(2_FIDELITY_LOGOS)FIDELITY
MID-CAP STOCK
FUND
SEMIANNUAL REPORT
OCTOBER 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 21 Statements of assets and liabilities,
operations, and changes in net assets,
as well as financial highlights.
NOTES 25 Notes to the financial statements.
DISTRIBUTIONS 29
PROXY VOTING RESULTS 30
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
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 OCTOBER 31, 1998 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
FIDELITY MID-CAP STOCK -11.26% 4.69% 117.96%
S&P MidCap 400 (registered trademark) -10.45% 6.71% 105.80%
Mid-Cap Funds Average -15.34% -2.89% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, or since
the fund started on March 29, 1994. 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 MidCap 400 Index - a widely
recognized, unmanaged index of 400 medium-capitalization stocks. To
measure how the fund's performance stacked up against its peers, you
can compare it to the mid-cap funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a
peer group of 344 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 OCTOBER 31, 1998 PAST 1 LIFE OF
YEAR FUND
FIDELITY MID-CAP STOCK 4.69% 18.48%
S&P MidCap 400 6.71% 17.01%
Mid-Cap Funds Average -2.89% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a slightly different figure than
that obtained by averaging the cumulative total returns and
annualizing the result.)
$10,000 OVER LIFE OF FUND
Mid-Cap Stock S&P MidCap 400
00337 SP004
1994/03/29 10000.00 10000.00
1994/03/31 9780.00 9827.50
1994/04/30 9840.00 9900.23
1994/05/31 9890.00 9806.17
1994/06/30 9690.00 9468.84
1994/07/31 9930.00 9789.83
1994/08/31 10740.00 10302.82
1994/09/30 10990.00 10110.16
1994/10/31 11180.00 10220.36
1994/11/30 10720.00 9759.42
1994/12/31 10846.15 9849.01
1995/01/31 10927.24 9951.54
1995/02/28 11464.48 10473.20
1995/03/31 11860.51 10654.91
1995/04/30 12195.61 10868.86
1995/05/31 12378.39 11131.13
1995/06/30 12984.78 11584.28
1995/07/31 13715.88 12188.63
1995/08/31 14004.20 12413.99
1995/09/30 14302.82 12714.91
1995/10/31 14014.50 12387.76
1995/11/30 14539.66 12928.73
1995/12/31 14525.66 12896.54
1996/01/31 14977.57 13083.66
1996/02/29 15397.20 13528.38
1996/03/31 15386.44 13690.45
1996/04/30 15956.71 14108.55
1996/05/31 16666.85 14299.30
1996/06/30 16158.58 14084.67
1996/07/31 15221.85 13131.84
1996/08/31 16080.52 13889.16
1996/09/30 17073.01 14494.72
1996/10/31 16638.10 14536.90
1996/11/30 17429.86 15355.77
1996/12/31 17157.68 15372.81
1997/01/31 17731.94 15949.91
1997/02/28 17274.87 15818.80
1997/03/31 16325.58 15144.44
1997/04/30 16759.21 15537.14
1997/05/31 18165.57 16895.71
1997/06/30 19160.83 17370.31
1997/07/31 20672.56 19090.14
1997/08/31 20635.69 19067.04
1997/09/30 21704.96 20163.01
1997/10/31 20820.05 19285.72
1997/11/30 21164.18 19571.54
1997/12/31 21804.06 20331.11
1998/01/31 21673.42 19944.00
1998/02/28 23463.20 21596.36
1998/03/31 24665.11 22570.36
1998/04/30 24560.59 22982.27
1998/05/31 23763.68 21948.30
1998/06/30 24491.13 22086.79
1998/07/31 23834.87 21230.48
1998/08/31 19394.63 17278.64
1998/09/30 20288.27 18891.60
1998/10/30 21796.27 20579.95
IMATRL PRASUN SHR__CHT 19981031 19981111 115503 R00000000000059
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Mid-Cap Stock Fund on March 29, 1994, when the
fund started. As the chart shows, by October 31, 1998, the value of
the investment would have grown to $21,796 - a 117.96% increase on the
initial investment. For comparison, look at how the Standard & Poor's
MidCap 400 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 would have grown to
$20,580 - a 105.80% 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
Thanks to two interest-rate cuts by
the Federal Reserve, a brighter
corporate earnings outlook and
new measures to control plummeting
economies worldwide, the U.S. stock
market rebounded strongly in the
final month of the six-month period
ending October 31, 1998. For the
period, the Standard & Poor's 500
Index - a market-capitalization
weighted index of 500 widely held
U.S. stocks - returned -0.41%,
a marked improvement over the
- -6.97% return for the six-month
period ending September 30, 1998.
