(2_FIDELITY_LOGOS)FIDELITY
MID-CAP STOCK
FUND
ANNUAL REPORT
APRIL 30, 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 22 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 26 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 30 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 31
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Low interest rates and subdued inflation were two main factors that
bolstered stock and bond markets in the U.S. during the first four
months of 1998. The stock market continued to soar to record heights
as corporate earnings proved to be stronger than expected and
investors shrugged off concerns about the effects of economic
difficulties in Asia. The Federal Reserve Board continued its steady
interest rate policy, which boosted the performance of bonds.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1998 PAST 1 LIFE OF
YEAR FUND
FIDELITY MID-CAP STOCK 46.55% 145.61%
S&P MIDCAP 400 (REGISTERED TRADEMARK) 47.92% 129.82%
MID-CAP FUNDS AVERAGE 42.28% N/A
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on March 29, 1994. For example, if you 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 one year average represents a peer
group of 276 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1998 PAST 1 LIFE OF
YEAR FUND
FIDELITY MID-CAP STOCK 46.55% 24.57%
S&P MIDCAP 400 47.92% 22.56%
MID-CAP FUNDS AVERAGE 42.28% 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
IMATRL PRASUN SHR__CHT 19980430 19980506 160458 R00000000000053
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Mid-Cap Stock Fund on March 29, 1994, when the
fund started. As the chart shows, by April 30, 1998, the value of the
investment would have grown to $24,561 - a 145.61% 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 investment would have
grown to $22,982 - an 129.82% 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
While the U.S. stock market's resolve
was tested repeatedly during the
12-month period that ended April 30,
1998, a strong domestic economy
helped stocks post impressive gains.
The Standard & Poor's 500 Index -
a measure of the U.S. stock market -
returned 41.07% during this time.
Early in the period, stocks of larger
companies were responsible for much
of the market's advance. In August
and September, stocks of smaller
companies joined in the fun. In fact,
the Russell 2000 Index - a general
measure of small-capitalization
stock performance - returned
42.40% during the 12-month period.
The tide turned in late October when
the Dow Jones Industrial Average
fell 550-plus points in one trading
session in response to an economic
crisis that was unfolding in
Southeast Asia. The shake-up in
global markets ignited a new "flight
to quality" - meaning investors
again sought out the liquidity and
stable earnings growth of large-cap
companies. Despite this volatility at
the end of 1997, the vibrant U.S.
economy helped the stock market
to achieve record gains in early
1998. In fact, the Dow itself closed
above 9000 for the first time in April.
The period ended on a positive note
when the Commerce Department
reported that gross domestic
product grew at a
stronger-than-expected rate of 4.2%
in the first quarter, while
employment costs increased at a
slower-than-expected pace -
continued signs of strong economic
growth amidst benign inflation.
An interview with Katherine Collins, Portfolio Manager of Fidelity
Mid-Cap Stock Fund
Q. HOW DID THE FUND PERFORM, KATHERINE?
A. During the 12 months that ended on April 30, 1998, the fund had a
total return of 46.55%, compared to a 47.92% return for the Standard &
Poor's MidCap 400 Index, and a 42.28% return for the mid-cap funds
average monitored by Lipper Analytical Services.
Q. WHY DID THE FUND DO BETTER THAN ITS PEER GROUP, BUT TRAIL THE
INDEX?
A. Obviously, it was a great year for the market. One reason the fund
slightly underperformed the S&P index was that for the full year I was
underweighted in finance, one of the best-performing areas. However,
the fund tended to outperform its mutual fund peers because it had
fewer technology holdings than most of its competitors, and technology
companies were especially hard-hit during the fourth quarter of 1997.
Q. WHAT WERE THE MOST IMPORTANT FACTORS INFLUENCING PERFORMANCE?
A. The single biggest factor was a very good market, spurred by a
strong economy and low inflation. One important trend was
consolidation. Leggett & Platt, the fund's second-largest holding at
the end of the fiscal year, was a good example. The company
manufactures furniture components and metal shelving. It is well
managed and generates a lot of cash flow that it uses to acquire many
smaller companies in its industry to increase its profitability. On a
larger scale, the pharmaceutical and healthcare industries have
experienced significant merger-and-acquisition activity. McKesson, the
fund's largest holding, and Cardinal Health, two drug distributors,
have benefited from acquiring other companies, taking advantage of
increased operational efficiencies and generating increased profits.
They also are able to service customers such as drug retailers much
more efficiently.
