FIDELITY(REGISTERED TRADEMARK)
EQUITY-INCOME
FUND
ANNUAL REPORT
JANUARY 31, 2000
(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 30 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 34 Notes to the financial
statements.
REPORT OF INDEPENDENT 40 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 41
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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 1-800-544-6666 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
While no major Y2K glitches disrupted the financial markets to start
the new year, inflation worries re-emerged to hinder stock performance
throughout January. The S&P 500(Registered trademark) and Dow Jones
Industrial Average each fell approximately 5%, while the
technology-oriented NASDAQ Index dropped more than 3% for the month.
In bond markets, the potential for further rate hikes as a pre-emptive
move against inflation continued to be an obstacle to fixed-income
performance.
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 1-800-544-6666, 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 JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY EQUITY-INCOME 2.27% 136.77% 293.78%
Russell 3000 Value 2.65% 156.26% 329.18%
S&P 500 10.35% 225.05% 442.52%
Equity Income Funds Average 0.73% 115.64% 236.47%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Russell 3000 Value Index - a market capitalization-weighted index of
U.S. domiciled value oriented stocks - and the Standard & Poor's 500SM
Index - a market capitalization-weighted index of common stocks. To
measure how the fund's performance stacked up against its peers, you
can compare it to the equity income funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past one year average represents a peer group of 246 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges. Lipper has
created new comparison categories that group funds according to
portfolio characteristics and capitalization, as well as by
capitalization only. The averages are listed on page 5 of this
report.*
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY EQUITY-INCOME 2.27% 18.81% 14.69%
Russell 3000 Value 2.65% 20.71% 15.68%
S&P 500 10.35% 26.59% 18.42%
Equity Income Funds Average 0.73% 16.49% 12.79%
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 10 YEARS
Equity-Income Russell 3000 Value
00023 RS008
1990/01/31 10000.00 10000.00
1990/02/28 10015.84 10251.64
1990/03/31 10022.68 10371.65
1990/04/30 9645.98 9969.71
1990/05/31 10267.14 10775.49
1990/06/30 10225.55 10545.95
1990/07/31 10079.59 10433.94
1990/08/31 9297.06 9496.72
1990/09/30 8624.36 9019.73
1990/10/31 8451.79 8872.30
1990/11/30 8981.83 9483.77
1990/12/31 9159.79 9727.22
1991/01/31 9606.19 10184.20
1991/02/28 10280.08 10882.92
1991/03/31 10429.67 11074.56
1991/04/30 10481.82 11156.66
1991/05/31 11029.38 11578.60
1991/06/30 10547.04 11088.08
1991/07/31 11110.02 11540.69
1991/08/31 11360.72 11759.75
1991/09/30 11305.17 11679.94
1991/10/31 11478.76 11869.29
1991/11/30 11024.77 11268.48
1991/12/31 11853.07 12198.83
1992/01/31 11970.20 12283.03
1992/02/29 12335.12 12603.82
1992/03/31 12168.83 12424.38
1992/04/30 12578.87 12908.79
1992/05/31 12701.87 12992.61
1992/06/30 12555.52 12888.03
1992/07/31 12868.26 13384.83
1992/08/31 12610.71 12986.89
1992/09/30 12712.29 13171.86
1992/10/31 12842.29 13207.10
1992/11/30 13264.79 13671.14
1992/12/31 13592.56 14016.50
1993/01/31 13995.52 14451.39
1993/02/28 14332.87 14922.28
1993/03/31 14804.28 15372.22
1993/04/30 14775.93 15161.16
1993/05/31 15040.55 15479.85
1993/06/30 15222.30 15805.01
1993/07/31 15455.75 15990.17
1993/08/31 15975.08 16571.74
1993/09/30 15952.15 16631.74
1993/10/31 16225.87 16656.32
1993/11/30 15966.56 16305.05
1993/12/31 16489.06 16630.79
1994/01/31 17146.87 17256.55
1994/02/28 16679.09 16717.65
1994/03/31 15953.81 16083.51
1994/04/30 16303.28 16377.06
1994/05/31 16510.93 16545.07
1994/06/30 16290.64 16145.61
1994/07/31 16749.25 16626.41
1994/08/31 17335.24 17122.45
1994/09/30 16931.17 16594.41
1994/10/31 17090.08 16768.52
1994/11/30 16387.81 16091.13
1994/12/31 16529.16 16307.34
1995/01/31 16631.46 16747.94
1995/02/28 17250.63 17405.90
1995/03/31 17684.60 17757.73
1995/04/30 18265.14 18315.49
1995/05/31 18862.11 19049.07
1995/06/30 19145.17 19345.47
1995/07/31 19824.00 20022.10
1995/08/31 19973.01 20336.22
1995/09/30 20592.58 21027.89
1995/10/31 20237.44 20756.25
1995/11/30 21202.98 21785.47
1995/12/31 21787.10 22345.32
1996/01/31 22487.87 22988.80
1996/02/29 22706.14 23180.05
1996/03/31 23131.29 23582.56
1996/04/30 23418.31 23724.86
1996/05/31 23711.18 24050.59
1996/06/30 23740.47 24041.07
1996/07/31 22932.81 23093.19
1996/08/31 23475.18 23789.43
1996/09/30 24330.90 24703.41
1996/10/31 25078.45 25588.24
1996/11/30 26638.81 27394.47
1996/12/31 26367.76 27170.64
1997/01/31 27377.41 28393.78
1997/02/28 27814.51 28795.91
1997/03/31 26959.23 27787.01
1997/04/30 27785.27 28877.53
1997/05/31 29637.63 30558.66
1997/06/30 30950.23 31893.40
1997/07/31 33183.88 34187.76
1997/08/31 31780.77 33138.55
1997/09/30 33527.96 35161.41
1997/10/31 32352.20 34181.34
1997/11/30 33439.46 35578.71
1997/12/31 34273.70 36633.79
1998/01/31 34136.37 36101.16
1998/02/28 36346.73 38507.31
1998/03/31 38178.49 40785.51
1998/04/30 38165.21 41051.53
1998/05/31 37680.59 40362.10
1998/06/30 38131.79 40809.14
1998/07/31 37251.83 39867.98
1998/08/31 31398.73 33908.77
1998/09/30 33199.96 35852.24
1998/10/31 35723.43 38486.40
1998/11/30 37336.57 40219.03
1998/12/31 38566.29 41579.55
1999/01/31 38503.81 41811.12
1999/02/28 38080.31 41048.03
1999/03/31 39491.81 41811.10
1999/04/30 42980.54 45710.03
1999/05/31 41765.84 45340.92
1999/06/30 43670.80 46680.89
1999/07/31 42416.58 45332.10
1999/08/31 41226.14 43653.51
1999/09/30 39837.36 42175.42
1999/10/31 41422.89 44365.59
1999/11/30 40925.19 44057.10
1999/12/31 41325.45 44344.96
2000/01/31 39378.18 42917.85
IMATRL PRASUN SHR__CHT 20000131 20000225 121431 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Equity-Income Fund on January 31, 1990. As the
chart shows, by January 31, 2000, the value of the investment would
have grown to $39,378 - a 293.78% increase on the initial investment.
For comparison, look at how the Russell 3000 Value Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 would have grown to $42,918 - a 329.18% 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.
* THE LIPPER EQUITY INCOME FUNDS AVERAGE REFLECTS THE PERFORMANCE
(EXCLUDING SALES CHARGES) OF MUTUAL FUNDS WITH SIMILAR PORTFOLIO
CHARACTERISTICS AND CAPITALIZATION. AS OF JANUARY 31, 2000, THE ONE
YEAR, FIVE YEAR, AND 10 YEAR CUMULATIVE AND AVERAGE ANNUAL TOTAL
RETURNS FOR THE EQUITY INCOME FUNDS WERE 0.73%, 115.64%, AND 236.47%,
RESPECTIVELY AND 0.73%, 16.49%, AND. 12.79%, RESPECTIVELY.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Market followers know that every
year is interesting, but the 12 months
that ended January 31, 2000, were
more than interesting. They were
intriguing. Never has a particular
group of stocks led the market's
charge as technology stocks did
during this period. The
technology-oriented NASDAQ
Index returned a startling 57.68%
during this time, fueled mostly by
investors' insatiable appetites for
Internet and dot.com stocks. The
technology burst wasn't limited to
large-cap stocks, either, as scores of
small- and mid-sized tech companies
performed extraordinarily well. The
Russell 2000(Registered trademark) Index - a popular
performance benchmark for smaller
stocks - generated a 17.75% return
during the 12 months. In contrast, the
Standard & Poor's 500 Index, a
broad measure of U.S. stock
performance, returned 10.35%.
What made the tech rally intriguing
was that investors seemed to discard
the generally accepted notion that stock
prices reflect a company's earnings.
Many of these technology stocks rose
despite having no sound earnings
platform - of the 100 top-performing
stocks within the Russell 2000 at the
end of 1999, 43 of the companies
were actually losing money.
Meanwhile, the NASDAQ kept
climbing, crossing the 4000-point mark
between Christmas and New Year's.
Sensing that the Federal Reserve Board
would raise interest rates in early
February, tech stocks sold off
throughout January. Time will tell,
though, if it's only a temporary
obstacle.
(photograph of Steve Petersen)
An interview with Steve Petersen, Portfolio Manager of Fidelity
Equity-Income Fund
Q. HOW DID THE FUND PERFORM, STEVE?
A. For the 12-month period ending January 31, 2000, the fund returned
2.27%, outperforming the 0.73% return of the equity income funds
average, as tracked by Lipper Inc. By comparison, the Russell 3000
Value Index returned 2.65% for the same time period.
Q. WHY DID THE FUND'S PERFORMANCE LAG THAT OF THE RUSSELL INDEX, WHILE
BEATING ITS PEER GROUP?
A. The Russell 3000 Value Index, which focuses on companies with value
characteristics, closely reflects the fund's investment strategy.
However, with 7% of the Russell index in technology stocks - typically
growth stocks rather than dividend-paying stocks - the fund was unable
to identify good candidates within this sector. A huge push in
technology performance, particularly during the fourth quarter, helped
boost the Russell index. Consequently, the fund's underweighting in
technology stocks caused its performance to slightly lag that of the
index. On the positive side, the fund was a little more aggressively
positioned than many of its peers, holding less fixed income, less
cash and slightly larger positions in certain stocks. As a result, the
fund outperformed the peer group average.
Q. WHAT WAS YOUR STRATEGY WITHIN THIS CHALLENGING ENVIRONMENT?
A. I continued to follow my long-term strategy, emphasizing companies
that pay dividends, show signs of improvement in business fundamentals
and have good valuations. Rather than buying high-priced growth
stocks, I looked for companies with good earnings growth,
restructuring progress, acquisition activity or share buyback
programs. Although this approach has worked well for us over time,
during the past two years the market focused only on companies that
had robust growth, and punished most companies that could not sustain
strong earnings growth.
Q. FINANCIAL STOCKS ACCOUNTED FOR A SIGNIFICANT PORTION OF THE FUND'S
PORTFOLIO. HOW DID THEY DO?