As investors are well aware,
extreme volatility was the rule rather
than the exception for the past six
months. Despite the Asian economic
difficulties that plagued the rest of
the world, the U.S. market posted a
strong second quarter, culminating
in a record-high Dow Jones
Industrial Average - an index of 30
blue-chip stocks - of 9337.97
points on July 17. Just six weeks
later, however, evidence that the
bull market may have made its last
charge was reinforced on August
31, when the Dow plunged 512.61
points - erasing all previous gains
for the year. Anxious to stave off the
effects of a bear market - as well
as the impact of turbulent
international and emerging markets
- - the Fed dropped the fed funds rate
by 0.25% on September 29, then in
a surprise move, slashed rates
another quarter-point on October
15, sparking the Dow to a 9.73%
return for the month of October.
An interview with Katherine Collins, Portfolio Manager of Fidelity
Mid-Cap Stock Fund
Q. HOW DID THE FUND PERFORM, KATHERINE?
A. For the six-month period that ended on October 31, 1998, the fund
had a return of -11.26%, compared to a return of -10.45% for the
Standard & Poor's Mid Cap 400 Index and -15.34% for the mid-cap funds
average, as monitored by Lipper Analytical Services. For the 12 months
that ended on October 31, the fund had a total return of 4.69%, while
the S&P Mid Cap 400 had a return of 6.71% and the mid-cap funds
average was -2.89%.
Q. WHAT FACTORS AFFECTED PERFORMANCE?
A. The fund's relative performance was helped by my emphasis on media
and leisure companies and my de-emphasis of energy and basic industry
companies, whose stocks were badly hit in the summer correction. For
the first time, the fund's de-emphasis of utility stocks hurt relative
performance, as these stocks tend to do better in times of
uncertainty. I manage the fund to be somewhat more aggressive than the
S&P Mid Cap index, but it is less aggressive than many of the funds in
the Lipper category. It makes sense that in a down market, the fund
would underperform the S&P 400 index while beating the Lipper average.
Q. YOUR LARGEST INDUSTRY WEIGHTING WAS IN MEDIA AND LEISURE, AT ABOUT
13% OF INVESTMENTS. WHAT WAS YOUR STRATEGY WITH RESPECT TO THAT
POSITION?
A. This very diverse group encompasses a number of broadcasters,
advertising and cable television companies and even Harley-Davidson,
the motorcycle manufacturer, that was one of the fund's largest
holdings and one of the best performers. I added to my investment in
Harley-Davidson after the stock price fell dramatically when it was
caught in a general market downturn unrelated to the quality of the
company. Within the media and leisure group, my greatest areas of
emphasis were broadcasters and advertisers. Both performed relatively
well, although they did suffer corrections. They were helped by good
cash flow and continued industry consolidation. Two of my
better-performing broadcasters were Clear Channel Communications and
Jacor, both of which the fund owned before they announced merger plans
in early October.
Q. YOU ALSO HAVE CONCENTRATIONS IN TECHNOLOGY, FINANCE AND HEALTH
CARE. WHAT HAS BEEN YOUR STRATEGY IN THESE INDUSTRIES?
A. While technology and finance were about 12% and 10% of investments,
respectively, both were under-represented when compared to the
benchmark S&P Mid Cap index. In technology, I looked for companies
that either had attractive valuations or had records of strong,
recurring revenues. This was a challenge, as many fast-growing
companies had very expensive stock prices, but I found opportunities
in the semiconductor equipment area. This industry was one of the
first hit by the Asian economic crisis, and many stocks lost more than
half their value. Companies in which I had invested included
KLA-Tencor, Teradyne and Applied Materials. In financial services, I
was concerned about being late in the economic cycle and high stock
valuations. As a result, I under-weighted this area, which turned out
to be good for the fund since these stocks corrected sharply in the
summer. The health care industry stood at about 10% of investments as
of October 31. I tended to emphasize health care products rather than
services.
Q. WERE THERE ANY PARTICULAR DISAPPOINTMENTS?
A. Yes, there were. Three of the poorest performing investments were
retailers: Proffitts, Stage Stores and Consolidated Stores. Each had
completed acquisitions and either ran into problems or encountered
market skepticism about its ability to integrate operations of the
acquired companies. Other disappointing investments included Unifi, a
yarn manufacturer that proved to be more vulnerable to Asian
competition than anticipated, and HEALTHSOUTH, which operates physical
therapy centers and was under pressure from HMOs, which reimburse it
for services, to hold down the fees it charged them.
Q. WHAT IS YOUR OUTLOOK?
A. I think there are still some great investment opportunities within
the mid-cap universe, although my outlook on the economy is a little
less bullish than it was six months or 12 months ago. However, I do
think there are companies that will be able to weather the economic
conditions and do well. Mid-cap stock values, in relation to large-cap
stock values, are cheap on an historical basis, so that is a good
backdrop in which to be investing.
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.
KATHERINE COLLINS ON THE
PERFORMANCE GAP BETWEEN
LARGE-CAP AND MID-CAP
STOCKS:
"In recent years we have seen a
large divergence in the performance
of large-, mid- and small-cap stocks.