Q. FINANCE WAS THE LARGEST AREA OF EMPHASIS AT THE END OF THE FISCAL
YEAR, AT 14.1% OF PORTFOLIO ASSETS, EVEN THOUGH YOU INDICATED THE FUND
WAS UNDERWEIGHTED THERE RELATIVE TO MARKET BENCHMARKS. WHAT WAS YOUR
STRATEGY?
A. One of the things I did wrong in 1997 was not own more financial
stocks. My thinking at the beginning of the year was that it was
pretty late in the economic cycle, so I didn't want to rely too much
on a continuation of good credit trends keeping the risks of lending
low. In addition, stock valuations were at all-time highs for the
sector. So, business was as good as it gets and valuations were as
high as they get. That is usually a pretty risky combination. However,
the economy remained strong; there were no problems with credit; and
business consolidation continued and even accelerated. I continue to
be cautious for the same reasons as a year ago. When investing in
finance stocks, I am trying not to rely solely on takeovers. If I own
an individual bank, I am counting on the company's strong fundamentals
to cause the stock to rise. I am not counting on it being bought out.
Q. WHAT HAS BEEN YOUR STRATEGY IN INVESTING IN TECHNOLOGY COMPANIES?
EVEN THOUGH YOU OWN FEWER TECHNOLOGY STOCKS THAN MANY COMPETITORS,
THESE COMPANIES STILL COMPRISED ABOUT 11% OF PORTFOLIO ASSETS ON APRIL
30.
A. Over the past year, I have focused on companies with a service
component - companies that could rely on regularly recurring revenues
rather than solely on new product sales. Three examples are Keane,
Compuware and America Online. The entire technology group suffered a
price correction at the end of 1997 because of the feared impact of
the Asian financial crisis. As a result, I looked for fundamentally
sound companies with attractive stock valuations. An example was
Linear Technology, a semi-conductor company.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Several stocks hurt performance, including three semiconductor
equipment companies - Lam Research, Novellus, and Integrated Process
Equipment. The fund owned all three through most of the period. The
fund no longer owns Integrated Process. When the Asian financial
crisis emerged late in 1997, all three companies were badly hit
because of their dependence on Asia for significant parts of their
business.
Q. WHAT IS YOUR OUTLOOK?
A. I am optimistic. Even after the strong performance of the past
year, mid-cap stocks still are attractively priced. A study by
Prudential Securities shows that the price of mid-cap stocks is at a
20-year low when compared to large-cap stocks on several valuation
measures. At the same time, the earnings-growth patterns of mid-cap
stocks are strong. I have more than 3,000 companies to look at in my
investing universe. I believe I can continue to find good investment
opportunities.
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
ISSUES TO CONSIDER IN
EVALUATING CORPORATE
MERGERS IN AN ERA OF
CONSOLIDATION:
"Right now, we are seeing
substantial business consolidation
across many industries. In
managing this fund, I am not just
buying every deal that is
announced. Some of the mergers
and acquisitions will not work.
"The key goes back to our strength
at Fidelity, which is research. We
try to be there before the merger
announcement and know both
companies in-depth and
independently. This enables me to
look at both sides of the story and
not just rely on the financial
projections. I need to understand
the companies' customer bases
and products and what can happen
to them after a merger. I need to be
able to ask operational questions
as well as financial questions.
"When a deal is announced, we ask
our analysts who have studied the
companies to get together and
examine the customers, products
and operations. This allows me to
ask more insightful questions. I try
to look at the financial projections
and analyze how a consolidated
company can meet these
projections by generating greater
revenues or by realizing cost
savings.
"For every three consolidations, one
may be okay, one may be a failure
and one may do very well. It is our
job to figure out in advance which
deals are most likely to do well. We
don't buy everything. Our analysis
depends on research, both before
and after merger announcements."