A. The biggest negative impact on financial stocks during the past 12
months was the Federal Reserve Board's interest-
rate increases. In general, rising interest rates are not good for
this sector because they tend to cause borrowing activity to slow. We
also saw a gradual narrowing between longer-term fixed-income yields
and shorter-term yields during the year, which negatively affected
many financial stocks. Lending institutions play the spreads,
borrowing short-term money - deposits - and lending long-term money -
mortgages and installment loans. When spreads narrow, it hurts banks'
profitability. Such traditional commercial banks as Bank One and Bank
of America and savings and loan institution Washington Mutual
performed poorly. Fannie Mae also suffered from the negative investor
perception of the overall sector, even though its earnings were on
track during the year. On the other hand, financial companies that
earned a higher percentage of their revenues from transactions or
asset management businesses did well during the year. For example,
Citigroup benefited from the transaction activity that strong equity
markets brought its Salomon Smith Barney subsidiary. Also on the
positive side, American Express benefited from strong consumer
spending, strong equity markets boosting its investment advisory
business and several successful initiatives, including its new
Internet-friendly "Blue" credit card.
Q. WHICH OTHER STOCKS PERFORMED WELL?
A. GE, the fund's largest holding, contributed significantly to
overall performance. This company demonstrated consistent earnings
growth and did a good job strengthening its various business units.
Energy holdings BP Amoco and Royal Dutch Petroleum benefited from
rising oil prices.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. In addition to the financial stocks I mentioned earlier, Philip
Morris performed poorly, suffering from continued litigation woes that
do not appear likely to let up in the near future. I sold some of the
fund's position in this stock. Waste Management experienced internal
accounting problems earlier in 1999, and its stock fell significantly.
I sold this stock from the fund's portfolio.
Q. STEVE, WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS?
A. I'm still cautious. For the past couple of years, the market has
narrowed to the point where only technology stocks and certain
telecommunications issues are driving its performance. Given that this
is a value fund, with more of an emphasis on conservative companies,
it will probably continue to face a difficult environment, at least in
the short term. The good news is that with technology stocks having
done so well for such a long period of time, most other stocks look
pretty cheap, and I now have the opportunity to enhance the quality of
the fund's portfolio by adding more large, high-quality stocks.
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: seeks reasonable income
FUND NUMBER: 023
TRADING SYMBOL: FEQIX
START DATE: May 16, 1966
SIZE: as of January 31,
2000, more than $21.1
billion
MANAGER: Stephen Petersen,
since 1993; manager,
Fidelity Puritan Fund, since
February, 2000; Fidelity
Balanced Fund,
1996-1997; manager,
various institutional accounts,
since 1987; joined Fidelity in
1980
STEVEN PETERSEN ON THE
IMPORTANCE OF MAINTAINING
A CONSISTENT APPROACH IN A
CHALLENGING MARKET:
"One danger in this very narrow
market is changing a fund's
investment approach in response to
a short-term situation. We have
come to recognize that such
market conditions don't last
forever. When the market turns
around, as it has invariably done in
the past, it generally has done so
before anticipated. An example of
this was during the mid-1980s,
when the emergence of the
personal computer produced a
boom in technology, with dozens of
companies manufacturing PCs,
peripherals and components. We
reached a saturation point where
supply outstripped demand, and
this situation lasted for a number
of years. Despite the fact that the
technology business continued to
grow and prosper, stock prices did
not, and many companies' earnings
were unexceptional until the 1990s,
when technology took off once again.
Now the wild rush of commerce in
the Internet and wireless areas, with
companies spending to gear up
and participate in the new
economy, is building on the
amount of capacity that will be
created in the next few years. At
some point capacity will probably
begin to exceed demand, and this
boom may begin to run out of
steam. If and when it does, we'll be
ready."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JANUARY
31, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Electric Co. 4.1 3.7
Citigroup, Inc. 3.9 2.9
Exxon Mobil Corp. 3.4 1.9
American Express Co. 2.5 2.5
BP Amoco PLC sponsored ADR 2.4 2.7
Fannie Mae 2.3 2.2
AT&T Corp. 2.1 1.8
SBC Communications, Inc. 2.0 1.0
Bank of New York Co., Inc. 1.8 1.7
Wells Fargo & Co. 1.6 1.3
26.1 21.7
TOP FIVE MARKET SECTORS AS OF
JANUARY 31, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
FINANCE 24.5 24.3
ENERGY 14.4 12.8
UTILITIES 12.0 12.4
MEDIA & LEISURE 7.6 5.9
BASIC INDUSTRIES 7.2 7.5
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF JANUARY 31, 2000 * AS OF JULY 31, 1999 **
Stocks 94.2% Stocks 93.6%
Bonds 0.4% Bonds 0.4%
Convertible Securities 5.4% Convertible Securities 5.1%
Short-Term Investments and Short-Term Investments and
Net Other Assets 0.0% Net Other Assets 0.9%
* FOREIGN INVESTMENTS 9.0% ** FOREIGN INVESTMENTS 9.4%
Row: 1, Col: 1, Value: 94.2 Row: 1, Col: 1, Value: 93.59999999999999
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.4 Row: 1, Col: 3, Value: 0.4
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 5.4 Row: 1, Col: 5, Value: 5.1
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 0.0 Row: 1, Col: 8, Value: 0.9
</TABLE>
INVESTMENTS JANUARY 31, 2000
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 94.1%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 3.3%
AEROSPACE & DEFENSE - 3.1%
Boeing Co. 2,351,600 $ 104,205
Harsco Corp. 1,120,400 30,181
Honeywell International, Inc. 4,110,150 197,287
Rockwell International Corp. 627,400 31,017
Textron, Inc. 2,305,400 137,604
United Technologies Corp. 2,933,700 155,303
655,597
SHIP BUILDING & REPAIR - 0.2%
General Dynamics Corp. 1,021,300 48,129
TOTAL AEROSPACE & DEFENSE 703,726
BASIC INDUSTRIES - 6.9%
CHEMICALS & PLASTICS - 2.9%
Arch Chemicals, Inc. 650,350 10,446
Aventis SA (Germany) 779,894 40,724
Celanese AG (a) 301,960 6,153
CK Witco Corp. 1,286,024 15,352
Dexter Corp. 560,000 20,825
Dow Chemical Co. 548,800 63,935
E. I. du Pont de Nemours and 1,125,185 66,386
Co.
Eastman Chemical Co. 405,200 16,157
Engelhard Corp. 1,112,000 17,723
Great Lakes Chemical Corp. 2,118,500 70,175
Hercules, Inc. 1,762,100 30,176
Hercules Trust II unit 31,600 18,881
IMC Global, Inc. 3,281,500 53,735
Lyondell Chemical Co. 1,231,700 13,318
M. A. Hanna Co. 1,973,300 22,570
Millennium Chemicals, Inc. 1,541,857 28,139
Monsanto Co. 419,700 14,821
Praxair, Inc. 897,000 36,385
Solutia, Inc. 2,499,300 34,365
Union Carbide Corp. 754,600 42,258
622,524
IRON & STEEL - 0.7%
AK Steel Holding Corp. 1,961,800 19,863
Allegheny Technologies, Inc. 1,558,350 32,531
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - CONTINUED
Dofasco, Inc. 1,613,100 $ 30,413
Nucor Corp. 1,262,700 62,819
145,626
METALS & MINING - 1.7%
Alcan Aluminium Ltd. 699,400 27,098
Alcoa, Inc. 3,137,688 218,658
Olin Corp. 1,430,500 25,034
Phelps Dodge Corp. 1,112,500 64,664
Ryerson Tull, Inc. (e) 1,534,295 29,247
364,701
PACKAGING & CONTAINERS - 0.4%
American National Can Group, 765,600 9,187
Inc.
Ball Corp. 769,745 27,999
Owens-Illinois, Inc. (a) 1,363,500 24,969
Tupperware Corp. 841,200 13,722
75,877
PAPER & FOREST PRODUCTS - 1.2%
Bowater, Inc. 1,597,100 82,550
Champion International Corp. 1,594,500 93,278
Georgia-Pacific Corp. 708,100 28,855
Pentair, Inc. 474,800 15,906
Smurfit-Stone Container Corp. 1,512,800 29,972
(a)
250,561
TOTAL BASIC INDUSTRIES 1,459,289
CONSTRUCTION & REAL ESTATE -
1.6%
BUILDING MATERIALS - 0.4%
Fortune Brands, Inc. 1,612,300 46,757
Masco Corp. 2,549,100 50,823
Water Pik Technologies, Inc. 109,865 934
(a)
98,514
ENGINEERING - 0.3%
PerkinElmer, Inc. 1,190,600 59,604
REAL ESTATE INVESTMENT TRUSTS
- - 0.9%
Alexandria Real Estate 232,800 6,868
Equities, Inc.
Crescent Real Estate Equities 1,713,400 30,841
Co.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONSTRUCTION & REAL ESTATE -
CONTINUED
REAL ESTATE INVESTMENT TRUSTS
- - CONTINUED
Duke-Weeks Realty Corp. 868,496 $ 17,207
Equity Office Properties Trust 1,053,200 26,922
Equity Residential Properties 1,295,600 53,767
Trust (SBI)
Public Storage, Inc. 1,219,600 27,670
Reckson Associates Realty 153,900 3,040
Corp.
Spieker Properties, Inc. 558,500 21,712
188,027
TOTAL CONSTRUCTION & REAL 346,145
ESTATE
DURABLES - 2.7%
AUTOS, TIRES, & ACCESSORIES -
1.5%
Eaton Corp. 931,600 66,551
Federal-Mogul Corp. 1,007,300 15,235
Ford Motor Co. 1,818,200 90,455
Meritor Automotive, Inc. 1,338,400 22,418
Navistar International Corp. 774,700 30,455
(a)
Pep Boys-Manny, Moe & Jack 1,330,600 9,647
TRW, Inc. 1,728,100 75,712
310,473
CONSUMER DURABLES - 0.6%
Minnesota Mining & 769,100 72,007
Manufacturing Co.
Snap-On, Inc. 2,236,600 60,109
132,116
CONSUMER ELECTRONICS - 0.1%
Black & Decker Corp. 504,800 20,224
HOME FURNISHINGS - 0.4%
Newell Rubbermaid, Inc. 2,882,900 86,487
TEXTILES & APPAREL - 0.1%
Kellwood Co. 818,000 14,417
TOTAL DURABLES 563,717
ENERGY - 14.2%
ENERGY SERVICES - 1.7%
Baker Hughes, Inc. 3,632,900 89,460
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Halliburton Co. 5,257,000 $ 189,252
Schlumberger Ltd. 1,446,700 88,339
367,051
OIL & GAS - 12.5%
Amerada Hess Corp. 1,536,700 81,733
Anadarko Petroleum Corp. 1,205,100 39,542
Atlantic Richfield Co. 369,500 28,452
BP Amoco PLC sponsored ADR 9,327,824 501,371
Burlington Resources, Inc. 2,382,600 76,392
Chevron Corp. 2,559,741 213,898
Conoco, Inc.:
Class A 1,478,200 34,461
Class B 2,215,349 52,199
Exxon Mobil Corp. 8,651,937 722,437
Kerr-McGee Corp. 91,600 5,072
Occidental Petroleum Corp. 3,782,500 75,177
Royal Dutch Petroleum Co. (NY 4,046,400 222,805
Shares)
Santa Fe Snyder Corp. (a) 2,674,275 19,556
Tosco Corp. 366,700 9,420
Total Fina SA:
Class B 899,543 111,993
sponsored ADR 4,441,903 276,508
Ultramar Diamond Shamrock 1,431,600 31,316
Corp.