In general, larger stocks have done
significantly better: for example, in
the first 10 months of 1998, the S&P
500 was up nearly 15%, while the
S&P Midcap 400 was up only 1% and
the Russell 2000 was down a
whopping 13%.
"This magnitude of performance
differences is very unusual - in
fact, the difference between the
S&P 500 and the small-cap Russell
index is the widest on record. The
disparity is even more remarkable
because small- and mid-cap
companies actually have shown
better earnings performance than
larger companies: according to data
from Prudential Securities, the third
quarter of 1998 was the sixth
consecutive quarter in which small
and mid-cap companies grew
earnings faster than large caps.
"I am encouraged that the strong
earnings trends at many mid-cap
companies appear to be
continuing. Generally these
companies have more domestic
business than large multinational
corporations, so they have been
somewhat insulated from the
turmoil in international markets.
Also, the stocks are at low
valuations relative to large stocks.
Finally, I continue to find exciting
companies generating superior
earnings growth at decent
valuations, which should translate
into good opportunities for the
fund."
FUND FACTS
GOAL: long-term growth of
capital by investing mainly in
equity securities of companies
with medium-sized market
capitalizations
FUND NUMBER: 337
TRADING SYMBOL: FMCSX
START DATE: March 29, 1994
SIZE: as of October 31,
1998, more than $1.5 billion
MANAGER: Katherine Collins,
since 1997; manager, Fidelity
Advisor Mid Cap Fund, 1997;
Fidelity Select Leisure Portfolio,
Fidelity Select Consumer
Industries Portfolio,
1996-1997; Fidelity Select
Construction and Housing
Portfolio, 1992-
1994; joined Fidelity in 1990
(checkmark)
INVESTMENT CHANGES
TOP TEN STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
Medtronic, Inc. 1.9 1.1
Leggett & Platt, Inc. 1.8 1.6
Harley-Davidson, Inc. 1.5 0.9
Safeway, Inc. 1.4 1.4
Cardinal Health, Inc. 1.1 1.1
Armstrong World Industries, Inc. 1.1 0.8
Service Corp. International 1.0 0.5
Linear Technology Corp. 1.0 0.8
Sybron International, Inc. 1.0 0.5
USA Networks, Inc. 1.0 0.5
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
MEDIA & LEISURE 13.0 11.1
TECHNOLOGY 11.5 11.0
FINANCE 10.4 14.1
HEALTH 10.3 8.6
RETAIL & WHOLESALE 9.1 11.1
</TABLE>
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998 * AS OF APRIL 30, 1998 **
ROW: 1, COL: 1, VALUE: 91.8
ROW: 1, COL: 2, VALUE: 8.199999999999999
STOCKS 97.8%
SHORT-TERM
INVESTMENTS 2.2%
FOREIGN
INVESTMENTS 1.7%
STOCKS 91.8%
SHORT-TERM
INVESTMENTS 8.2%
FOREIGN
INVESTMENTS 0.6%
ROW: 1, COL: 1, VALUE: 97.8
ROW: 1, COL: 2, VALUE: 2.2
*
**
INVESTMENTS OCTOBER 31, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 91.8%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.4%
AEROSPACE & DEFENSE - 0.7%
Gulfstream Aerospace 146,400 $ 6,478
Corp. (a)
Harsco Corp. 125,300 4,104
10,582
SHIP BUILDING & REPAIR - 0.7%
Avondale Industries, Inc. (a) 197,123 5,138
General Dynamics Corp. 110,300 6,528
11,666
TOTAL AEROSPACE & DEFENSE 22,248
BASIC INDUSTRIES - 2.8%
CHEMICALS & PLASTICS - 1.8%
Cytec Industries, Inc. (a) 263,800 6,331
IMC Global, Inc. 348,300 9,056
Ivex Packaging Corp. 457,300 8,088
Spartech Corp. 207,600 3,737
27,212
IRON & STEEL - 0.5%
Nucor Corp. 137,000 6,208
Steel Dynamics, Inc. (a) 136,600 1,861
8,069
PACKAGING & CONTAINERS - 0.5%
Owens-Illinois, Inc. (a) 136,500 4,172
Silgan Holdings, Inc. (a) 140,000 3,500
7,672
TOTAL BASIC INDUSTRIES 42,953
CONSTRUCTION & REAL ESTATE - 5.3%
BUILDING MATERIALS - 4.6%
Armstrong World Industries, 266,400 16,517
Inc.