FUND FACTS
GOAL: long-term growth of
capital by investing mainly in
equity securities of companies
with medium-sized market
capitalizations
FUND NUMBER: 337
TRADING SYMBOL: FMCSX
START DATE: March 29, 1994
SIZE: as of April 30, 1998,
more than $1.8 billion
MANAGER: Katherine Collins,
since 1997; manager Fidelity
Advisor Mid Cap Fund, since
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 APRIL 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
MCKESSON CORP. 1.8 1.8
LEGGETT & PLATT, INC. 1.6 1.8
SAFEWAY, INC. 1.4 0.7
CVS CORP. 1.3 1.3
U.S. BANCORP 1.3 0.7
KEANE, INC. 1.2 1.2
OMNICOM GROUP, INC. 1.2 1.2
MEDTRONIC, INC. 1.1 0.7
CONSOLIDATED STORES CORP. 1.1 0.9
CARDINAL HEALTH, INC. 1.1 0.7
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 14.1 9.4
RETAIL & WHOLESALE 11.1 11.2
MEDIA & LEISURE 11.1 10.4
TECHNOLOGY 11.0 14.8
HEALTH 8.6 9.7
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998 * AS OF OCTOBER 31, 1997 **
ROW: 1, COL: 1, VALUE: 97.8
ROW: 1, COL: 2, VALUE: 2.2
STOCKS 95.4%
SHORT-TERM
INVESTMENTS 4.6%
FOREIGN
INVESTMENTS 1.6%
STOCKS 97.8%
SHORT-TERM
INVESTMENTS 2.2%
FOREIGN
INVESTMENTS 1.7%
ROW: 1, COL: 1, VALUE: 95.40000000000001
ROW: 1, COL: 2, VALUE: 4.6
*
**
INVESTMENTS APRIL 30, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 97.8%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 2.4%
AEROSPACE & DEFENSE - 1.6%
AAR Corp. 200,200 $ 5,244
Alliant Techsystems, Inc. (a) 123,700 7,909
Gulfstream Aerospace Corp. (a) 230,100 9,650
Harsco Corp. 163,100 7,503
30,306
DEFENSE ELECTRONICS - 0.5%
Litton Industries, Inc. (a) 87,700 5,262
Raytheon Co. Class A 72,000 3,974
9,236
SHIP BUILDING & REPAIR - 0.3%
Avondale Industries, Inc. (a) 234,300 6,296
TOTAL AEROSPACE & DEFENSE 45,838
BASIC INDUSTRIES - 5.3%
CHEMICALS & PLASTICS - 3.0%
Cytec Industries, Inc. (a) 160,900 8,809
Hanna Co. 316,100 7,251
Ivex Packaging Corp. 383,400 9,297
MacDermid, Inc. 155,400 4,652
Sealed Air Corp. (a) 192,700 12,080
Spartech Corp. 297,100 6,295
Valspar Corp. 182,900 7,293
55,677
IRON & STEEL - 0.2%
Nucor Corp. 18,900 1,133
Steel Dynamics, Inc. (a) 137,900 3,154
4,287
PACKAGING & CONTAINERS - 1.4%
Owens-Illinois, Inc. (a) 397,600 15,730
Silgan Holdings, Inc. (a) 293,300 10,266
25,996
PAPER & FOREST PRODUCTS - 0.7%
Champion International Corp. 35,400 1,905
Georgia-Pacific Corp. 35,100 2,709
Jefferson Smurfit Corp. (a) 132,500 2,733
Pentair, Inc. 137,800 5,960
13,307
TOTAL BASIC INDUSTRIES 99,267
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - 5.3%
BUILDING MATERIALS - 2.8%
Armstrong World Industries, Inc. 179,400 $ 15,384
Carlisle Companies, Inc. 120,100 6,095
Chart Industries, Inc. 78,000 2,194
Dayton Superior Corp. Class A (a) 176,700 3,534
Elcor Corp. 413,550 11,502
Lone Star Industries, Inc. 62,500 5,164
Mark IV Industries, Inc. 204,650 4,310
Medusa Corp. 92,000 5,658
53,841
CONSTRUCTION - 1.8%
Centex Corp. 131,700 4,577
Jacobs Engineering Group, Inc. (a) 218,900 7,306
Lennar Corp. 136,581 3,747
Oakwood Homes Corp. 344,650 9,715
Toll Brothers, Inc. (a) 125,500 3,498
Walter Industries, Inc. (a) 258,600 5,334
34,177
REAL ESTATE - 0.1%
LNR Property Corp. 98,000 2,622
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Bedford Property Investors, Inc. 59,500 1,156
Brandywine Realty Trust 81,300 1,850
Duke Realty Investors, Inc. 117,400 2,796
Home Properties of NewYork, Inc. 35,500 952
Kimco Realty Corp. 37,000 1,370
SL Green Realty Corp. 96,700 2,320
10,444
TOTAL CONSTRUCTION & REAL ESTATE 101,084
DURABLES - 6.5%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Pep Boys-Manny, Moe & Jack 119,400 2,597
CONSUMER ELECTRONICS - 0.4%
Black & Decker Corp. 122,500 6,324
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
HOME FURNISHINGS - 3.7%
Bassett Furniture Industries, Inc. 128,200 $ 4,006