Union Pacific Resources 1,296,500 14,262
Group, Inc.
Unocal Corp. 986,455 28,237
USX - Marathon Group 3,318,900 85,254
2,630,085
TOTAL ENERGY 2,997,136
FINANCE - 24.0%
BANKS - 9.9%
Bank of America Corp. 6,032,317 292,190
Bank of New York Co., Inc. 9,211,234 374,206
Bank One Corp. 3,117,529 92,941
Chase Manhattan Corp. 4,024,200 323,697
Comerica, Inc. 3,201,939 141,486
FleetBoston Financial Corp. 4,728,596 148,655
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Mellon Financial Corp. 4,380,500 $ 150,306
National Bank of Canada 5,255,240 63,448
Toronto Dominion Bank 1,178,000 29,545
U.S. Bancorp 4,178,500 92,710
Wachovia Corp. 883,900 56,625
Wells Fargo & Co. 8,161,168 326,447
2,092,256
CREDIT & OTHER FINANCE - 7.9%
American Express Co. 3,155,100 520,000
Associates First Capital 7,239,824 144,796
Corp. Class A
Citigroup, Inc. 14,375,500 825,693
Household International, Inc. 5,092,378 179,506
1,669,995
FEDERAL SPONSORED CREDIT - 2.7%
Fannie Mae 7,985,800 478,649
Freddie Mac 1,096,400 55,026
SLM Holding Corp. 853,900 33,249
566,924
INSURANCE - 1.8%
ACE Ltd. 2,940,400 52,008
Conseco, Inc. 489,600 7,466
Everest Reinsurance Holdings, 241,800 6,090
Inc.
Financial Security Assurance 309,134 17,060
Holdings Ltd.
Hartford Financial Services 3,407,200 129,900
Group, Inc.
Highlands Insurance Group, 787,590 6,941
Inc. (a)(e)
PMI Group, Inc. 378,600 15,617
Reliastar Financial Corp. 532,757 15,816
The Chubb Corp. 279,800 15,739
Torchmark Corp. 1,101,500 27,744
Travelers Property Casualty 1,267,700 45,954
Corp. Class A
UnumProvident Corp. 1,166,000 31,191
371,526
SAVINGS & LOANS - 0.7%
TCF Financial Corp. 1,072,800 24,607
Washington Mutual, Inc. 5,237,780 132,909
157,516
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - 1.0%
Franklin Resources, Inc. 1,187,800 $ 42,390
Morgan Stanley Dean Witter & 824,400 54,617
Co.
Nomura Securities Co. Ltd. 3,138,000 71,282
Waddell & Reed Financial, Inc.:
Class A 794,335 22,936
Class B 387,946 10,838
202,063
TOTAL FINANCE 5,060,280
HEALTH - 6.4%
DRUGS & PHARMACEUTICALS - 4.5%
Bristol-Myers Squibb Co. 3,693,800 243,791
Eli Lilly & Co. 3,785,100 253,129
Merck & Co., Inc. 3,436,300 270,823
Schering-Plough Corp. 4,276,900 188,184
955,927
MEDICAL EQUIPMENT & SUPPLIES
- - 1.3%
Abbott Laboratories 3,027,000 98,756
Becton, Dickinson & Co. 1,858,000 48,656
Cardinal Health, Inc. 577,200 27,597
Johnson & Johnson 1,217,100 104,747
279,756
MEDICAL FACILITIES MANAGEMENT
- - 0.6%
Columbia/HCA Healthcare Corp. 4,567,900 124,761
TOTAL HEALTH 1,360,444
INDUSTRIAL MACHINERY &
EQUIPMENT - 6.4%
ELECTRICAL EQUIPMENT - 4.9%
General Electric Co. 6,453,600 860,739
Loral Space & Communications 634,300 12,448
Ltd. (a)
Siemens AG 1,113,100 150,260
Teledyne Technologies, Inc. 313,899 2,904
(a)
1,026,351
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.4%
Caterpillar, Inc. 981,000 41,631
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
Deere & Co. 2,594,400 $ 113,343
Ingersoll-Rand Co. 1,283,800 60,419
ITT Industries, Inc. 349,900 11,066
Kennametal, Inc. 990,918 26,074
Parker-Hannifin Corp. 1,213,300 52,475
The Stanley Works 87,900 2,208
307,216
POLLUTION CONTROL - 0.1%
Allied Waste Industries, Inc. 503,400 3,241
(a)
Republic Services, Inc. Class 870,100 10,224
A (a)
13,465
TOTAL INDUSTRIAL MACHINERY & 1,347,032
EQUIPMENT
MEDIA & LEISURE - 5.6%
BROADCASTING - 2.6%
CBS Corp. (a) 3,183,414 185,633
MediaOne Group, Inc. (a) 1,512,127 120,214
Time Warner, Inc. 3,000,536 239,855
545,702
ENTERTAINMENT - 1.4%
Fox Entertainment Group, Inc. 892,600 20,976
Class A (a)
Mandalay Resort Group (a) 961,000 14,835
Viacom, Inc. Class B 3,520,100 194,926
(non-vtg.) (a)
Walt Disney Co. 1,916,500 69,593
300,330
LEISURE DURABLES & TOYS - 0.1%
Brunswick Corp. 1,155,600 21,884
LODGING & GAMING - 0.5%
Mirage Resorts, Inc. (a) 2,102,200 26,278
Starwood Hotels & Resorts 2,990,900 71,782
Worldwide, Inc. unit
98,060
PUBLISHING - 0.5%
Harcourt General, Inc. 849,400 33,976
Reader's Digest Association, 1,902,300 71,812
Inc. Class A (non-vtg.)
105,788
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.5%
McDonald's Corp. 3,126,200 $ 116,256
TOTAL MEDIA & LEISURE 1,188,020
NONDURABLES - 3.2%
BEVERAGES - 0.1%
Brown-Forman Corp. Class B 294,500 16,474
FOODS - 0.5%
Corn Products International, 856,300 19,695
Inc.
Hershey Foods Corp. 790,300 33,588
Nabisco Group Holdings Corp. 1,945,500 16,780
Nabisco Holdings Corp. Class A 1,569,800 47,388
117,451
HOUSEHOLD PRODUCTS - 1.7%
Avon Products, Inc. 1,830,300 58,226
Clorox Co. 1,486,400 70,976
Dial Corp. 400,700 6,436
Gillette Co. 1,540,900 57,976
Procter & Gamble Co. 630,400 63,592
Unilever NV 23,571 1,062
Unilever NV (NY Shares) 525,714 24,314
Unilever PLC 10,757,678 69,252
351,834
TOBACCO - 0.9%
Philip Morris Companies, Inc. 8,738,700 182,967
TOTAL NONDURABLES 668,726
PRECIOUS METALS - 0.1%
Newmont Mining Corp. 1,280,700 26,094
RETAIL & WHOLESALE - 2.7%
APPAREL STORES - 1.0%
Charming Shoppes, Inc. (a) 1,334,600 9,092
Footstar, Inc. (a)(e) 1,130,354 28,259
Payless ShoeSource, Inc. (a) 778,700 31,732
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
The Limited, Inc. 2,669,539 $ 81,921
TJX Companies, Inc. 4,004,146 65,318
216,322
GENERAL MERCHANDISE STORES -
1.7%
Ames Department Stores, Inc. 156,800 3,273
(a)
Consolidated Stores Corp. (a) 2,598,100 37,023
Federated Department Stores, 2,575,240 107,194
Inc. (a)
Hudson's Bay Co. (f) 642,800 6,582
Target Corp. 1,876,100 123,940
Wal-Mart Stores, Inc. 1,542,900 84,474
362,486
TOTAL RETAIL & WHOLESALE 578,808
SERVICES - 1.7%
EDUCATIONAL SERVICES - 0.0%
SkillSoft Corp. 6,900 97
LEASING & RENTAL - 0.2%
Ryder System, Inc. 1,761,200 38,856
PRINTING - 0.2%
New England Business Service, 587,800 11,572
Inc.
R. R. Donnelley & Sons Co. 1,069,400 23,460
35,032
SERVICES - 1.3%
ACNielsen Corp. (a) 1,720,733 35,275
Cendant Corp. (a) 1,660,300 33,517
Dun & Bradstreet Corp. 189,300 4,768
Edperbrascan Corp. Class A 7,136,569 87,396
(ltd. vtg.)
H&R Block, Inc. 1,658,100 71,506
Viad Corp. 1,966,500 51,744
284,206
TOTAL SERVICES 358,191
TECHNOLOGY - 3.5%
COMMUNICATIONS EQUIPMENT - 0.0%
Turnstone Systems, Inc. 4,000 116
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - 0.8%
Litton Industries, Inc. (a) 457,400 $ 19,411
NCR Corp. (a) 496,100 19,100
Unisys Corp. (a) 4,116,671 131,219
169,730
COMPUTERS & OFFICE EQUIPMENT
- - 1.2%
Compaq Computer Corp. 3,901,900 106,815
International Business 1,269,500 142,422
Machines Corp.
249,237
ELECTRONIC INSTRUMENTS - 0.1%
Beckman Coulter, Inc. 183,800 9,615
Sequenom, Inc. 6,900 179
Thermo Electron Corp. (a) 1,236,100 21,400
31,194
ELECTRONICS - 1.4%
Quantum Effect Devices, Inc. 5,100 82
Tyco International Ltd. 6,781,440 289,907
289,989
TOTAL TECHNOLOGY 740,266
TRANSPORTATION - 1.3%
AIR TRANSPORTATION - 0.2%
AMR Corp. (a) 680,000 36,593
Southwest Airlines Co. 219,500 3,498
40,091
RAILROADS - 1.1%
Burlington Northern Santa Fe 5,980,900 143,915
Corp.
CSX Corp. 1,766,400 51,667
Union Pacific Corp. 828,400 33,136
228,718
TOTAL TRANSPORTATION 268,809
UTILITIES - 10.5%
CELLULAR - 0.3%
ALLTEL Corp. 1,017,300 67,905
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - 2.6%
Allegheny Energy, Inc. 2,456,600 $ 67,403
American Electric Power Co., 2,031,100 68,042
Inc.