Carlisle Companies, Inc. 260,800 10,073
Dayton Superior Corp. Class 228,600 4,115
A (a)
Elcor Corp. 435,850 12,640
Lone Star Industries, Inc. 150,000 10,566
Sherwin-Williams Co. 349,500 8,803
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
BUILDING MATERIALS - CONTINUED
Southdown, Inc. 64,152 $ 3,492
York International Corp. 130,100 4,895
71,101
CONSTRUCTION - 0.5%
Jacobs Engineering Group, 230,400 7,517
Inc. (a)
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Duke Realty Investments, Inc. 117,400 2,803
TOTAL CONSTRUCTION & REAL ESTATE 81,421
DURABLES - 8.8%
AUTOS, TIRES, & ACCESSORIES - 2.0%
Casey's General Stores, Inc. 343,100 4,803
Danaher Corp. 351,800 14,050
Pep Boys-Manny, Moe & 300,600 4,697
Jack
SPX Corp. 128,710 7,007
30,557
CONSUMER ELECTRONICS - 1.3%
Black & Decker Corp. 246,600 12,746
Newell Co. 181,300 7,977
20,723
HOME FURNISHINGS - 3.5%
Bassett Furniture Industries, 141,000 3,208
Inc.
Knoll, Inc. (a) 284,100 7,671
Leggett & Platt, Inc. 1,197,000 27,980
Miller (Herman), Inc. 452,200 9,977
OSF, Inc. (a) 243,700 1,658
Restoration Hardware, Inc. 193,400 3,892
54,386
TEXTILES & APPAREL - 2.0%
Kellwood Co. 137,900 3,758
Liz Claiborne, Inc. 157,600 4,630
Mohawk Industries, Inc. (a) 222,300 6,711
Stride Rite Corp. 116,300 1,061
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Unifi, Inc. 314,250 $ 5,303
WestPoint Stevens, Inc. Class 301,400 8,571
A (a)
30,034
TOTAL DURABLES 135,700
ENERGY - 2.8%
OIL & GAS - 2.8%
Apache Corp. 147,500 4,176
Conoco (a) 56,700 1,410
Enron Oil & Gas Co. 173,000 2,887
Nuevo Energy Co. (a) 220,950 4,681
Oryx Energy Co. (a) 137,500 1,925
Seagull Energy Corp. (a) 284,600 3,397
Tosco Corp. 419,800 11,781
Ultramar Diamond 226,700 6,107
Shamrock Corp.
USX-Marathon Group 97,000 3,171
Valero Energy Co. 151,800 3,795
43,330
FINANCE - 10.4%
BANKS - 3.9%
Amcore Financial, Inc. 46,600 1,115
AmSouth Bancorp. 317,250 12,710
Centura Banks, Inc. 36,900 2,546
Comerica, Inc. 149,500 9,643
Marshall & Ilsley Corp. 157,500 7,678
North Fork Bancorp, Inc. 310,282 6,167
Texas Regional Bancshares, 44,900 1,021
Inc. Class A (vtg.)
U.S. Bancorp 184,668 6,740
Westamerica Bancorp. 202,100 6,720
Zions Bancorp 100,000 5,306
59,646
CREDIT & OTHER FINANCE - 1.8%
Associates First Capital 161,300 11,372
Corp.
Household International, Inc. 167,800 6,135
Providian Financial Corp. 138,500 10,993
28,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - 4.3%
AFLAC, Inc. 254,500 $ 9,703
Allmerica Financial Corp. 190,600 9,530
Ambac Financial Group, 118,100 6,872
Inc.
American Bankers Insurance 133,000 5,943
Group, Inc.
Hartford Life, Inc. Class A 40,700 1,882
HCC Insurance Holdings, 142,000 2,547
Inc.
Lincoln National Corp. 15,100 1,146
MBIA, Inc. 48,300 2,952
PAULA Financial 162,600 1,291
Progressive Corp. 30,800 4,535
Protective Life Corp. 181,600 6,731
Reliastar Financial Corp. 165,800 7,264
UNUM Corp. 152,040 6,756
67,152
SAVINGS & LOANS - 0.4%
Richmond County Financial 114,300 1,672
Corp.