Ethan Allen Interiors, Inc. 102,100 5,201
Furniture Brands International, Inc. (a) 247,400 7,267
Haverty Furniture Companies, Inc. 111,800 2,474
Knoll, Inc. 296,200 10,311
Leggett & Platt, Inc. 590,100 30,648
Miller (Herman), Inc. 139,600 4,214
Steelcase, Inc. Class A 155,900 5,398
69,519
TEXTILES & APPAREL - 2.3%
Culp, Inc. 184,800 3,511
Kellwood Co. 207,400 6,624
Mohawk Industries, Inc. (a) 538,300 16,620
Unifi, Inc. 334,850 12,829
Westpoint Stevens, Inc. Class A (a) 117,500 3,936
43,520
TOTAL DURABLES 121,960
ENERGY - 3.3%
ENERGY SERVICES - 0.7%
R&B Falcon Corp. (a) 179,780 5,763
Transocean Offshore, Inc. 78,294 4,375
Weatherford Enterra, Inc. (a) 57,500 2,879
13,017
OIL & GAS - 2.6%
Burlington Resources, Inc. 29,300 1,377
Cabot Oil & Gas Corp. Class A 35,200 825
Cooper Cameron Corp. (a) 61,900 4,112
EVI, Inc. (a) 91,500 4,872
Enron Oil & Gas Co. 169,800 3,969
Nuevo Energy Corp. (a) 210,750 7,508
Ocean Energy, Inc. (a) 327,232 8,017
Renaissance Energy Ltd. (a) 188,100 3,621
Tosco Corp. 200,700 7,150
Valero Energy Corp. 268,500 8,693
50,144
TOTAL ENERGY 63,161
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 14.1%
BANKS - 7.9%
AmSouth Bancorp. 155,100 $ 9,674
Banc One Corp. 138,370 8,138
Comerica, Inc. 271,000 18,140
Compass Bancshares, Inc. 106,200 5,151
Crestar Financial Corp. 118,100 7,064
Marshall & Ilsley Corp. 76,200 4,458
National City Corp. 74,700 5,173
North Fork Bancorp., Inc. 513,588 19,067
Providian Financial Corp. 41,200 2,480
Southwest Bancorporation Texas, Inc. (a) 152,100 6,084
Star Banc Corp. 100,700 6,363
Sterling Bancshares, Inc. 44,250 774
Texas Regional Bancshares, Inc. Class A 168,900 5,574
U.S. Bancorp 189,256 24,036
Wells Fargo & Co. 29,300 10,797
Westamerica Bancorporation 173,100 5,712
Zions Bancorp 187,900 9,606
148,291
CREDIT & OTHER FINANCE - 1.4%
Associates First Capital Corp. 188,400 14,083
Heller Financial, Inc. 5,800 157
Household International, Inc. 96,600 12,697
26,937
INSURANCE - 4.4%
AFLAC, Inc. 225,900 14,683
Allmerica Financial Corp. 182,000 11,397
AMBAC, Inc. 93,800 5,316
Capital Re Corp. 29,300 2,163
Chubb Corp. (The) 35,200 2,779
HCC Insurance Holdings Inc. 171,700 3,734
Hartford Life, Inc. Class A 29,200 1,444
Horace Mann Educators Corp. 23,900 822
Life RE Corp. 29,300 2,110
MBIA, Inc. 81,400 6,074
Nationwide Financial Services, Inc. Class A 40,800 1,770
Paula Financial 162,600 3,902
Progressive Corp 41,000 5,553
Protective Life Corp 65,500 2,432
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Provident Companies, Inc. 52,600 $ 2,055
Reliastar Financial Corp. 119,200 5,439
SunAmerica, Inc. 69,100 3,451
UNUM Corp. 143,740 7,726
82,850
SAVINGS & LOANS - 0.4%
Richmond County Financial Corp. 114,300 2,243
TCF Financial Corp 35,200 1,146
Webster Financial Corp. Waterbury, Conn 137,200 4,648
8,037
TOTAL FINANCE 266,115
HEALTH - 8.6%
DRUGS & PHARMACEUTICALS - 0.6%
Barr Laboratories, Inc. (a) 118,500 4,807
Cytyc Corp. (a) 161,600 2,343
Rexall Sundown, Inc. (a) 133,000 4,248
11,398
MEDICAL EQUIPMENT & SUPPLIES - 5.7%
Bard (C.R.), Inc. 129,200 4,627
Cardinal Health, Inc. 212,200 20,424
Cyberonics Inc. (a) 58,700 1,409
Guidant Corp. 176,700 11,817
InControl, Inc. (a) 313,500 1,705
McKesson Corp. 486,300 34,375
Medtronic, Inc. 410,300 21,592
Sybron International Corp. (a) 381,050 10,098
Young Innovations, Inc. 131,700 2,140
108,187
MEDICAL FACILITIES MANAGEMENT - 2.3%
HEALTHSOUTH Corp. (a) 509,050 15,367
Health Management Associates, Inc. Class A (a) 589,750 18,577
Hooper Holmes, Inc. 64,400 1,517
Tenet Healthcare Corp. (a) 175,800 6,582
42,043
TOTAL HEALTH 161,628
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HOLDING COMPANIES - 0.5%
Triarc Companies, Inc. Class A (a) 383,500 $ 9,899
INDUSTRIAL MACHINERY & EQUIPMENT - 6.2%
ELECTRICAL EQUIPMENT - 1.4%
General Electric Co. 77,600 6,605
