FIDELITY
MID-CAP STOCK
FUND
ANNUAL REPORT
APRIL 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
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 29 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 30
OF SPECIAL NOTE 31
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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.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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, or visit our
web site at www.fidelity.com. 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, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY MID-CAP STOCK 9.92% 174.36% 169.97%
S&P MidCap 400 (registered 6.43% 147.07% 144.61%
trademark)
Mid-Cap Funds Average 5.00% 122.65% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years 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 market
capitalization-weighted 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
Inc. The past one year average represents a peer group of 349 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, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY MID-CAP STOCK 9.92% 22.37% 21.55%
S&P MidCap 400 6.43% 19.83% 19.21%
Mid-Cap Funds Average 5.00% 17.03% 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 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
1998/10/31 21796.27 20579.95
1998/11/30 23220.50 21606.89
1998/12/31 25114.84 24217.43
1999/01/31 25466.00 23274.65
1999/02/28 24075.41 22055.98
1999/03/31 25241.26 22672.23
1999/04/30 26997.05 24460.61
IMATRL PRASUN SHR__CHT 19990430 19990520 110300 R00000000000065
$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, 1999, the value of the
investment would have grown to $26,997 - a 169.97% 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
$24,461 - a 144.61% increase.
(checkmark)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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Powerful momentum in stock prices
and overwhelming investor
confidence provided the backdrop
for the surge in large-cap stock
prices during the 12-month period
that ended April 30, 1999.
Following the July through October
1998 correction, investor
confidence was bolstered by a
near-perfect economic environment
of strong domestic growth, low
interest rates, benign inflation and
improving overseas markets. The
hype surrounding equities was
greatest in the technology sector,
most notably Internet stocks.
Pharmaceutical, finance and
telecommunications shares also
performed well. Late in the period,
economically sensitive cyclical stocks
outperformed other sectors as
investors worried about the
potential threat of inflation due to
strong economic indicators in the
U.S. and signs that global markets
were beginning to turn around.
Approximately one month after
surpassing the 10,000 level late in
March, the Dow Jones Industrial
Average was flirting with 11,000. As
market leadership broadened
into cyclical stocks and
value-oriented sectors, the surge in
stock prices drove the Dow Jones
Industrials, Standard & Poor's 500
and NASDAQ indexes up 21.06%,
21.82% and 36.10%, respectively,
for the year. The phenomenal
performance of a narrow group of
large-cap growth stocks, however,
masked the weak results of the
overall market as the average stock
on the New York Stock Exchange
posted negative returns during the
period.
(photograph of Katherine Collins)
An interview with Katherine Collins, Portfolio Manager of Fidelity
Mid-Cap Stock Fund
Q. HOW DID THE FUND PERFORM, KATHERINE?
A. The fund did very well, outperforming both the benchmark Standard &
Poor's MidCap 400 Index and the mid-cap funds average. For the 12
months that ended April 30, 1999, the fund had a return of 9.92%,
compared to a return of 6.43% for the S&P 400 index and a 5.00% return
for the mid-cap funds average monitored by Lipper Inc.
Q. WHAT FACTORS AFFECTED PERFORMANCE DURING THE 12-MONTH PERIOD?
A. The fund's diversified approach worked well during a period of
change, which included a dramatic correction in the late summer of
1998 prompted by the Russian financial crisis. During the first six to
nine months of the fund's fiscal year, the fund did better than the
S&P index because technology and traditional growth stocks were doing
well. I manage the fund to be somewhat more aggressive than the S&P
mid-cap index, although it is often less aggressive than many
competitive funds. In the final three months of the period, as value
stocks started to recover, the fund's performance also pulled ahead of
some of the more aggressive growth funds in the Lipper group. I tried
to keep the fund firmly in the growth style, but also have some
balance with cyclical issues and other types of value stocks to keep
the fund diversified throughout the full spectrum of the market.
Q. TECHNOLOGY WAS YOUR LARGEST INDUSTRY WEIGHTING AT THE END OF THE
PERIOD, AT 14.8% OF INVESTMENTS. WHAT WAS YOUR STRATEGY?
A. Technology was an important contributor to performance, and
Internet-related stocks were the largest contributors within
technology. Throughout the 12-month period, I repositioned the
technology portion of the portfolio. I moved the fund away from
hardware and software companies that were dependent on sales of
personal computers because I was concerned about general corporate
technology spending. I emphasized cyclical technology areas like
semiconductor capital equipment and I invested in selected Internet
stocks, especially those focused on the business-to-business market.
