
9,870
TOTAL DURABLES 38,178
ENERGY - 6.7%
ENERGY SERVICES - 1.8%
ENSCO International, Inc. (a) 192,400 9,139
Falcon Drilling, Inc. (a) 79,500 3,041
Transocean Offshore, Inc. 113,697 6,893
19,073
OIL & GAS - 4.9%
Cabot Oil & Gas Corp. Class A 289,600 4,851
Chesapeake Energy Corp. (a) 347,200 5,251
Coastal Corp. (The) 120,000 5,700
Cooper Cameron Corp. (a) 55,700 3,969
Flores & Rucks, Inc. (a) 316,100 13,790
Petsec Energy Ltd. sponsored ADR (a) 150,000 3,225
Tosco Corp. 428,100 12,682
Vintage Petroleum, Inc. 161,400 4,560
54,028
TOTAL ENERGY 73,101
FINANCE - 9.2%
BANKS - 0.8%
U.S. Bancorp 146,300 8,357
CREDIT & OTHER FINANCE - 2.1%
Associates First Capital Corp. 116,600 5,976
Beneficial Corp. 63,400 4,058
Fleet Financial Group, Inc. 133,200 8,125
Household International, Inc. 51,400 4,523
22,682
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - 4.9%
Allmerica Financial Corp. 244,300 $ 8,795
AMBAC, Inc. 134,400 8,702
American Bankers Insurance Group, Inc. 112,500 5,948
Equitable of Iowa Companies 106,600 5,210
MBIA, Inc. 99,000 9,640
Protective Life Corp. 154,800 6,850
UNUM Corp. 113,820 8,764
53,909
SAVINGS & LOANS - 1.1%
Coast Savings Financial, Inc. (a) 100,600 4,049
Great Western Financial Corp. 200,000 8,400
12,449
SECURITIES INDUSTRY - 0.3%
Lehman Brothers Holdings, Inc. 106,900 3,621
TOTAL FINANCE 101,018
HEALTH - 9.4%
DRUGS & PHARMACEUTICALS - 0.6%
Cytyc Corp. (a) 330,600 7,025
MEDICAL EQUIPMENT & SUPPLIES - 5.4%
Becton, Dickinson & Co. 155,300 7,144
Biopsys Medical, Inc. 149,700 3,069
Boston Scientific Corp. (a) 184,100 8,883
Cardinal Health, Inc. 56,437 3,005
Heartport, Inc. (a) 240,200 6,155
InControl, Inc. (a) 200,000 1,775
McKesson Corp. 107,900 7,809
Medtronic, Inc. 145,500 10,076
St. Jude Medical, Inc. (a) 333,150 10,827
58,743
MEDICAL FACILITIES MANAGEMENT - 3.4%
Cambridge Heart, Inc. 38,500 366
HEALTHSOUTH Rehabilitation Corp. (a) 307,200 6,067
Health Management Associates, Inc. Class A (a) 188,900 5,053
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
Humana, Inc. (a) 502,400 $ 10,927
Oxford Health Plans, Inc. (a) 76,900 5,066
Tenet Healthcare Corp. (a) 357,200 9,287
36,766
TOTAL HEALTH 102,534
INDUSTRIAL MACHINERY & EQUIPMENT - 5.4%
ELECTRICAL EQUIPMENT - 1.9%
Adtran, Inc. (a) 18,600 551
Cherry Corp. Class B (a) 41,100 452
General Electric Co. 38,700 4,291
Harris Corp. 67,700 5,788
Westinghouse Electric Corp. 575,000 9,775
20,857
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
Stanley Works 211,600 8,226
Tyco International Ltd. 179,100 10,925
19,151
POLLUTION CONTROL - 1.8%
USA Waste Services, Inc. (a) 389,900 12,769
United Waste Systems, Inc. 191,800 6,473
19,242
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 59,250