TCF Financial Corp. 58,800 1,385
Webster Financial Corp. 137,200 3,387
6,444
TOTAL FINANCE 161,742
HEALTH - 10.3%
MEDICAL EQUIPMENT & SUPPLIES - 9.4%
Arterial Vascular 217,900 6,700
Engineering, Inc. (a)
Becton, Dickinson & Co. 292,300 12,313
Boston Scientific Corp. (a) 266,000 14,480
Cardinal Health, Inc. 179,900 17,012
Cyberonics, Inc. (a) 205,000 1,230
Guidant Corp. 187,000 14,306
McKesson Corp. 146,900 11,311
Medtronic, Inc. 445,000 28,930
Millipore Corp. 289,500 7,129
Pall Corp. 404,000 10,201
Sofamor/Danek Group, 62,100 6,311
Inc. (a)
Sybron International, Inc. (a) 625,050 15,470
Young Innovations, Inc. 31,000 424
145,817
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - 0.9%
Health Management 580,425 $ 10,339
Associates, Inc. Class
A (a)
Tenet Healthcare Corp. (a) 150,900 4,216
14,555
TOTAL HEALTH 160,372
INDUSTRIAL MACHINERY & EQUIPMENT - 4.7%
ELECTRICAL EQUIPMENT - 1.9%
American Power Conversion 183,500 7,787
Corp. (a)
Emerson Electric Co. 97,800 6,455
General Electric Co. 62,500 5,469
VWR Scientific Products 395,400 9,613
Corp. (a)
29,324
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
ASM Lithography 56,700 1,446
Holding (a)
Gorman-Rupp Co. 169,900 2,888
Illinois Tool Works, Inc. 62,600 4,014
Kaydon Corp. 49,500 1,739
Kuhlman Corp. 248,800 6,593
Mark IV Industries, Inc. 156,950 2,413
PRI Automation, Inc. 325,900 5,642
Stanley Works 134,100 4,023
28,758
POLLUTION CONTROL - 0.9%
Allied Waste Industries, 123,870 2,679
Inc. (a)
Eastern Environmental 236,800 6,571
Services, Inc. (a)
Waste Management, Inc. 114,292 5,157
14,407
TOTAL INDUSTRIAL MACHINERY & 72,489
EQUIPMENT
MEDIA & LEISURE - 13.0%
BROADCASTING - 6.4%
CBS Corp. 388,600 10,857
Chum Ltd. Class B 56,000 1,198
Clear Channel 194,000 8,839
Communications, Inc. (a)
Cox Communications, Inc. 71,700 3,935
Class A (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Heftel Broadcasting Corp. 271,800 $ 11,178
Class A (a)
Jacor Communications, Inc. 261,200 14,366
Class A (a)
MediaOne Group, Inc. 156,300 6,613
Nielsen Media Research, 273,333 3,878
Inc. (a)
RCN Corp. (a) 119,600 1,925
Univision Communications, 271,700 8,015
Inc. Class A (a)
USA Networks, Inc. (a) 683,000 15,368
Westwood One, Inc. (a) 707,300 12,731
98,903
ENTERTAINMENT - 1.9%
Cinar Films, Inc. Class B 245,000 5,359
(sub. vtg.) (a)
Pixar (a) 181,400 8,617
Premier Parks, Inc. (a) 557,500 12,370
Tele-Communications, Inc. 140,100 2,609
(TCI Ventures Group)
Series A (a)
28,955
LEISURE DURABLES & TOYS - 2.4%
Harley-Davidson, Inc. 584,200 22,638
Mattel, Inc. 399,300 14,325
36,963
PUBLISHING - 0.2%
Meredith Corp. 22,300 825
Times Mirror Co. Class A 52,800 2,927
3,752
RESTAURANTS - 2.1%
CKE Restaurants, Inc. 358,235 9,426
Cracker Barrel Old Country 333,800 8,637
Store, Inc.
Papa John's International, 153,400 5,824
Inc. (a)
Starbucks Corp. (a) 209,500 9,087
32,974
TOTAL MEDIA & LEISURE 201,547
NONDURABLES - 4.1%
AGRICULTURE - 0.3%
Michael Foods, Inc. 202,100 4,850
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
BEVERAGES - 0.7%
Coca-Cola Bottling Co. 37,100 $ 2,235
Consolidated
Whitman Corp. 365,400 7,833
10,068
FOODS - 2.6%
American Italian Pasta Co. 101,800 2,341
Class A
Dean Foods Co. 256,700 12,033
Earthgrains Co. 34,000 1,020
Flowers Industries, Inc. 198,000 4,059
Interstate Bakeries Corp. 151,300 3,792
Keebler Foods Co. (a) 43,000 1,236
Suiza Foods Corp. (a) 176,900 5,771
Tootsie Roll Industries, Inc. 77,100 3,050
Wrigley (Wm.) Jr. Co. 75,800 6,135
39,437
HOUSEHOLD PRODUCTS - 0.1%
Clorox Co. 11,200 1,224
First Brands Corp. 23,200 876
2,100
TOBACCO - 0.4%
RJR Nabisco Holdings Corp. 224,500 6,412
TOTAL NONDURABLES 62,867
RETAIL & WHOLESALE - 9.1%
APPAREL STORES - 1.2%
Abercrombie & Fitch Co. 100,100 3,973
Class A (a)
Bon-Ton Stores, Inc. (a) 489,700 3,214
Stage Stores, Inc. (a) 228,400 3,026
TJX Companies, Inc. 465,800 8,821
19,034
DRUG STORES - 1.0%
CVS Corp. 206,418 9,431
Walgreen Co. 130,100 6,334
15,765
GENERAL MERCHANDISE STORES - 2.0%
Consolidated Stores 160,932 2,645
Corp. (a)
Dollar Tree Stores, Inc. (a) 311,275 12,004
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Nordstrom, Inc. 186,300 $ 5,088
Saks Holdings, Inc. (a) 476,120 10,832
30,569
GROCERY STORES - 3.0%
Hannaford Brothers Co. 67,700 2,966
Meyer (Fred), Inc. (a) 179,400 9,564
Safeway, Inc. (a) 465,100 22,238
U.S. Foodservice (a) 253,490 12,041
46,809
RETAIL & WHOLESALE, MISCELLANEOUS - 1.9%
Action Performance 242,100 7,233
Companies, Inc. (a)
Bed Bath & Beyond, Inc. (a) 276,400 7,618
Brylane, Inc. (a) 81,300 1,311
Fingerhut Companies, Inc. 454,900 3,838
Staples, Inc. (a) 169,500 5,530
Zale Corp. (a) 153,600 3,638
29,168
TOTAL RETAIL & WHOLESALE 141,345
SERVICES - 3.8%
ADVERTISING - 1.4%
ADVO, Inc. (a) 183,900 4,678
Interpublic Group of 94,100 5,505
Companies, Inc.
