FIDELITY DEVONSHIRE TRUST, N-30D, 1998-03-23

FIDELITY DEVONSHIRE TRUST
N-30D, 1998-03-23

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FIDELITY

(REGISTERED TRADEMARK)

UTILITIES
FUND
ANNUAL REPORT
JANUARY 31, 1998
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 19 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 23 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 27 THE AUDITORS' OPINION.
ACCOUNTANTS

DISTRIBUTIONS 28

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.

(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As we entered 1998, the pesky economic and currency crises in
Southeast Asia were still very much with us. Adding to these concerns
was the possibility that U.S. corporate earnings might decline in the
face of lower global product demand. But the news wasn't all bad as
low inflation, low interest rates and moderate economic growth
continued to prevail. The bond market performed well, as it benefited
from the favorable economic backdrop and a "flight-to-safety"
mentality on the part of stock investors.
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 JANUARY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY UTILITIES 29.16% 109.19% 283.12%

S&P 500 (REGISTERED TRADEMARK) 26.91% 152.28% 410.11%

S&P UTILITIES 18.73% 81.14% 244.45%

UTILITY FUNDS AVERAGE 22.52% 82.18% 240.33%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had 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 Utilities Index - an unmanaged index of 40 gas,
electric, and telephone stocks that are included in the Standard &
Poor's 500 Index - a widely recognized, unmanaged index of common
stocks. To measure how the fund's performance stacked up against its
peers, you can compare it to the utility 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 96 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 JANUARY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY UTILITIES 29.16% 15.91% 14.38%

S&P 500 26.91% 20.33% 17.69%

S&P UTILITIES 18.73% 12.62% 13.17%

UTILITY FUNDS AVERAGE 22.52% 12.65% 12.94%

$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19980131 19980220 080558 S00000000000001
Utilities S&P 500 S&P Utilities
00311 SP001 SP002
1988/01/31 10000.00 10000.00 10000.00
1988/02/29 9899.45 10466.00 9828.00
1988/03/31 9560.11 10142.60 9310.06
1988/04/30 9569.34 10255.18 9323.10
1988/05/31 9966.14 10344.40 9749.16
1988/06/30 10094.73 10819.21 10055.29
1988/07/31 9973.22 10778.10 10070.37
1988/08/31 9926.49 10411.64 9928.38
1988/09/30 10284.13 10855.18 10336.43
1988/10/31 10501.93 11156.95 10605.18
1988/11/30 10426.17 10997.41 10520.34
1988/12/31 10511.40 11189.86 10585.57
1989/01/31 10674.89 12008.96 11186.83
1989/02/28 10472.93 11709.94 10940.72
1989/03/31 10589.71 11982.78 11228.46
1989/04/30 10911.21 12604.69 11930.24
1989/05/31 11437.28 13115.18 12615.03
1989/06/30 11672.14 13040.42 12810.56
1989/07/31 12285.42 14217.97 13832.85
1989/08/31 12156.83 14496.64 13747.08
1989/09/30 12216.91 14437.21 13973.91
1989/10/31 12257.07 14102.26 14025.61
1989/11/30 12648.57 14389.95 14487.06
1989/12/31 13236.16 14735.31 15541.72
1990/01/31 12563.85 13746.57 14284.39
1990/02/28 12595.36 13923.90 14127.26
1990/03/31 12584.26 14292.88 14390.03
1990/04/30 12076.57 13935.56 13831.70
1990/05/31 12659.87 15294.28 14775.02
1990/06/30 12713.72 15190.28 14463.26
1990/07/31 12724.69 15141.67 14418.43
1990/08/31 12077.48 13772.86 13272.16
1990/09/30 12263.96 13102.12 13816.32
1990/10/31 13010.95 13045.78 14717.15
1990/11/30 13300.83 13888.54 15001.19
1990/12/31 13480.64 14276.03 15131.70
1991/01/31 13423.47 14898.47 14670.18
1991/02/28 13903.69 15963.71 15180.70
1991/03/31 14068.43 16350.03 15479.76
1991/04/30 14068.43 16389.27 15232.09
1991/05/31 14068.43 17097.28 15035.59
1991/06/30 13963.36 16314.23 14825.09
1991/07/31 14400.82 17074.47 15278.74
1991/08/31 14755.52 17479.14 15672.93
1991/09/30 15222.49 17187.24 15989.53
1991/10/31 15414.27 17417.54 16304.52
1991/11/30 15534.13 16715.62 16139.85
1991/12/31 16336.16 18627.88 17322.90
1992/01/31 15798.95 18281.40 16399.59
1992/02/29 15737.90 18519.06 15955.16
1992/03/31 15554.99 18157.94 15725.40
1992/04/30 16065.20 18691.78 16738.12
1992/05/31 16388.74 18783.37 16713.01
1992/06/30 16551.58 18503.50 16948.67
1992/07/31 17445.92 19260.30 18287.61
1992/08/31 17471.11 18865.46 18150.45
1992/09/30 17521.64 19088.07 18282.95
1992/10/31 17496.16 19154.88 18109.26
1992/11/30 17661.82 19808.06 18080.29
1992/12/31 18116.90 20051.70 18727.56
1993/01/31 18313.97 20220.14 19015.97
1993/02/28 19286.16 20495.13 20385.12
1993/03/31 19805.10 20927.58 20754.09
1993/04/30 19618.38 20421.13 20316.18
1993/05/31 19671.73 20968.42 20297.89
1993/06/30 20597.58 21029.22 21237.68
1993/07/31 20853.20 20945.11 21713.41
1993/08/31 21808.41 21738.93 22762.17
1993/09/30 21821.54 21571.54 22714.36
1993/10/31 21645.23 22018.07 22673.48
1993/11/30 20750.12 21808.90 21526.20
1993/12/31 20944.46 22072.78 21412.11
1994/01/31 21855.09 22823.26 21576.99
1994/02/28 20958.26 22204.75 20357.89
1994/03/31 20165.28 21236.62 19667.75
1994/04/30 20675.79 21508.45 20153.55
1994/05/31 20307.09 21861.19 19613.43
1994/06/30 20146.98 21325.59 19654.62
1994/07/31 20776.12 22025.07 20320.91
1994/08/31 20933.41 22928.10 20266.04
1994/09/30 20374.31 22366.36 19751.29
1994/10/31 20359.89 22869.60 19923.12
1994/11/30 19711.03 22036.69 19632.25
1994/12/31 19837.16 22363.49 19732.37
1995/01/31 20459.92 22943.38 21271.50
1995/02/28 20748.52 23837.48 21241.72
1995/03/31 20857.29 24540.93 21114.27
1995/04/30 21485.61 25263.66 21880.71
1995/05/31 21976.01 26273.45 22572.14
1995/06/30 22118.69 26883.78 22675.98
1995/07/31 22768.78 27775.24 23242.87
1995/08/31 23264.10 27844.96 23703.08
1995/09/30 24339.44 29020.02 25212.97
1995/10/31 24448.80 28916.42 25802.95
1995/11/30 25073.69 30185.85 26146.13
1995/12/31 25911.97 30767.23 27994.66
1996/01/31 26312.84 31814.54 28361.39
1996/02/29 25623.35 32109.46 27238.28
1996/03/31 25421.63 32418.68 26682.62
1996/04/30 26219.11 32896.53 26970.79
1996/05/31 26170.28 33744.93 26897.97
1996/06/30 26778.00 33873.50 28011.55
1996/07/31 25597.34 32376.97 26238.42
1996/08/31 25974.49 33059.80 26786.80
1996/09/30 26267.58 34920.40 27116.28
1996/10/31 27275.32 35883.51 28401.59
1996/11/30 28729.13 38595.94 28995.18
1996/12/31 28875.89 37831.36 28815.41
1997/01/31 29661.40 40195.06 29011.36
1997/02/28 29746.78 40510.19 28735.75
1997/03/31 28498.82 38845.62 27867.93
1997/04/30 29227.77 41164.71 27441.55
1997/05/31 30755.12 43670.82 28599.59
1997/06/30 31499.71 45627.27 29494.75
1997/07/31 32495.54 49257.83 30170.18
1997/08/31 31604.54 46498.41 29612.03
1997/09/30 33848.00 49045.12 30891.27
1997/10/31 33935.92 47407.02 31172.38
1997/11/30 36362.42 49601.49 33366.92
1997/12/31 37999.35 50453.15 35872.78
1998/01/30 38311.78 51011.16 34445.04
IMATRL PRASUN SHR__CHT 19980131 19980220 080601 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Utilities Fund on January 31, 1988. As the chart
shows, by January 31, 1998, the value of the investment would have
grown to $38,312 - a 283.12% increase on the initial investment. For
comparison, look at how both the S&P 500 and the S&P Utilities Index
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment in the S&P 500 would have
grown to $51,011 - a 410.11% increase. If $10,000 was put in the S&P
Utilities Index, it would have grown to $34,445 - a 244.45% 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
A seesaw battle between
large-company and small-company
stocks, economic chaos in Southeast
Asia and an ensuing "flight to
quality" mentality on the part of
investors were just three factors
that played a key role in the
direction of the U.S. stock market
over the past year. For the 12 months
that ended January 31, 1998, the
Standard & Poor's 500 Index
returned 26.91%. Large-cap stocks
continued to account for much of the
market's advance in early 1997, as
investors - seeking reliability -
gravitated toward stocks of
well-known companies. But along
with their dominance, large-cap
stocks had become expensive. In
early May, small-cap stocks began to
display better earnings growth and,
combined with attractive valuations,
performed well. The Dow Jones
Industrial Average soared to record
heights during the period, closing
above the 8000-point mark for the
first time ever in July. Thousands of
miles away, however, an economic
crisis threatened to interrupt the U.S.
market's parade. Several small
countries in Southeast Asia devalued
their currencies in June, and by late
October the trouble had spread to
larger Asian markets such as Hong
Kong. Investors across the globe
expressed their concerns. In the
U.S., for instance, the Dow slid
550-plus points in one trading
session only to bounce back
significantly the next. Along with this
turmoil, investors flocked to
higher-quality stocks with strong
brand names, good liquidity and
minimal international exposure.
Despite the late-period uncertainty,
stock investors still displayed
confidence. Stock mutual funds -
having had record cash inflows of
$222 billion in 1996 - eclipsed that
mark in 1997 with $231 billion in
new money.
An interview with Nick Thakore, Portfolio Manager of Fidelity
Utilities Fund
Q. HOW DID THE FUND PERFORM, NICK?
A. For the 12 months that ended January 31, 1998, the fund had a total
return of 29.16%, which exceeded the 18.73% return of the Standard &
Poor's Utilities Index. Over the same period, the fund also bested the
22.52% return recorded by the utility funds average compiled by Lipper
Analytical Services.
Q. WHY DID THE FUND OUTPERFORM THE INDEX AND THE AVERAGE?
A. There were two important considerations working in the fund's
favor. First, I chose to weight the fund heavily in the telephone
utility sector, which was the strongest utility sector over the
period. Second, the stocks the fund held within that sector performed
extremely well.
Q. WHAT MADE TELEPHONE UTILITIES ATTRACTIVE TO INVESTORS?
A. Deregulation has created many opportunities to invest in telephone
utility companies with prospects for strong long-term earnings and
share-price growth. This includes some established companies, as well
as a number of relative newcomers who are claiming increasingly larger
shares of the long-distance telephone service market. The group also
benefited from a generally supportive regulatory environment.
Q. HOW WOULD YOU DESCRIBE THE ENVIRONMENT FOR ELECTRIC AND GAS
UTILITIES?
A. The environment for electric utilities was challenging for most of
the period but improved in the latter stages of it. An uncertain
interest rate environment and mild weather were negative factors early
in 1997, as was the higher cost of operating nuclear power plants due
to tougher standards imposed by the Nuclear Regulatory Commission. As
a result, electric utility shares performed poorly until the fall,
when sharply falling long-term interest rates sparked more interest in
the group. Electric utility stocks tend to be purchased primarily for
the income provided by their dividends, and their prices typically
move in concert with bond prices. In addition, many investors bought
electric utility stocks because of a perception that they offer more
protection than stocks in other sectors against the threats to
earnings growth posed by the unstable financial conditions in Asia.
Turning to gas utilities, the supply and demand considerations there
were not especially attractive during the period, and the sector did
not benefit as much as electric utilities from falling interest rates
or from the move toward investments perceived as offering greater
safety. I reduced the fund's holdings of gas utilities to about 11% of
the portfolio by the end of the period - roughly half of what they had
been six months earlier.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. MCI Communications was one of the fund's top performers, as well as
its largest holding for much of the period. The company's stock surged
upward as MCI was pursued by no fewer than three corporate suitors
during the period, with WorldCom the apparent winner. Although
uncertainty arising from these takeover attempts caused MCI's stock to
experience considerable volatility, the overall effect was to drive
the share price higher by the end of the period. Another stock that
helped the fund's performance was AT&T, which benefited from improved
earnings trends and investors' confidence in the abilities of the
company's new CEO. Ameritech is a regional Bell operating company
whose stock price rose sharply toward the end of the period because of
the favorable interest-rate and regulatory factors I mentioned
earlier.
Q. WHICH OF THE FUND'S HOLDINGS PROVED TO BE DISAPPOINTMENTS?
A. NGC Corp. was one of the fund's weaker performers. Although its
1997 revenues were up sharply versus the previous year's, the company
recorded a fourth-quarter loss due to writedowns on some of its
inventories. Sonat suffered because it is one of the gas companies
most sensitive to natural gas prices, which were weak during the
period. Finally, EXCEL Communications posted earnings that were short
of Wall Street's expectations, primarily because of
higher-than-expected marketing costs.
Q. WHAT'S YOUR OUTLOOK, NICK?
A. I don't foresee much change for the fund's positioning. I will
continue to emphasize telephone utility stocks because, based on
current and projected price-to-earnings multiples, I think they offer
better growth potential than the shares of electric and gas companies.
As deregulation continues to unfold, I will try to purchase the stocks
of companies that I believe will thrive most in a more competitive
environment.
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.