Kuhlman Corp. 179,300 8,786
Loral Space & Communications Ltd. (a) 193,200 6,050
VWR Corp. (a) 172,100 5,658
27,099
INDUSTRIAL MACHINERY & EQUIPMENT - 2.8%
Cooper Industries, Inc. 136,800 9,148
Gorman Rupp Co. 146,600 2,950
Kaydon Corp. 119,900 5,253
PRI Automation, Inc. 173,000 4,628
Stanley Works 303,900 15,556
Tyco International Ltd. 262,160 14,288
51,823
POLLUTION CONTROL - 2.0%
American Disposal Services, Inc. (a) 197,700 7,926
Eastern Environmental Services Inc. (a) 292,800 7,649
Thermo Instrument Systems, Inc. (a) 107,850 3,182
USA Waste Services, Inc. (a) 381,792 18,732
37,489
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 116,411
MEDIA & LEISURE - 11.1%
BROADCASTING - 3.9%
CBS Corp. 195,800 6,975
Chum Ltd. Class B 58,800 2,260
Clear Channel Communications, Inc. (a) 208,100 19,613
Cox Communications, Inc. Class A (a) 94,200 4,204
Jacor Communications, Inc. Class A (a) 195,600 11,125
PanAmSat Corp. (a) 58,600 3,424
RCN Corp. 119,600 2,706
Tele-Communications, Inc. (TCI Ventures Group),
Series A (a) 64,200 1,047
USA Networks, Inc. (a) 381,900 9,380
Westwood One, Inc. (a) 410,700 12,321
73,055
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - 1.8%
Carnival Cruise Lines, Inc. Class A 101,100 $ 7,033
Cinar Films, Inc. Class B (sub-vtg.) (a) 245,000 4,708
Pixar (a) 111,100 4,611
Premier Parks, Inc. (a) 324,400 18,045
34,397
LEISURE DURABLES & TOYS - 1.8%
Callaway Golf Co. 108,200 2,948
Harley-Davidson, Inc. 477,000 17,172
Mattel, Inc. 387,700 14,854
34,974
LODGING & GAMING - 0.4%
Promus Hotel Corp.(a) 172,500 7,795
PUBLISHING - 2.1%
Applied Graphics Technologies, Inc. (a) 58,700 2,935
Harcourt General, Inc. 72,700 3,794
Meredith Corp. 200,600 8,626
Times Mirror Co. Class A 105,600 6,461
Tribune Co. 158,300 10,448
US WEST Media Group (a) 184,400 6,961
39,225
RESTAURANTS - 1.1%
CKE Restaurants, Inc. 256,035 8,865
Papa John's International, Inc. (a) 145,700 6,083
Starbucks Corp. (a) 116,300 5,597
20,545
TOTAL MEDIA & LEISURE 209,991
NONDURABLES - 5.4%
AGRICULTURE - 1.1%
DEKALB Genetics Corp. Class B 29,500 2,012
Delta & Pine Land Co. 225,300 10,377
Michael Foods, Inc. 172,500 5,046
Northland Cranberries, Inc. Class A 177,600 2,964
20,399
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
BEVERAGES - 0.4%
Coca-Cola Enterprises, Inc. 142,100 $ 5,364
Coors (Adolph) Co. Class B 37,600 1,344
6,708
FOODS - 2.0%
Dean Foods Co. 262,200 12,290
Flowers Industries, Inc. 168,200 3,595
Interstate Bakeries Corp. 250,600 7,941
Omega Protein Corp. 61,000 1,067
Pilgrims Pride Corp. 108,400 1,843
Suiza Foods Corp. (a) 172,200 10,203
36,939
HOUSEHOLD PRODUCTS - 1.9%
Alberto-Culver Co. Class A 584,900 15,646
Brady (W.H.) Co. Class A 348,000 10,614
Church & Dwight Co., Inc. 271,300 8,359
Revlon, Inc. Class A (a) 35,500 1,862
36,481
TOBACCO - 0.0%
RJR Nabisco Holdings Corp. 29,200 812
TOTAL NONDURABLES 101,339
RETAIL & WHOLESALE - 11.1%
APPAREL STORES - 2.1%
BON-TON Stores, Inc. (a) 175,100 2,867
Charming Shoppes, Inc. (a) 182,100 848
Payless ShoeSource, Inc. (a) 30,600 2,188
Stage Stores, Inc. (a) 295,000 15,174
TJX Companies, Inc. 432,950 19,158
40,235
DRUG STORES - 1.6%
CVS Corp. 336,759 24,836
Walgreen Co. 132,400 4,568
29,404
GENERAL MERCHANDISE STORES - 3.2%
Consolidated Stores Corp. (a) 516,932 20,677
Dollar Tree Stores (a) 243,350 13,202
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Kohls Corp. 1,200 $ 50
Meyer (Fred), Inc. 82,200 3,689
Michaels Stores, Inc. (a) 277,200 8,385
Proffitts, Inc. (a) 364,100 14,473
60,476
GROCERY STORES - 2.6%
Dominick's Supermarkets, Inc. (a) 19,700 789
Great Atlantic & Pacific Tea Co., Inc. 82,500 2,568
Hannaford Brothers Co. 165,700 7,363
Safeway, Inc. (a) 705,800 26,997
U.S. Foodservice, Inc. (a) 333,090 11,762
49,479
RETAIL & WHOLESALE, MISCELLANEOUS - 1.6%