Cinergy Corp. 1,083,198 26,945
CMS Energy Corp. 889,500 26,685
Consolidated Edison, Inc. 1,049,050 34,291
DPL, Inc. 2,846,675 54,621
Entergy Corp. 6,373,700 158,944
Niagara Mohawk Holdings, Inc. 3,055,600 38,386
(a)
PG&E Corp. 3,118,898 68,421
543,738
GAS - 0.1%
Sempra Energy 1,377,551 25,571
TELEPHONE SERVICES - 7.5%
AT&T Corp. 8,487,550 447,718
BCE, Inc. 89,900 9,159
Bell Atlantic Corp. 2,706,492 167,633
BellSouth Corp. 4,230,401 199,093
CenturyTel, Inc. 938,400 35,894
GTE Corp. 2,176,600 159,572
MCI WorldCom, Inc. (a) 2,751,990 126,420
Pathnet, Inc. warrants 1,040 10
4/15/08 (a)(f)
SBC Communications, Inc. 9,801,044 422,670
1,568,169
TOTAL UTILITIES 2,205,383
TOTAL COMMON STOCKS 19,872,066
(Cost $14,352,176)
PREFERRED STOCKS - 3.9%
CONVERTIBLE PREFERRED STOCKS
- - 3.8%
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.2%
Monsanto Co. $1.625 ACES 939,300 30,351
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONVERTIBLE PREFERRED STOCKS
- - CONTINUED
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - 0.1%
Georgia-Pacific Corp. $3.75 631,600 $ 27,278
PEPS
TOTAL BASIC INDUSTRIES 57,629
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES -
0.0%
Automatic Common Exchangeable 465,300 3,664
Securities Trust II
(Republic Industries, Inc.)
$1.55 ACES
ENERGY - 0.2%
OIL & GAS - 0.2%
Apache Corp. $2.015 ACES 368,200 12,542
The Coastal Corp. $1.20 PRIDES 741,500 15,056
Tosco Financing Trust $2.875 76,600 3,509
(f)
31,107
FINANCE - 0.5%
CREDIT & OTHER FINANCE - 0.5%
Federal-Mogul Financing Trust 990,000 30,443
$3.50
Union Pacific Capital Trust:
$3.125 823,100 32,924
$3.125 TIDES (f) 817,600 32,704
96,071
INSURANCE - 0.0%
Conseco, Inc. $3.50 PRIDES 481,100 10,765
SECURITIES INDUSTRY - 0.0%
Merrill Lynch & Co., Inc. 156,500 2,817
(IMC Global, Inc.) $2.39
STRYPES
TOTAL FINANCE 109,653
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.2%
Loral Space & Communications
Ltd. Series C:
$3.00 (f) 388,600 20,790
$3.00 418,500 22,390
43,180
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONVERTIBLE PREFERRED STOCKS
- - CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.1%
Ingersoll Rand Co./Ingersoll 1,126,900 $ 24,244
Rand Finance $1.68 Growth
PRIDES
TOTAL INDUSTRIAL MACHINERY & 67,424
EQUIPMENT
MEDIA & LEISURE - 1.1%
BROADCASTING - 0.8%
Cox Communications, Inc.:
$2.27 PRIDES 452,100 26,730
$6.858 PRIZES 292,700 30,221
MediaOne Group, Inc.:
$3.04 898,000 46,247
(Vodafone AirTouch PLC) $3.63 528,700 62,519
PIES
165,717
ENTERTAINMENT - 0.1%
Premier Parks, Inc. $4.05 PIES 581,100 31,379
PUBLISHING - 0.2%
Readers Digest Automatic 985,200 33,497
Common Exchange Trust $1.93
TRACES
Taylor (J.N.) Holdings Ltd. 956,400 0
9.5%
Tribune Co. (The Learning 24,800 333
Co., Inc.) $1.75 DECS
33,830
TOTAL MEDIA & LEISURE 230,926
NONDURABLES - 0.3%
BEVERAGES - 0.2%
Seagram Co. Ltd. $3.76 ACES 950,900 52,418
FOODS - 0.1%
Chiquita Brands
International, Inc.:
Series A, $2.875 474,500 8,067
Series B, $3.75 178,500 4,284
12,351
TOTAL NONDURABLES 64,769
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONVERTIBLE PREFERRED STOCKS
- - CONTINUED
RETAIL & WHOLESALE - 0.1%
GENERAL MERCHANDISE STORES -
0.1%
K mart Financing I $3.875 607,400 $ 24,865
UTILITIES - 1.0%
ELECTRIC UTILITY - 0.7%
Alliant Energy Resources, 105,400 7,510
Inc. $4.91 (f)
Houston Industries, Inc. 612,600 81,629
(Time Warner, Inc.) $3.216
ACES
NiSource, Inc. $3.875 PIES 606,800 23,210
Texas Utilities Co. $3.90 795,000 30,562
growth PRIDES
142,911
GAS - 0.3%
Enron Corp.:
(EOG Resources, Inc.) $1.5575 976,300 16,536
ACES
Series J, $10.50 31,800 58,554
75,090
TOTAL UTILITIES 218,001
TOTAL CONVERTIBLE PREFERRED 808,038
STOCKS
NONCONVERTIBLE PREFERRED
STOCKS - 0.1%
CONSTRUCTION & REAL ESTATE -
0.0%
REAL ESTATE INVESTMENT TRUSTS
- - 0.0%
California Federal Preferred 63,160 1,405
Capital Corp. $2.2812
MEDIA & LEISURE - 0.1%
BROADCASTING - 0.1%
CSC Holdings, Inc. 11.125% 44,718 4,841
pay-in-kind
PUBLISHING - 0.0%
PRIMEDIA, Inc. 8.625% 12,245 1,059
TOTAL MEDIA & LEISURE 5,900
TOTAL NONCONVERTIBLE 7,305
PREFERRED STOCKS
TOTAL PREFERRED STOCKS 815,343
(Cost $764,772)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 2.0%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CONVERTIBLE BONDS - 1.6%
CONSTRUCTION & REAL ESTATE -
0.0%
REAL ESTATE INVESTMENT TRUSTS
- - 0.0%
Liberty Property LP 8.3% Ba2 $ 1,358 $ 1,610
7/1/01
DURABLES - 0.1%
CONSUMER ELECTRONICS - 0.1%
Sunbeam Corp. 0% 3/25/18 (f) Caa2 128,730 20,919
FINANCE - 0.0%
INSURANCE - 0.0%
Loews Corp. 3.125% 9/15/07 A2 9,210 7,259
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.1%
Jacor Communications, Inc.
liquid yield option notes:
0% 6/12/11 Ba3 18,492 24,792
0% 2/9/18 Ba3 7,150 4,676
29,468
PUBLISHING - 0.5%
News America Holdings, Inc. Baa3 99,380 96,274
liquid yield option notes 0%
3/11/13
TOTAL MEDIA & LEISURE 125,742
NONDURABLES - 0.0%
FOODS - 0.0%
Chiquita Brands B3 1,680 1,210
International, Inc. 7%
3/28/01
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
Charming Shoppes, Inc. 7.5% B2 5,338 5,445
7/15/06
J. Baker, Inc. 7% 6/1/02 B3 13,300 10,042
15,487
SERVICES - 0.2%
ADT Operations, Inc. liquid Baa1 19,295 45,161
yield option notes 0%, 7/6/10
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.3%
COMPUTER SERVICES & SOFTWARE
- - 0.1%
Softkey International, Inc. - $ 29,030 $ 28,159
5.5% 11/1/00 (f)
COMPUTERS & OFFICE EQUIPMENT
- - 0.1%
Quantum Corp. 7% 8/1/04 B2 16,080 12,140
ELECTRONICS - 0.1%
Micron Technology, Inc. 7% B2 19,377 22,126
7/1/04
TOTAL TECHNOLOGY 62,425
UTILITIES - 0.3%
CELLULAR - 0.2%
Nextel Communications, Inc. B1 26,830 25,556
5.25% 1/15/10 (f)
TELEPHONE SERVICES - 0.1%
Cam-Net Communications - 4,225 0
Network, Inc. 11.5% 4/4/00
(c)(h)
Telefonos de Mexico SA de CV BB 19,710 24,638
4.25% 6/15/04
TOTAL UTILITIES 50,194
TOTAL CONVERTIBLE BONDS 330,007
NONCONVERTIBLE BONDS - 0.4%
BASIC INDUSTRIES - 0.0%
CHEMICALS & PLASTICS - 0.0%
Lyondell Chemical Co. 9.875% Ba3 2,660 2,627
5/1/07
ENERGY - 0.0%
ENERGY SERVICES - 0.0%
RBF Finance Co. 11.375% Ba3 3,030 3,197
3/15/09
FINANCE - 0.0%
CREDIT & OTHER FINANCE - 0.0%
Macsaver Financial Services, Ba2 2,000 1,000
Inc. 7.875% 8/1/03
HEALTH - 0.0%
MEDICAL FACILITIES MANAGEMENT
- - 0.0%
Tenet Healthcare Corp. 8.125% Ba3 3,110 2,877
12/1/08
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - 0.0%
POLLUTION CONTROL - 0.0%
Allied Waste North America, B2 $ 2,870 $ 2,497
Inc. 10% 8/1/09
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.2%
Adelphia Communications Corp.:
7.75% 1/15/09 B1 2,200 1,898
9.875% 3/1/07 B1 4,670 4,606
Century Communications Corp. B1 910 378
Series B, 0% 1/15/08
Charter Communications B2 2,680 2,452
Holdings LLC/Charter
Communications Holdings
Capital Corp. 8.625% 4/1/09
Falcon Holding Group B2 3,630 2,677
LP/Falcon Funding Corp. 0%
4/15/10 (d)
NTL Communications Corp. B3 12,950 13,598
11.5% 10/1/08
Telewest PLC 0% 10/1/07 (d) B1 3,640 3,413
29,022
ENTERTAINMENT - 0.0%
Regal Cinemas, Inc. 8.875% Caa1 4,650 2,930
12/15/10
LODGING & GAMING - 0.0%
HMH Properties, Inc. 7.875% Ba2 1,670 1,453
8/1/08
RESTAURANTS - 0.0%
Domino's, Inc. 10.375% 1/15/09 B3 2,020 1,899
TOTAL MEDIA & LEISURE 35,304
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Revlon Consumer Products B3 1,960 1,411
Corp. 9% 11/1/06
UTILITIES - 0.2%
CELLULAR - 0.1%
Nextel Communications, Inc.:
0% 10/31/07 (d) B1 9,230 6,530
12% 11/1/08 B1 4,160 4,555
11,085
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS -
CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - 0.1%
GST Network Funding, Inc. 0% - $ 3,190 $ 1,786
5/1/08 (d)
ICG Services, Inc. 0% 5/1/08 B3 2,795 1,523
(d)
Intermedia Communications, B2 1,540 1,382
Inc. 8.6% 6/1/08
McLeodUSA, Inc. 9.5% 11/1/08 B1 1,815 1,779
NEXTLINK Communications, Inc. B2 5,550 5,328
9.625% 10/1/07
Pathnet, Inc. 12.25% 4/15/08 - 1,040 676
Rhythms NetConnections, Inc. B3 3,330 3,164
12.75% 4/15/09
Teligent, Inc. 0% 3/1/08 (d) Caa1 6,110 3,544
WinStar Communications, Inc.:
0% 10/15/05 (d) Caa1 1,280 1,165
15% 3/1/07 CCC 1,660 2,357
22,704
TOTAL UTILITIES 33,789
TOTAL NONCONVERTIBLE BONDS 82,702
TOTAL CORPORATE BONDS 412,709
(Cost $348,939)
COMMERCIAL MORTGAGE
SECURITIES - 0.0%
Bardell Associates Note Trust - 2,382 2,530
12.5%, 11/1/08 (h) (Cost
$2,427)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 0.2%
SHARES VALUE (NOTE 1) (000S)
Central Cash Collateral Fund, 43,279,200 $ 43,279
5.56% (g) (Cost $43,279)
TOTAL INVESTMENT PORTFOLIO - 21,145,927
100.2%
(Cost $15,511,593)
NET OTHER ASSETS - (0.2)% (34,599)
NET ASSETS - 100% $ 21,111,328
</TABLE>
SECURITY TYPE ABBREVIATIONS
ACES - Automatic Common Exchange
Securities
DECS - Dividend Enhanced Convertible
Stock/Debt Exchangeable for
Common Stock
PEPS - Participating Equity
Preferred Shares/Premium
Exchangeable Participating
Shares
PIES - Premium Income Equity
Securities
PRIDES - Preferred Redeemable
Increased Dividend Equity
Securities
PRIZES - Participating Redeemable
Indexed Zero-Premium
Exchangeable Securities
STRYPES - Structured Yield Product
Exchangeable for Common Stock
TIDES - Term Income Deferred Equity
Securities
TRACES - Trust Automatic Common
Exchange Securities
LEGEND
(a) Non-income producing
(b) S&P(registered trademark) credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
(c) Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.