Omnicom Group, Inc. 212,100 10,486
Outdoor Systems, Inc. (a) 59,900 1,322
21,991
PRINTING - 0.1%
Schawk, Inc. Class A 150,400 2,077
SERVICES - 2.3%
Administaff, Inc. (a) 141,300 4,636
Borg-Warner Security 679,600 10,364
Corp. (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Pittston Co. (Brinks Group) 127,100 $ 3,781
Service Corp. International 451,400 16,081
34,862
TOTAL SERVICES 58,930
TECHNOLOGY - 11.5%
COMMUNICATIONS EQUIPMENT - 1.1%
Ascend Communications, 208,700 10,070
Inc. (a)
Aspect Telecommunications 173,000 2,617
Corp. (a)
Dialogic Corp. (a) 57,900 1,303
Intermedia Communications, 172,400 3,189
Inc. (a)
17,179
COMPUTER SERVICES & SOFTWARE - 3.8%
America Online, Inc. 65,500 8,323
Autodesk, Inc. 166,300 5,186
BMC Software, Inc. (a) 69,400 3,336
Compuware Corp. (a) 86,800 4,703
CSG Systems International, 24,700 1,346
Inc. (a)
E Trade Group, Inc. (a) 42,100 758
Electronics for Imaging, 130,100 3,131
Inc. (a)
International Telecom Data 120,800 2,884
Systems, Inc.
Keane, Inc. (a) 334,100 11,109
Netscape Communications 141,600 3,036
Corp. (a)
Sabre Group Holdings, Inc. 68,200 2,570
Class A (a)
Shared Medical Systems 40,300 2,010
Corp.
Siebel Systems, Inc. (a) 218,390 4,463
Sportsline USA, Inc. 114,300 1,607
Technology Solutions, 170,100 2,041
Inc. (a)
Wind River Systems, Inc. 34,900 1,529
58,032
COMPUTERS & OFFICE EQUIPMENT - 1.9%
Apple Computer, Inc. (a) 120,800 4,485
Comverse Technology, 55,525 2,554
Inc. (a)
Ingram Micro, Inc. Class 127,500 5,801
A (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Lexmark International 129,900 $ 9,085
Group, Inc. (a)
Quantum Corp. (a) 414,800 7,285
29,210
ELECTRONIC INSTRUMENTS - 3.7%
Applied Materials, Inc. (a) 353,700 12,269
KLA-Tencor Corp. (a) 315,500 11,634
Novellus Systems, Inc. (a) 165,900 6,439
Teradyne, Inc. (a) 472,200 15,347
Varian Associates, Inc. 149,600 5,853
Waters Corp. (a) 80,100 5,887
57,429
ELECTRONICS - 1.0%
Linear Technology Corp. 263,000 15,681
TOTAL TECHNOLOGY 177,531
UTILITIES - 3.8%
CELLULAR - 0.4%
Nextel Communications, Inc. 86,200 1,562
Class A
SkyTel Communications, 227,400 3,766
Inc. (a)
5,328
ELECTRIC UTILITY - 1.8%
AES Corp. (a) 124,500 5,097
Duke Energy Corp. 112,100 7,251
Entergy Corp. 132,700 3,815
IPALCO Enterprises, Inc. 120,900 5,546
PacifiCorp 27,300 520
PG&E Corp. 198,400 6,039
28,268
GAS - 0.4%
Enron Corp. 123,700 6,525
TELEPHONE SERVICES - 1.2%
COMSAT Corp. Series 1 55,100 2,173
e.spire Communications, 252,700 3,032
Inc. (a)
Global TeleSystems Group, 73,500 2,945
Inc. (a)
MCI WorldCom, Inc. (a) 123,100 6,801
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
U.S. LEC Corp. Class A 36,400 $ 475
WinStar Communications, 139,000 3,753
Inc. (a)
19,179
TOTAL UTILITIES 59,300
TOTAL COMMON STOCKS 1,421,775
(Cost $1,326,607)
CASH EQUIVALENTS - 8.2%
Taxable Central Cash Fund (b) 127,163,686 127,164
(Cost $127,164)
TOTAL INVESTMENT IN SECURITIES - 100% $ 1,548,939
(Cost $1,453,771)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $1,454,262,000. Net unrealized appreciation
aggregated $94,677,000, of which $216,090,000 related to appreciated
investment securities and $121,413,000 related to depreciated
investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) OCTOBER 31, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $1,453,771) - $ 1,548,939
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE (COST $156) 156
RECEIVABLE FOR INVESTMENTS SOLD 32,678
RECEIVABLE FOR FUND SHARES SOLD 6,949
DIVIDENDS RECEIVABLE 487
INTEREST RECEIVABLE 403
OTHER RECEIVABLES 523
TOTAL ASSETS 1,590,135
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 22,592
PAYABLE FOR FUND SHARES REDEEMED 4,543
ACCRUED MANAGEMENT FEE 478
OTHER PAYABLES AND ACCRUED EXPENSES 321
TOTAL LIABILITIES 27,934
NET ASSETS $ 1,562,201
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 1,457,588
UNDISTRIBUTED NET INVESTMENT INCOME 783
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 8,662
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 95,168
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 100,047 SHARES OUTSTANDING $ 1,562,201
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $15.61