NICK THAKORE ON RECENT
REGULATORY DEVELOPMENTS IN
THE TELECOMMUNICATIONS
INDUSTRY:
"The telecommunications industry
has witnessed some potentially
significant regulatory events lately.
On December 31, 1997, a federal
judge overturned certain key
provisions of a 1996
telecommunications law requiring
the regional Bell operating
companies (RBOCs) - the primary
providers of local telephone service
in the United States - to open their
markets to competition before
offering long-distance telephone
service. According to the judge,
those provisions constituted a `bill of
attainder' that unfairly punished the
RBOCs because the law applied only
to them and not to all local phone
companies. Since then, in response to
pleas from long-distance carriers such
as AT&T, MCI, and Sprint, the judge
has delayed implementation of his
order until an appeal is heard. In the
meantime, the RBOCs must abide by
the provisions of the 1996 law.
"If the RBOCs are permitted to enter
the long-distance market without
opening their own markets to
competition, they will have a
powerful competitive advantage.
However, there will undoubtedly be
more chapters to this story, and
ultimately the case might be decided
by the Supreme Court.
"Deregulation has created many
opportunities but also many
uncertainties in the utilities sector. I
will continue to monitor regulatory
developments carefully and try
to position the fund accordingly."
FUND FACTS
GOAL: to seek a high total return
through a combination of current
income and capital appreciation
FUND NUMBER: 311
TRADING SYMBOL: FIUIX
START DATE: November 27,1987
SIZE: as of January 31, 1998,
more than $1.7 billion
MANAGER: Nick Thakore, since
August 1997; manager, Fidelity
Select Telecommunications
Portfolio, since 1996; Fidelity
Select Utilities Growth Portfolio
and Fidelity Advisor Utilities
Growth Fund, since August
1997; joined Fidelity in 1993
(checkmark)
INVESTMENT CHANGES

TOP TEN STOCKS AS OF JANUARY 31, 1998

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

MCI COMMUNICATIONS CORP. 6.8 1.4

AT&T CORP. 5.2 1.7

WORLDCOM, INC. 3.3 3.0

AMERITECH CORP. 2.4 3.4

U S WEST COMMUNICATIONS GROUP 2.3 3.4

BELLSOUTH CORP. 2.1 3.3

CINCINNATI BELL, INC. 2.0 0.2

ALCATEL ALSTHOM COMPAGNIE GENERALE
D'ELECTRICITE SA 2.0 0.3

WORLDCOM, INC. 8% DEPOSITARY SHARES DECS 1.9 0.0

NIAGARA MOHAWK POWER CORP. 1.8 2.1

</TABLE>

TOP UTILITY INDUSTRIES AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO

TELEPHONE SERVICES 38.4 36.5

ELECTRIC UTILITY 24.5 30.1

GAS 10.9 21.6

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1998 * AS OF JULY 31, 1997 **
ROW: 1, COL: 1, VALUE: 50.0
ROW: 1, COL: 2, VALUE: 31.2
ROW: 1, COL: 3, VALUE: 3.2
ROW: 1, COL: 4, VALUE: 15.6
STOCKS 98.0%
CONVERTIBLE
SECURITIES 0.5%
SHORT-TERM
INVESTMENTS 1.5%
FOREIGN
INVESTMENTS 3.1%
STOCKS 81.2%
CONVERTIBLE
SECURITIES 3.2%
SHORT-TERM
INVESTMENTS 15.6%
FOREIGN
INVESTMENTS 10.8%
ROW: 1, COL: 1, VALUE: 50.0
ROW: 1, COL: 2, VALUE: 47.0
ROW: 1, COL: 3, VALUE: 1.5
ROW: 1, COL: 4, VALUE: 2.0
*
**
INVESTMENTS JANUARY 31, 1998

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

COMMON STOCKS - 81.2%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.0%
AEROSPACE & DEFENSE - 0.0%
Harsco Corp. 12,700 $ 515
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE - 0.0%
Echelon International Corp. (a) 1,179 25
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Developers Diversified Realty Corp. 12,100 480
TOTAL CONSTRUCTION & REAL ESTATE 505
DURABLES - 0.6%
AUTOS, TIRES, & ACCESSORIES - 0.6%
AutoZone, Inc. (a) 900 25
NGC Corp. 589,250 9,428
9,453
ENERGY - 2.1%
COAL - 0.2%
MAPCO, Inc. 55,700 2,600
INDEPENDENT POWER - 0.0%
Trigen Energy Corp. 14,500 261
OIL & GAS - 1.9%
Burlington Resources, Inc. 42,200 1,804
Coastal Corp. (The) 422,800 24,522
EEX Corp. (a) 455,099 3,840
Nuevo Energy Corp. (a) 10,400 381
Occidental Petroleum Corp. 32,300 824
Pennzoil Co. 6,200 401
Petroleum Heat & Power, Inc. Class A 118,700 326
Royal Dutch Petroleum Co. 20,400 1,046
Texaco, Inc. 12,400 646
Total SA Class B 4,100 426
34,216
TOTAL ENERGY 37,077
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
OEC Medical Systems, Inc. (a) 900 $ 20
World Heart Corp. (a) 900 4
24
HOLDING COMPANIES - 0.9%
CEI Citicorp Holdings SA Class B (a) 224,346 875
CINergy Corp. 384,779 13,275
Iven SA 3,200,000 1,539
15,689
INDUSTRIAL MACHINERY & EQUIPMENT - 2.1%
ELECTRICAL EQUIPMENT - 2.1%
Alcatel Alsthom Compagnie Generale d'Electricite SA
sponsored ADR 50,000 1,303
Alcatel Alsthom Compagnie Generale d'Electricite SA 268,100 35,531
American Superconductor Corp. (a) 27,400 250
Titan Corp. (a) 38,200 229
37,313
MEDIA & LEISURE - 2.4%
BROADCASTING - 1.3%
CBS Corp. 56,700 1,698
Smartalk Teleservices, Inc. (a) 7,700 223
TCI Satellite Entertainment, Inc. Class A (a) 49,900 275
TCI Group Class A (a) 317,464 8,889
Tele-Communications, Inc. (TCI Ventures Group) Series A (a) 381,536
11,255
22,340
PUBLISHING - 1.1%
U S WEST Media Group (a) 677,124 20,102
TOTAL Media & leisure 42,442
PRECIOUS METALS - 0.1%
Barrick Gold Corp. 69,400 1,352
Newmont Mining Corp. 32,500 926
2,278
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 0.1%
Chemed Corp. 33,300 $ 1,334
Hagler Bailly, Inc. 800 18
1,352
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.0%
Intermedia Communications, Inc. (a) 5,315 327
Lucent Technologies, Inc. 200 18
345
COMPUTER SERVICES & SOFTWARE - 0.1%
NCR Corp. (a) 29,650 891
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Itron, Inc. (a) 140,100 2,224
TOTAL TECHNOLOGY 3,460
UTILITIES - 72.7%
CELLULAR - 0.6%
AirTouch Communications, Inc. (a) 243,600 10,688
Mobile Telecommunications Technologies, Inc. (a) 13,300 300
10,988
ELECTRIC UTILITY - 24.1%
AES Corp. (a) 291,302 12,471
Allegheny Energy, Inc. 634,400 19,428
Ameren Corp. (a) 169,641 6,213
American Electric Power Co., Inc. 418,300 20,627
Baltimore Gas & Electric Co. 39,000 1,185
Boston Edison Co. 116,800 4,351
CMS Energy Corp. 100,000 4,256
CMS Energy Corp. Class G 35,100 888
Calenergy, Inc. (a) 22,300 573
Carolina Power & Light Co. 28,500 1,158
Central & South West Corp. 246,400 6,668
Central Hudson Gas & Electric Corp. 47,100 1,875
Central Louisiana Electric Co., Inc. 90,300 2,805
Central Maine Power Co. 185,100 3,066
CILCORP, Inc. 183,900 8,230
Citizens Utilities Co. Class B 406,912 3,866
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Compania Energertica Minas Gerais 102,793,000 $ 4,064
Consolidated Edison, Inc. 520,000 21,482
DPL, Inc. 615,150 11,265
DQE, Inc. 216,350 7,072
DTE Energy Co. 120,000 4,305
Dominion Resources, Inc. 36,800 1,467
Duke Energy Corp. 525,593 28,481
Eastern Utilities Associates 9,500 229
Electricity Generating PCL (For. Reg.) 26,800 74
Energy Group PLC sponsored ADR 300,000 14,737
Energy Group PLC 50,000 614
Enova Corp. 75,900 1,926
Entergy Corp. 175,961 5,037
FPL Group, Inc. 130,000 7,459
FirstEnergy Corp. 226,675 6,574
Florida Progress Corp. 10,000 383
GPU, Inc. 60,000 2,359
Hawaiian Electric Industries, Inc. 35,000 1,367
Houston Industries, Inc. 446,790 11,672
IES Industries, Inc. 50,700 1,860
Idaho Power Co. 116,100 4,027
Interstate Power Co. 6,500 226
KU Energy Corp. 66,300 2,486
Kansas City Power & Light Co. 28,400 806
LG&E Energy Corp. 62,700 1,466
Midamerican Energy Holdings Co. 9,500 197
Montana Power Co. 46,500 1,395
NIPSCO Industries, Inc. 145,100 7,409
National Grid Co. PLC 308,500 1,456
Nevada Power Co. 50,000 1,237
New Century Energies, Inc. 228,775 10,424
New England Electric System 39,300 1,651
New York State Electric & Gas Corp. 164,800 5,809
Niagara Mohawk Power Corp. (a) 2,922,300 31,597
Northeast Utilities 736,800 9,026
Northern States Power Co. 6,300 338
OGE Energy Corp. 16,600 868
PECO Energy Co. 668,400 12,658
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
PG&E Corp. 506,800 $ 15,109
PP&L Resources, Inc. 29,200 639
PacifiCorp. 643,900 14,930
Pinnacle West Capital Corp. 128,300 5,132
Potomac Electric Power Co. 259,100 6,445
Public Service Co. of New Mexico 434,800 9,837
Public Service Enterprise Group, Inc. 29,000 899
Puget Sound Power & Light Co. 98,700 2,764
Rochester Gas & Electric Corp. 28,500 894
SCANA Corp. 6,300 178
Sierra Pacific Resources 7,900 279
Southern Co. 244,300 5,940
Southern Electric PLC 79,300 687
TECO Energy, Inc. 6,300 163
TNP Enterprises, Inc. 17,700 592
Texas Utilities Co. 205,687 8,459
Unicom Corp. 400,300 12,409
Unisource Energy Corp. (a) 431,120 7,437
United Illuminating Co. 39,400 1,679
Utilicorp United, Inc. 113,677 4,021
WPL Holdings, Inc. 38,700 1,241
WPS Resources Corp. 25,000 806
Wisconsin Energy Corp. 42,400 1,169
424,872
GAS - 10.9%
AGL Resources, Inc. 30,800 610
Aquila Gas Pipeline Corp. 37,200 395
Colonial Gas Co. 8,400 241
Columbia Gas System, Inc. (The) 185,400 14,067
Connecticut Energy Corp. 400 11
Consolidated Natural Gas Co. 282,800 15,360
Eastern Enterprises Co. 397,800 16,459
Energen Corp. 206,300 8,046
Enron Corp. 378,223 15,673
Equitable Resources, Inc. 28,500 937
K N Energy, Inc. 242,600 12,191
Keyspan Energy Corp. 309,800 10,553
MCN Corp. 463,600 17,153
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - CONTINUED
MDU Resources Group, Inc. 48,050 $ 1,435
National Fuel Gas Co. 69,400 3,192
NICOR, Inc. 168,100 6,766
ONEOK, Inc. 258,657 8,843
Pacific Enterprises 312,300 11,262
Peoples Energy Corp. 83,300 3,145
Public Service Co. of North Carolina, Inc. 1,400 29
Questar Corp. 287,200 11,955
Sonat, Inc. 188,000 8,213
Southern Union Co. 34,069 794
UGI Corp. 116,583 3,301
WICOR, Inc. 40,600 1,799
Washington Gas Light Co. 117,500 3,114
Western Resources, Inc. 8,500 346
Williams Companies, Inc. 558,700 15,923
191,813
TELEPHONE SERVICES - 36.5%
AT&T Corp. 1,475,000 92,372
ALLTEL Corp. 186,000 7,951
American Communication Services, Inc. (a) 44,700 698
Ameritech Corp. 975,000 41,864
BCE, Inc. 841,000 26,347
BC Telecom, Inc. 71,100 1,998
BellSouth Corp. 614,500 37,216
Cincinnati Bell, Inc. 991,900 35,584
Compania Anonima Nacional Telefonos de Venezuela
sponsored ADR 613,300 22,539
EXCEL Communications, Inc. (a) 550,000 8,697
France Telecom SA (a) 10,500 448
Frontier Corp. 194,100 5,059
GST Telecommunications, Inc. (a) 250,000 2,888
GTE Corp. 481,500 26,272
ITC Deltacom, Inc. 1,700 33
Indosat (Indonesia Satellite) sponsored ADR 10,900 189
MCI Communications Corp. 2,575,800 119,614
Maritime Telegraph & Telephone Co., Ltd. 111,300 2,504
McLeodUSA, Inc. Class A (a) 304,300 10,479
Newtel Enterprises Ltd. 114,500 2,753
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
NEXTLINK Communications, Inc. Class A 1,400 $ 35
PT Telekomunikasi Indonesia Persero, Series B, sponsored ADR 10,100
93
Qwest Communications International, Inc. 1,900 135
Sprint Corp. 237,100 14,078
Tel-Save Holdings, Inc. (a) 597,100 14,181
Telebras sponsored ADR 160,000 17,760
Telefonica de Espana SA sponsored ADR 82,800 8,083
Telefonos de Mexico SA sponsored ADR representing Ord.
Class L shares 338,600 16,676
Teleport Communications Group, Inc. Class A (a) 60,000 3,349
Telus Corp. 400,000 8,876
Telecom Italia Mobile Spa 2,882,100 13,661
U S WEST Communications Group 841,924 40,518
Winstar Communications, Inc. (a) 73,100 2,389
WorldCom, Inc. (a) 1,650,760 59,118
644,457
WATER - 0.6%
American Water Works, Inc. 318,357 8,596
E Town Corp. 15,200 549
Severn Trent PLC 56,905 897
Yorkshire Water PLC 100,800 779
10,821
TOTAL UTILITIES 1,282,951
TOTAL COMMON STOCKS
(Cost $997,846) 1,433,059
CONVERTIBLE PREFERRED STOCKS - 3.2%
TECHNOLOGY - 0.9%
COMMUNICATIONS EQUIPMENT - 0.9%
Intermedia Communications, Inc., Series D, 7% 388,500 16,317
UTILITIES - 2.3%
ELECTRIC UTILITY - 0.4%
Citizens Utilities Trust $2.50 EPPICS 141,300 6,800
Kenetech Corp. 8 1/4% (a) 41,700 88
6,888
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 1.9%
WorldCom, Inc. 8% depositary shares DECS 270,000 $ 33,784
TOTAL UTILITIES 40,672
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $55,133) 56,989
CASH EQUIVALENTS - 15.6%
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.59% dated
1/30/98 due 2/02/98 $ 153,482 153,411

SHARES
Taxable Central Cash Fund (b) 121,964,536 121,965
TOTAL CASH EQUIVALENTS
(Cost $275,376) 275,376
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,328,355) $ 1,765,424
SECURITY TYPE ABBREVIATIONS
DECS - Dividend Enhanced Convertible
Stock/Debt Exchangeable for Common Stock
EPPICS - Equity Providing Preferred
Income Convertible Securities
LEGEND
1. Non-income producing
2. At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.63%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 89.2%
Canada 2.6
France 2.1
Brazil 1.3
Venezuela 1.3
United Kingdom 1.1
Others (individually less than 1%) 2.4
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1998, the aggregate cost of investment securities for
income tax purposes was $1,330,951,000. Net unrealized appreciation
aggregated $434,473,000, of which $445,645,000 related to appreciated
investment securities and $11,172,000 related to depreciated
investment securities.
The fund hereby designates approximately $35,257,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
On December 31, 1991, the fund acquired substantially all of the
assets of Fidelity Corporate Trust: Adjustable Rate Preferred
Portfolio. At the time of the merger, Fidelity Corporate Trust:
Adjustable Rate Preferred Portfolio had a capital loss carryforward,
of which approximately $1,130,000 is still available to offset future
capital gains of the fund, to the extent provided by regulations.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JANUARY 31, 1998

ASSETS

INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 1,765,424
AGREEMENTS OF $153,411) (COST $1,328,355) -
SEE ACCOMPANYING SCHEDULE

CASH 1

RECEIVABLE FOR INVESTMENTS SOLD 11,976

RECEIVABLE FOR FUND SHARES SOLD 11,240

DIVIDENDS RECEIVABLE 3,701

INTEREST RECEIVABLE 944

OTHER RECEIVABLES 18

TOTAL ASSETS 1,793,304

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 26,491

PAYABLE FOR FUND SHARES REDEEMED 12,911

ACCRUED MANAGEMENT FEE 866

OTHER PAYABLES AND ACCRUED EXPENSES 389

COLLATERAL ON SECURITIES LOANED, AT VALUE 14,354

TOTAL LIABILITIES 55,011

NET ASSETS $ 1,738,293

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 1,245,730

UNDISTRIBUTED NET INVESTMENT INCOME 2,016

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 53,477
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 437,070
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

NET ASSETS, FOR 88,587 SHARES OUTSTANDING $ 1,738,293

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $19.62
PER SHARE ($1,738,293 (DIVIDED BY) 88,587 SHARES)

STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED JANUARY 31, 1998

INVESTMENT INCOME $ 38,910
DIVIDENDS

INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $79) 3,608

TOTAL INCOME 42,518

EXPENSES

MANAGEMENT FEE $ 6,631
BASIC FEE

PERFORMANCE ADJUSTMENT 1,432

TRANSFER AGENT FEES 2,750

ACCOUNTING AND SECURITY LENDING FEES 559

NON-INTERESTED TRUSTEES' COMPENSATION 9

CUSTODIAN FEES AND EXPENSES 38

REGISTRATION FEES 144

AUDIT 65

LEGAL 11

MISCELLANEOUS 27

TOTAL EXPENSES BEFORE REDUCTIONS 11,666

EXPENSE REDUCTIONS (311) 11,355

NET INVESTMENT INCOME 31,163

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES 216,302

FOREIGN CURRENCY TRANSACTIONS (162) 216,140

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES 102,437

ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 6 102,443

NET GAIN (LOSS) 318,583

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 349,746
FROM OPERATIONS

STATEMENT OF CHANGES IN NET ASSETS

</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31,
1998 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 31,163 $ 38,852
NET INVESTMENT INCOME