MEDIA & LEISURE - 12.2%
BROADCASTING - 5.0%
American Radio Systems Corp. Class A 223,700 6,543
Chancellor Broadcasting Co. Class A (a) 111,100 3,111
Clear Channel Communications, Inc. (a) 260,700 12,644
Evergreen Media Corp. Class A (a) 425,400 13,772
HSN, Inc. (a) 317,700 7,466
Heftel Broadcasting Corp. Class A (a) 75,900 3,795
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Univision Communications, Inc. Class A (a) 100,900 $ 3,431
Westwood One, Inc. (a) 185,600 4,431
55,193
ENTERTAINMENT - 0.5%
Premier Parks, Inc. (a) 189,200 5,605
LEISURE DURABLES & TOYS - 1.9%
Callaway Golf Co. 150,300 4,490
Galoob (Lewis) Toys, Inc. (a) 185,700 3,134
Harley-Davidson, Inc. 130,000 5,135
Mattel, Inc. 302,500 8,432
21,191
LODGING & GAMING - 2.4%
Bristol Hotel Co. (a) 117,800 4,447
Doubletree Corp. (a) 79,000 3,318
Mirage Resorts, Inc. (a) 448,100 9,018
Sun International Hotels Ltd. Ord. (a) 294,000 8,930
25,713
PUBLISHING - 1.0%
Meredith Corp. 155,000 3,643
Times Mirror Co. Class A 126,000 6,962
10,605
RESTAURANTS - 1.4%
Rainforest Cafe, Inc. (a) 252,800 6,036
Starbucks Corp. (a) 290,700 8,685
14,721
TOTAL MEDIA & LEISURE 133,028
NONDURABLES - 4.7%
BEVERAGES - 0.8%
Coors (Adolph) Co. Class B 381,700 8,731
FOODS - 0.6%
Tyson Foods, Inc. 315,900 6,318
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 1.2%
Alberto-Culver Co. Class A 76,500 $ 1,893
Clorox Co. 47,700 6,076
Safeskin Corp. (a) 252,700 5,654
13,623
TOBACCO - 2.1%
Dimon, Inc. 19,650 388
Philip Morris Companies, Inc. 177,200 6,977
RJR Nabisco Holdings Corp. 245,200 7,295
Schweitzer-Mauduit International, Inc. 181,500 5,921
Universal Corp. 72,300 2,024
22,605
TOTAL NONDURABLES 51,277
PRECIOUS METALS - 0.5%
Getchell Gold Corp. (a) 155,600 5,971
RETAIL & WHOLESALE - 9.6%
APPAREL STORES - 3.3%
Gymboree Corp. (a) 167,400 4,635
Kenneth Cole Productions, Inc. Class A (a) 288,200 4,791
Payless ShoeSource, Inc. (a) 153,400 6,520
Ross Stores, Inc. 257,900 7,253
TJX Companies, Inc. 274,100 12,951
36,150
DRUG STORES - 2.5%
CVS Corp. 266,900 13,245
Revco (D.S.), Inc. (a) 126,100 5,485
Rite Aid Corp. 196,800 9,053
27,783
GENERAL MERCHANDISE STORES - 0.6%
Neiman-Marcus Group, Inc. (a) 125,800 3,302
Proffitts, Inc. (a) 77,400 2,893
6,195
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 1.2%
Safeway, Inc. (a) 283,800 $ 12,665
RETAIL & WHOLESALE, MISCELLANEOUS - 2.0%
Gadzooks, Inc. (a) 134,100 3,738
Guitar Center, Inc. 201,200 2,842
Toys "R" Us, Inc. (a) 322,000 9,177
Williams-Sonoma, Inc. (a) 106,300 3,295
Zale Corp. (a) 145,900 2,699
21,751
TOTAL RETAIL & WHOLESALE 104,544
SERVICES - 5.1%
ADVERTISING - 1.3%
ADVO, Inc. (a) 215,100 2,608
American List Corp. 77,800 1,799