Action Performance Companies, Inc. (a) 161,800 5,602
Brylane, Inc. (a) 119,800 7,038
800-JR CIGAR, Inc. 83,600 1,808
Tandy Corp. 204,000 10,149
Zale Corp.(a) 202,700 6,106
30,703
TOTAL RETAIL & WHOLESALE 210,297
SERVICES - 4.6%
ADVERTISING - 1.3%
Interpublic Group of Companies, Inc. 41,900 2,676
Omnicom Group, Inc. 467,800 22,162
24,838
PRINTING - 0.5%
Donnelley (R.R.) & Sons Co. 141,000 6,213
Schawk, Inc. Class A 158,100 2,530
8,743
SERVICES - 2.8%
AccuStaff, Inc. (a) 274,500 9,848
Administaff, Inc. (a) 71,300 3,075
Borg Warner Security Corp. (a) 393,500 8,018
Computer Horizons Corp. (a) 179,200 6,798
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Medaphis Corp. (a) 156,100 $ 1,434
Medpartners, Inc. (a) 252,500 2,588
Personnel Group of America, Inc. (a) 93,000 1,848
Pittston Co. (Brinks Group) 185,500 7,258
Service Corp. International 211,600 8,729
Snyder Communications, Inc. (a) 72,600 3,086
52,682
TOTAL SERVICES 86,263
TECHNOLOGY - 11.0%
COMMUNICATIONS EQUIPMENT - 1.0%
Aspect Telecommunications Corp. (a) 226,900 6,523
DSC Communications Corp. (a) 130,300 2,345
Davox Corp. (a) 53,700 1,202
Dialogic Corp. (a) 214,400 8,013
18,083
COMPUTER SERVICES & SOFTWARE - 7.2%
Affiliated Computer Services, Inc. Class A (a) 115,400 4,053
America Online, Inc. (a) 180,100 14,408
Brio Technology, Inc. 600 7
BMC Software, Inc. (a) 65,800 6,156
CSG Systems International, Inc. (a) 118,800 5,405
Ciber, Inc. (a) 224,200 7,287
Computer Learning Centers, Inc. (a) 359,600 4,315
Compuware Corp. (a) 325,000 15,884
E Trade Group, Inc. (a) 236,100 5,888
Equifax, Inc. 67,000 2,592
HBO & Co. 220,600 13,195
Keane, Inc. (a) 458,300 23,030
Pegasus Systems, Inc. 30,650 820
Saville Systems Ireland PLC sponsored ADR 55,800 2,783
Scopus Technology, Inc. (a) 120,300 2,256
Security Dynamics Technologies, Inc. (a) 29,900 721
Siebel Systems, Inc. (a) 288,400 7,462
Symantec Corp. (a) 378,900 10,988
Synopsys, Inc. (a) 199,200 8,566
Technology Solutions, Inc. (a) 32,300 1,038
136,854
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 0.6%
Comverse Technology, Inc. (a) 122,325 $ 5,795
Quantum Corp. (a) 95,600 2,247
Sequent Computer Systems, Inc. (a) 179,700 3,527
11,569
ELECTRONIC INSTRUMENTS - 1.0%
Elsag Baily Process Automat NV (a) 61,500 1,226
Lam Research Corp. (a) 142,897 4,430
Novellus Systems, Inc. (a) 99,500 4,764
Waters Corp. (a) 170,100 9,100
19,520
ELECTRONICS - 0.9%
Linear Technology Corp. 181,200 14,587
3Dfx Interactive, Inc. 60,100 1,439
3D Labs, Inc. Ltd. (a) 29,600 418
16,444
PHOTOGRAPHIC EQUIPMENT - 0.3%
Polaroid Corp. 124,300 5,469
TOTAL TECHNOLOGY 207,939
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.2%
Virgin Express Holdings PLC sponsored ADR 148,700 3,346
UTILITIES - 2.2%
CELLULAR - 0.1%
Mobile Telecommunications Technologies, Inc. (a) 70,600 1,800
ELECTRIC UTILITY - 1.0%
Duke Energy Corp. 122,500 7,090
IPALCO Enterprises, Inc. 134,100 5,842
LG&E Energy Corp. 64,400 1,707
PG&E Corp. 115,300 3,733
18,372
GAS - 0.1%
Enron Corp. 58,400 2,873
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 1.0%
Comsat Corp., Series 1 78,400 $ 3,165
EXCEL Communications, Inc. (a) 77,200 1,814
LCI International, Inc. (a) 35,400 1,407
U.S. LEC Corp. Class A 21,600 524
WorldCom, Inc. (a) 259,600 11,107
18,017
TOTAL UTILITIES 41,062
TOTAL COMMON STOCKS
(Cost $1,521,558) 1,845,600
CASH EQUIVALENTS - 2.2%
Taxable Central Cash Fund (b) (Cost $42,459) 42,459,486 42,459
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,564,017) $ 1,888,059
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.51%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $1,565,358,000. Net unrealized appreciation
aggregated $322,701,000 of which $358,505,000 related to appreciated
investment securities and $35,804,000 related to depreciated
investment securities.