NET REALIZED GAIN (LOSS) 216,140 61,625

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 102,443 44,036

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 349,746 144,513
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS (31,789) (38,660)
FROM NET INVESTMENT INCOME

FROM NET REALIZED GAIN (171,605) (41,320)

TOTAL DISTRIBUTIONS (203,394) (79,980)

SHARE TRANSACTIONS 796,964 542,924
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 185,940 71,648

COST OF SHARES REDEEMED (670,869) (945,410)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 312,035 (330,838)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 458,387 (266,305)

NET ASSETS

BEGINNING OF PERIOD 1,279,906 1,546,211

END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 1,738,293 $ 1,279,906
INCOME OF $2,016 AND $3,209, RESPECTIVELY)

OTHER INFORMATION
SHARES

SOLD 40,935 33,232

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 9,844 4,482

REDEEMED (35,868) (58,288)

NET INCREASE (DECREASE) 14,911 (20,574)

</TABLE>

FINANCIAL HIGHLIGHTS

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

1998 1997 1996 1995 1994

SELECTED PER-SHARE DATA

NET ASSET VALUE, $ 17.37 $ 16.41 $ 13.47 $ 15.84 $ 13.94
BEGINNING OF PERIOD

INCOME FROM
INVESTMENT OPERATIONS

NET INVESTMENT INCOME .43 B .48 B .54 .55 .50

NET REALIZED 4.46 1.50 3.22 (1.58) 2.14
AND UNREALIZED GAIN (LOSS)

TOTAL FROM INVESTMENT OPERATIONS 4.89 1.98 3.76 (1.03) 2.64

LESS DISTRIBUTIONS

FROM NET INVESTMENT INCOME (.44) (.48) (.54) (.54) (.52)

FROM NET REALIZED GAIN (2.20) (.54) (.28) (.68) (.22)

IN EXCESS OF NET REALIZED GAIN - - - (.12) -

TOTAL DISTRIBUTIONS (2.64) (1.02) (.82) (1.34) (.74)

NET ASSET VALUE, END OF PERIOD $ 19.62 $ 17.37 $ 16.41 $ 13.47 $ 15.84

TOTAL RETURN A 29.16% 12.73% 28.61% (6.38)% 19.34%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD $ 1,738 $ 1,280 $ 1,546 $ 1,171 $ 1,456
(IN MILLIONS)

RATIO OF EXPENSES TO AVERAGE .87% .84% .80% .88% .87%
NET ASSETS

RATIO OF EXPENSES TO AVERAGE .85% .81% .77% .87% .86%
NET ASSETS AFTER EXPENSE C C C C C
REDUCTIONS

RATIO OF NET INVESTMENT INCOME TO 2.34% 2.96% 3.69% 3.87% 3.39%
AVERAGE NET ASSETS

PORTFOLIO TURNOVER RATE 57% 56% 98% 98% 47%

AVERAGE COMMISSION RATE D $ .0104 $ .0048

</TABLE>

A 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).
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C 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).
D FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Utilities Fund (the fund) is a fund of Fidelity Devonshire
Trust (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
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, and gains and losses between
trade and settlement date on purchases and sales of securities. The
effects of changes in foreign currency exchange rates on investments
in securities are included with the net realized and unrealized gain
or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
partnerships, non-taxable dividends, capital loss carryforwards, and
losses deferred due to wash sales. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part
of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
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.
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.
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 Fidelity Investments Money Management, Inc.
(formerly FMR Texas, Inc.), an affiliate of FMR. The Cash Fund is an
2. OPERATING POLICIES - CONTINUED
TAXABLE CENTRAL CASH FUND - CONTINUED
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. Income distributions from the Cash Fund are declared daily
and paid monthly from net interest income. Income distributions earned
by the fund are recorded as interest income in the accompanying
financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $730,894,000 and $825,055,000, 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. The annual individual fund fee rate is .20%. 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 basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).15% 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 .60% 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 .21% of average net assets.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $94,000 for the
period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income.
The fund receives U.S. Treasury obligations and/or cash as collateral
against the loaned securities, in an amount at least equal to 102% of
the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan.
At period end, the value of the securities loaned and the value of
collateral amounted to $13,507,000 and $14,354,000, respectively.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $296,000 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 $3,000 and $12,000, respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Utilities Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Devonshire Trust: Fidelity Utilities Fund, including the
schedule of portfolio investments, as of January 31, 1998, and the
related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights
are the responsibility of the fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of January 31, 1998 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 Utilities
Fund as of January 31, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with
generally accepted accounting principles.
/s/COOPERS & LYBRAND LLP.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 10, 1998
DISTRIBUTIONS

The Board of Trustees of Fidelity Utilities Fund voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:

PAY DATE 3/10/97 12/29/97 3/9/98

RECORD DATE 3/7/97 12/26/97 3/6/98

DIVIDENDS $ .10 $ .10 $ .10

SHORT-TERM
CAPITAL GAINS $ .07 $ .22 $ .03

LONG-TERM
CAPITAL GAINS $ .11 $ 1.80 $ .22

LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 100% 34.22% 33.18%
20% rate 0% 65.78% 66.82%
A total of .91% 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 70% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
MANAGING YOUR INVESTMENTS

Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate
the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.

For quotes.*

For account balances and holdings.

To review orders and mutual
fund activity.

To change your PIN.

To speak to a Fidelity representative.
0
*
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
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251 University Avenue
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1760 Challenge Way
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7676 Hazard Center Drive
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455 Market Street
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950 Northgate Drive
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1400 Civic Drive
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6300 Canoga Avenue
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COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
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265 Church Street
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300 Atlantic Street
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DELAWARE
222 Delaware Avenue
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FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
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4090 N. Ocean Boulevard
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4001 Tamiami Trail, North
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8065 Beneva Road
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1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
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3232 Lake Avenue
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INDIANA
4729 East 82nd Street
Indianapolis, IN
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
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1 West Pennsylvania Ave.
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MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
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44 Mall Road
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416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
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14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Robert A. Lawrence, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
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 *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities 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

(REGISTERED TRADEMARK)

EQUITY-INCOME
FUND
ANNUAL REPORT
JANUARY 31, 1998
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 31 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 35 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 40 THE AUDITORS' OPINION.
ACCOUNTANTS

DISTRIBUTIONS 41

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

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 JANUARY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY EQUITY-INCOME 24.69% 143.91% 336.60%

S&P 500 (REGISTERED TRADEMARK) 26.91% 152.28% 410.11%

EQUITY INCOME FUNDS AVERAGE 22.80% 117.46% 278.21%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had 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 return to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. To measure how the fund's performance stacked up
against its peers, you can compare it to the equity income 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 190 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 JANUARY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY EQUITY-INCOME 24.69% 19.52% 15.88%

S&P 500 26.91% 20.33% 17.69%

EQUITY INCOME FUNDS AVERAGE 22.80% 16.68% 14.04%

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 10 YEARS
IMAHDR PRASUN SHR__CHT 19980131 19980209 141221 S00000000000001
Equity-Income S&P 500
00023 SP001
1988/01/31 10000.00 10000.00
1988/02/29 10467.61 10466.00
1988/03/31 10341.34 10142.60
1988/04/30 10484.66 10255.18
1988/05/31 10606.28 10344.40
1988/06/30 11207.36 10819.21
1988/07/31 11185.38 10778.10
1988/08/31 10961.23 10411.64
1988/09/30 11284.13 10855.18
1988/10/31 11484.28 11156.95
1988/11/30 11373.09 10997.41
1988/12/31 11481.90 11189.86
1989/01/31 12215.46 12008.96
1989/02/28 12106.11 11709.94
1989/03/31 12341.00 11982.78
1989/04/30 12801.20 12604.69
1989/05/31 13106.44 13115.18
1989/06/30 13146.70 13040.42
1989/07/31 14000.99 14217.97
1989/08/31 14171.85 14496.64
1989/09/30 13999.50 14437.21
1989/10/31 13256.37 14102.26
1989/11/30 13433.76 14389.95
1989/12/31 13625.62 14735.31
1990/01/31 12789.85 13746.57
1990/02/28 12810.11 13923.90
1990/03/31 12818.86 14292.88
1990/04/30 12337.06 13935.56
1990/05/31 13131.51 15294.28
1990/06/30 13078.33 15190.28
1990/07/31 12891.64 15141.67
1990/08/31 11890.80 13772.86
1990/09/30 11030.43 13102.12
1990/10/31 10809.71 13045.78
1990/11/30 11487.62 13888.54
1990/12/31 11715.23 14276.03
1991/01/31 12286.17 14898.47
1991/02/28 13148.07 15963.71
1991/03/31 13339.39 16350.03
1991/04/30 13406.09 16389.27
1991/05/31 14106.41 17097.28
1991/06/30 13489.51 16314.23
1991/07/31 14209.55 17074.47
1991/08/31 14530.19 17479.14
1991/09/30 14459.15 17187.24
1991/10/31 14681.16 17417.54
1991/11/30 14100.51 16715.62
1991/12/31 15159.89 18627.88
1992/01/31 15309.71 18281.40
1992/02/29 15776.43 18519.06
1992/03/31 15563.75 18157.94
1992/04/30 16088.18 18691.78
1992/05/31 16245.51 18783.37
1992/06/30 16058.33 18503.50
1992/07/31 16458.31 19260.30
1992/08/31 16128.91 18865.46
1992/09/30 16258.82 19088.07
1992/10/31 16425.09 19154.88
1992/11/30 16965.47 19808.06
1992/12/31 17384.68 20051.70
1993/01/31 17900.05 20220.14
1993/02/28 18331.52 20495.13
1993/03/31 18934.45 20927.58
1993/04/30 18898.19 20421.13
1993/05/31 19236.63 20968.42
1993/06/30 19469.09 21029.22
1993/07/31 19767.68 20945.11
1993/08/31 20431.88 21738.93
1993/09/30 20402.57 21571.54
1993/10/31 20752.64 22018.07
1993/11/30 20420.99 21808.90
1993/12/31 21089.26 22072.78
1994/01/31 21930.59 22823.26
1994/02/28 21332.31 22204.75
1994/03/31 20404.68 21236.62
1994/04/30 20851.64 21508.45
1994/05/31 21117.23 21861.19
1994/06/30 20835.49 21325.59
1994/07/31 21422.03 22025.07
1994/08/31 22171.51 22928.10
1994/09/30 21654.71 22366.36
1994/10/31 21857.95 22869.60
1994/11/30 20959.77 22036.69
1994/12/31 21140.55 22363.49
1995/01/31 21271.39 22943.38
1995/02/28 22063.30 23837.48
1995/03/31 22618.33 24540.93
1995/04/30 23360.83 25263.66
1995/05/31 24124.35 26273.45
1995/06/30 24486.39 26883.78
1995/07/31 25354.60 27775.24
1995/08/31 25545.18 27844.96
1995/09/30 26337.60 29020.02
1995/10/31 25883.38 28916.42
1995/11/30 27118.29 30185.85
1995/12/31 27865.37 30767.23
1996/01/31 28761.65 31814.54
1996/02/29 29040.82 32109.46
1996/03/31 29584.57 32418.68
1996/04/30 29951.66 32896.53
1996/05/31 30326.24 33744.93
1996/06/30 30363.70 33873.50
1996/07/31 29330.72 32376.97
1996/08/31 30024.40 33059.80
1996/09/30 31118.86 34920.40
1996/10/31 32074.96 35883.51
1996/11/30 34070.64 38595.94
1996/12/31 33723.97 37831.36
1997/01/31 35015.29 40195.06
1997/02/28 35574.34 40510.19
1997/03/31 34480.44 38845.62
1997/04/30 35536.95 41164.71
1997/05/31 37906.08 43670.82
1997/06/30 39584.88 45627.27
1997/07/31 42441.69 49257.83
1997/08/31 40647.13 46498.41
1997/09/30 42881.75 49045.12
1997/10/31 41377.98 47407.02
1997/11/30 42768.56 49601.49
1997/12/31 43835.54 50453.15
1998/01/30 43659.90 51011.16
IMATRL PRASUN SHR__CHT 19980131 19980209 141225 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Equity-Income Fund on January 31, 1988. As the
chart shows, by January 31, 1998, the value of the investment would
have grown to $43,660 - a 336.60% increase on the initial investment.
For comparison, look at how the S&P 500 did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $51,011 - a 410.11% 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
A seesaw battle between
large-company and
small-company stocks, economic
chaos in Southeast Asia and an
ensuing "flight to quality" mentality
on the part of investors were just
three factors that played a key role
in the direction of the U.S. stock
market over the past year. For the
12 months that ended January 31,
1998, the Standard & Poor's 500
Index returned 26.91%. Large-cap
stocks continued to account for
much of the market's advance in
early 1997 as investors - seeking
reliability - gravitated toward
stocks of well-known companies.
But along with their dominance,
large-cap stocks had become
expensive. In early May, small-cap
stocks began to display better
earnings growth and, combined
with attractive valuations,
performed well. The Dow Jones
Industrial Average soared to
record heights during the period,
closing above the 8000-point
mark for the first time ever in
July. Thousands of miles away,
however, an economic crisis
threatened to interrupt the U.S.
market's parade. Several small
countries in Southeast Asia
devalued their currencies in June,
and by late October the trouble had
spread to larger Asian markets
such as Hong Kong. Investors
across the globe expressed their
concerns. In the U.S., for instance,
the Dow slid 550-plus points in
one trading session only to
bounce back significantly the next.
Along with this turmoil, investors
flocked to higher-quality stocks
with strong brand names, good
liquidity and minimal international
exposure. Despite the late-period
uncertainty, stock investors still
displayed confidence. Stock
mutual funds - having had record
cash inflows of $222 billion in
1996 - eclipsed that mark in
1997 with $231 billion in new
money.
An interview with Stephen Petersen, Portfolio Manager of Fidelity
Equity-Income Fund
Q. STEVE, HOW DID THE FUND PERFORM OVER THE PAST YEAR?
A. For the 12-month period ending January 31, 1998, the fund returned
24.69%, outperforming the equity-income funds average tracked by
Lipper Analytical Services, which returned 22.80% over the same
period. However, over the past 12 months, the fund lagged the Standard
& Poor's 500 Index, which returned 26.91%.
Q. WHY DID THE FUND OUTPERFORM ITS PEER GROUP OVER THE PERIOD?
A. It performed better than most other equity-income funds because of
strong individual stock selection. One outstanding stock choice was
General Electric, the fund's largest holding at the end of the period.
This company showed strong earnings growth and solid underlying
fundamentals. Fannie Mae, which packages and facilitates mortgage
loans, also turned in a solid performance over the period.
Q. ON THE OTHER HAND, THE FUND UNDERPERFORMED THE INDEX . . .
A. That was largely because the fund's equity-income style of
management - which favors companies that pay high dividends instead of
high-growth companies - was not as effective in the strong market of
1997 as some other management styles. To be in line with the fund's
management style, I did not invest in some of the year's
top-performing companies because they did not pay dividends. So the
fund missed out on most technology companies and large growth
companies, which were part of the index and were generally the
strongest performers in 1997. That said, I'd like to point out that
the fund did relatively well compared to the index because of its
strong sector-weighting selection. It was overweighted relative to the
index in the financial sector - which outperformed the market - and
underweighted compared to the index in the utility sector - which
underperformed the market.
Q. FINANCIAL HOLDINGS MADE UP OVER 24% OF THE FUND AT THE END OF THE
PERIOD. WHY DID THIS SECTOR PERFORM SO WELL OVER THE PAST YEAR?
A. In general, financial stocks move in the opposite direction of
interest rates. That is, when interest rates go down, financial stocks
usually do well and, conversely, when rates go up, financial stocks
tend to turn in weaker performances. So it was good news for the
sector that interest rates trended downward in 1997. The sector also
benefited from a fair amount of consolidation. Some standout financial
stocks over the period were Bank of New York and Allstate Corp. Bank
of New York - a fee-oriented bank that provides customers with a
variety of cash-management services - performed extremely well over
the period as fee-oriented banks outperformed lending banks.
Similarly, Allstate - which offers automobile insurance and homeowner
policies for individuals rather than large companies - benefited from
a market that favored personal-line insurance companies over
commercial insurance companies.
Q. DID YOU HAVE ANY REGRETS OVER THE PERIOD?
A. Sure. I wish I had reduced the fund's exposure to cyclical stocks -
those stocks that tend to perform well when the economy is up and
poorly when the economy is weak - during the fourth quarter of 1997.
While cyclical stocks, such as paper companies, were relatively good
performers for the first three quarters of the year, they were hit
hard in the fourth quarter when Southeast Asian markets plummeted.
That's because cyclical industries tend to be commodity industries.
So, if demand drops dramatically in Asia, many of the raw materials
that are produced there get backed out into the world market. This, in
turn, creates an oversupply and hurts commodity pricing across the
world.
Q. STEVE, HOW DOES THE FUND LOOK GOING FORWARD?
A. On the positive side, it looks like pretty much all of the factors
that allowed the market to perform well in 1997 still exist - little
to no inflation, low interest rates and a fairly benign political
environment. On the negative side, I expect the market declines
throughout Asia to have an impact on the earnings of a number of
companies, especially cyclical ones. In addition, the U.S. dollar
continues to remain stronger than most European currencies, hurting
U.S.-based multinationals when they try to price their goods
competitively against foreign companies. Overall, while I think that
the fund will have some challenges going forward - mostly due to
factors outside the United States - the general environment still
looks pretty good.
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.