Omnicom Group, Inc. 178,100 9,439
13,846
EDUCATIONAL SERVICES - 0.2%
Strayer Education, Inc. 82,200 2,117
LEASING & RENTAL - 0.0%
Hertz Corp. Class A 4,600 133
PRINTING - 0.7%
Donnelley (R.R.) & Sons Co. 224,100 7,675
SERVICES - 2.9%
ADT Ltd. (a) 5,900 162
AccuStaff, Inc. (a) 401,800 7,333
CDI Corp. (a) 184,000 6,969
Learning Tree International, Inc. (a) 130,200 4,101
National Service Industries, Inc. 115,400 4,861
Sitel Corp. (a) 472,900 4,670
Snyder Communications, Inc. (a) 179,100 3,716
31,812
TOTAL SERVICES 55,583
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - 14.0%
COMMUNICATIONS EQUIPMENT - 0.5%
Aspect Telecommunications Corp. (a) 334,600 $ 5,939
COMPUTER SERVICES & SOFTWARE - 7.5%
Acxiom Corp. (a) 83,900 1,101
Adobe Systems, Inc. 123,100 4,816
BMC Software, Inc. 27,000 1,168
Cadence Design Systems, Inc. (a) 193,300 6,186
Ceridian Corp. (a) 199,200 6,648
Computer Learning Centers, Inc. (a) 258,100 6,872
Equifax, Inc. 237,200 6,820
Keane, Inc. (a) 337,300 15,642
McAfee Associates, Inc. (a) 152,800 8,519
PeopleSoft, Inc. (a) 97,200 4,034
Sabre Group Holdings, Inc. Class A (a) 276,500 7,085
Scopus Technology, Inc. (a) 233,900 6,257
SunGard Data Systems, Inc. (a) 144,900 6,430
81,578
COMPUTERS & OFFICE EQUIPMENT - 1.4%
Quantum Corp. (a) 171,700 7,158
Symbol Technologies, Inc. 250,650 8,115
Wang Laboratories, Inc. (a) 21,100 367
15,640
ELECTRONIC INSTRUMENTS - 0.8%
Elscint Ltd. (a) 149,900 1,124
Lam Research Corp. (a) 115,500 3,350
Perkin-Elmer Corp. 60,000 4,358
8,832
ELECTRONICS - 3.8%
Etec Systems, Inc. (a) 116,600 3,396
Integrated Device Technology, Inc. (a) 365,300 4,292
Linear Technology Corp. 119,200 5,990
Maxim Integrated Products, Inc. (a) 92,300 4,880
Microchip Technology, Inc. (a) 66,800 2,088
OnTrak Systems, Inc. (a) 365,900 8,507
Sanmina Corp. (a) 43,600 2,180
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Tencor Instruments (a) 176,200 $ 7,819
Triumph Group, Inc. (a) . 73,100 1,855
41,007
TOTAL TECHNOLOGY 152,996
TRANSPORTATION - 1.2%
RAILROADS - 1.2%
Wisconsin Central Transportation Corp. (a) 419,300 13,732
UTILITIES - 1.4%
TELEPHONE SERVICES - 1.4%
LCI International, Inc. (a) 250,400 4,163
Tel-Save Holdings, Inc. (a) 150,400 2,106
WorldCom, Inc. (a) 380,650 9,136
15,405
TOTAL COMMON STOCKS
(Cost $995,264) 1,043,526
CASH EQUIVALENTS - 4.6%
Taxable Central Cash Fund (b) (Cost $50,424) 50,424,214 50,424
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,045,688) $ 1,093,950
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $1,047,145,000. Net unrealized appreciation aggregated
$46,805,000, of which $107,234,000 related to appreciated investment
securities and $60,429,000 related to depreciated investment securities.