The fund hereby designates approximately $73,541,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) APRIL 30, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $1,564,017) - $ 1,888,059
SEE ACCOMPANYING SCHEDULE
CASH 32
RECEIVABLE FOR INVESTMENTS SOLD 47,273
RECEIVABLE FOR FUND SHARES SOLD 5,671
DIVIDENDS RECEIVABLE 654
INTEREST RECEIVABLE 154
OTHER RECEIVABLES 144
TOTAL ASSETS 1,941,987
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 38,518
PAYABLE FOR FUND SHARES REDEEMED 4,661
ACCRUED MANAGEMENT FEE 716
OTHER PAYABLES AND ACCRUED EXPENSES 541
TOTAL LIABILITIES 44,436
NET ASSETS $ 1,897,551
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 1,400,963
UNDISTRIBUTED NET INVESTMENT INCOME 10
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) 172,536
ON INVESTMENTS AND FOREIGN CURRENCY TANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 324,042
NET ASSETS, FOR 100,944 SHARES OUTSTANDING $ 1,897,551
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $18.80
SHARE ($1,897,551 (DIVIDED BY) 100,944 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1998
INVESTMENT INCOME $ 8,558
DIVIDENDS
INTEREST 3,475
TOTAL INCOME 12,033
EXPENSES
MANAGEMENT FEE $ 9,389
BASIC FEE
PERFORMANCE ADJUSTMENT 24
TRANSFER AGENT FEES 3,735
ACCOUNTING FEES AND EXPENSES 628
NON-INTERESTED TRUSTEES' COMPENSATION 7
CUSTODIAN FEES AND EXPENSES 59
REGISTRATION FEES 261
AUDIT 54
LEGAL 7
MISCELLANEOUS 8
TOTAL EXPENSES BEFORE REDUCTIONS 14,172
EXPENSE REDUCTIONS (525) 13,647
NET INVESTMENT INCOME (LOSS) (1,614)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 278,121
FOREIGN CURRENCY TRANSACTIONS (24) 278,097
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON 275,780
INVESTMENT SECURITIES
NET GAIN (LOSS) 553,877
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 552,263
FROM OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ (1,614) $ 2,558
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) 278,097 191,856
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 275,780 (102,264)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 552,263 92,150
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (752) (3,338)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (157,007) (137,083)
TOTAL DISTRIBUTIONS (157,759) (140,421)
SHARE TRANSACTIONS 2,015,319 1,492,515
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 153,508 137,693
COST OF SHARES REDEEMED (1,767,175) (1,941,066)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 401,652 (310,858)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 796,156 (359,129)
NET ASSETS
BEGINNING OF PERIOD 1,101,395 1,460,524
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 1,897,551 $ 1,101,395
INCOME OF $10 AND $2,799, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 118,438 101,183
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 9,563 9,326
REDEEMED (104,070) (132,008)
NET INCREASE (DECREASE) 23,931 (21,499)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED APRIL 30, THREE MONTH YEAR ENDED
PERIOD ENDED JANUARY 31,
APRIL 30,
1998 1997 1996 1995 1995 H
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 14.30 $ 14.83 $ 12.01 $ 10.78 $ 10.00
OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.02) D .03 D .11 E .02 -
NET REALIZED AND UNREALIZED 6.30 .73 3.49 1.23 .92
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS 6.28 .76 3.60 1.25 .92
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01) (.03) (.06) - -
FROM NET REALIZED GAIN (1.77) (1.26) (.72) (.02) (.14)
TOTAL DISTRIBUTIONS (1.78) (1.29) (.78) (.02) (.14)
NET ASSET VALUE, END OF PERIOD $ 18.80 $ 14.30 $ 14.83 $ 12.01 $ 10.78
TOTAL RETURN B, C 46.55% 5.03% 30.84% 11.61% 9.27%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 1,898 $ 1,101 $ 1,461 $ 459 $ 138
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE .90% 1.00% 1.02% 1.27% A 1.63% A