TOP TEN STOCKS AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO

GENERAL ELECTRIC CO. 3.5 3.2

PHILIP MORRIS COMPANIES, INC. 2.4 2.7

FANNIE MAE 2.2 1.9

AMERICAN EXPRESS CO. 2.0 2.1

BRITISH PETROLEUM PLC ADR 1.7 1.9

ALLSTATE CORP. 1.6 1.5

BANK OF NEW YORK CO., INC. 1.4 1.2

WAL-MART STORES, INC. 1.3 1.2

BANKAMERICA CORP. 1.2 1.3

BELL ATLANTIC CORP. 1.2 0.4

TOP FIVE MARKET SECTORS AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO

FINANCE 24.1 24.2

ENERGY 10.2 10.8

UTILITIES 9.3 8.2

BASIC INDUSTRIES 7.4 7.9

INDUSTRIAL MACHINERY & EQUIPMENT 7.2 7.8

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1998 * AS OF JULY 31, 1997 **
ROW: 1, COL: 1, VALUE: 50.0
ROW: 1, COL: 2, VALUE: 38.0
ROW: 1, COL: 3, VALUE: 1.5
ROW: 1, COL: 4, VALUE: 6.0
ROW: 1, COL: 5, VALUE: 4.3
STOCKS 89.0%
BONDS 0.1%
CONVERTIBLE
SECURITIES 6.0%
SHORT-TERM
INVESTMENTS 4.9%
FOREIGN
INVESTMENTS 13.9%
STOCKS 89.6%
BONDS 0.1%
CONVERTIBLE
SECURITIES 6.0%
SHORT-TERM
INVESTMENTS 4.3%
FOREIGN
INVESTMENTS 11.7%
ROW: 1, COL: 1, VALUE: 50.0
ROW: 1, COL: 2, VALUE: 38.0
ROW: 1, COL: 3, VALUE: 1.5
ROW: 1, COL: 4, VALUE: 6.0
ROW: 1, COL: 5, VALUE: 4.9
*
**
INVESTMENTS JANUARY 31, 1998