Many of these infrastructure and business-related companies have
records of profitability, unlike many consumer-focused Internet
companies.
Q. WHICH TECHNOLOGY HOLDINGS PERFORMED WELL FOR THE FUND?
A. Internet-related companies that did well included Intuit, which did
an excellent job expanding its core finance and accounting products to
the Web, and VeriSign, which provides security systems for Internet
transactions. Another significant contributor to performance was E
Trade, which unlike many consumer-related companies showed it can
earn a profit. AOL was a positive contributor during the period,
although I sold most of the position to take profits from the stock's
price appreciation and because AOL has grown to be a large-cap
company. Semi-conductor equipment companies also helped performance,
including Applied Materials and Teradyne. I recently reduced the
holdings in this area following the price gains.
Q. WHAT OTHER AREAS HAVE HELPED PERFORMANCE?
A. The media and leisure sector continued to be the fund's largest
overweighting, relative to the S&P mid-cap index, at 12.1% of
investments at the end of the fiscal year. I invested in a number of
broadcasting companies, including Clear Channel, Westwood One and
Jacor Communications. All did well as radio advertising sales remained
healthy. Premier Parks, which owns a number of regional theme parks
and acquired the Six Flags parks, also was a strong contributor. Other
contributors were USA Network and Harley-Davidson. Energy was another
area that helped performance. Late in 1998 and early in 1999, I
substantially increased the fund's energy holdings, and this helped as
the sector revived.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. One of the biggest single disappointments was Service Corp., which
owns a chain of funeral homes. This company failed to meet analysts'
earnings expectations because of a decline in the death rate and
earnings shortfalls in acquired properties. Another poor performer was
Network Associates, a software company specializing in security
programs.
Q. WHAT IS YOUR OUTLOOK?
A. I am a little more optimistic about the stock market than I was six
months ago as the economy continues to grow and corporate earnings
have increased. Mid-cap stocks remain undervalued when compared to
large-cap stocks on the basis of measures such as price-to-earnings
ratios. However, in managing this fund, I don't concentrate on
macro-economic issues. It's a stock-by-stock selection process, and I
think Fidelity's emphasis on research gives me an advantage in finding
good companies at attractive stock prices.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: long-term growth of
capital by investing mainly in
equity securities of
companies with
medium-sized market
capitalizations
START DATE: March 29, 1994
FUND NUMBER: 337
TRADING SYMBOL: FMCSX
SIZE: as of April 30, 1999,
more than $1.7 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
KATHERINE COLLINS ON THE
RELATIVE INEFFICIENCY OF
THE MID-CAP STOCK MARKET:
"The mid-cap stock market is less
efficient than the large-cap market
simply because there are fewer
equity analysts following mid-cap
companies. A company larger than
$5 billion in market capitalization
is likely to have more than twice
as many analysts covering it as a
mid-cap company. This means that
there is a greater opportunity for
an independent analyst to discover
discrepancies between a
company's fundamental outlook
and the market valuation of its
stock.
"That's where Fidelity's proven
strength - independent equity
research - comes in. A recent
Reuters poll of more than 1,000
executives in small- and mid-cap
companies ranked Fidelity as the
No. 1 buy-side research organization
in every category. We have
invested more people and technology
in independent research, covering
industries from large-cap through
small-cap. This allows us to
develop insights across the entire
industry and relate trends to specific
companies.