The fund hereby designates approximately $62,077,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) APRIL 30, 1997
ASSETS
Investment in securities, at value (cost $1,045,688) - $ 1,093,950
See accompanying schedule
Receivable for investments sold 30,948
Receivable for fund shares sold 2,577
Dividends receivable 329
Interest receivable 233
TOTAL ASSETS 1,128,037
LIABILITIES
Payable for investments purchased $ 15,674
Payable for fund shares redeemed 9,951
Accrued management fee 700
Other payables and accrued expenses 317
TOTAL LIABILITIES 26,642
NET ASSETS $ 1,101,395
Net Assets consist of:
Paid in capital $ 937,234
Undistributed net investment income 2,799
Accumulated undistributed net realized gain (loss) 113,100
on investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 48,262
investments
NET ASSETS, for 77,013 shares outstanding $ 1,101,395
NET ASSET VALUE, offering price and redemption price per $14.30
share ($1,101,395 (divided by) 77,013 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME $ 11,705
Dividends
Interest 5,586
TOTAL INCOME 17,291
EXPENSES
Management fee $ 9,219
Basic fee
Performance adjustment 1,539
Transfer agent fees 3,667
Accounting fees and expenses 612
Non-interested trustees' compensation 8
Custodian fees and expenses 57
Registration fees 58
Audit 47
Legal 9
Miscellaneous 8
Total expenses before reductions 15,224
Expense reductions (491) 14,733
NET INVESTMENT INCOME 2,558
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain (loss) of 191,857
$(115) on sales of investments in affiliated issuers)
Foreign currency transactions (1) 191,856
Change in net unrealized appreciation (depreciation) (102,264)
on investment securities
NET GAIN (LOSS) 89,592
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 92,150
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 2,558 $ 10,595
Net investment income
Net realized gain (loss) 191,856 126,038
Change in net unrealized appreciation (depreciation) (102,264) 127,572
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 92,150 264,205
FROM OPERATIONS
Distributions to shareholders (3,338) (4,823)
From net investment income
From net realized gain (137,083) (56,500)
TOTAL DISTRIBUTIONS (140,421) (61,323)
Share transactions 1,492,515 1,757,604
Net proceeds from sales of shares
Reinvestment of distributions 137,693 60,345
Cost of shares redeemed (1,941,066) (1,019,326)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (310,858) 798,623
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (359,129) 1,001,505
NET ASSETS
Beginning of period 1,460,524 459,019
End of period (including undistributed net investment $ 1,101,395 $ 1,460,524
income of $2,799 and $6,386, respectively)
OTHER INFORMATION
Shares
Sold 101,183 130,754
Issued in reinvestment of distributions 9,326 4,521
Redeemed (132,008) (74,976)
Net increase (decrease) (21,499) 60,299
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED APRIL 30, THREE MONTH MARCH 29, 1994
PERIOD (COMMENCEME
ENDED NT
APRIL 30, OF OPERATIONS)
TO
JANUARY 31,
1997 1996 1995 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 14.83 $ 12.01 $ 10.78 $ 10.00
Income from Investment Operations
Net investment income .03 F .11 G .02 -
Net realized and unrealized .73 3.49 1.23 .92
gain (loss)
Total from investment operations .76 3.60 1.25 .92
Less Distributions
From net investment income (.03) (.06) - -
From net realized gain (1.26) (.72) (.02) (.14)
Total distributions (1.29) (.78) (.02) (.14)
Net asset value, end of period $ 14.30 $ 14.83 $ 12.01 $ 10.78
TOTAL RETURN B, C 5.03% 30.84% 11.61% 9.27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 1,101 $ 1,461 $ 459 $ 138
Ratio of expenses to average net 1.00% 1.02% 1.27% A 1.63% A
assets
Ratio of expenses to average net .96% D 1.00% D 1.22% A, D 1.61% A,
assets after expense reductions D
Ratio of net investment income (loss) .17% 1.01% .95% A (.03)%
to average net assets A
Portfolio turnover rate 155% 179% 163% A 190% A
Average commission rate E $ .0411
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS).