(d) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.
(e) Affiliated company
(f) Security exempt from registration under Rule 144A of the
Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $145,739,000 or
0.7% of net assets.
(g) The rate quoted is the annualized seven-day yield of the fund at
period end.
(h) Restricted securities - Investment in securities not registered
under the Securities Act of 1933.
Additional information on each holding is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST (000S)
Bardell Associates Note 4/19/94 $ 2,420
Trust 12.5%, 11/1/08
Cam-Net Communications 4/12/96 $ 3,413
Network, Inc. 11.5% 4/4/00
INCOME TAX INFORMATION
At January 31, 2000, the aggregate
cost of investment securities for income
tax purposes was $15,517,429,000.
Net unrealized appreciation aggre-
gated $5,628,498,000, of which $7,247,802,000 related to appreciated
investment securities and $1,619,304,000 related to depreciated
investment securities.
The Fund hereby designates approximately $2,152,723,000 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 AMOUNT) JANUARY 31, 2000
ASSETS
Investment in securities, at $ 21,145,927
value (cost $15,511,593) -
See accompanying schedule
Receivable for investments 126,696
sold
Receivable for fund shares 21,135
sold
Dividends receivable 29,939
Interest receivable 3,663
Other receivables 174
TOTAL ASSETS 21,327,534
LIABILITIES
Payable to custodian bank $ 4,999
Payable for investments 61,314
purchased
Payable for fund shares 80,546
redeemed
Accrued management fee 8,711
Notes payable 13,630
Other payables and accrued 3,727
expenses
Collateral on securities 43,279
loaned, at value
TOTAL LIABILITIES 216,206
NET ASSETS $ 21,111,328
Net Assets consist of:
Paid in capital $ 14,682,977
Undistributed net investment 23,219
income
Accumulated undistributed net 770,905
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 5,634,227
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 414,279 $ 21,111,328
shares outstanding
NET ASSET VALUE, offering $50.96
price and redemption price
per share ($21,111,328
(divided by) 414,279 shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED JANUARY 31, 2000
INVESTMENT INCOME $ 462,149
Dividends (including $309
received from affiliated
issuers)
Interest 31,557
Security lending 754
TOTAL INCOME 494,460
EXPENSES
Management fee $ 113,797
Transfer agent fees 45,592
Accounting and security 1,166
lending fees
Non-interested trustees' 86
compensation
Custodian fees and expenses 697
Registration fees 171
Audit 144
Legal 84
Interest 116
Miscellaneous 427
Total expenses before 162,280
reductions
Expense reductions (3,977) 158,303
NET INVESTMENT INCOME 336,157
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,509,055
(including realized gain
(loss) of $637 on sales of
investments in affiliated
issuers)
Foreign currency transactions (695) 2,508,360
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (2,260,154)
Assets and liabilities in (258) (2,260,412)
foreign currencies
NET GAIN (LOSS) 247,948
NET INCREASE (DECREASE) IN $ 584,105
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED JANUARY 31, 2000 YEAR ENDED JANUARY 31, 1999
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 336,157 $ 360,230
income
Net realized gain (loss) 2,508,360 1,218,566
Change in net unrealized (2,260,412) 1,066,198
appreciation (depreciation)
NET INCREASE (DECREASE) IN 584,105 2,644,994
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (333,394) (359,850)
From net investment income
From net realized gain (2,055,215) (993,948)
TOTAL DISTRIBUTIONS (2,388,609) (1,353,798)
Share transactions Net 4,570,193 6,654,024
proceeds from sales of shares
Reinvestment of distributions 2,319,337 1,317,537
Cost of shares redeemed (7,240,283) (7,268,343)
NET INCREASE (DECREASE) IN (350,753) 703,218
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) (2,155,257) 1,994,414
IN NET ASSETS
NET ASSETS
Beginning of period 23,266,585 21,272,171
End of period (including $ 21,111,328 $ 23,266,585
undistributed net investment
income of $23,219 and
$20,609, respectively)
OTHER INFORMATION
Shares
Sold 79,856 120,581
Issued in reinvestment of 43,176 24,642
distributions
Redeemed (128,249) (133,223)
Net increase (decrease) (5,217) 12,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED JANUARY 31, 2000 1999 1998 1997 1996
SELECTED PER-SHARE DATA
Net asset value, beginning $ 55.46 $ 52.20 $ 44.47 $ 39.15 $ 30.89
of period
Income from Investment
Operations
Net investment income .82 B .85 B .94 B 1.01 B .93
Net realized and unrealized .63 5.65 9.79 7.17 9.65
gain (loss)
Total from investment 1.45 6.50 10.73 8.18 10.58
operations
Less Distributions
From net investment income (.82) (.85) (.96) (1.02) (.96)
From net realized gain (5.13) (2.39) (2.04) (1.84) (1.36)
Total distributions (5.95) (3.24) (3.00) (2.86) (2.32)
Net asset value, end of period $ 50.96 $ 55.46 $ 52.20 $ 44.47 $ 39.15
TOTAL RETURN A 2.27% 12.79% 24.69% 21.74% 35.21%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 21,111 $ 23,267 $ 21,272 $ 15,024 $ 11,010
(in millions)
Ratio of expenses to average .69% .67% .67% .68% .68%
net assets
Ratio of expenses to average .67% C .66% C .65% C .66% C .67% C
net assets after expense
reductions
Ratio of net investment 1.42% 1.54% 1.90% 2.46% 2.86%
income to average net assets
Portfolio turnover rate 26% 30% 23% 30% 39%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 2000
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Equity-Income Fund (the fund) is a fund of Fidelity
Devonshire Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended, 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. Foreign securities are valued based
on quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of the business of the fund, are expected
to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into
account. Fair value is determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases
debt securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value. 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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES - CONTINUED
fund is not subject to U.S. federal income taxes to the extent that it
distributes substantially all of its taxable income for its fiscal
year. The fund may be subject to foreign taxes on income and gains on
investments which are accrued based upon the fund's understanding of
the tax rules and regulations that exist in the markets in which it
invests. Foreign governments may also impose taxes on other payments
or transactions with respect to foreign securities. The fund accrues
such taxes as applicable. 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, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
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,
market discount, non-taxable dividends and losses deferred due to wash
sales. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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, Federal Agency,
and other obligations found satisfactory by FMR 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.
CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC,
the fund may invest in the Taxable Central Cash Fund and the Central
Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments
Money Management, Inc. (FIMM), an affiliate of FMR. The Cash Funds are
open-end money market funds available only to investment companies and
other accounts managed by FMR and its affiliates. The Cash Funds seek
preservation of capital, liquidity, and current income. Income
distributions from the Cash Funds are declared daily and paid monthly
from net interest income. Income distributions earned by the fund are
recorded as either interest income or security lending income in the
accompanying financial statements.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the fund, along with other registered
2. OPERATING POLICIES - CONTINUED
INTERFUND LENDING PROGRAM - CONTINUED
investment companies having management contracts with FMR, may
participate in an interfund lending program. This program provides an
alternative credit facility allowing the fund to borrow from, or lend
money to, other participating funds.
INDEXED SECURITIES. The fund may invest in indexed securities whose
values are linked either directly or inversely to changes in foreign
currencies, interest rates, commodities, indices, or other underlying
instruments. The fund uses these securities to increase or decrease
its exposure to different underlying instruments and to gain exposure
to markets that might be difficult to invest in through conventional
securities. Indexed securities may be more volatile than their
underlying instruments, but any loss is limited to the amount of the
original investment. Gains (losses) realized upon the sale of indexed
securities are included in realized gains (losses) on investment
securities.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $2,530,000 or .01% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $6,083,359,000 and $8,428,139,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2167% to .5200% for the
period. The annual individual fund fee rate is .20%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annual rate of .48% of average net assets.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES - CONTINUED
of all shareholder reports, except proxy statements. For the period,
the transfer agent fees were equivalent to an annual rate of .19% of
average net assets.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
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 $668,000 for the
period.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower.
The average daily loan balance during the period for which loans were
outstanding amounted to $55,892,000. The weighted average interest
rate was 5.67%. Interest expense includes $114,000 paid under the
interfund lending program.
6. SECURITY LENDING.
The fund lends portfolio securities from time to time in order to earn
additional income. The fund receives collateral in the form of U.S.
Treasury obligations, letters of credit, and/or cash against the
loaned securities, and maintains collateral in an amount not less than
100% of the market value of the loaned securities during the period of
the loan. The market value of the loaned securities is determined at
the close of business of the fund and any additional required
collateral is delivered to the fund on the next business day. If the
borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the fund could experience
delays and costs in recovering the securities loaned or in gaining
access to the collateral. At period end, the value of the securities
loaned amounted to $38,734,000. The fund received cash collateral of
$43,279,000 which was invested in the cash equivalents.
7. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. The average daily loan balance during the period for which
the loan was outstanding amounted to $11,537,000. The weighted average
interest rate was 5.98%. Interest expense includes $2,000 paid under
the bank borrowing program.
8. 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 $2,484,000 under this arrangement.
In addition, through an arrangement with the fund's transfer agent,
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
transfer agent fees were reduced by $1,493,000 under this arrangement.
9. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF TRANSACTIONS WITH
AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
Footstar, Inc. $ - $ - $ - $ 28,259
Fremont General Corp. - 1,602 - -
Highlands Insurance Group, - - - 6,941
Inc.
Inland Steel Industries, Inc. - 9,301 - -
Ryerson Tull, Inc. 5,411 394 309 29,247
TOTALS $ 5,411 $ 11,297 $ 309 $ 64,447
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Equity-Income 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 Equity-Income Fund (a fund of Fidelity Devonshire Trust) at
January 31, 2000, and the results of its operations, the changes in
its net assets and the financial highlights for the periods indicated,
in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Equity-Income 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 auditing standards generally accepted in
the United States 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 January 31, 2000 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 10, 2000
DISTRIBUTIONS
The Board of Trustees of Fidelity Equity-Income Fund voted to pay on
March 6, 2000, to shareholders of record at the opening of business on
March 3, 2000, a distribution of $1.27 per share derived from capital
gains realized from sales of portfolio securities and a dividend of
$.20 per share from net investment income.