"Our analysts may discover an
exciting new product, or they may
discover hidden value in a company's
operations, or they may better
understand the challenges of a
proposed merger. This kind of
bottoms-up research can uncover
exciting investment opportunities
in an inefficient market."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCKS 6 MONTHS AGO
Leggett & Platt, Inc. 1.8 1.8
QUALCOMM, Inc. 1.6 0.0
Westwood One, Inc. 1.4 0.8
Jacor Communications, Inc. 1.3 0.9
Class A
Cardinal Health, Inc. 1.2 1.1
USA Networks, Inc. 1.1 1.0
Premier Parks, Inc. 1.1 0.8
Service Corp. International 1.1 1.0
Associates First Capital 1.0 0.7
Corp. Class A
Harley-Davidson, Inc. 1.0 1.5
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO
TECHNOLOGY 14.8 11.5
MEDIA & LEISURE 12.1 13.0
FINANCE 10.3 10.4
RETAIL & WHOLESALE 9.2 9.1
ENERGY 7.8 2.8
</TABLE>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF APRIL 30, 1999 *
Stocks 94.5%
Short-term
investments 5.5%
*FOREIGN
INVESTMENTS 1.2%
Row: 1, Col: 1, Value: 94.5
Row: 1, Col: 2, Value: 5.5
AS OF OCTOBER 31, 1998 **
Stocks 91.8%
Short-term
investments 8.2%
**FOREIGN
INVESTMENTS 0.6%
Row: 1, Col: 1, Value: 91.8
Row: 1, Col: 2, Value: 8.199999999999999
INVESTMENTS APRIL 30, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 94.5%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 1.4%
AEROSPACE & DEFENSE - 0.8%
Gulfstream Aerospace Corp. (a) 280,900 $ 13,694
SHIP BUILDING & REPAIR - 0.6%
General Dynamics Corp. 158,500 11,135
TOTAL AEROSPACE & DEFENSE 24,829
BASIC INDUSTRIES - 2.5%
CHEMICALS & PLASTICS - 1.4%
Cytec Industries, Inc. (a) 213,300 6,066
IMC Global, Inc. 234,000 5,850
Ivex Packaging Corp. (a) 436,300 8,590
Solutia, Inc. 127,700 3,113
23,619
IRON & STEEL - 0.6%
Nucor Corp. 120,500 7,072
Steel Dynamics, Inc. (a) 212,700 3,589
10,661
PACKAGING & CONTAINERS - 0.5%
Bemis Co., Inc. 105,500 3,693
Owens-Illinois, Inc. (a) 136,500 3,959
Silgan Holdings, Inc. (a) 98,800 1,704
9,356
TOTAL BASIC INDUSTRIES 43,636
CONSTRUCTION & REAL ESTATE -
3.9%
BUILDING MATERIALS - 2.2%
Armstrong World Industries, 63,500 3,477
Inc.
Carlisle Companies, Inc. 276,500 13,549
Dayton Superior Corp. Class A 256,700 5,086
(a)
Elcor Corp. 92,560 3,575
Lone Star Industries, Inc. 60,500 2,159
Masco Corp. 209,800 6,163
Sherwin-Williams Co. 104,300 3,246
York International Corp. 23,900 986
38,241
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONSTRUCTION & REAL ESTATE -
CONTINUED
CONSTRUCTION - 1.2%
Centex Corp. 197,300 $ 7,214
Jacobs Engineering Group, 167,300 6,598
Inc. (a)
Lennar Corp. 244,800 5,921
Pulte Corp. 69,600 1,575
21,308
REAL ESTATE INVESTMENT TRUSTS
- - 0.5%
Apartment Investment & 129,300 5,180
Management Co. Class A
Duke Realty Investments, Inc. 117,400 2,759
7,939
TOTAL CONSTRUCTION & REAL 67,488
ESTATE
DURABLES - 7.3%
AUTOS, TIRES, & ACCESSORIES -
2.3%
Barrett Resources Corp. (a) 84,000 2,552
Casey's General Stores, Inc. 428,100 5,672
Danaher Corp. 228,200 15,161
Navistar International Corp. 83,300 4,358
(a)
Pep Boys-Manny, Moe & Jack 212,400 3,040
SPX Corp. 128,710 8,406
39,189
CONSUMER ELECTRONICS - 0.3%
Black & Decker Corp. 98,100 5,567
HOME FURNISHINGS - 2.8%
Bassett Furniture Industries, 141,000 3,384
Inc.