PER SHARE ($1,562,201 (DIVIDED BY) 100,047 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED OCTOBER 31, 1998 (UNAUDITED)
INVESTMENT INCOME $ 5,707
DIVIDENDS
INTEREST 1,507
TOTAL INCOME 7,214
EXPENSES
MANAGEMENT FEE $ 5,027
BASIC FEE
PERFORMANCE ADJUSTMENT (571)
TRANSFER AGENT FEES 1,951
ACCOUNTING FEES AND EXPENSES 333
NON-INTERESTED TRUSTEES' COMPENSATION 3
CUSTODIAN FEES AND EXPENSES 34
REGISTRATION FEES 44
AUDIT 17
LEGAL 2
TOTAL EXPENSES BEFORE REDUCTIONS 6,840
EXPENSE REDUCTIONS (399) 6,441
NET INVESTMENT INCOME 773
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 10,281
FOREIGN CURRENCY TRANSACTIONS (1) 10,280
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON (228,874)
INVESTMENT SECURITIES
NET GAIN (LOSS) (218,594)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (217,821)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1998 APRIL 30,
(UNAUDITED) 1998
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 773 $ (1,614)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 10,280 278,097
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (228,874) 275,780
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (217,821) 552,263
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS - (752)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (117,014) (157,007)
TOTAL DISTRIBUTIONS (117,014) (157,759)
SHARE TRANSACTIONS 525,291 2,015,319
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 114,607 153,508
COST OF SHARES REDEEMED (640,413) (1,767,175)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (515) 401,652
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (335,350) 796,156
NET ASSETS
BEGINNING OF PERIOD 1,897,551 1,101,395
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 1,562,201 $ 1,897,551
INCOME OF $783 AND $10, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 31,959 118,438
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 6,683 9,563
REDEEMED (39,539) (104,070)
NET INCREASE (DECREASE) (897) 23,931
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED APRIL 30, THREE MONTH YEAR ENDED
OCTOBER 31, 1998 PERIOD ENDED JANUARY 31,
APRIL 30,
(UNAUDITED) 1998 1997 1996 1995 1995 G
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 18.80 $ 14.30 $ 14.83 $ 12.01 $ 10.78 $ 10.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT .01 D (.02) D .03 D .11 E .02 -
INCOME (LOSS)
NET REALIZED AND (2.02) 6.30 .73 3.49 1.23 .92
UNREALIZED GAIN
(LOSS)
TOTAL FROM INVESTMENT (2.01) 6.28 .76 3.60 1.25 .92
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT - (.01) (.03) (.06) - -
INCOME
FROM NET REALIZED (1.18) (1.77) (1.26) (.72) (.02) (.14)
GAIN
TOTAL DISTRIBUTIONS (1.18) (1.78) (1.29) (.78) (.02) (.14)
NET ASSET VALUE, $ 15.61 $ 18.80 $ 14.30 $ 14.83 $ 12.01 $ 10.78
END OF PERIOD
TOTAL RETURN B, C (11.26)% 46.55% 5.03% 30.84% 11.61% 9.27%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF $ 1,562 $ 1,898 $ 1,101 $ 1,461 $ 459 $ 138
PERIOD (IN MILLIONS)
RATIO OF EXPENSES TO .79% A .90% 1.00% 1.02% 1.27% A 1.63% A
AVERAGE NET ASSETS
RATIO OF EXPENSES .74% A, F .86% F .96% F 1.00% F 1.22% A, F 1.61% A, F
TO AVERAGE NET
ASSETS AFTER
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT .09% A (.10)% .17% 1.01% .95% A (.03)% A
INCOME (LOSS) TO
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 130% A 132% 155% 179% 163% A 190% A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G FOR THE PERIOD MARCH 29, 1994 (COMMENCEMENT OF OPERATIONS) TO
JANUARY 31, 1995.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Mid-Cap Stock Fund (the fund) is a fund of Fidelity
Devonshire Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended, 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 require 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, 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 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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 foreign currency transactions, non-taxable dividends,
and losses deferred due to wash sales. The fund also utilized earnings
and profits distributed to shareholders on redemption of shares as a
part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
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.