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

COMMON STOCKS - 89.6%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 4.6%
AEROSPACE & DEFENSE - 3.4%
AlliedSignal, Inc. 3,884,600 $ 151,257
Boeing Co. 684,878 32,574
GenCorp, Inc. 1,184,073 29,306
Gulfstream Aerospace Corp. (a) 535,900 18,254
Harsco Corp. 1,187,700 48,176
Lockheed Martin Corp. 1,466,300 152,587
Textron, Inc. 2,090,700 125,050
Thiokol Corp. 218,800 18,871
United Technologies Corp. 1,811,500 147,864
723,939
DEFENSE ELECTRONICS - 1.1%
Northrop Grumman Corp. 629,300 77,168
Raytheon Co.:
Class A 112,556 5,754
Class B 2,949,200 153,727
236,649
SHIP BUILDING & REPAIR - 0.1%
General Dynamics Corp. 170,800 14,732
TOTAL AEROSPACE & DEFENSE 975,320
BASIC INDUSTRIES - 7.3%
CHEMICALS & PLASTICS - 3.5%
Air Products & Chemicals, Inc. 802,200 64,226
du Pont (E.I.) de Nemours & Co. 1,318,700 74,671
Goodrich (B.F.) Co. 1,019,500 42,755
Great Lakes Chemical Corp. 1,047,800 45,776
Hercules, Inc. 1,494,000 70,498
Hoechst AG Ord. 784,800 27,502
Lyondell Petrochemical Co. 359,339 9,163
Millennium Chemicals, Inc. 1,107,257 25,882
Monsanto Co. 2,019,200 95,786
Nalco Chemical Co. 964,200 36,158
Olin Corp. 1,260,700 54,210
Solutia, Inc. 1,368,500 38,232
Union Carbide Corp. 2,017,800 88,405
Witco Corp. 1,696,500 68,708
741,972
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - 0.5%
Dofasco, Inc. 1,613,100 $ 27,706
Inland Steel Industries, Inc. 1,827,300 36,432
Lukens, Inc. 221,900 6,560
USX-U.S. Steel Group 966,600 32,260
102,958
METALS & MINING - 1.6%
Alcan Aluminium Ltd. 1,514,100 45,042
Alumax, Inc. (a) 1,844,884 64,225
Aluminum Co. of America 1,685,048 128,696
Inco Ltd. 606,500 10,834
Kaiser Aluminum Corp. (a) 961,201 10,393
Noranda, Inc. 631,200 11,622
Pechiney SA Class A 702,838 27,554
Phelps Dodge Corp. 570,800 37,601
335,967
PACKAGING & CONTAINERS - 0.0%
Corning, Inc. 319,400 10,859
Tupperware Corp. 85,000 2,173
13,032
PAPER & FOREST PRODUCTS - 1.7%
Boise Cascade Corp. 823,600 26,355
Champion International Corp. 1,065,400 54,535
Domtar, Inc. 2,118,000 14,624
Georgia-Pacific Corp. 405,500 22,353
Georgia-Pacific Corp. (Timber Group) 405,500 9,428
Kimberly-Clark Corp. 2,753,400 143,693
Weyerhaeuser Co. 1,843,300 91,820
362,808
TOTAL BASIC INDUSTRIES 1,556,737
CONSTRUCTION & REAL ESTATE - 1.3%
BUILDING MATERIALS - 0.4%
American Standard Companies, Inc. (a) 1,193,600 47,819
Masco Corp. 821,800 40,474
88,293
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
ENGINEERING - 0.3%
EG & G, Inc. 823,400 $ 19,865
Fluor Corp. 582,000 21,934
Foster Wheeler Corp. 348,300 8,359
50,158
REAL ESTATE - 0.0%
Fastighets AB Tornet 528,030 7,779
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Alexandria Real Estate Equities, Inc. 232,800 7,770
Boston Properties, Inc. 165,700 5,893
Equity Residential Properties Trust (SBI) 1,083,500 55,394
First Industrial Realty Trust, Inc. 239,400 8,588
Liberty Property Trust (SBI) 135,500 3,675
Macerich Co. 469,400 13,319
Patriot American Hospitality, Inc. 437,806 11,219
Public Storage, Inc. 545,600 17,937
Weeks Corp. 360,700 11,249
135,044
TOTAL CONSTRUCTION & REAL ESTATE 281,274
DURABLES - 4.3%
AUTOS, TIRES, & ACCESSORIES - 2.6%
(BMW) Muenchen Bayerische Motorenwerke AG 39,700 31,644
Chrysler Corp. 3,417,000 118,954
Cummins Engine Co., Inc. 240,300 12,856
Eaton Corp. 851,300 76,404
Ford Motor Co. 436,000 22,236
General Motors Corp. 1,785,035 103,420
Johnson Controls, Inc. 867,900 43,992
Meritor Automotive, Inc. 1,194,700 27,329
Modine Manufacturing Co. 394,200 13,748
TRW, Inc. 507,400 25,814
Volvo AB:
Class B 2,615,100 71,575
ADR Class B 396,900 10,716
558,688
CONSUMER DURABLES - 0.8%
Minnesota Mining & Manufacturing Co. 2,056,200 171,693
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.4%
Maytag Co. 1,883,600 $ 72,401
Sunbeam-Oster, Inc. 208,300 7,902
Whirlpool Corp. 202,100 11,684
91,987
TEXTILES & APPAREL - 0.5%
Dexter Corp. 758,200 30,944
Kellwood Co. 898,400 27,289
Stride Rite Corp. 403,200 4,586
Unifi, Inc. 903,900 37,060
99,879
TOTAL DURABLES 922,247
ENERGY - 9.6%
ENERGY SERVICES - 1.3%
Baker Hughes, Inc. 206,100 7,948
Dresser Industries, Inc. 1,994,700 71,310
Eni Spa 108,600 638
Halliburton Co. 1,804,800 81,103
Schlumberger Ltd. 1,687,600 124,355
285,354
OIL & GAS - 8.3%
Amerada Hess Corp. 1,486,700 81,304
Amoco Corp. 846,800 68,908
Atlantic Richfield Co. 2,057,400 153,019
British Petroleum PLC:
ADR 4,558,748 366,124
Ord. 7,847,031 106,006
Burlington Resources, Inc. 880,000 37,620
Chevron Corp. 424,300 31,743
Coastal Corp. (The) 618,100 35,850
Exxon Corp. 646,200 38,328
Kerr-McGee Corp. 351,400 22,006
Mobil Corp. 1,148,400 78,235
Occidental Petroleum Corp. 3,441,600 87,761
Phillips Petroleum Co. 1,271,900 55,964
Royal Dutch Petroleum Co. 4,328,400 221,831
Santa Fe Energy Resources, Inc. 863,275 9,064
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Texaco, Inc. 130,633 $ 6,801
Total SA:
Class B 1,275,943 132,701
sponsored ADR 1,595,892 82,787
USX-Marathon Group 2,558,500 85,870
Ultramar Diamond Shamrock Corp. 610,500 20,337
Unocal Corp. 911,979 31,349
Valero Energy Corp. 522,300 16,485
1,770,093
TOTAL ENERGY 2,055,447
FINANCE - 23.1%
BANKS - 9.8%
Banc One Corp. 3,333,700 186,270
Bank of New York Co., Inc. 5,534,917 299,923
Bank of Nova Scotia 710,200 31,154
BankBoston Corp. 1,000,372 89,533
BankAmerica Corp. 3,651,600 259,492
Canadian Imperial Bank of Commerce 872,300 23,732
Chase Manhattan Corp. 725,000 77,711
Citicorp 952,100 113,300
Comerica, Inc. 1,223,826 115,499
Credit Suisse Group (Reg.) 317,900 50,617
Den Danske Bank Group AS 268,000 35,757
Den Norske Bank AS Class A Free shares 508,100 2,222
Forenings Sparbanken AB Class A (f) 1,156,300 27,157
Fuji International Trust unit sponsored ADR (f) 332 4,479
National Bank of Canada 4,435,000 68,861
NationsBank Corp. 3,799,559 227,974
Norwest Corp. 2,849,468 104,006
Royal Bank of Canada 1,774,100 93,059
Societe Generale Class A 120,655 15,656
Sparebanken Norway primary shares certificates 385,100 13,141
U.S. Bancorp 1,269,500 139,010
Wells Fargo & Co. 376,600 116,369
2,094,922
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 4.3%
American Express Co. 5,069,800 $ 424,279
Beneficial Corp. 773,500 60,043
First Chicago NBD Corp. 2,665,353 198,902
Fleet Financial Group, Inc. 1,255,798 89,946
Household International, Inc. 878,278 109,346
Transamerica Corp. 477,100 49,022
931,538
FEDERAL SPONSORED CREDIT - 2.2%
Fannie Mae 7,605,400 469,633
INSURANCE - 5.4%
Aetna, Inc. 483,300 35,523
Allstate Corp. 3,816,285 337,741
American Bankers Insurance Group, Inc. 1,564,840 86,457
American Financial Group, Inc. 1,144,000 43,115
CIGNA Corp. 334,100 56,651
Edperbrascan Corp. Ltd., Class A (vtg.) 5,989,050 105,540
Fremont General Corp. (e) 1,821,228 92,541
Frontier Insurance Group, Inc. 6,300 150
General Re Corp. 355,100 73,905
Hartford Financial Services Group, Inc. 1,696,700 152,703
Highlands Insurance Group, Inc. (a)(e) 747,690 19,440
MBIA, Inc. 266,200 17,237
Marsh & McLennan Companies, Inc. 317,200 23,433
Reliastar Financial Corp. 2,440,559 101,283
SAFECO Corp. 32,900 1,643
1,147,362
SAVINGS & LOANS - 1.0%
Washington Mutual, Inc. 3,487,740 224,087
SECURITIES INDUSTRY - 0.4%
Bear Stearns Companies, Inc. 232,840 9,736
First Marathon Inc. Class A (non-vtg.) 1,115,900 15,371
Lehman Brothers Holdings, Inc. 959,860 52,133
Nomura Securities Co. Ltd. 898,000 12,025
89,265
TOTAL FINANCE 4,956,807
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 5.4%
DRUGS & PHARMACEUTICALS - 3.9%
American Home Products Corp. 2,062,500 $ 196,840
Bristol-Myers Squibb Co. 2,045,800 203,941
Merck & Co., Inc. 725,600 85,076
Novartis AG (Reg.) 53,317 91,297
Pharmacia & Upjohn, Inc. 1,011,000 38,860
Schering-Plough Corp. 2,713,100 196,361
Takeda Chemical Industries Ltd. 924,000 26,057
838,432
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
Allegiance Corp. 1,131,620 36,283
Bausch & Lomb, Inc. 516,600 22,149
Baxter International, Inc. 1,686,800 93,934
Johnson & Johnson 724,800 48,516
200,882
MEDICAL FACILITIES MANAGEMENT - 0.6%
Columbia/HCA Healthcare Corp. 5,066,800 126,670
TOTAL HEALTH 1,165,984
HOLDING COMPANIES - 0.6%
CINergy Corp. 1,149,198 39,647
Norfolk Southern Corp. 2,599,300 82,041
U.S. Industries, Inc. 152,887 4,290
125,978
INDUSTRIAL MACHINERY & EQUIPMENT - 7.0%
ELECTRICAL EQUIPMENT - 4.0%
Alcatel Alsthom Compagnie Generale d'Electricite SA 567,565 75,219
Emerson Electric Co. 372,300 22,524
General Electric Co. 9,551,400 740,234
Loral Space & Communications Ltd. (a) 333,600 7,360
Omron Corp. 1,018,000 17,401
862,738
INDUSTRIAL MACHINERY & EQUIPMENT - 2.0%
Caterpillar, Inc. 507,100 24,341
Cooper Industries, Inc. 409,372 21,722
Harnischfeger Industries, Inc. 601,400 21,049
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Ingersoll-Rand Co. 1,427,200 $ 56,731
Parker-Hannifin Corp. 1,419,400 62,010
Regal-Beloit Corp. 268,800 8,115
Stewart & Stevenson Services, Inc. 1,109,600 26,977
Tyco International Ltd. 4,576,070 203,063
424,008
POLLUTION CONTROL - 1.0%
Browning-Ferris Industries, Inc. 2,256,682 77,997
Ogden Corp. 646,900 16,213
Safety Kleen Corp. 538,900 14,011
Waste Management, Inc. 3,199,200 75,181
Zurn Industries, Inc. (e) 706,200 24,364
207,766
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,494,512
MEDIA & LEISURE - 3.4%
BROADCASTING - 0.7%
Ascent Entertainment Group, Inc. (a) 80,305 853
CBS Corp. 4,553,314 136,315
Chancellor Media Corp. (a) 409,650 14,082
151,250
ENTERTAINMENT - 0.8%
MGM Grand, Inc. (a) 792,500 28,381
Viacom, Inc. (a):
Class A 19,900 821
Class B (non-vtg.) 3,530,700 147,407
176,609
LEISURE DURABLES & TOYS - 0.3%
Brunswick Corp. 1,073,300 32,333
Hasbro, Inc. 1,043,700 36,008
68,341
LODGING & GAMING - 0.6%
Circus Circus Enterprises, Inc. (a) 1,440,000 33,120
ITT Corp. (a) 1,094,400 87,552
Mirage Resorts, Inc. (a) 611,100 14,094
134,766
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - 1.0%
ACNielsen Corp. (a) 1,474,433 $ 31,885
Cognizant Corp. 751,300 34,090
Dun & Bradstreet Corp. 787,300 25,095
Harcourt General, Inc. 1,208,200 64,412
Hollinger International, Inc. Class A 536,900 7,483
McGraw-Hill, Inc. 506,500 35,360
198,325
RESTAURANTS - 0.0%
Tricon Global Restaurants, Inc. (a) 44,850 1,222
TOTAL MEDIA & LEISURE 730,513
NONDURABLES - 6.4%
BEVERAGES - 0.3%
PepsiCo, Inc. 305,000 10,999
Seagram Co. Ltd. 1,248,600 43,063
54,062
FOODS - 1.3%
Bestfoods 617,200 60,177
Corn Products International, Inc. 669,800 21,433
General Mills, Inc. 1,039,658 77,389
Goodman Fielder Ltd. Ord. 9,848,517 15,537
Heinz (H.J.) Co. 849,400 47,089
Ralcorp Holdings, Inc. 400,000 6,675
Ralston Purina Co. 569,200 53,434
281,734
HOUSEHOLD PRODUCTS - 1.1%
Avon Products, Inc. 357,100 21,426
Dial Corp. 1,092,800 22,880
Premark International, Inc. 1,002,200 27,999
Rubbermaid, Inc. 2,204,000 57,029
Unilever PLC Ord. 10,411,600 81,933
Unilever NV:
CVA 26,400 1,513
NY Shares 588,800 33,598
246,378
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
TOBACCO - 3.7%
BAT Industries PLC:
Ord. 2,170,186 $ 19,781
sponsored ADR 163,900 3,012
Dimon, Inc. 458,450 9,427
Gallaher Group PLC sponsored ADR 2,228,500 51,534
Philip Morris Companies, Inc. 12,233,900 507,707
RJR Nabisco Holdings Corp. 5,454,520 171,817
UST, Inc. 569,400 19,644
Universal Corp. 436,700 16,895
799,817
TOTAL NONDURABLES 1,381,991
PRECIOUS METALS - 0.2%
Newmont Mining Corp. 1,515,500 43,192
RETAIL & WHOLESALE - 3.6%
APPAREL STORES - 0.9%
Charming Shoppes, Inc. (a) 882,700 3,586
Footstar, Inc. (a) 786,654 21,043
Limited, Inc. (The) 2,088,539 55,346
Payless ShoeSource, Inc. (a) 443,828 28,877
TJX Companies, Inc. 2,573,264 87,169
196,021
DRUG STORES - 0.1%
CVS Corp. 394,900 25,890
GENERAL MERCHANDISE STORES - 2.2%
Dayton Hudson Corp. 864,900 62,219
Federated Department Stores, Inc. (a) 1,902,267 80,609
Hudson's Bay Co. Ord. 808,100 14,296
May Department Stores Co. (The) 259,400 13,635
Penney (J.C.) Co., Inc. 377,600 25,441
Sears, Roebuck & Co. 90 4
Wal-Mart Stores, Inc. 6,795,500 270,970
Woolworth Corp. (a) 315,500 6,862
474,036
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 0.1%
American Stores Co. 536,800 $ 11,675
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
Tandy Corp. 1,138,700 44,125
Toys "R" Us, Inc. (a) 632,500 16,959
61,084
TOTAL RETAIL & WHOLESALE 768,706
SERVICES - 1.1%
LEASING & RENTAL - 0.2%
Ryder Systems, Inc. 988,700 33,121
PRINTING - 0.5%
Deluxe Corp. 1,245,600 41,105
Donnelley (R.R.) & Sons Co. 1,262,600 47,111
Ennis Business Forms, Inc. 417,200 4,276
Harland (John H.) Co. 27,700 426
New England Business Service, Inc. 587,800 19,397
Wallace Computer Services, Inc. 79,000 3,047
115,362
SERVICES - 0.4%
Block (H&R), Inc. 1,072,440 47,053
Jostens, Inc. 306,900 6,925
Manpower, Inc. 826,900 30,595
84,573
TOTAL SERVICES 233,056
TECHNOLOGY - 2.7%
COMPUTER SERVICES & SOFTWARE - 0.8%
Electronic Data Systems Corp. 2,829,900 117,794
First Data Corp. 974,000 29,829
NCR Corp. (a) 706,900 21,251
Sabre Group Holdings, Inc. Class A (a) 371,400 10,794
179,668
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 1.0%
Digital Equipment Corp. (a) 275,700 $ 15,595
International Business Machines Corp. 1,121,400 110,668
Unisys Corp. (a) 4,529,771 74,741
Xerox Corp. 183,543 14,752
215,756
ELECTRONICS - 0.4%
AMP, Inc. 1,061,100 42,444
Nitto Denko Corp. 860,000 14,904
Thomas & Betts Corp. 457,600 22,594
79,942
PHOTOGRAPHIC EQUIPMENT - 0.5%
Eastman Kodak Co. 322,200 21,023
Fuji Photo Film Co. Ltd. 1,112,000 46,600
Polaroid Corp. 722,900 29,684
97,307
TOTAL TECHNOLOGY 572,673
TRANSPORTATION - 0.8%
AIR TRANSPORTATION - 0.2%
Viad Corp. 1,966,500 39,084
RAILROADS - 0.6%
CSX Corp. 2,620,200 138,871
TOTAL TRANSPORTATION 177,955
UTILITIES - 8.2%
ELECTRIC UTILITY - 2.8%
Allegheny Energy, Inc. 2,386,600 73,090
American Electric Power Co., Inc. 2,220,400 109,493
Central Maine Power Co. 1,269,800 21,031
CILCORP, Inc. 325,000 14,544
Consolidated Edison, Inc. 977,350 40,377
DQE, Inc. 235,700 7,704
DPL, Inc. 2,038,475 37,330
Duke Energy Co. 829,227 44,934
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Entergy Corp. 3,303,400 $ 94,560
Illinova Corp. 658,500 19,220
National Grid Co. PLC 1,465,686 6,919
Niagara Mohawk Power Corp. (a) 2,119,000 22,912
PECO Energy Co. 550,100 10,417
PG&E Corp. 1,524,598 45,452
PacifiCorp. 673,300 15,612
Pinnacle West Capital Corp. 1,016,700 40,668
Unicom Corp. 106,400 3,298
607,561
GAS - 1.0%
MCN Corp. 1,168,100 43,220
Nova Corp. 2,487,400 27,001
Pacific Enterprises 1,966,700 70,924
Questar Corp. 1,702,300 70,858
212,003
TELEPHONE SERVICES - 4.4%
AT&T Corp. 1,546,900 96,875
ALLTEL Corp. 1,113,200 47,589
Ameritech Corp. 3,577,800 153,622
BCE, Inc. 477,700 14,966
Bell Atlantic Corp. 2,747,546 254,320
BellSouth Corp. 2,045,200 123,862
Cam-Net Communications Network, Inc. (a)(e)(g) 1,626,737 -
Comsat Corp., Series 1 492,800 12,289
France Telecom SA 84,700 3,611
GTE Corp. 504,800 27,543
MCI Communications Corp. 580,400 26,952
SBC Communications, Inc. 1,425,500 110,833
Sprint Corp. 673,900 40,013
WorldCom, Inc. (a) 800,627 28,672
941,147
TOTAL UTILITIES 1,760,711
TOTAL COMMON STOCKS
(Cost $12,620,177) 19,203,103
CONVERTIBLE PREFERRED STOCKS - 3.4%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 0.1%
IRON & STEEL - 0.1%
Armco, Inc. Class A $3.625 276,200 $ 13,119
PAPER & FOREST PRODUCTS - 0.0%
International Paper $2.625 (f) 228,900 11,531
TOTAL BASIC INDUSTRIES 24,650
CONSTRUCTION & REAL ESTATE - 0.1%
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Vornado Realty Trust, Series A, $3.25 270,900 17,812
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Republic Industries, Inc. $1.55 465,300 9,888
ENERGY - 0.2%
OIL & GAS - 0.2%
Occidental Petroleum Corp. $3.00 329,200 25,513
Tosco Financing Trust $2.875 TOPRS (f) 76,600 4,596
Unocal Capital Trust $3.125 238,600 12,884
42,993
FINANCE - 0.8%
CREDIT & OTHER FINANCE - 0.1%
DECS Trust $2.01 DECS 93,000 1,953
WBK STRYPES Trust $3.135 STRYPES 605,200 20,804
22,757
INSURANCE - 0.4%
Aetna, Inc. Class C 6.25% PRIDES 335,700 25,408
American Bankers Insurance Group, Inc., Series B, $3.125 37,900
4,287
Conseco, Inc.:
$4.2788 PRIDES 268,200 41,940
$3.50 PRIDES 363,200 18,955
90,590
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - 0.1%
Ahmanson (H.F.) & Co., Series D, $3.00 150,000 $ 17,916
SECURITIES INDUSTRY - 0.2%
Merrill Lynch & Co, Inc. $2.3906 STRYPES 329,100 11,436
Salomon, Inc.:
$2.03 DECS 490,100 19,175
$3.484 DECS 198,400 13,293
43,904
TOTAL FINANCE 175,167
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.2%
Loral Space & Communications Ltd., Series C:
$3.00 (f) 388,600 24,628
$3.00 162,900 10,344
34,972
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.1%
Evergreen Media Corp. $3.00 (f) 395,800 29,536
LODGING & GAMING - 0.1%
Hilton Hotels Corp. $0.89 PRIDES 612,400 16,382
Host Marriott Financial Trust $3.375 QUIPS (f) 94,300 5,080
21,462
PUBLISHING - 0.1%
Hollinger Inernational, Inc. $0.95 PRIDES 1,329,800 16,789
Taylor, J.N. Holdings Ltd. 9 1/2% (a) 956,400 0
16,789
TOTAL MEDIA & LEISURE 67,787
NONDURABLES - 0.2%
FOODS - 0.2%
Chiquita Brands International, Inc.:
Series A, $2.875 474,500 22,064
Series B, $3.75 178,500 9,996
Dole Food Automatic Common Exchange Security
Trust $2.7475 ACES 283,900 12,279
44,339
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 47,800 $ 16,491
GENERAL MERCHANDISE STORES - 0.1%
K mart Financing I $3.875 607,400 31,281
TOTAL RETAIL & WHOLESALE 47,772
TECHNOLOGY - 0.2%
COMPUTERS & OFFICE EQUIPMENT - 0.2%
Wang Laboratories, Inc.:
$3.25 (f) 228,300 12,271
$3.25 276,100 14,771
27,042
UTILITIES - 1.1%
CELLULAR - 0.2%
AirTouch Communications, Inc. Class B $1.74 DECS 1,030,400 38,640
ELECTRIC UTILITY - 0.2%
Houston Industries, Inc. $3.215 ACES 612,600 36,143
GAS - 0.2%
Enron Corp. Series J, $10.50 31,800 17,991
MCN Corp. $4.00 52,900 3,194
Williams Companies, Inc. $3.50 166,600 22,262
43,447
TELEPHONE SERVICES - 0.5%
Enhance Financial Services Group, Inc. $7.625 DECS 393,500 18,691
U S West, Inc., Series D, $2.25 819,600 52,250
Worldcom, Inc. 8% depositary shares DECS 350,500 43,856
114,797
TOTAL UTILITIES 233,027
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $559,026) 725,449
CORPORATE BONDS - 2.7%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (000S) (C) (000S)
CONVERTIBLE BONDS - 2.6%
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
Hexcel Corp. 7%, 8/1/03 B1 $ 6,758 $ 11,227
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Liberty Property 8%, 7/1/01 Ba2 1,358 1,853
TOTAL CONSTRUCTION & REAL ESTATE 13,080
DURABLES - 0.1%
CONSUMER ELECTRONICS - 0.1%
Matsushita Electric Industrial Co. Ltd.:
1.3%, 3/29/02 Aa2 JPY 959,000 9,509
1.4%, 3/31/04 Aa2 JPY 442,000 4,391
13,900
ENERGY - 0.4%
ENERGY SERVICES - 0.1%
Baker Hughes, Inc. 0%, 5/5/08 A2 18,959 15,238
OIL & GAS - 0.3%
Pennzoil Co.:
6 1/2%, 1/15/03 Baa 27,382 49,630
4 3/4%,10/1/03 Baa 22,210 28,901
78,531
TOTAL ENERGY 93,769
FINANCE - 0.2%
CREDIT & OTHER FINANCE - 0.1%
Volkswagen AG 3%, 1/24/02 (f) A1 18,750 22,008
INSURANCE - 0.1%
EdperBrascan Corp. 7%, 5/31/06 (f) - CAD 14,000 15,870
Loews Corp. 3 1/8%, 9/15/07 A2 9,210 8,819
24,689
TOTAL FINANCE 46,697
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (000S) (C) (000S)
CONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 0.7%
BROADCASTING - 0.4%
Jacor Communications, Inc. liquid yield option
notes 0%, 6/12/11 B3 $ 18,492 $ 12,875
Time Warner, Inc. liquid yield option notes
0%, 6/22/13 Ba1 124,890 64,240
77,115
LODGING & GAMING - 0.0%
Hilton Hotels Corp. 5%, 5/15/06 Baa 7,760 8,226
PUBLISHING - 0.3%
News America Holdings, Inc. liquid yield option
notes 0%, 3/11/13 Baa 114,540 57,986
TOTAL MEDIA & LEISURE 143,327
RETAIL & WHOLESALE - 0.5%
APPAREL STORES - 0.1%
Baker (J.), Inc. 7%, 6/1/02 B3 13,300 10,507
Charming Shoppes, Inc. 7 1/2%, 7/15/06 B2 5,338 4,858
15,365
DRUG STORES - 0.1%
Rite Aid Corp.:
5 1/4%, 9/15/02 - 230 263
5 1/4%, 9/15/05 (f) Baa 24,600 27,952
28,215
GENERAL MERCHANDISE STORES - 0.1%
Federated Department Stores, Inc. 5%, 10/1/03 Baa 20,953 27,985
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Home Depot, Inc. 3 1/4%, 10/1/01 A1 24,290 33,733
TOTAL RETAIL & WHOLESALE 105,298
SERVICES - 0.1%
ADT Operations, Inc. liquid yield option notes
0%, 7/6/10 Ba1 19,295 23,268
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (000S) (C) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.4%
COMPUTER SERVICES & SOFTWARE - 0.1%
Softkey International, Inc.
5 1/2%, 11/1/00 (f) - $ 29,030 $ 25,764
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Apple Computer, Inc.:
6%, 6/1/01 CCC 120 111
6%, 6/1/01 (f) CCC 12,780 11,814
Quantum Corp. 7%, 8/1/04 B2 11,830 11,837
23,762
ELECTRONICS - 0.2%
Cirrus Logic, Inc. 6%, 12/15/03 (f) B3 11,090 8,283
Micron Technology, Inc. 7%, 7/1/04 B1 27,190 26,935
National Semiconductor Corp.
6 1/2%, 10/1/02 (f) Ba2 7,197 7,305
42,523
TOTAL TECHNOLOGY 92,049
TRANSPORTATION - 0.1%
AIR TRANSPORTATION - 0.1%
Continental Airlines, Inc.
6 3/4%, 4/15/06 (f) B2 9,150 14,874
UTILITIES - 0.0%
GAS - 0.0%
SFP Pipeline Holdings, Inc.
0%, 8/15/10 Baa 3,690 6,476
TELEPHONE SERVICES - 0.0%
Cam-Net Communications Network, Inc.
11 1/2%, 4/4/98 (g) (h) - 4,225 -
TOTAL UTILITIES 6,476
TOTAL CONVERTIBLE BONDS 552,738
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (D) AMOUNT (000S) (C) (000S)
NONCONVERTIBLE BONDS - 0.1%
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Daimler-Benz Capital AG 4 1/8%, 7/5/03 unit A1 DEM 19,000 $ 14,944
TOTAL CORPORATE BONDS
(Cost $490,005) 567,682
COMMERCIAL MORTGAGE SECURITIES - 0.0%
Bardell Associates Note Trust 12 1/2%, 11/1/08 (g)
(Cost $2,698) - 2,647 2,813
INDEXED SECURITIES - 0.0%
Merrill Lynch & Co. Inc. Japan Index equity
participation securities 0%, 1/31/00
(Cost $4,188) Aa3 5,000 5,137
PURCHASED BANK DEBT - 0.0%
GPA Group PLC term loan
6.40%, 11/19/98
(Cost $340) - 450 439
CASH EQUIVALENTS - 4.3%
SHARES
Taxable Central Cash Fund (b)
(Cost $922,216) 922,215,920 922,216
PURCHASED OPTIONS - 0.0%
EXPIRATION DATE/ UNDERLYING FACE
STRIKE PRICE AMOUNT AT VALUE
(000S)
J. Aron and Co. OTC Put Option
on 11,970,000,000 Japanese Yen Mar. 1998/
(Cost $1,431) 126 $ 94,587 1,811
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $14,600,081) $ 21,428,650
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
DEM - German deutsche mark
JPY - Japanese yen
SECURITY TYPE ABBREVIATIONS
ACES - Automatic Common
Exchange Securities
DECS - Dividend Enhanced
Convertible Stock/Debt
Exchangeable for
Common Stock
PRIDES - Preferred Redeemable
Increased Dividend Equity
Securities
QUIPS - Quarterly Income Preferred
Securities
STRYPES - Structured Yield Product
Exchangeable for Common
Stock
TOPRS - Trust Originated Preferred
Securities
LEGEND
1. Non-income producing
2. At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.63%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Principal amount is stated in United States dollars unless
otherwise noted.
4. Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
5. Affiliated company (see Note 7 of Notes to Financial Statements).
6. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $253,148,000 or
1.2% of net assets.
7. Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
(000S)
Bardell Associates Note
Trust 12 1/2%,
11/1/08 4/19/94 $ 2,698
Cam-Net Communications
Network, Inc. 4/12/96 $ 1,271
Cam-Net Communications
Network, Inc. 11 1/2%,
4/4/98 4/12/96 $ 2,792
8. Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 88.3%
United Kingdom 3.0
Canada 2.6
France 1.6
Netherlands 1.3
Others (individually less than 1%) 3.2
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1998, the aggregate cost of investment securities for
income tax purposes was $14,606,274,000. Net unrealized appreciation
aggregated $6,822,376,000 of which $7,090,323,000 related to
appreciated investment securities and $267,947,000 related to
depreciated investment securities.
The fund hereby designates approximately $83,205,000 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) JANUARY 31, 1998