Knoll, Inc. (a) 87,400 2,098
Leggett & Platt, Inc. 1,321,100 30,465
Miller (Herman), Inc. 140,500 2,801
Newell Rubbermaid, Inc. 117,800 5,588
Restoration Hardware, Inc. 224,500 3,508
47,844
TEXTILES & APPAREL - 1.9%
Liz Claiborne, Inc. 109,980 3,636
Mohawk Industries, Inc. (a) 253,100 8,162
Quiksilver, Inc. (a) 84,300 2,239
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Shaw Industries, Inc. (a) 136,300 $ 2,470
WestPoint Stevens, Inc. Class 454,300 15,560
A (a)
32,067
TOTAL DURABLES 124,667
ENERGY - 7.8%
ENERGY SERVICES - 2.3%
ENSCO International, Inc. 660,200 12,255
Halliburton Co. 335,200 14,288
Schlumberger Ltd. 131,000 8,368
Transocean Offshore, Inc. 153,200 4,548
39,459
OIL & GAS - 5.5%
Anadarko Petroleum Corp. 238,600 9,052
Apache Corp. 385,100 11,818
Cabot Oil & Gas Corp. Class A 84,000 1,470
Coastal Corp. (The) 137,200 5,248
Conoco, Inc. Class A 130,800 3,548
Enron Oil & Gas Co. 251,300 4,775
Kerr-McGee Corp. 123,952 5,252
Noble Affiliates, Inc. 129,300 4,146
Nuevo Energy Co. (a) 277,150 4,400
Santa Fe Energy Resources, 255,100 2,296
Inc. (a)
Snyder Oil Corp. 306,000 5,565
Stone Energy Corp. (a) 102,500 3,479
Tosco Corp. 530,500 14,191
Ultramar Diamond Shamrock 278,100 6,414
Corp.
USX-Marathon Group 132,600 4,144
Vastar Resources, Inc. 164,600 9,032
94,830
TOTAL ENERGY 134,289
FINANCE - 10.3%
BANKS - 2.5%
Amcore Financial, Inc. 46,600 979
Comerica, Inc. 212,100 13,800
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Marshall & Ilsley Corp. 213,100 $ 14,917
Westamerica Bancorp. 202,100 6,745
Whitney Holding Corp. 25,900 1,049
Zions Bancorp 85,300 5,688
43,178
CREDIT & OTHER FINANCE - 1.7%
Associates First Capital 376,800 16,697
Corp. Class A
Household International, Inc. 49,100 2,470
Providian Financial Corp. 81,250 10,486
29,653
INSURANCE - 4.7%
AFLAC, Inc. 173,900 9,434
Allmerica Financial Corp. 195,400 11,199
Ambac Financial Group, Inc. 246,600 14,888
American Bankers Insurance 133,000 6,974
Group, Inc.
CIGNA Corp. 152,800 13,322
Financial Security Assurance 14,500 828
Holdings Ltd.
MBIA, Inc. 165,300 11,116
Protective Life Corp. 174,300 6,830
Reliastar Financial Corp. 181,811 6,682
81,273
SAVINGS & LOANS - 0.5%
Commercial Federal Corp. 83,300 2,020
Richmond County Financial 121,100 1,991
Corp.
Webster Financial Corp. 137,200 4,219
8,230
SECURITIES INDUSTRY - 0.9%
E Trade Group, Inc. (a) 130,100 15,027
TOTAL FINANCE 177,361
HEALTH - 6.4%
DRUGS & PHARMACEUTICALS - 0.6%
Quintiles Transnational Corp. 274,300 11,126
(a)
MEDICAL EQUIPMENT & SUPPLIES
- - 5.3%
Becton, Dickinson & Co. 143,300 5,329
Biomet, Inc. 197,600 8,102
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES
- - CONTINUED
Boston Scientific Corp. (a) 45,100 $ 1,920
Cardinal Health, Inc. 339,650 20,315
Cyberonics, Inc. (a) 184,000 1,495
Guidant Corp. 134,000 7,194
Heartport, Inc. (a) 173,600 944
Medtronic, Inc. 211,585 15,221
Millipore Corp. 197,500 6,061
Novoste Corp. (a) 107,900 2,401
Pall Corp. 358,400 6,608
Sybron International, Inc. (a) 529,350 14,656
90,246
MEDICAL FACILITIES MANAGEMENT
- - 0.5%
Health Management Associates, 383,925 5,999
Inc. Class A (a)
Trigon Healthcare, Inc. (a) 55,800 1,772
7,771
TOTAL HEALTH 109,143
INDUSTRIAL MACHINERY &
EQUIPMENT - 3.8%
ELECTRICAL EQUIPMENT - 1.7%
American Power Conversion 93,200 3,076
Corp. (a)
Emerson Electric Co. 115,200 7,430