NET ASSETS
RATIO OF EXPENSES TO AVERAGE NET .86% F .96% F 1.00% F 1.22% A, F 1.61% A, F
ASSETS AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME (.10)% .17% 1.01% .95% A (.03)% A
(LOSS) TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 132% 155% 179% 163% A 190% A
AVERAGE COMMISSION RATE G $ .0428 $ .0411
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 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 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.
H FOR THE PERIOD MARCH 29, 1994 (COMMENCEMENT OF OPERATIONS) TO
JANUARY 31, 1995.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Mid-Cap Stock Fund(the fund) is a fund of Fidelity Devonshire
Trust (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The financial
statements have been prepared in conformity with generally accepted
accounting principles which 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
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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.
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.
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,208,203,000 and $1,987,105,000, 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 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES - CONTINUED
disbursing and shareholder servicing agent. FSC receives account fees
and asset-based fees that vary according to account size and type of
account. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. For the period, the
transfer agent fees were equivalent to an annual rate of .24% of
average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $481,000 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 $500,000 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 $18,000, respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Mid-Cap Stock Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Devonshire Trust: Fidelity MidCap Stock Fund, including
the schedule of portfolio investments, as of April 30, 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 three years in the
period then ended, for the three month period ended April 30, 1995,
and for the period March 29, 1994 (commencement of operations) to
January 31, 1995. These financial statements and financial highlights
are the responsibility of the fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of April 30, 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 Mid-Cap
Stock Fund as of April 30, 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 three years in the period then ended, for the three month
period ended April 30, 1995, and for the period March 29, 1994
(commencement of operations) to January 31, 1995, in conformity with
generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 5, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Mid-Cap Stock 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 6/9/97 12/8/97 6/8/98
RECORD DATE 6/6/97 12/5/97 6/5/98
DIVIDENDS $ .01 - -
SHORT-TERM
CAPITAL GAINS $ .29 $ .81 $ .81
LONG-TERM
CAPITAL GAINS $ .43 $ .24 $ .37
LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 100.00% 52.73% 51.62%
20% rate - 47.27% 48.38%
A total of 7% 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.
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 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
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Contrafund II
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export and Multinational Fund
Fidelity Fifty
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Small Cap Stock Fund
Stock Selector
TechnoQuant Growth Fund
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Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
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