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
A total of 74% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 2001 of amounts for use
in preparing 2000 income tax returns.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE (FASTSM)
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0To speak to a Fidelity representative.
BY PC
Fidelity's web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-0240 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5587
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5587
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity Investments Japan Ltd.
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Stephen R. Petersen, Vice President
Richard A. Spillane, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Maria F. Dwyer, Deputy Treasurer
John H. Costello, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
* INDEPENDENT TRUSTEES
EQU-ANN-0300 95614
1.471443.102
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity(registered trademark) Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II Portfolio
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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)
Fidelity Automated Service
Telephone (FASTSM) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
FIDELITY(REGISTERED TRADEMARK)
REAL ESTATE INVESTMENT
PORTFOLIO
ANNUAL REPORT
JANUARY 31, 2000
(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 14 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 18 Notes to the financial
statements.
REPORT OF INDEPENDENT 22 The auditors' opinion.
ACCOUNTANTS
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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 1-800-544-6666
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
While no major Y2K glitches disrupted the financial markets to start
the new year, inflation worries re-emerged to hinder stock performance
throughout January. The S&P 500(Registered trademark) and Dow Jones
Industrial Average each fell approximately 5%, while the
technology-oriented NASDAQ Index dropped more than 3% for the month.
In bond markets, the potential for further rate hikes as a pre-emptive
move against inflation continued to be an obstacle to fixed-income
performance.
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 1-800-544-6666, 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 JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY REAL ESTATE 0.43% 53.49% 161.60%
S&P 500 10.35% 225.05% 442.52%
Wilshire Real Estate Securities -0.64% 54.56% 57.71%
Real Estate Funds Average -2.26% 52.29% 94.06%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Wilshire Real Estate Securities Index - a market
capitalization-weighted index of publicly traded real estate
securities such as real estate investment trusts (REITs) and real
estate operating companies (REOCs) - and the performance of the
Standard & Poor's 500SM Index - a market capitalization-weighted index
of common stocks. To measure how the fund's performance stacked up
against its peers, you can compare it to the real estate funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Inc. The past one year average represents
a peer group of 138 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY REAL ESTATE 0.43% 8.95% 10.09%
S&P 500 10.35% 26.59% 18.42%
Wilshire Real Estate Securities -0.64% 9.10% 4.66%
Real Estate Funds Average -2.26% 8.69% 6.62%
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 10 YEARS
Real Estate S&P 500
Wilshire Real Estate
00303 SP001
WA005
1990/01/31 10000.00 10000.00
10000.00
1990/02/28 9936.03 10129.00
9996.00
1990/03/31 9989.34 10397.42
9973.01
1990/04/30 9859.75 10137.48
9779.53
1990/05/31 9816.55 11125.89
9736.50
1990/06/30 9968.17 11050.23
9755.00
1990/07/31 10033.82 11014.87
9381.39
1990/08/31 9322.59 10019.13
8285.64
1990/09/30 8856.76 9531.20
7325.33
1990/10/31 8601.49 9490.21
6797.91
1990/11/30 9145.32 10103.28
7074.59
1990/12/31 9334.81 10385.16
6983.32
1991/01/31 10205.01 10837.95
7662.80
1991/02/28 10521.44 11612.87
8113.37
1991/03/31 11217.34 11893.90
8836.27
1991/04/30 11526.39 11922.44
8764.70
1991/05/31 11801.10 12437.49
8900.55
1991/06/30 11421.32 11867.86
8461.76
1991/07/31 11664.57 12420.90
8426.22
1991/08/31 11722.49 12715.27
8324.26
1991/09/30 12062.58 12502.93
8229.36
1991/10/31 11863.30 12670.47
8044.20
1991/11/30 11746.07 12159.85
7777.13
1991/12/31 12992.96 13550.93
8382.20
1992/01/31 13776.81 13298.89
8777.00
1992/02/29 13479.90 13471.77
8755.05
1992/03/31 13397.27 13209.07
8565.95
1992/04/30 13205.20 13597.42
8423.75
1992/05/31 13601.35 13664.05
8457.45
1992/06/30 13444.86 13460.45
8202.88
1992/07/31 14037.31 14010.98
8233.23
1992/08/31 14073.58 13723.76
8108.91
1992/09/30 14462.22 13885.70
8417.04
1992/10/31 14620.48 13934.30
8507.11
1992/11/30 14888.30 14409.46
8580.27
1992/12/31 15527.78 14586.70
9002.42
1993/01/31 16291.84 14709.22
9628.08
1993/02/28 16686.20 14909.27
10094.08
1993/03/31 17887.88 15223.86
10771.40
1993/04/30 17081.00 14855.44
10160.66
1993/05/31 16869.97 15253.56
10001.14
1993/06/30 17309.11 15297.80
10263.17
1993/07/31 17421.84 15236.61
10471.51
1993/08/31 17697.38 15814.08
10689.32
1993/09/30 18514.62 15692.31
11173.54
1993/10/31 18211.52 16017.14
10859.57
1993/11/30 17150.65 15864.97
10386.09
1993/12/31 17470.55 16056.94
10373.63
1994/01/31 17612.17 16602.88
10684.83
1994/02/28 18474.76 16152.94
11121.84
1994/03/31 17814.00 15448.67
10606.90
1994/04/30 18060.69 15646.41
10725.70
1994/05/31 18450.21 15903.02
10948.79
1994/06/30 17898.93 15513.39
10733.10
1994/07/31 17859.62 16022.23
10757.79
1994/08/31 17781.00 16679.14
10750.26
1994/09/30 17569.57 16270.50
10570.73
1994/10/31 16868.38 16636.59
10183.84
1994/11/30 16273.02 16030.68
9785.65
1994/12/31 17826.65 16268.42
10544.04
1995/01/31 17043.36 16690.26
10203.47
1995/02/28 17313.46 17340.68
10522.84
1995/03/31 17382.01 17852.40
10583.87
1995/04/30 17108.49 18378.16
10507.67
1995/05/31 17737.58 19112.73
10855.47
1995/06/30 18108.18 19556.72
11044.35
1995/07/31 18426.59 20205.22
11222.17
1995/08/31 18800.38 20255.94
11359.08
1995/09/30 19134.61 21110.74
11568.09
1995/10/31 18602.31 21035.37
11209.47
1995/11/30 18700.37 21958.82
11326.05
1995/12/31 19772.56 22381.75
11982.96
1996/01/31 20128.69 23143.63
12148.33
1996/02/29 20199.92 23358.17
12388.87
1996/03/31 20215.31 23583.11
12489.22
1996/04/30 20186.49 23930.72
12545.42
1996/05/31 20604.34 24547.89
12825.18
1996/06/30 20940.34 24641.42
13081.68
1996/07/31 21013.30 23552.76
12965.26
1996/08/31 21932.63 24049.49
13516.28
1996/09/30 22636.90 25403.00
13854.19
1996/10/31 23330.92 26103.61
14229.64
1996/11/30 24423.64 28076.78
14820.17
1996/12/31 26935.18 27520.58
16401.48
1997/01/31 27263.84 29240.07
16636.02
1997/02/28 27353.48 29469.31
16646.00
1997/03/31 27360.16 28258.42
16702.60
1997/04/30 26500.91 29945.44
16163.10
1997/05/31 27254.64 31768.52
16644.76
1997/06/30 28722.74 33191.75
17470.34
1997/07/31 29818.67 35832.82
18045.12
1997/08/31 29636.02 33825.47
17911.58
1997/09/30 32620.16 35678.09
19677.67
1997/10/31 31667.97 34486.44
18841.37
1997/11/30 31882.98 36082.82
19220.08
1997/12/31 32697.15 36702.36
19648.68
1998/01/31 32153.53 37108.29
19371.64
1998/02/28 31561.94 39784.53
19123.68
1998/03/31 32398.47 41821.90
19500.42
1998/04/30 31254.22 42242.63
18886.15
1998/05/31 30845.56 41516.48
18704.85
1998/06/30 30682.43 43202.88
18605.71
1998/07/31 28519.14 42742.77
17310.75
1998/08/31 25827.41 36563.02
15512.17
1998/09/30 27142.49 38905.24
16380.85
1998/10/31 26692.06 42069.80
16156.43
1998/11/30 26975.67 44619.65
16460.17
1998/12/31 26614.42 47190.63
16224.79
1999/01/31 26049.25 49164.14
15872.71
1999/02/28 26203.39 47636.12
15747.32
1999/03/31 25765.46 49542.04
15662.28
1999/04/30 28539.67 51460.81
17331.88
1999/05/31 29163.86 50245.82
17623.06
1999/06/30 28346.13 53034.46
17323.47
1999/07/31 27192.00 51378.72
16659.98
1999/08/31 27034.62 51124.40
16410.08
1999/09/30 25892.89 49723.08
15669.98
1999/10/31 25136.00 52869.56
15378.52
1999/11/30 24907.17 53944.39
15137.08
1999/12/31 26357.53 57121.72
15706.23
2000/01/31 26160.29 54251.92
15770.63
IMATRL PRASUN SHR__CHT 20000131 20000222 102849 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Real Estate Investment Portfolio on January 31,
1990. As the chart shows, by January 31, 2000, the value of the
investment would have grown to $26,160 - a 161.60% increase on the
initial investment. For comparison, look at how both the Wilshire Real
Estate Securities Index and Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment in the Wilshire Real Estate Securities Index
would have grown to $15,771 - a 57.71% increase. If $10,000 was
invested in the S&P 500 Index, it would have grown to $54,252 - a
442.52% 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
Market followers know that every
year is interesting, but the 12 months
that ended January 31, 2000, were
more than interesting. They were
intriguing. Never has a particular
group of stocks led the market's
charge as technology stocks did
during this period. The
technology-oriented NASDAQ
Index returned a startling 57.68%
during this time, fueled mostly by
investors' insatiable appetites for
Internet and dot.com stocks. The
technology burst wasn't limited to
large-cap stocks, either, as scores of
small- and mid-sized tech companies
performed extraordinarily well. The
Russell 2000(Registered trademark) Index - a popular
performance benchmark for smaller
stocks - generated a 17.75% return
during the 12 months. In contrast, the
Standard & Poor's 500 Index, a
broad measure of U.S. stock
performance, returned 10.35%.
What made the tech rally intriguing
was that investors seemed to discard
the generally accepted notion that stock
prices reflect a company's earnings.
Many of these technology stocks rose
despite having no sound earnings
platform - of the 100 top-performing
stocks within the Russell 2000 at the
end of 1999, 43 of the companies
were actually losing money.
Meanwhile, the NASDAQ kept
climbing, crossing the 4000-point mark
between Christmas and New Year's.
Sensing that the Federal Reserve Board
would raise interest rates in early
February, tech stocks sold off
throughout January. Time will tell,
though, if it's only a temporary
obstacle.
(photograph of Steve Buller)
An interview with Steve Buller, Portfolio Manager of Fidelity Real
Estate Investment Portfolio
Q. HOW DID THE FUND PERFORM, STEVE?
A. It fared relatively well, given the circumstances. For the 12
months that ended January 31, 2000, the fund returned 0.43%. This
performance topped both the real estate funds average tracked by
Lipper Inc. and the Wilshire Real Estate Securities Index, which
returned -2.26% and -0.64%, respectively, during the same period. The
Standard & Poor's 500 Index returned 10.35% during this time frame.