General Electric Co. 28,400 2,996
VWR Scientific Products Corp. 610,900 15,654
(a)
29,156
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.8%
ASM Lithography Holding N V 136,300 5,316
(a)
Gorman-Rupp Co. 169,900 2,633
Illinois Tool Works, Inc. 53,300 4,104
Kaydon Corp. 45,400 1,532
Manitowoc Co., Inc. 187,500 7,148
PRI Automation, Inc. (a) 302,100 7,496
Stanley Works 95,900 2,919
31,148
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
POLLUTION CONTROL - 0.3%
Waste Management, Inc. 95,386 $ 5,389
TOTAL INDUSTRIAL MACHINERY & 65,693
EQUIPMENT
MEDIA & LEISURE - 12.1%
BROADCASTING - 6.5%
AT&T Corp. (Liberty Media 72,852 4,653
Group) Class A (a)
Cablevision Systems Corp. 17,600 1,362
Class A (a)
CBS Corp. (a) 259,100 11,805
Cox Communications, Inc. 58,600 4,651
Class A (a)
Hearst-Argyle Television, 77,600 1,979
Inc. (a)
Heftel Broadcasting Corp. 43,500 2,365
Class A (a)
Jacor Communications, Inc. 272,100 21,836
Class A (a)
MediaOne Group, Inc. 27,800 2,267
Nielsen Media Research, Inc. 59,633 1,632
Sinclair Broadcast Group, 113,600 1,590
Inc. Class A (a)
Univision Communications, 204,000 11,807
Inc. Class A (a)
USA Networks, Inc. (a) 513,600 19,196
Westwood One, Inc. (a) 697,500 23,889
Young Broadcasting, Inc. 66,900 2,835
Class A (a)
111,867
ENTERTAINMENT - 2.4%
Cinar Films, Inc. Class B 203,100 4,240
(sub. vtg.) (a)
Fox Entertainment Group, Inc. 329,300 8,438
Pixar (a) 173,000 7,180
Premier Parks, Inc. (a) 537,700 18,584
Ticketmaster Online 104,900 3,317
CitySearch, Inc. (a)
41,759
LEISURE DURABLES & TOYS - 1.7%
Harley-Davidson, Inc. 275,100 16,403
Hasbro, Inc. 238,800 8,149
Mattel, Inc. 198,100 5,126
29,678
PUBLISHING - 0.3%
Belo (A.H.) Corp. Class A 127,600 2,759
Meredith Corp. 37,200 1,365
4,124
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 1.2%
Papa John's International, 184,800 $ 7,427
Inc. (a)
Starbucks Corp. (a) 360,000 13,298
20,725
TOTAL MEDIA & LEISURE 208,153
NONDURABLES - 4.0%
AGRICULTURE - 0.3%
Michael Foods, Inc. 229,700 5,254
BEVERAGES - 1.0%
Brown-Forman Corp. Class B 47,000 3,463
Celestial Seasonings, Inc. (a) 30,700 587
Coca-Cola Bottling Co. 26,300 1,447
Consolidated
Coors (Adolph) Co. Class B 197,400 10,561
Whitman Corp. 39,800 652
16,710
FOODS - 2.7%
American Italian Pasta Co. 73,500 1,975
Class A (a)
Dean Foods Co. 302,100 10,781
Earthgrains Co. 361,600 7,661
Flowers Industries, Inc. 264,800 5,627
Interstate Bakeries Corp. 336,800 7,494
Keebler Foods Co. (a) 126,800 4,073
Nabisco Holdings Corp. Class A 33,700 1,274
Suiza Foods Corp. (a) 48,900 1,837
Tootsie Roll Industries, Inc. 139,977 5,800
46,522
TOTAL NONDURABLES 68,486
RETAIL & WHOLESALE - 9.2%
APPAREL STORES - 1.6%
American Eagle Outfitters, 58,900 4,403
Inc. (a)
Bon-Ton Stores, Inc. (a) 442,900 2,740
Ross Stores, Inc. 84,300 3,873
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
TJX Companies, Inc. 392,500 $ 13,075
Wet Seal, Inc. Class A (a) 85,100 3,468
27,559
DRUG STORES - 0.8%
CVS Corp. 206,418 9,831
Duane Reade, Inc. (a) 55,700 1,493
Walgreen Co. 86,700 2,330
13,654
GENERAL MERCHANDISE STORES -
3.2%
Dayton Hudson Corp. 85,600 5,762
Dollar General Corp. 115,100 4,036
Dollar Tree Stores, Inc. (a) 368,075 13,435
Family Dollar Stores, Inc. 149,700 3,612
Nordstrom, Inc. 442,600 15,574
Saks, Inc. (a) 435,120 12,319
Tuesday Morning Corp. (a) 54,700 1,067
55,805
GROCERY STORES - 2.6%