2. OPERATING POLICIES - CONTINUED
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., 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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,072,382,000 and $1,277,613,000, 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 .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. The basic fee is
subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annualized rate of .51% 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 annualized rate of .23% 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 $266,000 for the
period.
5. 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 $379,000 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 $13,000 and $7,000, respectively, under these arrangements.
DISTRIBUTIONS
The Board of Trustees of Fidelity Mid-Cap Stock Fund voted to pay on
December 7, 1998, to shareholders of record at the opening of business
on December 4, 1998, a distribution of $.10 per share derived from
capital gains realized from sales of portfolio securities.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on November 18,
1998. The results of votes taken among shareholders on proposals
before them are reported below. Each vote reported represents one
dollar of net asset value held on the record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
AFFIRMATIVE 11,686,179,596.28 90.301
WITHHELD 1,255,148,568.70 9.699
TOTAL 12,941,328,164.98 100.000
PHYLLIS BURKE DAVIS
AFFIRMATIVE 11,682,992,125.34 90.277
WITHHELD 1,258,336,039.64 9.723
TOTAL 12,941,328,164.98 100.000
ROBERT M. GATES
AFFIRMATIVE 11,681,467,382.29 90.265
WITHHELD 1,259,860,782.69 9.735
TOTAL 12,941,328,164.98 100.000
EDWARD C. JOHNSON 3D
AFFIRMATIVE 11,683,371,215.62 90.280
WITHHELD 1,257,956,949.36 9.720
TOTAL 12,941,328,164.98 100.000
E. BRADLEY JONES
AFFIRMATIVE 11,669,294,690.53 90.171
WITHHELD 1,272,033,474.45 9.829
TOTAL 12,941,328,164.98 100.000
DONALD J. KIRK
AFFIRMATIVE 11,689,271,881.03 90.325
WITHHELD 1,252,056,283.95 9.675
TOTAL 12,941,328,164.98 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
AFFIRMATIVE 11,690,803,868.46 90.337
WITHHELD 1,250,524,296.52 9.663
TOTAL 12,941,328,164.98 100.000
WILLIAM O. MCCOY
AFFIRMATIVE 11,690,491,696.56 90.335
WITHHELD 1,250,836,468.42 9.665
TOTAL 12,941,328,164.98 100.000
GERALD C. MCDONOUGH
AFFIRMATIVE 11,674,205,667.03 90.209
WITHHELD 1,267,122,497.95 9.791
TOTAL 12,941,328,164.98 100.000
MARVIN L. MANN
AFFIRMATIVE 11,689,754,284.66 90.329
WITHHELD 1,251,573,880.32 9.671
TOTAL 12,941,328,164.98 100.000
ROBERT C. POZEN
AFFIRMATIVE 11,687,715,714.99 90.313
WITHHELD 1,253,612,449.99 9.687
TOTAL 12,941,328,164.98 100.000
THOMAS R. WILLIAMS
AFFIRMATIVE 11,675,479,177.58 90.219
WITHHELD 1,265,848,987.40 9.781
TOTAL 12,941,328,164.98 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of Mid-Cap Stock Fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 668,514,371.75 88.918
AGAINST 8,675,385.00 1.154
ABSTAIN 74,640,168.54 9.928
TOTAL 751,829,925.29 100.000
PROPOSAL 3
To adopt an Amended and Restated Declaration of Trust.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 10,550,495,730.26 81.926
AGAINST 613,430,706.07 4.764
ABSTAIN 1,714,127,002.49 13.310
TOTAL 12,878,053,438.82 100.000
BROKER 63,274,726.16
NON-VOTES
PROPOSAL 4
To approve an amended management contract for Mid-Cap Stock Fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 633,446,262.40 84.254
AGAINST 20,943,383.24 2.786
ABSTAIN 97,440,279.65 12.960
TOTAL 751,829,925.29 100.000
PROPOSAL 5
To approve an agreement and plan providing for the reorganization of
the fund from a separate series of one Massachusetts business trust to
another.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 633,181,116.52 84.219
AGAINST 20,099,820.62 2.673
ABSTAIN 98,548,988.15 13.108
TOTAL 751,829,925.29 100.000
PROPOSAL 6
To amend Mid-Cap Stock Fund's fundamental investment limitation
concerning diversification to exclude securities of other investment
companies.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 621,328,162.47 82.642
AGAINST 32,783,271.47 4.361
ABSTAIN 97,718,491.35 12.997
TOTAL 751,829,925.29 100.000
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity Management & Research
(U.K.) Inc., London, England
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Abigail P. Johnson, 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
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
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