Q. WHAT HELPED THE FUND GAIN AN EDGE OVER THE WILSHIRE INDEX AND
LIPPER PEER GROUP DURING THE 12-MONTH PERIOD?
A. Sector selection and timely trading played a big role in our
success. Within that framework, owning more of the larger, liquid real
estate investment trusts (REITs), which outperformed, served us well.
Specifically, having a significant underweighting in retail REITs
helped, as this sector grew increasingly troubled over concerns
surrounding the impact of electronic commerce. Nearly everything under
the retail umbrella suffered, including malls, strip centers and
factory outlets. Remaining underexposed to the poorly performing
lodging sector also gave us an advantage, as did the fund's
overweighted stake in office, industrial and apartment REITs. Finally,
I maintained a very low turnover rate, which helped, given the high
cost of trading these securities.
Q. WHAT FACTORS CAUSED REITS TO STRUGGLE FOR MUCH OF THE PERIOD?
A. Having characteristics of value and income investments - each of
which were shunned during the period - REITs struggled to find solid
footing in a tech-dominated environment. Total return expectations in
the mid-teens failed to stir investors as they once had. Frankly
speaking, real estate is a capital-intensive, not-so-sexy,
can't-make-50%-in-a-day industry. Investors made it quite clear during
the period that they wanted to be where the action was. Owning real
estate stocks for diversification purposes, under normal
circumstances, is a sound long-term investment strategy. Regrettably,
this traditional diversification strategy is oftentimes ignored in a
momentum-driven market.
Q. THERE WERE A COUPLE OF STRONG RALLIES IN THE REIT MARKET DURING THE
PERIOD THAT HELPED BUOY PERFORMANCE. WHAT SPURRED THESE MINI
RECOVERIES?
A. Given the relatively small size of the sector, it takes very little
to buck a trend. And since REITs were generally oversold, conditions
were ripe for a turnaround. The sector needed a catalyst, however. On
two separate occasions during the period, famed stock picker Warren
Buffett obliged, breathing new life into the REIT market with
significant investments in the sector.
Q. HOW DID THE SUBSECTORS OF THE REIT MARKET FARE?
A. Apartment and office REITs benefited from a tighter supply and
demand balance spurred by stronger job growth in most major U.S.
markets. Industrial REITs climbed modestly on interest in new
distribution models stemming from electronic commerce. Supply
outstripped demand in lodging, pushing that sector lower.
Q. WHICH HOLDINGS LIFTED FUND RETURNS? WHICH DISAPPOINTED?
A. Office property giant Equity Office benefited from higher rents and
occupancy rates in the major business districts, as well as from its
success drawing in ancillary revenues (SEE CALLOUT BOX ON PAGE 8).
CenterPoint Properties, a leading industrial property company, was
rewarded for continually adding value to its customers as well as for
its collection of assets. Apartment Investment & Management Co., an
operator of diversified apartment communities, also enjoyed a strong
period. On the downside, Public Storage - one of the fund's top
holdings - slid lower, as earnings estimates for the company came
down. Trizec Hahn was plagued by uncertainty over its European retail
development program. Duke-Weeks Realty, a diversified REIT, suffered
from supply-induced weaknesses.
Q. WHAT'S YOUR OUTLOOK?
A. I feel good about the fund's prospects. Property markets stand
poised to further benefit from continued supply and demand
equilibrium. There are individual pockets of concern, but nothing that
corrective action won't be able to remedy. The sector is still quite
compelling on a valuation basis and should benefit if and when a
semblance of normalcy returns to the broader equity market.
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: above-average income
and long-term capital growth
by investing mainly in the
equity securities of
companies in the real estate
industry
FUND NUMBER: 303
TRADING SYMBOL: FRESX
START DATE: November 17,
1986
SIZE: as of January 31,
2000, more than $699
million
MANAGER: Steve Buller, since
1998; associate portfolio
manager, Fidelity Real Estate
Investment Portfolio, 1997-
1998; manager, Fidelity
Select Environmental Services
Portfolio, 1997-1998;
analyst, high income group;
1992-1995;
joined Fidelity in 1992
STEVE BULLER ON
EMERGING TRENDS IN
THE REAL ESTATE MARKET:
"Beginning in 2001, the REIT
Modernization Act signed last
year will allow REITS to engage in
ancillary real-estate business -
that is, anything above and beyond
passive rent collection. This opens
up worlds of possibilities for REITs,
as what was once a pure-play land
grab game should quickly
transform into an exploitation of
what one already owns for a
higher return on investment
capital. Since real estate
companies enjoy the unique
advantage of owning literally the
`last foot,' it's really become a
question of access - in terms of
square footage and customers -
and distribution. And as such,
REITs are presented with
countless ways to create value, or
free equity, that simply weren't
there before. For instance, we
should see everything from
property companies signing deals
with telecommunications and
broadband providers, selling
advertising space everywhere
imaginable, offering cleaning
services, paying for customer
referrals - the list is endless.
We're already seeing evidence of
some of this today with
advertisements infringing on us in
elevators, lobbies, parking garages,
and on and on. It shouldn't surprise
us to see more and more of these
exploitations of ancillary revenue
in the future."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JANUARY
31, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
Equity Office Properties Trust 9.6 7.0
Apartment Investment & 7.3 6.1
Management Co. Class A
Public Storage, Inc. 6.6 7.9
Equity Residential Properties 5.6 4.7
Trust (SBI)
CenterPoint Properties Trust 4.7 3.1
Duke-Weeks Realty Corp. 4.5 5.4
Simon Property Group, Inc. 4.4 3.6
Crescent Real Estate Equities 4.1 3.4
Co.
Avalonbay Communities, Inc. 4.1 3.0
Reckson Associates Realty Corp. 4.0 4.0
54.9 48.2
TOP FIVE REIT SECTORS AS OF
JANUARY 31, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
REITs - Industrial Buildings 27.9 22.8
REITs - Office Buildings 26.4 23.5
REITs - Apartments 20.1 16.8
REITs - Shopping Centers 6.4 7.9
REITs - Malls 5.8 5.9
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF JANUARY 31, 2000 * AS OF JULY 31, 1999 **
Stocks 96.4% Stocks 91.1%
Short-Term Investments and Short-Term Investments and
Net Other Assets 3.6% Net Other Assets 8.9%
* FOREIGN INVESTMENTS 4.4% ** FOREIGN INVESTMENTS 4.4%
Row: 1, Col: 1, Value: 96.40000000000001 Row: 1, Col: 1, Value: 91.09999999999999
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 3.6 Row: 1, Col: 8, Value: 8.9
</TABLE>
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS JANUARY 31, 2000
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 96.4%
SHARES VALUE (NOTE 1) (000S)
COMMUNICATIONS EQUIPMENT - 0.0%
TELEPHONE & TELEGRAPH
APPARATUS - 0.0%
Turnstone Systems, Inc. 100 $ 3
EDUCATIONAL SERVICES - 0.0%
SCHOOLS & EDUCATIONAL
SERVICES - 0.0%
SkillSoft Corp. 200 3
ELECTRONIC INSTRUMENTS - 0.0%
LABORATORY ANALYTICAL
INSTRUMENTS - 0.0%
Sequenom, Inc. 200 5
ELECTRONICS - 0.0%
SEMICONDUCTORS & RELATED
DEVICES - 0.0%
Quantum Effect Devices, Inc. 200 3
LODGING & GAMING - 2.1%
HOTELS & MOTELS - 2.1%
Starwood Hotels & Resorts 608,283 14,599
Worldwide, Inc. unit
REAL ESTATE - 5.3%
OPERATORS, NON-RESIDENTAL -
2.5%
Brookfield Properties Corp. 470,800 4,479
Cadillac Fairvew Corp. (a) 90,000 2,083
CR Leasing & Development, Inc.:
Class A (d) 46 0
Class B (d) 216 2
Trizec Hahn Corp. (sub. vtg.) 705,700 11,254
17,818
REAL ESTATE, GENERAL - 1.9%
Boardwalk Equities, Inc. (a) 1,966,900 11,839
Boardwalk Equities, Inc. 254,100 1,530
(a)(c)
13,369
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
REAL ESTATE - CONTINUED
SUBDIVIDED REAL ESTATE
DEVELOPMENT - 0.9%
Catellus Development Corp. (a) 102,200 $ 1,278
Newhall Land & Farming Co. 167,100 4,679
5,957
TOTAL REAL ESTATE 37,144
REAL ESTATE INVESTMENT TRUSTS
- - 89.0%
REITS - APARTMENTS - 20.1%
Apartment Investment & 1,336,800 50,631
Management Co. Class A
Archstone Communities Trust 12,100 243
Avalonbay Communities, Inc. 825,404 28,476
BRE Properties, Inc. Class A 547,800 12,052
Colonial Properties Trust 137,000 3,365
(SBI)
Equity Residential Properties 941,762 39,083
Trust (SBI)
Essex Property Trust, Inc. 105,200 3,577
Post Properties, Inc. 558 21
Walden Residential 115,000 2,588
Properties, Inc.
140,036
REITS - INDUSTRIAL BUILDINGS
- - 27.9%
AMB Property Corp. 859,900 17,574
CenterPoint Properties Trust 922,900 32,705
Duke-Weeks Realty Corp. 1,605,134 31,802
First Industrial Realty 70,000 1,881
Trust, Inc.
Liberty Property Trust (SBI) 829,700 19,342
ProLogis Trust 1,011,100 19,274
Public Storage, Inc. 2,041,800 46,324
Spieker Properties, Inc. 672,900 26,159
195,061
REITS - MALLS - 5.8%
CBL & Associates Properties, 430,939 9,077
Inc.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
REAL ESTATE INVESTMENT TRUSTS
- - CONTINUED
REITS - MALLS - CONTINUED
Crown American Realty Trust 145,000 $ 870
Simon Property Group, Inc. 1,253,300 30,941
40,888
REITS - MOBILE HOME PARKS -
2.4%
Manufactured Home 215,500 5,172
Communities, Inc.
Sun Communities, Inc. 378,600 11,737
16,909
REITS - OFFICE BUILDINGS -
26.4%
Boston Properties, Inc. 765,400 22,962
Crescent Real Estate Equities 1,604,200 28,876
Co.
Crocker Realty, Inc.:
Class A (d) 1,497 14
Class B (d) 1,521,600 13,801
Equity Office Properties Trust 2,641,610 67,524
Mack-Cali Realty Corp. 303,500 7,720
PS Business Parks, Inc. 207,060 4,659
PS Business Parks, Inc. (d) 292,934 6,591
Reckson Associates Realty 1,425,300 28,150
Corp.
SL Green Realty Corp. 213,500 4,644
184,941
REITS - SHOPPING CENTERS - 6.4%
Bradley Real Estate, Inc. 278,038 4,727
(SBI)
Developers Diversified Realty 12,300 160
Corp.