Meyer (Fred), Inc. (a) 247,700 13,407
Safeway, Inc. (a) 303,900 16,392
U.S. Foodservice (a) 340,890 14,339
44,138
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.0%
Action Performance Companies, 68,400 2,317
Inc. (a)
Bed Bath & Beyond, Inc. (a) 191,460 6,833
Borders Group, Inc. (a) 166,600 2,405
Office Depot, Inc. (a) 227,100 4,996
16,551
TOTAL RETAIL & WHOLESALE 157,707
SERVICES - 4.1%
ADVERTISING - 2.0%
Clear Channel Communications, 160,500 11,155
Inc. (a)
Getty Images, Inc. (a) 55,400 1,440
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - CONTINUED
ADVERTISING - CONTINUED
Omnicom Group, Inc. 212,100 $ 15,377
Outdoor Systems, Inc. (a) 286,100 7,206
35,178
PRINTING - 0.1%
Schawk, Inc. Class A 182,100 2,094
SERVICES - 2.0%
Borg-Warner Security Corp. 670,100 11,811
International Telecom Data 177,600 2,009
Systems, Inc. (a)
Pittston Co. (Brinks Group) 78,700 2,076
Service Corp. International 855,700 17,756
33,652
TOTAL SERVICES 70,924
TECHNOLOGY - 14.8%
COMMUNICATIONS EQUIPMENT - 0.2%
Andrew Corp. (a) 193,000 2,690
COMPUTER SERVICES & SOFTWARE
- - 8.2%
Affiliated Computer Services, 142,200 5,439
Inc. Class A (a)
America Online, Inc. 28,570 4,078
At Home Corp. Series A (a) 46,500 6,693
CSG Systems International, 93,200 3,600
Inc. (a)
DST Systems, Inc. (a) 122,800 7,153
Electronics for Imaging, Inc. 191,500 9,060
(a)
Excite, Inc. (a) 17,000 2,482
Exodus Communications, Inc. 141,900 12,789
(a)
GeoTel Communications Corp. 160,400 9,023
(a)
Inktomi Corp. 75,300 9,017
Intuit, Inc. (a) 162,900 14,030
Legato Systems, Inc. (a) 184,500 7,461
Lycos, Inc. (a) 68,100 6,789
Mentor Graphics Corp. (a) 187,500 2,273
Polycom, Inc. (a) 147,700 3,609
RealNetworks, Inc. (a) 20,500 4,541
Sabre Group Holdings, Inc. 55,300 2,883
Class A (a)
Siebel Systems, Inc. (a) 108,490 4,170
Sportsline USA, Inc. (a) 66,000 2,640
Synopsys, Inc. (a) 45,400 2,139
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - CONTINUED
VeriSign, Inc. (a) 77,800 $ 8,947
Veritas Software Corp. (a) 105,500 7,491
Wang Laboratories, Inc. (a) 220,600 5,529
141,836
COMPUTERS & OFFICE EQUIPMENT
- - 1.9%
Adaptec, Inc. (a) 90,800 2,185
Apple Computer, Inc. (a) 83,000 3,818
Comverse Technology, Inc. (a) 152,737 9,794
Gateway 2000, Inc. (a) 55,600 3,680
Ingram Micro, Inc. Class A (a) 89,300 2,277
Lexmark International Group, 32,400 4,001
Inc. Class A (a)
Quantum Corp. (a) 258,500 4,621
Symbol Technologies, Inc. 38,800 1,853
32,229
ELECTRONIC INSTRUMENTS - 2.3%
Applied Materials, Inc. (a) 90,300 4,842
KLA-Tencor Corp. (a) 105,300 5,226
Kulicke & Soffa Industries, 62,300 1,425
Inc. (a)
Novellus Systems, Inc. (a) 85,300 4,030
Perkin-Elmer Corp. 109,200 11,807
Teradyne, Inc. (a) 196,100 9,253
Waters Corp. (a) 36,300 3,816
40,399
ELECTRONICS - 2.2%
Altera Corp. (a) 77,900 5,628
Analog Devices, Inc. (a) 157,600 5,536
Broadcom Corp. Class A 4,500 347
Conexant Systems, Inc. (a) 44,500 1,813
Flextronics International (a) 85,400 3,987
International Rectifier Corp. 277,700 2,708
(a)
Linear Technology Corp. 185,500 10,550
Maxim Integrated Products, 22,300 1,249
Inc. (a)
Uniphase Corp. (a) 39,500 4,794
Xilinx, Inc. (a) 27,700 1,264
37,876
TOTAL TECHNOLOGY 255,030
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TRANSPORTATION - 0.1%
TRUCKING & FREIGHT - 0.1%
Expeditors International of 28,300 $ 1,716
Washington, Inc.