ASSETS

INVESTMENT IN SECURITIES, AT VALUE (COST $14,600,081) - $ 21,428,650
SEE ACCOMPANYING SCHEDULE

FOREIGN CURRENCY HELD AT VALUE (COST $147) 147

RECEIVABLE FOR INVESTMENTS SOLD 110,917

RECEIVABLE FOR FUND SHARES SOLD 124,390

DIVIDENDS RECEIVABLE 35,069

INTEREST RECEIVABLE 8,004

OTHER RECEIVABLES 369

TOTAL ASSETS 21,707,546

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 261,573

PAYABLE FOR FUND SHARES REDEEMED 27,859

ACCRUED MANAGEMENT FEE 8,232

OTHER PAYABLES AND ACCRUED EXPENSES 5,039

COLLATERAL ON SECURITIES LOANED, AT VALUE 132,672

TOTAL LIABILITIES 435,375

NET ASSETS $ 21,272,171

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 14,085,266

UNDISTRIBUTED NET INVESTMENT INCOME 21,363

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 337,101
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 6,828,441
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

NET ASSETS, FOR 407,496 SHARES OUTSTANDING $ 21,272,171

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $52.20
PER SHARE ($21,272,171 (DIVIDED BY) 407,496 SHARES)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JANUARY 31, 1998

INVESTMENT INCOME $ 403,130
DIVIDENDS (INCLUDING $1,678 RECEIVED FROM AFFILIATED ISSUERS)

INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $979) 74,631

477,761

LESS FOREIGN TAXES WITHHELD (7,186)

TOTAL INCOME 470,575

EXPENSES

MANAGEMENT FEE $ 84,814

TRANSFER AGENT FEES 34,528

ACCOUNTING AND SECURITY LENDING FEES 952

NON-INTERESTED TRUSTEES' COMPENSATION 93

CUSTODIAN FEES AND EXPENSES 742

REGISTRATION FEES 1,280

AUDIT 152

LEGAL 125

MISCELLANEOUS 85

TOTAL EXPENSES BEFORE REDUCTIONS 122,771

EXPENSE REDUCTIONS (3,019) 119,752

NET INVESTMENT INCOME 350,823

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES (INCLUDING REALIZED GAIN OF 941,270
$3,368 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)

FOREIGN CURRENCY TRANSACTIONS 6,612 947,882

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES 2,664,671

ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (6,598) 2,658,073

NET GAIN (LOSS) 3,605,955

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 3,956,778
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31,
1998 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 350,823 $ 311,265
NET INVESTMENT INCOME

NET REALIZED GAIN (LOSS) 947,882 658,250

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 2,658,073 1,597,637

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 3,956,778 2,567,152
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS (352,802) (311,393)
FROM NET INVESTMENT INCOME

FROM NET REALIZED GAIN (774,993) (571,846)

TOTAL DISTRIBUTIONS (1,127,795) (883,239)

SHARE TRANSACTIONS 6,976,733 4,405,850
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 1,101,392 858,753

COST OF SHARES REDEEMED (4,658,832) (2,934,221)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 3,419,293 2,330,382
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 6,248,276 4,014,295

NET ASSETS

BEGINNING OF PERIOD 15,023,895 11,009,600

END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 21,272,171 $ 15,023,895
INCOME OF $21,363 AND $22,089, RESPECTIVELY)

OTHER INFORMATION
SHARES

SOLD 141,602 107,111

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 22,381 21,056

REDEEMED (94,339) (71,564)

NET INCREASE (DECREASE) 69,644 56,603

</TABLE>

FINANCIAL HIGHLIGHTS

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

1998 1997 1996 1995 1994

SELECTED PER-SHARE DATA

NET ASSET VALUE, BEGINNING $ 44.47 $ 39.15 $ 30.89 $ 35.19 $ 29.87
OF PERIOD

INCOME FROM INVESTMENT
OPERATIONS

NET INVESTMENT INCOME .94 C 1.01 C .93 1.02 1.11

NET REALIZED AND 9.79 7.17 9.65 (2.12) 5.48
UNREALIZED GAIN (LOSS)

TOTAL FROM INVESTMENT 10.73 8.18 10.58 (1.10) 6.59
OPERATIONS

LESS DISTRIBUTIONS

FROM NET INVESTMENT INCOME (.96) (1.02) (.96) (.98) (1.15)

FROM NET REALIZED GAIN (2.04) (1.84) (1.36) (2.22) (.12)

TOTAL DISTRIBUTIONS (3.00) (2.86) (2.32) (3.20) (1.27)

NET ASSET VALUE, END OF PERIOD $ 52.20 $ 44.47 $ 39.15 $ 30.89 $ 35.19

TOTAL RETURN A 24.69% 21.74% 35.21% (3.01)% 22.52% B

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD $ 21,272 $ 15,024 $ 11,010 $ 7,439 $ 6,943
(IN MILLIONS)

RATIO OF EXPENSES TO AVERAGE .67% .68% .68% .70% .66%
NET ASSETS

RATIO OF EXPENSES TO AVERAGE .65% D .66% D .67% D .69% D .66%
NET ASSETS AFTER
EXPENSE REDUCTIONS

RATIO OF NET INVESTMENT INCOME 1.90% 2.46% 2.86% 3.37% 3.55%
TO AVERAGE NET ASSETS

PORTFOLIO TURNOVER RATE 23% 30% 39% 50% 70%

AVERAGE COMMISSION RATE E $ .0421 $ .0331

</TABLE>

E THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
F TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
H 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).
I FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1998

7. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Equity-Income Fund (the fund) is a fund of Fidelity
Devonshire Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The
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 (including restricted
securities) for which exchange quotations are not readily available
(and in certain cases debt securities which trade on an exchange) are
valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts and foreign currency options, disposition of
foreign currencies, the difference between the amount of net
investment income accrued and the U.S. dollar amount actually
received, and gains and losses between trade date and settlement date
on purchases and sales of securities. 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
U.S. federal income taxes to the extent that it distributes
substantially all of its taxable income for its fiscal year. The fund
may be subject to foreign taxes on income and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests. The
fund accrues such taxes as applicable. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. 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
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, 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.
8. 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.
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 Fidelity Investments Money Management, Inc.
(formerly FMR Texas Inc.), 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. Income distributions from the Cash Fund are declared daily
and paid monthly from net interest income.
Income distributions earned by the fund are recorded as interest
income in the accompanying financial statements.
OPTIONS. The fund may use options to manage its exposure to
fluctuations in currency values. Writing puts and buying calls tend to
increase the fund's exposure to the underlying instrument. Buying puts
and writing calls tend to decrease the fund's exposure to the
underlying instrument, or hedge other fund investments. The underlying
face amount at value of any open options at period end is shown in the
schedule of investments under the caption "Purchased Options". This
amount reflects each contract's exposure to the underlying instrument
at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparties do not perform under the
contracts' terms. Gains and losses are realized upon the expiration or
closing of the options. Realized gains (losses) on purchased options
are included in realized gains (losses) on investment securities,
except purchased options on foreign currency which are included in
realized gains (losses) on foreign currency transactions.
Exchange-traded options are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations.
INDEXED SECURITIES. The fund may invest in indexed securities whose
values are linked either directly or inversely to changes in foreign
currencies, interest rates, commodities, indices, or other underlying
instruments. The fund uses these securities to increase or decrease
its exposure to different underlying instruments and to gain exposure
to markets that might be difficult to invest in through conventional
securities.
2. OPERATING POLICIES - CONTINUED
INDEXED SECURITIES - CONTINUED
Indexed securities may be more volatile than their underlying
instruments, but any loss is limited to the amount of the original
investment. Gains (losses) realized upon the sale of indexed
securities are included in realized gains (losses) on investment
securities.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $2,813,000 or 0.01% of net assets.
9. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $6,906,748,000 and $4,094,972,000, respectively.
10. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus
a fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .18% (.16% prior to
December 1, 1997). 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. For the period, the management fee was equivalent to
an annual rate of .46% of average net assets.
In accordance with the management contract currently in effect, the
annual individual fund fee rate is scheduled to increase to .20% on
December 1, 1998.
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 .19% of average net assets.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 $1,209,000 for the
period.
11. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income.
The fund receives U.S. Treasury obligations and/or cash as collateral
against the loaned securities, in an amount at least equal to 102% of
the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan.
At period end, the value of the securities loaned and the value of
collateral amounted to $128,038,000 and $132,672,000, respectively.
12. 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 $1,676,000 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 $7,000 and $1,336,000, respectively, under these
arrangements.
13. 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
Cam-Net Communications
Network, Inc. $ - $ - $ - $ -
Fremont General Corp. 510 - 815 92,541
Highlands Insurance Group, Inc. - - - 19,440
Kellwood Co. - 3,818 565 -
Zurn Industries, Inc. 350 1,456 298 24,364
TOTALS $ 860 $ 5,274 $ 1,678 $ 136,345
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Equity-Income Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Devonshire Trust: Fidelity Equity-Income Fund, including
the schedule of portfolio investments, as of January 31, 1998, and the
related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights
are the responsibility of the fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of January 31, 1998 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Devonshire Trust: Fidelity
Equity-Income Fund as of January 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND LLP.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 10, 1998
DISTRIBUTIONS

The Board of Trustees of Fidelity Equity-Income Fund voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:

PAY DATE 3/10/97 12/29/97 3/9/98
RECORD DATE 3/7/97 12/26/97 3/6/98
DIVIDENDS $.26 $.20 $.22
SHORT-TERM
CAPITAL GAINS $.09 $.22 $.08
LONG-TERM
CAPITAL GAINS $.40 $1.33 $.54
LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 100% 23.89% 7.78%
20% rate 0% 76.11% 92.22%
A total of 1.85% 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 69% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentage for use in preparing 1998 income tax returns.
MANAGING YOUR INVESTMENTS

For quotes.*

For account balances and holdings.

To review orders and mutual
fund activity.

To change your PIN.

To speak to a Fidelity representative.
0
*
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools... all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY

If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
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COLORADO
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CONNECTICUT
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FLORIDA
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GEORGIA
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Road, N.E.
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HAWAII
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LOUISIANA
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MAINE
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MASSACHUSETTS
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MICHIGAN
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MINNESOTA
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MISSOURI
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NEW JERSEY
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501 Route 17, South
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NEW YORK
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NORTH CAROLINA
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UTAH
215 South State Street
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VIRGINIA
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Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Stephen R. Petersen, Vice President
Richard A. Spillane, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
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 *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities 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
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AUTOMATED LINE FOR QUICKEST SERVICE

FIDELITY

(REGISTERED TRADEMARK)

REAL ESTATE INVESTMENT
PORTFOLIO
ANNUAL REPORT
JANUARY 31, 1998
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 16 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 20 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 24 THE AUDITORS' OPINION.
ACCOUNTANTS

DISTRIBUTIONS 25

FIDELITY REAL ESTATE 17.93% 97.36% 270.80%

S&P 500 (REGISTERED TRADEMARK) 26.91% 152.28% 410.11%

REAL ESTATE FUNDS AVERAGE 18.73% 77.64% 192.32%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had 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 return to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. To measure how the fund's performance stacked up
against its peers, you can compare it to the real estate 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 69 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 JANUARY 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY REAL ESTATE 17.93% 14.56% 14.00%