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
G INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$0.04 PER SHARE.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Mid-Cap Stock Fund (the fund) is a fund of Fidelity Devonshire
Trust (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The financial statements have
been prepared in conformity with generally accepted accounting principles
which permit management to make certain estimates and assumptions at the
date of the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an exchange)
are valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange
rates on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
date. Non-cash dividends included in dividend income, if any, are recorded
at the fair market value of the securities received. Interest income, which
includes accretion of original issue discount, is accrued as earned.
Investment income is recorded net of foreign taxes withheld where recovery
of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, passive foreign investment companies (PFIC), market
discount, non-taxable dividends, and losses deferred due to wash sales. The
fund also utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for income
tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
Losses may arise from changes in the value of the foreign currency or if
the counterparties do not perform under the contracts' terms. The U.S.
dollar value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements for U.S.
Treasury or Federal Agency obligations.
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities. Dividends from
the Cash Fund are declared daily and paid monthly from net interest income.
Income distributions received by the fund are recorded as interest income
in the accompanying financial statements.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,208,427,000 and $2,565,688,000, respectively, of which U.S.
government and government agency obligations aggregated $0 and $18,657,000,
respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2500% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. The
basic fee is subject to a performance adjustment
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
(up to a maximum of ".20% of the fund's average net assets over the
performance period) based on the fund's investment performance as compared
to the appropriate index over a specified period of time. For the period,
the management fee was equivalent to an annual rate of .70% of average net
assets after the performance adjustment.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, is the fund's transfer, dividend disbursing and shareholder servicing
agent. FSC receives account fees and asset-based fees that vary according
to account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annual rate of .24%
of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $797,000 for the period.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a lender. The
maximum loan and the average daily loan balances during the period for
which the loan was outstanding amounted to $69,809,000 and $63,064,000,
respectively. The weighted average interest rate was 5.50%. Interest earned
from the interfund lending program amounted to $29,000 and is included in
interest income on the Statement of Operations.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$472,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During the
period, the fund's custodian and transfer agent fees were reduced by $9,000
and $10,000, respectively, under these arrangements.
7. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions during the period with
companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Hot Topic, Inc. $ 918 $ 570 $ - $ -
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Mid-Cap Stock Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Devonshire Trust: Fidelity Mid-Cap Stock Fund, including the
schedule of portfolio investments, as of April 30, 1997, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the two years in the period then ended,
for the three month period ended April 30, 1995 and for the period March
29, 1994 (commencement of operations) to January 31, 1995. These financial
statements and financial highlights are the responsibility of the fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1997 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Devonshire Trust: Fidelity Mid-Cap Stock Fund as of April 30,
1997, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the two years in the period then ended,
for the three month period ended April 30, 1995 and for the period March
29, 1994 (commencement of operations) to January 31, 1995, in conformity
with generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 5, 1997
DISTRIBUTIONS
A total of 1.21% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
A total of 14% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders.
The fund will notify shareholders in January 1998 of these percentages for
use in preparing 1997 income tax returns.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity Management & Research
(U.K.) Inc., London, England
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export and Multinational Fund
Fidelity Fifty
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
TechnoQuant(trademark) Growth Fund
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
FIDELITY MID-CAP STOCK FUND
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109
TO THE SHAREHOLDERS:
The Board of Trustees of Fidelity Mid-Cap Stock Fund voted to pay on June
9, 1997, to shareholders of record at the opening of business on June 6,
1997, a distribution of $.72 derived from capital gains realized from sales
of portfolio securities and $.01 derived from net investment income.
In the opinion of management, regardless of whether you took payments in
cash or in additional shares, the distribution will be reportable for tax
purposes for the year 1997. You will be notified at a later date as to the
tax treatment of this distribution.
If your account is a Fidelity prototype retirement plan such as an
Individual Retirement Account (IRA), a Keogh Plan, a 403(b), or a qualified
pension or profit sharing plan, the above information is provided for
informational purposes only and is not reportable for tax purposes in 1997.
FIDELITY MID-CAP STOCK FUND
June 6, 1997