UTILITIES - 6.8%
CELLULAR - 2.3%
ALLTEL Corp. 78,600 5,301
QUALCOMM, Inc. 138,900 27,780
SkyTel Communications, Inc. 339,200 5,809
(a)
38,890
ELECTRIC UTILITY - 2.6%
AES Corp. (a) 172,900 8,645
Calpine Corp. (a) 132,100 5,631
CMS Energy Corp. 143,000 6,292
Duke Energy Corp. 67,300 3,769
Energy East Corp. 49,900 1,319
Entergy Corp. 132,700 4,147
Illinova Corp. 49,900 1,310
IPALCO Enterprises, Inc. 241,800 5,577
PG&E Corp. 215,600 6,697
Unicom Corp. 27,700 1,075
44,462
GAS - 0.8%
Enron Corp. 112,200 8,443
Ocean Energy, Inc. (a) 554,400 5,163
13,606
TELEPHONE SERVICES - 1.1%
Cincinnati Bell, Inc. 355,200 8,036
COMSAT Corp. Series 1 55,100 1,791
Qwest Communications 36,500 3,118
International, Inc. (a)
WinStar Communications, Inc. 139,800 6,798
(a)
19,743
TOTAL UTILITIES 116,701
TOTAL COMMON STOCKS 1,625,823
(Cost $1,315,475)
CASH EQUIVALENTS - 5.5%
SHARES VALUE (NOTE 1) (000S)
Taxable Central Cash Fund (b) 93,887,679 $ 93,888
(Cost $93,888)
TOTAL INVESTMENT IN $ 1,719,711
SECURITIES - 100%
(Cost $1,409,363)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.79%. 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, 1999, the aggregate cost of investment securities for
income tax purposes was $1,421,104,000. Net unrealized appreciation
aggregated $298,607,000, of which $361,487,000 related to appreciated
investment securities and $62,880,000 related to depreciated
investment securities.
The fund hereby designates approximately $62,790,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNTS) APRIL 30, 1999
ASSETS
Investment in securities, at $ 1,719,711
value (cost $1,409,363) -
See accompanying schedule
Cash 9
Receivable for investments 22,735
sold
Receivable for fund shares 4,889
sold
Dividends receivable 424
Interest receivable 200
Other receivables 812
TOTAL ASSETS 1,748,780
LIABILITIES
Payable for investments $ 32,782
purchased
Payable for fund shares 6,500
redeemed
Accrued management fee 681
Other payables and accrued 241
expenses
TOTAL LIABILITIES 40,204
NET ASSETS $ 1,708,576
Net Assets consist of:
Paid in capital $ 1,262,960
Undistributed net investment 1,420
income
Accumulated undistributed net 133,848
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 310,348
(depreciation) on investments
NET ASSETS, for 88,914 shares $ 1,708,576
outstanding
NET ASSET VALUE, offering $19.22
price and redemption price
per share ($1,708,576
(divided by) 88,914 shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED APRIL 30, 1999
INVESTMENT INCOME $ 10,739
Dividends
Interest 3,095
TOTAL INCOME 13,834
EXPENSES
Management fee Basic fee $ 9,927
Performance adjustment (1,558)
Transfer agent fees 3,757
Accounting fees and expenses 621
Non-interested trustees' 6
compensation
Custodian fees and expenses 56
Audit 31
Legal 13
Reports to shareholders 170
Total expenses before 13,023
reductions
Expense reductions (610) 12,413
NET INVESTMENT INCOME 1,421
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 145,383
Foreign currency transactions 11 145,394
Change in net unrealized (13,694)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 131,700
NET INCREASE (DECREASE) IN $ 133,121
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1999 YEAR ENDED APRIL 30, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 1,421 $ (1,614)
income (loss)
Net realized gain (loss) 145,394 278,097
Change in net unrealized (13,694) 275,780
appreciation (depreciation)
NET INCREASE (DECREASE) IN 133,121 552,263
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (752)
From net investment income
From net realized gain (126,952) (157,007)
TOTAL DISTRIBUTIONS (126,952) (157,759)
Share transactions Net 1,068,343 2,015,319
proceeds from sales of shares
Reinvestment of distributions 124,117 153,508
Cost of shares redeemed (1,387,604) (1,767,175)
NET INCREASE (DECREASE) IN (195,144) 401,652
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) (188,975) 796,156
IN NET ASSETS
NET ASSETS
Beginning of period 1,897,551 1,101,395
End of period (including $ 1,708,576 $ 1,897,551
undistributed net investment
income of $1,420 and $10,
respectively)
OTHER INFORMATION
Shares
Sold 62,872 118,438
Issued in reinvestment of 7,250 9,563
distributions
Redeemed (82,152) (104,070)
Net increase (decrease) (12,030) 23,931
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED APRIL 30, 1999 1998 1997 1996 1995 H 1995 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 18.80 $ 14.30 $ 14.83 $ 12.01 $ 10.78 $ 10.00