S&P 500 26.91% 20.33% 17.69%

REAL ESTATE FUNDS AVERAGE 18.73% 11.96% 11.15%

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 10 YEARS
IMAHDR PRASUN SHR__CHT 19980131 19980311 180351 S00000000000001
Real Estate S&P 500
00303 SP001
1988/01/31 10000.00 10000.00
1988/02/29 10326.80 10466.00
1988/03/31 10238.25 10142.60
1988/04/30 10249.32 10255.18
1988/05/31 10005.81 10344.40
1988/06/30 10339.88 10819.21
1988/07/31 10384.88 10778.10
1988/08/31 10283.62 10411.64
1988/09/30 10441.88 10855.18
1988/10/31 10350.39 11156.95
1988/11/30 10201.71 10997.41
1988/12/31 10363.09 11189.86
1989/01/31 10467.65 12008.96
1989/02/28 10502.50 11709.94
1989/03/31 10583.29 11982.78
1989/04/30 10866.45 12604.69
1989/05/31 11067.03 13115.18
1989/06/30 11446.50 13040.42
1989/07/31 12021.22 14217.97
1989/08/31 12188.85 14496.64
1989/09/30 12045.00 14437.21
1989/10/31 11595.74 14102.26
1989/11/30 11741.45 14389.95
1989/12/31 11790.47 14735.31
1990/01/31 11532.29 13746.57
1990/02/28 11458.52 13923.90
1990/03/31 11519.99 14292.88
1990/04/30 11370.54 13935.56
1990/05/31 11320.73 15294.28
1990/06/30 11495.58 15190.28
1990/07/31 11571.29 15141.67
1990/08/31 10751.08 13772.86
1990/09/30 10213.87 13102.12
1990/10/31 9919.48 13045.78
1990/11/30 10546.65 13888.54
1990/12/31 10765.17 14276.03
1991/01/31 11768.71 14898.47
1991/02/28 12133.63 15963.71
1991/03/31 12936.16 16350.03
1991/04/30 13292.56 16389.27
1991/05/31 13609.37 17097.28
1991/06/30 13171.39 16314.23
1991/07/31 13451.92 17074.47
1991/08/31 13518.71 17479.14
1991/09/30 13910.92 17187.24
1991/10/31 13681.09 17417.54
1991/11/30 13545.91 16715.62
1991/12/31 14983.85 18627.88
1992/01/31 15887.81 18281.40
1992/02/29 15545.40 18519.06
1992/03/31 15450.12 18157.94
1992/04/30 15228.61 18691.78
1992/05/31 15685.47 18783.37
1992/06/30 15505.00 18503.50
1992/07/31 16188.22 19260.30
1992/08/31 16230.05 18865.46
1992/09/30 16678.25 19088.07
1992/10/31 16860.75 19154.88
1992/11/30 17169.61 19808.06
1992/12/31 17907.07 20051.70
1993/01/31 18788.22 20220.14
1993/02/28 19243.00 20495.13
1993/03/31 20628.82 20927.58
1993/04/30 19698.30 20421.13
1993/05/31 19454.93 20968.42
1993/06/30 19961.37 21029.22
1993/07/31 20091.36 20945.11
1993/08/31 20409.12 21738.93
1993/09/30 21351.59 21571.54
1993/10/31 21002.05 22018.07
1993/11/30 19778.62 21808.90
1993/12/31 20147.54 22072.78
1994/01/31 20310.86 22823.26
1994/02/28 21305.62 22204.75
1994/03/31 20543.61 21236.62
1994/04/30 20828.11 21508.45
1994/05/31 21277.31 21861.19
1994/06/30 20641.55 21325.59
1994/07/31 20596.22 22025.07
1994/08/31 20505.56 22928.10
1994/09/30 20261.73 22366.36
1994/10/31 19453.09 22869.60
1994/11/30 18766.51 22036.69
1994/12/31 20558.20 22363.49
1995/01/31 19654.89 22943.38
1995/02/28 19966.38 23837.48
1995/03/31 20045.43 24540.93
1995/04/30 19730.00 25263.66
1995/05/31 20455.49 26273.45
1995/06/30 20882.87 26883.78
1995/07/31 21250.07 27775.24
1995/08/31 21681.14 27844.96
1995/09/30 22066.58 29020.02
1995/10/31 21452.72 28916.42
1995/11/30 21565.80 30185.85
1995/12/31 22802.28 30767.23
1996/01/31 23212.98 31814.54
1996/02/29 23295.13 32109.46
1996/03/31 23312.87 32418.68
1996/04/30 23279.64 32896.53
1996/05/31 23761.52 33744.93
1996/06/30 24149.00 33873.50
1996/07/31 24233.14 32376.97
1996/08/31 25293.34 33059.80
1996/09/30 26105.52 34920.40
1996/10/31 26905.89 35883.51
1996/11/30 28166.04 38595.94
1996/12/31 31062.42 37831.36
1997/01/31 31441.44 40195.06
1997/02/28 31544.81 40510.19
1997/03/31 31552.51 38845.62
1997/04/30 30561.61 41164.71
1997/05/31 31430.82 43670.82
1997/06/30 33123.88 45627.27
1997/07/31 34387.75 49257.83
1997/08/31 34177.10 46498.41
1997/09/30 37618.50 49045.12
1997/10/31 36520.41 47407.02
1997/11/30 36768.36 49601.49
1997/12/31 37707.28 50453.15
1998/01/30 37080.37 51011.16
IMATRL PRASUN SHR__CHT 19980131 19980311 180356 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Real Estate Investment Portfolio on January 31,
1988. As the chart shows, by January 31, 1998, the value of the
investment would have grown to $37,080 - a 270.80% increase on the
initial investment. For comparison, look at how the S&P 500 did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $51,011 - a 410.11%
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
A seesaw battle between
large-company and
small-company stocks, economic
chaos in Southeast Asia and an
ensuing "flight to quality" mentality
on the part of investors were just
three factors that played a key role
in the direction of the U.S. stock
market over the past year. For the
12 months that ended January 31,
1998, the Standard & Poor's 500
Index returned 26.91%. Large-cap
stocks continued to account for
much of the market's advance in
early 1997 as investors - seeking
reliability - gravitated toward
stocks of well-known companies.
But along with their dominance,
large-cap stocks had become
expensive. In early May, small-cap
stocks began to display better
earnings growth and, combined
with attractive valuations,
performed well. The Dow Jones
Industrial Average soared to
record heights during the period,
closing above the 8000-point mark
for the first time ever in July.
Thousands of miles away,
however, an economic crisis
threatened to interrupt the U.S.
market's parade. Several small
countries in Southeast Asia
devalued their currencies in June,
and by late October the trouble had
spread to larger Asian markets
such as Hong Kong. Investors
across the globe expressed their
concerns. In the U.S., for instance,
the Dow slid 550-plus points in
one trading session only to bounce
back significantly the next. Along
with this turmoil, investors flocked
to higher-quality stocks with
strong brand names, good
liquidity and minimal international
exposure. Despite the late-period
uncertainty, stock investors still
displayed confidence. Stock
mutual funds - having had record
cash inflows of $222 billion in
1996 - eclipsed that mark in
1997 with $231 billion in new
money.
An interview with Barry Greenfield, Portfolio Manager of Fidelity Real
Estate Investment Portfolio
Q. HOW DID THE FUND PERFORM, BARRY?
A. For the 12 months that ended January 31, 1998, the fund returned
17.93%. This trailed the real estate funds average - as tracked by
Lipper Analytical Services - which returned 18.73% during the period.
Relative to the larger-sized funds within the peer group, the fund
performed capably.
Q. WHAT FACTORS INFLUENCED PERFORMANCE OVER THE COURSE OF THE YEAR?
A. While not quite matching its astounding growth in 1996, the real
estate investment trust (REIT) market and its sub-sectors enjoyed a
climate of strong occupancy rates, rising rents, healthy revenues and
solid earnings growth. As a result, REITs continued to be an
attractive area for investors. But in keeping with the adage "what
goes up, must come down," the REIT market also experienced its share
of growing pains. In the past 18 months, REIT market assets have
almost doubled, rising from $80 billion to $155 billion in that time.
In 1997 alone, $35 billion in new REIT issuance flooded the market,
and buyers had trouble absorbing the new supply. As with any industry,
an uneven supply/demand balance is cause for concern. Earlier in the
year, the REIT market also witnessed a long overdue pricing
correction. Along with their rapid growth, REIT prices had soared.
This correction - which came in April 1997 - was more of a reaction to
the surge in valuations than to deteriorating business prospects.
Q. DID YOU ALTER YOUR STRATEGY AS THE REIT MARKET DISPLAYED ITS
GROWING PAINS?
A. When I last spoke to shareholders six months ago, I mentioned the
positive effect of "new era" REITs on the fund's performance. These
aggressive REITs - characterized by a proactive mentality on the part
of their managements - performed well throughout the period. As the
market slowed, however, I began to throttle back on my new era
emphasis. Instead, I began to add "triple net lease" REITs. In a
triple net lease arrangement, the owner of the property gives the keys
to the tenant and the tenant assumes responsibility for paying
property taxes, covering any maintenance costs and paying the utility
bills. These types of REITs were attractive because they were offering
more predictable earnings streams. Examples in the portfolio included
Entertainment Property - which houses movie theaters - and Franchise
Finance Corp., which leases space to food-related businesses. Having
exposure to different types of REITs gives the fund the chance to
perform well in various market environments.
Q. HOW DID THE DIFFERENT SEGMENTS OF THE REIT MARKET PERFORM OVER THE
COURSE OF THE PERIOD?
A. Three areas that were particularly appealing were downtown hotels,
downtown office buildings and public storage facilities. As many
shareholders can no doubt attest, finding a hotel room in a big city
these days can be extremely difficult. There hasn't been a lot of new
hotel construction, and occupancies and rates have been growing
briskly. Because of this demand, hotels continued to thrive due to
pricing advantages. The downtown office building situation was
similar. Very little construction has led to high demand for downtown
office buildings, and landlords took advantage of this tight supply as
leases rolled over. Similarly, public storage facilities benefited
from a favorable supply/demand situation during the period. On the
negative side, one area that fell out of favor was the no-frills,
low-budget hotel group. This group suffered as new construction began
to outpace demand.
Q. LET'S TALK REGIONAL STRATEGIES. WHAT AREAS OF THE COUNTRY WERE
APPEALING TO YOU DURING THE PERIOD AND WHY?
A. My previous attraction to California-based REITs waned during this
time, with Texas-based REITs picking up the slack. California's
economy had blossomed over the past couple of years, and I felt that
much of the good news with the stocks had already been captured.
Instead, I shifted assets from California-based positions to REITs in
the Houston area in particular, where the economy was bustling. At the
end of the period, it appeared that the Northeast region also was
beginning to show signs of recovery.
Q. WHICH STOCKS PERFORMED WELL? WERE THERE ANY DISAPPOINTMENTS?
A. Many of the fund's top positions - including Starwood Lodging, Duke
Realty and Equity Residential - performed very well during the period.
Most benefited primarily from healthy earnings growth. Starwood -
which continued its drive to purchase ITT - enjoyed a particularly
strong period. Meditrust Corp., which was actually an amalgamation of
Meditrust and Santa Anita, turned out to be disappointing as the
volume of early purchases into the paired-share REIT was disappointing
to Wall Street analysts.
Q. WHAT'S YOUR OUTLOOK?
A. All the work that our analysts have done indicates that the REIT
market - relative to the general stock market - is poised for a very
good year. Though strictly conjecture, analysts expect the REIT market
to outperform the general stock market in 1998. Increased merger and
acquisition activity should also help drive earnings, and may
partially offset the negative impact of high levels of secondary
offerings. In sum, I'm bullish on REIT prospects for the coming year.
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.

TOP TEN STOCKS AS OF JANUARY 31, 1998

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

STARWOOD LODGING TRUST COMBINED 5.8 4.1
CERTIFICATE (SBI)

MACK-CALI REALTY CORP. 4.8 3.8

PUBLIC STORAGE, INC. 4.6 4.1

DUKE REALTY INVESTORS, INC. 4.4 3.6

EQUITY RESIDENTIAL PROPERTIES TRUST (SBI) 4.3 4.8

CRESCENT REAL ESTATE EQUITIES, INC. 4.2 3.5

EQUITY OFFICE PROPERTIES TRUST 3.1 0.6

PATRIOT AMERICAN HOSPITALITY, INC. 3.0 3.2

RECKSON ASSOCIATES REALTY CORP. 2.9 2.6

APARTMENT INVESTMENT & MANAGEMENT CO. 2.7 2.4
CLASS A

</TABLE>

TOP FIVE REIT SECTORS AS OF JANUARY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE REIT SECTORS
6 MONTHS AGO

OFFICE BUILDINGS 24.8 14.6

INDUSTRIAL BUILDINGS 18.5 16.4

APARTMENTS 14.4 15.6

HOTELS 12.1 13.1

SHOPPING CENTERS 5.7 9.6

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JANUARY 31, 1998 * AS OF JULY 31, 1997 **
ROW: 1, COL: 1, VALUE: 50.0
ROW: 1, COL: 2, VALUE: 43.2
ROW: 1, COL: 3, VALUE: 1.5
ROW: 1, COL: 4, VALUE: 5.3
STOCKS 94.7%
CONVERTIBLE
SECURITIES 0.5%
SHORT-TERM
INVESTMENTS 4.8%
FOREIGN
INVESTMENTS 1.9%
STOCKS 93.4%
CONVERTIBLE
SECURITIES 0.2%
SHORT-TERM
INVESTMENTS 6.4%
FOREIGN
INVESTMENTS 1.7%
ROW: 1, COL: 1, VALUE: 50.0
ROW: 1, COL: 2, VALUE: 44.7
ROW: 1, COL: 3, VALUE: 1.5
ROW: 1, COL: 4, VALUE: 3.8
*
**
INVESTMENTS JANUARY 31, 1998