period
Income from Invest- ment
Operations
Net investment income (loss) .01 D (.02) D .03 D .11 E .02 -
Net realized and unrealized 1.69 6.30 .73 3.49 1.23 .92
gain (loss)
Total from investment 1.70 6.28 .76 3.60 1.25 .92
operations
Less Distributions
From net investment income - (.01) (.03) (.06) - -
From net realized gain (1.28) (1.77) (1.26) (.72) (.02) (.14)
Total distributions (1.28) (1.78) (1.29) (.78) (.02) (.14)
Net asset value, end of $ 19.22 $ 18.80 $ 14.30 $ 14.83 $ 12.01 $ 10.78
period
TOTAL RETURN B, C 9.92% 46.55% 5.03% 30.84% 11.61% 9.27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,709 $ 1,898 $ 1,101 $ 1,461 $ 459 $ 138
(in millions)
Ratio of expenses to average .77% .90% 1.00% 1.02% 1.27% A 1.63% A
net assets
Ratio of expenses to average .74% F .86% F .96% F 1.00% F 1.22% A, F 1.61% A, F
net assets after expense
reductions
Ratio of net investment .08% (.10)% .17% 1.01% .95% A (.03)% A
income (loss) to average net
assets
Portfolio turnover rate 121% 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.
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.
G FOR THE PERIOD MARCH 29, 1994 (COMMENCEMENT OF OPERATIONS) TO
JANUARY 31, 1995.
H FOR THE THREE MONTH PERIOD ENDED APRIL 30, 1995.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999
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. At a
special meeting of the shareholders of the fund, held on November 18,
1998, shareholders approved an agreement and Plan of Reorganization of
the fund into Fidelity Commonwealth Trust, effective on or about June
26, 1999. 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
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
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.
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
2. OPERATING POLICIES- CONTINUED
TAXABLE CENTRAL CASH FUND -
CONTINUED
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 $1,968,266,000 and $2,319,730,000, 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 .50% of average net
assets after the performance adjustment
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .22% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $386,000 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 $574,000 under this arrangement.
In addition, the fund has entered into arrangements with its
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of the fund's
expenses. During the period, the fund's custodian and transfer agent
fees were reduced by $9,000 and $27,000, respectively, under these
arrangements.
6. BENEFICIAL INTEREST.
At the end of the period, Charitable Gift Fund, an affiliate of FMR
was record owner of approximately 5% of the total outstanding shares
of the fund.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Mid-Cap Stock Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Mid-Cap Stock Fund (a fund of Fidelity Devonshire Trust) at
April 30, 1999, and the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fidelity
Mid-Cap Stock Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at April
30, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 8, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Mid-Cap Stock Fund voted to pay on
June 7, 1999, to shareholders of record at the opening of business on
June 4, 1999, a distribution of $1.33 per share derived from capital
gains realized from sales of portfolio securities and a dividend of
$.01 per share from net investment income.
A total of 13% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
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
Matthew N. Karstetter, Deputy 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
MCS-ANN-0699 78297
1.703594.101
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
FIDELITY'S GROWTH FUNDS
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Large Cap Stock Fund
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Magellan(registered trademark) Fund
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OTC Portfolio
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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)
TouchTone Xpress (registered trademark) 1-800-544-5555
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Corporate Headquarters
82 Devonshire St., Boston, MA 02109
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