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

COMMON STOCKS - 93.4%
SHARES VALUE (NOTE 1)
(000S)
REAL ESTATE INVESTMENT TRUST (REITs) - 86.0%
REITS - APARTMENTS - 14.4%
Apartment Investment & Management Co. Class A (b) 1,833,500 $ 68,069
Avalon Properties, Inc. 446,600 13,147
BRE Properties, Inc. Class A 1,180,200 32,529
Bay Apartment Communities, Inc. (b) 1,364,620 51,770
Camden Property Trust (SBI) 819,000 24,416
Equity Residential Properties Trust (SBI) 2,092,662 106,989
Essex Property Trust, Inc. 394,400 13,582
Gables Residential Trust (SBI) 5,800 158
Grove Property Trust 370,000 4,070
Home Properties of NY, Inc. (b) 455,200 12,148
Irvine Apartment Communities, Inc. 153,900 4,934
Merry Land & Investment Co., Inc. 206,864 4,771
Pennsylvania Real Estate Investment Trust (SBI) 144,000 3,528
Security Capital Pacific Trust (SBI) 160,700 3,786
Smith (Charles E.) Residential Realty, Inc. 341,400 11,821
Town & Country Trust 223,300 3,908
359,626
REITS - FACTORY OUTLETS - 0.7%
Tanger Factory Outlet Centers, Inc. (b) 532,200 16,432
REITS - HEALTHCARE FACILITIES - 3.0%
American Health Properties, Inc. 40,000 1,120
G&L Realty Corp. 78,600 1,646
Healthcare Realty Trust, Inc. 34,000 1,018
Health and Retirement Properties Trust 60,000 1,208
Health Care REIT, Inc. 191,892 5,409
LTC Properties, Inc. 717,000 14,519
National Health Investors, Inc. 176,500 7,292
Nationwide Health Properties, Inc. 570,000 14,678
Omega Healthcare Investors, Inc. 341,000 13,597
Meditrust Corp. 457,036 14,711
75,198
REITS - HOTELS - 12.1%
Boykin Lodging Co. 141,500 3,962
Felcor Suite Hotels, Inc. 1,075,270 40,121
Innkeepers USA Trust 943,924 14,454
Patriot American Hospitality, Inc. 2,979,907 76,360
Starwood Lodging Trust combined certificate (SBI) (b) 2,653,883
144,305
Sunstone Hotel Investors, Inc. 1,469,400 24,704
303,906
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
REAL ESTATE INVESTMENT TRUSTS (REITs) - CONTINUED
REITS - INDUSTRIAL BUILDINGS - 18.5%
AMB Property Corp. 498,700 $ 12,218
Bedford Property Investors, Inc. 574,300 12,168
CenterPoint Properties Corp. (b) 1,064,900 35,741
Duke Realty Investors, Inc. (b) 4,602,568 109,311
Eastgroup Properties, Inc. 710,250 14,915
First Industrial Realty Trust, Inc. 1,060,200 38,035
Liberty Property Trust (SBI) 1,347,000 36,537
MGI Properties, Inc. 34,200 855
Meridian Industrial Trust, Inc. 382,800 9,833
Public Storage, Inc. 3,511,400 115,437
Security Capital Industrial Trust, Inc. 75,000 1,917
Sovran Self Storage, Inc. 109,800 3,376
Spieker Properties, Inc. 1,437,700 60,743
Storage USA, Inc. 166,578 6,507
Weeks Corp. 194,700 6,072
463,665
REITS - LEISURE - 0.4%
Entertainment Property Trust 220,000 4,345
Franchise Finance Corp. of America 252,300 7,033
11,378
REITS - MALLS - 3.7%
General Growth Properties, Inc. 514,100 18,893
Simon Debartolo Group, Inc. 999,700 33,178
Rouse Co. (The) 559,300 18,806
Urban Shopping Centers, Inc. 608,700 20,696
91,573
REITS - MOBILE HOME PARKS - 1.9%
Chateau Communities, Inc. 136,482 4,188
Manufactured Home Communities, Inc. 789,600 20,727
Sun Communities, Inc. 661,400 23,108
48,023
REITS - MORTGAGE - 0.7%
Asset Investors Corp. 141,800 2,801
Realty Income Corp. 568,500 15,136
17,937
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
REAL ESTATE INVESTMENT TRUSTS (REITs) - CONTINUED
REITS - OFFICE BUILDINGS - 24.8%
Alexandria Real Estate Equities, Inc. 486,600 $ 16,240
American Office Park Property, Inc. (d) 210,305 5,678
Boston Properties, Inc. 1,000,000 35,563
Brandywine Realty Trust 700,000 16,800
CarrAmerica Realty Corp. 719,200 21,082
Cousins Properties, Inc. 266,500 8,012
Crescent Real Estate Equities, Inc. 2,983,000 104,778
Crocker Realty, Inc. (d):
Class A (b) 1,497 15
Class B (non-vtg.) 1,308,241 13,082
Equity Office Properties Trust 2,540,510 77,009
Glenborough Realty Trust, Inc. 1,517,200 48,171
Highwoods Properties, Inc. 1,180,000 42,701
Mack-Cali Realty Corp. (b) 2,990,000 120,534
Parkway Properties, Inc. 430,500 14,691
Reckson Associates Realty Corp. (b) 2,817,800 72,734
SL Green Realty Corp. 426,700 11,894
Trinet Corporate Realty Trust, Inc. 301,200 11,784
620,768
REITS - PRISON - 0.1%
CCA Prison Realty Trust 70,600 2,824
REITS - SHOPPING CENTERS - 5.7%
Bradley Real Estate Trust (SBI) 739,700 15,210
Burnham Pacific Properties, Inc. 460,300 6,876
Commercial Net Lease Realty, Inc. 112,400 1,960
Developers Diversified Realty Corp. 669,300 26,563
Excel Realty Trust, Inc. (b) 1,621,900 51,901
Glimcher Realty Trust (SBI) 110,300 2,427
HRE Properties 40,400 763
IRT Property Co. 539,695 6,341
JDN Realty Corp. 73,400 2,390
Kimco Realty Corp. 56,700 1,956
Malan Realty Investors, Inc. (b) 244,900 4,393
Mid-Atlantic Realty Trust 544,300 7,722
Ramco-Gershenson Property Trust 270,200 5,404
Regency Realty Group 80,000 2,175
Weingarten Realty Investors (SBI) 131,100 5,768
141,849
TOTAL REAL ESTATE INVESTMENT TRUSTS 2,153,179
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION - 0.4%
OPERATIVE BUILDERS - 0.4%
Kaufman & Broad Home Corp. 54,900 $ 1,413
M/I Schottenstein Homes, Inc. 32,600 693
Pulte Corp. 51,400 2,191
Standard Pacific Corp. 55,000 966
Vistana, Inc. 183,200 4,672
9,935
CREDIT & OTHER FINANCE - 0.3%
BUSINESS CREDIT - 0.2%
Allied Capital Corp. 194,000 4,389
TRUSTS, NEC - 0.1%
Security Capital US Realty Class A (Reg.) (a) 182,700 2,558
TOTAL Credit & other finance 6,947
LODGING & GAMING - 0.4%
HOTELS, MOTELS, & TOURIST COURTS - 0.4%
Red Lion Inns LP (b) 411,600 10,676
MEDICAL FACILITIES MANAGEMENT - 0.7%
HOME HEALTH CARE AGENCIES - 0.7%
Sunrise Assisted Living, Inc. (a) 443,800 17,807
REAL ESTATE - 4.3%
OPERATORS, NON-RESIDENTAL - 1.6%
CR Leasing & Development, Inc. (d):
Class A 46 -
Class B (non-vtg.) 216 2
Forest City Enterprises, Inc. Class A 213,800 11,452
Trizec Hahn Corp. (sub-vtg.) 958,900 22,399
Wellsford Real Properties, Inc. 391,225 5,746
39,599
REAL ESTATE AGENTS - 0.0%
Trammell Crow Co. 33,700 897
REAL ESTATE, GENERAL - 0.8%
Boardwalk Equities, Inc. (a) 1,357,400 17,019
Boardwalk Equities, Inc. (a)(c) 150,000 1,881
18,900
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
REAL ESTATE - CONTINUED
SUBDIVIDED REAL ESTATE DEVELOPMENT - 1.9%
Catellus Development Corp. (a) 2,217,400 $ 41,992
Hovnanian Enterprises, Inc. Class A (a) 60,900 544
Newhall Land & Farming Co. 200,200 6,019
48,555
TOTAL REAL ESTATE 107,951
SAVINGS & LOANS - 0.9%
SAVINGS BANKS, FEDERAL CHARTER - 0.9%
Golden State Bancorp (a) 676,800 22,377
SECURITIES INDUSTRY - 0.4%
INVESTMENT MANAGERS - 0.4%
Security Capital Group, Inc. Class B (a) 329,100 9,935
TOTAL COMMON STOCKS
(Cost $1,820,856) 2,338,807
CONVERTIBLE BONDS - 0.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
MEDICAL FACILITIES MANAGEMENT - 0.2%
HOME HEALTH CARE AGENCIES - 0.2%
Sunrise Assisted Living, Inc.
5 1/2%, 6/15/02 (c)
(Cost $5,000) B2 $ 5,000 6,300
CASH EQUIVALENTS - 6.4%
MATURITY VALUE (NOTE 1)
AMOUNT (000S) (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at:
5.59%, dated 1/30/98 due 2/2/98 $ 153,666 $ 153,594
5.58%, dated 1/30/98 due 2/2/98 5,670 5,667
TOTAL CASH EQUIVALENTS
(Cost $159,261) 159,261
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,985,117) $ 2,504,368
LEGEND
1. Non-income producing
2. Affiliated company (see Note 6 of Notes to Financial Statements).
3. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $8,181,000 or
0.3% of net assets.
4. Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
American Office Park
Property, Inc. 1/27/98 $ 5,678
CR Leasing and
Development, Inc.:
Class A 11/19/97 $ -
Class B (non-vtg.) 11/19/97 $ 2
Crocker Realty, Inc.:
Class A 11/19/97 $ 15
Class B (non-vtg.) 11/19/97 $ 13,082
INCOME TAX INFORMATION
At January 31, 1998 the aggregate cost of investment securities for
income tax purposes was $1,985,681,000. Net unrealized appreciation
aggregated $518,687,000, of which $527,807,000 related to appreciated
investment securities and $9,120,000 related to depreciated investment
securities.
The fund hereby designates approximately $10,825,000 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) JANUARY 31, 1998

ASSETS

INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 2,504,368
AGREEMENTS OF $159,261) (COST $1,985,117) -
SEE ACCOMPANYING SCHEDULE

FOREIGN CURRENCY HELD AT VALUE (COST $474) 474

RECEIVABLE FOR INVESTMENTS SOLD 38,149

RECEIVABLE FOR FUND SHARES SOLD 9,307

DIVIDENDS RECEIVABLE 2,821

INTEREST RECEIVABLE 35

REDEMPTION FEES RECEIVABLE 4

OTHER RECEIVABLES 6

TOTAL ASSETS 2,555,164

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 62,777

PAYABLE FOR FUND SHARES REDEEMED 10,165

ACCRUED MANAGEMENT FEE 1,224

OTHER PAYABLES AND ACCRUED EXPENSES 521

TOTAL LIABILITIES 74,687

NET ASSETS $ 2,480,477

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 1,916,320

UNDISTRIBUTED NET INVESTMENT INCOME 7,650

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 37,257
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 519,250
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

NET ASSETS, FOR 123,320 SHARES OUTSTANDING $ 2,480,477

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $20.11
PER SHARE ($2,480,477 (DIVIDED BY) 123,320 SHARES)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED JANUARY 31, 1998

INVESTMENT INCOME $ 102,084
DIVIDENDS (INCLUDING $20,494 RECEIVED FROM
AFFILIATED ISSUERS)

INTEREST 9,047

TOTAL INCOME 111,131

EXPENSES

MANAGEMENT FEE $ 13,537

TRANSFER AGENT FEES 4,920

ACCOUNTING FEES AND EXPENSES 803

NON-INTERESTED TRUSTEES' COMPENSATION 10

CUSTODIAN FEES AND EXPENSES 93

REGISTRATION FEES 151

AUDIT 55

LEGAL 19

MISCELLANEOUS 15

TOTAL EXPENSES BEFORE REDUCTIONS 19,603

EXPENSE REDUCTIONS (620) 18,983

NET INVESTMENT INCOME 92,148

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES (INCLUDING REALIZED GAIN (LOSS) OF 102,267
$1,645 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)

FOREIGN CURRENCY TRANSACTIONS (49) 102,218

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES 154,419

ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (1) 154,418

NET GAIN (LOSS) 256,636

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 348,784
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

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

1998 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 92,148 $ 57,482
NET INVESTMENT INCOME

NET REALIZED GAIN (LOSS) 102,218 13,773

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 154,418 297,293

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 348,784 368,548
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS (91,259) (46,819)
FROM NET INVESTMENT INCOME

FROM NET REALIZED GAIN (65,254) -

TOTAL DISTRIBUTIONS (156,513) (46,819)

SHARE TRANSACTIONS 1,046,591 1,406,864
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 148,396 43,072

COST OF SHARES REDEEMED (1,103,764) (307,589)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 91,223 1,142,347
FROM SHARE TRANSACTIONS

REDEMPTION FEES 1,140 460

TOTAL INCREASE (DECREASE) IN NET ASSETS 284,634 1,464,536

NET ASSETS

BEGINNING OF PERIOD 2,195,843 731,307

END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 2,480,477 $ 2,195,843
INCOME OF $7,650 AND $7,973, RESPECTIVELY)

OTHER INFORMATION
SHARES

SOLD 54,293 85,737

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 7,571 2,808

REDEEMED (58,833) (20,000)

NET INCREASE (DECREASE) 3,031 68,545

</TABLE>

FINANCIAL HIGHLIGHTS

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

1998 1997 1996 1995 1994

SELECTED PER-SHARE DATA

NET ASSET VALUE, $ 18.25 $ 14.13 $ 12.62 $ 13.68 $ 13.22
BEGINNING OF PERIOD

INCOME FROM INVESTMENT
OPERATIONS

NET INVESTMENT INCOME .79 B .86 B .72 .67 .54

NET REALIZED AND 2.41 3.97 1.50 (1.10) .52
UNREALIZED GAIN (LOSS)

TOTAL FROM 3.20 4.83 2.22 (.43) 1.06
INVESTMENT OPERATIONS

LESS DISTRIBUTIONS

FROM NET INVESTMENT INCOME (.79) (.72) (.71) (.63) (.60)

FROM NET REALIZED GAIN (.56) - - - -

TOTAL DISTRIBUTIONS (1.35) (.72) (.71) (.63) (.60)

REDEMPTION FEES .01 .01 - - -
ADDED TO PAID IN CAPITAL

NET ASSET VALUE, $ 20.11 $ 18.25 $ 14.13 $ 12.62 $ 13.68
END OF PERIOD

TOTAL RETURN A 17.93% 35.45% 18.10% (3.23)% 8.10%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD $ 2,480 $ 2,196 $ 731 $ 490 $ 431
(IN MILLIONS)

RATIO OF EXPENSES TO AVERAGE .86% .94% .99% 1.06% 1.17%
NET ASSETS

RATIO OF EXPENSES TO AVERAGE .84% C .90% C .95% C 1.03% C 1.13% C
NET ASSETS AFTER EXPENSE
REDUCTIONS

RATIO OF NET INVESTMENT 4.06% 5.63% 6.28% 5.67% 4.34%
INCOME TO AVERAGE
NET ASSETS

PORTFOLIO TURNOVER RATE 76% 55% 85% 75% 110%

AVERAGE COMMISSION RATE D $ .0397 $ .0420

</TABLE>

J THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
K NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
L FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
M FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1998

14. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Real Estate Investment Portfolio (the fund) is a fund of
Fidelity Devonshire Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. The 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 (including restricted
securities) for which exchange quotations are not readily available
(and in certain cases debt securities which trade on an exchange) are
valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement date on purchases and sales of securities. 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 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
among 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 partnerships, non-taxable dividends and losses deferred
due to wash sales. The fund also utilized earnings and profits
distributed to shareholders on redemption of shares as a part of the
dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
REDEMPTION FEES. Shares held in the fund less than 90 days are subject
to a redemption fee equal to .75% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
15. 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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission , the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR),
may transfer uninvested cash balances into one or more joint trading
accounts. These balances are invested in one or more repurchase
agreements 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.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $18,777,000 or 0.8% of net assets.
16. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,707,512,000 and $1,611,036,000, respectively.
17. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .30%. 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. For the period, the management
fee was equivalent to an annual rate of .60% of average net assets
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 .22% 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 $943,000 for the
period.
18. 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 $586,000 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 $8,000 and $26,000, respectively, under these arrangements.
19. 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
Ambassador Apartments, Inc. $ 2,042 $ 5,466 $ - $ -
Apartment Investment &
Management Co. Class A 16,108 909 1,970 68,069
Arden Realty Group, Inc. 259 1,758 - -
Bay Apartment Communities, Inc. 6,045 13,287 2,662 51,770
CenterPoint Properties Corp. 7,495 2,663 794 35,741
Crocker Realty, Inc. Class A - - - 15
Duke Realty Investors, Inc. 13,978 3,571 3,030 109,311
Eastgroup Properties, Inc. - - - -
Excel Realty Trust, Inc. 14,758 - 2,771 51,901
Haagen Alexander Properties, Inc. - 4,538 226 -
Home Properties of NY, Inc. 244 - - 12,148
Innkeepers USA Trust 296 4,749 1,012 -
Mack Cali Realty Corp. 33,847 - 2,335 120,534
Malan Realty Investors, Inc. 1,178 90 182 4,393
Mid Atlantic Realty Trust 617 1,151 218 -
Mills Corp. 482 879 545 -
Pacific Gulf Properties, Inc. 676 741 502 -
Parkway Properties, Inc. 1,634 - 176 -
Reckson Associates Realty Corp. 25,215 391 2,099 72,734
Red Lions Inns LP 310 - 895 10,676
Starwood Lodging Trust combined
certificate (SBI) 2,584 - - 144,305
Sunstone Hotel Investors, Inc. 2,406 - 356 -
Tanger Factory Outlet Centers, Inc. 4,329 - 721 16,432
Wellsford Real Properties, Inc. 1,328 - - -
TOTALS $ 135,831 $ 40,193 $ 20,494 $ 698,029
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Real Estate Investment Portfolio:
We have audited the accompanying statements of assets and liabilities
of Fidelity Devonshire Trust: Fidelity Real Estate Investment
Portfolio, including the schedule of portfolio investments, as of
January 31, 1998, and the related statements of operations for the
year then ended, the statements of changes in net assets for each of
the two years in the period then ended and the financial highlights
for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of January 31, 1998 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Devonshire Trust: Fidelity Real Estate
Investment Portfolio as of January 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND LLP.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 10, 1998
DISTRIBUTIONS

The Board of Trustees of Fidelity Real Estate Investment Portfolio
voted to pay to shareholders of record at the opening of business on
record date, the following distributions derived from capital gains
realized from sales of portfolio securities, and dividends derived
from net investment income:

PAY DATE 3/10/97 12/29/97 3/9/98

RECORD DATE 3/7/97 12/26/97 3/6/98

DIVIDENDS $ .16 $ .27 $ .18

SHORT-TERM
CAPITAL GAINS $ - $ - $ .07

LONG-TERM
CAPITAL GAINS $ .01 $ .55 $ .18

LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 100% 33.32% 59.44%
20% rate 0% 66.68% 40.56%
A total of 5% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentage for use in preparing 1998 income tax returns.
MANAGING YOUR INVESTMENTS

For quotes.*

For account balances and holdings.

To review orders and mutual
fund activity.

To change your PIN.

To speak to a Fidelity representative.
0
*
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
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(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools... all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
4001 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree
Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard A. Spillane Jr., Vice President
Barry Greenfield, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
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 *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
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Utilities Fund
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