Kimco Realty Corp. 535,700 18,883
Realty Income Corp. 88,600 1,883
Vornado Realty Trust 615,000 19,257
44,910
TOTAL REAL ESTATE INVESTMENT 622,745
TRUSTS
TOTAL COMMON STOCKS 674,502
(Cost $593,122)
CASH EQUIVALENTS - 3.4%
SHARES VALUE (NOTE 1) (000S)
Taxable Central Cash Fund, 23,576,184 $ 23,576
5.45% (b) (Cost $23,576)
TOTAL INVESTMENT PORTFOLIO - 698,078
99.8%
(Cost $616,698)
NET OTHER ASSETS - 0.2% 1,211
NET ASSETS - 100% $ 699,289
</TABLE>
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
(c) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $1,530,000 or 0.2% of net assets.
(d) Restricted securities - Investment in securities not registered
under the Securities Act of 1933.
Additional information on each holding is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST (000S)
CR Leasing & Development, 11/19/97 $ 0
Inc. Class A
CR Leasing & Development, 11/19/97 $ 2
Inc. Class B
Crocker Realty, Inc. Class A 11/19/97 $ 15
Crocker Realty, Inc. Class B 11/19/97 - 12/28/98 $ 15,215
PS Business Parks, Inc. 5/6/98 $ 6,703
INCOME TAX INFORMATION
At January 31, 2000, the aggregate cost of investment securities for
income tax purposes was $617,810,000. Net unrealized appreciation
aggregated $80,268,000, of which $114,836,000 related to appreciated
investment securities and $34,568,000 related to depreciated
investment securities.
At January 31, 2000, the fund had a capital loss carryforward of
approximately $52,659,000 all of which will expire on January 31,
2008.
The fund intends to elect to defer to its fiscal year ending January
31, 2001 approximately $4,523,000 of losses recognized during the
period November 1, 1999 to January 31, 2000.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) JANUARY 31, 2000
ASSETS
Investment in securities, at $ 698,078
value (cost $616,698) - See
accompanying schedule
Receivable for investments 4,427
sold
Receivable for fund shares 690
sold
Dividends receivable 1,999
Interest receivable 92
Other receivables 162
TOTAL ASSETS 705,448
LIABILITIES
Payable to custodian bank $ 8
Payable for investments 2,680
purchased
Payable for fund shares 2,953
redeemed
Accrued management fee 347
Other payables and accrued 171
expenses
TOTAL LIABILITIES 6,159
NET ASSETS $ 699,289
Net Assets consist of:
Paid in capital $ 674,839
Undistributed net investment 858
income
Accumulated undistributed net (57,787)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 81,379
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 47,933 shares $ 699,289
outstanding
NET ASSET VALUE, offering $14.59
price and redemption price
per share ($699,289 (divided
by) 47,933 shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED JANUARY 31, 2000
INVESTMENT INCOME $ 42,093
Dividends
Interest 2,226
TOTAL INCOME 44,319
EXPENSES
Management fee $ 5,216
Transfer agent fees 2,408
Accounting fees and expenses 327
Non-interested trustees' 3
compensation
Custodian fees and expenses 34
Registration fees 34
Audit 46
Legal 4
Miscellaneous 35
Total expenses before 8,107
reductions
Expense reductions (182) 7,925
NET INVESTMENT INCOME 36,394
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (26,023)
Foreign currency transactions 27 (25,996)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (8,498)
Assets and liabilities in (1) (8,499)
foreign currencies
NET GAIN (LOSS) (34,495)
NET INCREASE (DECREASE) IN $ 1,899
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED JANUARY 31, 2000 YEAR ENDED JANUARY 31, 1999
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 36,394 $ 72,172
income
Net realized gain (loss) (25,996) (4,110)
Change in net unrealized (8,499) (429,372)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,899 (361,310)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (39,916) (74,648)
From net investment income
From net realized gain - (27,019)
In excess of net realized - (13,599)
gain
TOTAL DISTRIBUTIONS (39,916) (115,266)
Share transactions Net 166,845 321,876
proceeds from sales of shares
Reinvestment of distributions 35,890 107,713
Cost of shares redeemed (550,052) (1,349,682)
NET INCREASE (DECREASE) IN (347,317) (920,093)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 249 566
TOTAL INCREASE (DECREASE) (385,085) (1,396,103)
IN NET ASSETS
NET ASSETS
Beginning of period 1,084,374 2,480,477
End of period (including $ 699,289 $ 1,084,374
undistributed net investment
income of $858 and $4,446,
respectively)
OTHER INFORMATION
Shares
Sold 10,721 17,819
Issued in reinvestment of 2,386 6,222
distributions
Redeemed (36,464) (76,071)
Net increase (decrease) (23,357) (52,030)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED JANUARY 31, 2000 1999 1998 1997 1996
SELECTED PER-SHARE DATA
Net asset value, beginning $ 15.21 $ 20.11 $ 18.25 $ 14.13 $ 12.62
of period
Income from Investment
Operations
Net investment income .62 B .75 B .79 B .86 B .72
Net realized and unrealized (.55) (4.48) 2.41 3.97 1.50
gain (loss)
Total from investment .07 (3.73) 3.20 4.83 2.22
operations
Less Distributions
From net investment income (.69) (.78) (.79) (.72) (.71)
From net realized gain - (.27) (.56) - -
In excess of net realized gain - (.13) - - -
Total distributions (.69) (1.18) (1.35) (.72) (.71)
Redemption fees added to paid - .01 .01 .01 -
in capital
Net asset value, end of period $ 14.59 $ 15.21 $ 20.11 $ 18.25 $ 14.13
TOTAL RETURN A 0.43% (18.98)% 17.93% 35.45% 18.10%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 699 $ 1,084 $ 2,480 $ 2,196 $ 731
(in millions)
Ratio of expenses to average .90% .89% .86% .94% .99%
net assets
Ratio of expenses to average .88% C .86% C .84% C .90% C .95% C
net assets after expense
reductions
Ratio of net investment 4.06% 4.23% 4.06% 5.63% 6.28%
income to average net assets
Portfolio turnover rate 32% 28% 76% 55% 85%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 2000
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Real Estate Portfolio (the fund) is a fund of Fidelity
Devonshire Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended, 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. Foreign securities are valued based
on quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of the business of the fund, are expected
to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into
account. Fair value is determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases
debt securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value. 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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES - CONTINUED
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.
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, partnerships, non-taxable dividends, and losses deferred
due to wash sales and excise tax regulations.
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 that will reverse
in a subsequent period. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 90 days are subject to a short-term trading fee equal to .75% of
the proceeds of the redeemed shares. The fee, which is retained by the
fund, is accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
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
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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, Federal Agency,
and other obligations found satisfactory by FMR 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. 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.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $20,408,000 or 2.9% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $274,938,000 and $605,440,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
is based on the monthly average net assets of all the mutual funds
advised by FMR. The rates ranged from .2167% to .5200% for the period.
The annual individual fund fee rate is .30%. In the event that these
rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annual rate of .58% of average net assets.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .27% 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 $123,000 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 $167,000 under this arrangement.
In addition, through arrangements with the fund's custodian and
transfer agent, 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 $2,000 and $13,000, respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Real Estate Investment Portfolio:
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 Real Estate Investment Portfolio (a fund of Fidelity
Devonshire Trust) at January 31, 2000, and the results of its
operations, the changes in its net assets and the financial highlights
for the periods indicated, in conformity with accounting principles
generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fidelity Real Estate
Portfolio'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 auditing
standards generally accepted in the United States 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 January 31, 2000 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 10, 2000
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE (FASTSM)
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0To speak to a Fidelity representative.
BY PC
Fidelity's web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-0240 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity Investments Japan Ltd.
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Robert A. Lawrence, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Maria F. Dwyer, Deputy Treasurer
John H. Costello, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
REA-ANN-0300 95621
1.700141.102
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity(registered trademark) Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II Portfolio
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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)
Fidelity Automated Service
Telephone (FASTSM) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
FIDELITY(REGISTERED TRADEMARK)
UTILITIES
FUND
ANNUAL REPORT
JANUARY 31, 2000
(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 14 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 18 Notes to the financial
statements.
REPORT OF INDEPENDENT 23 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 24
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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(registered trademark) FUND,
INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-6666 FOR
A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
While no major Y2K glitches disrupted the financial markets to start
the new year, inflation worries re-emerged to hinder stock performance
throughout January. The S&P 500(Registered trademark) and Dow Jones
Industrial Average each fell approximately 5%, while the
technology-oriented NASDAQ Index dropped more than 3% for the month.
In bond markets, the potential for further rate hikes as a pre-emptive
move against inflation continued to be an obstacle to fixed-income
performance.
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 1-800-544-6666, 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 JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY UTILITIES 23.80% 207.39% 400.58%
S&P 500 10.35% 225.05% 442.52%
Russell 3000 Utilities 11.22% 189.54% 343.50%
Utility Funds Average 17.11% 132.16% 260.15%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Standard & Poor's 500SM Index - a market capitalization-weighted index
of common stocks - and the Russell 3000(registered trademark)
Utilities Index - a market capitalization-weighted index comprised of
over 200 utility stocks that are included in the Russell 3000 Index.
To measure how the fund's performance stacked up against its peers,
you can compare it to the utility funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past one year average represents a peer group of 100 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY UTILITIES 23.80% 25.18% 17.48%
S&P 500 10.35% 26.59% 18.42%
Russell 3000 Utilities 11.22% 23.69% 16.06%
Utility Funds Average 17.11% 18.02% 13.41%
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 10 YEARS
Utilities S&P 500
Russell 3000 Utilities
00311 SP001
RS018
1990/01/31 10000.00 10000.00
10000.00
1990/02/28 10025.08 10129.00
10003.00
1990/03/31 10016.25 10397.42
10227.07
1990/04/30 9612.16 10137.48
9752.53
1990/05/31 10076.43 11125.89
10435.21
1990/06/30 10119.29 11050.23
10146.15
1990/07/31 10128.02 11014.87
10017.30
1990/08/31 9612.89 10019.13
9163.82
1990/09/30 9761.31 9531.20
9310.44
1990/10/31 10355.87 9490.21
9902.59
1990/11/30 10586.59 10103.28
10032.31
1990/12/31 10729.71 10385.16
10154.71
1991/01/31 10684.20 10837.95
10092.76
1991/02/28 11066.43 11612.87
10480.33
1991/03/31 11197.55 11893.90
10718.23
1991/04/30 11197.55 11922.44
10739.67
1991/05/31 11197.55 12437.49
10630.12
1991/06/30 11113.92 11867.86
10555.71
1991/07/31 11462.11 12420.90
10916.71
1991/08/31 11744.43 12715.27
11144.87
1991/09/30 12116.11 12502.93
11376.69
1991/10/31 12268.75 12670.47
11562.13
1991/11/30 12364.16 12159.85
11451.13
1991/12/31 13002.52 13550.93
12309.97
1992/01/31 12574.93 13298.89
11826.18
1992/02/29 12526.34 13471.77
11608.58
1992/03/31 12380.76 13209.07
11562.15
1992/04/30 12786.85 13597.42
12168.00
1992/05/31 13044.37 13664.05
12103.51
1992/06/30 13173.98 13460.45
12247.55
1992/07/31 13885.81 14010.98
13041.19
1992/08/31 13905.86 13723.76
12915.99
1992/09/30 13946.08 13885.70
13081.32
1992/10/31 13925.80 13934.30
13018.53
1992/11/30 14057.65 14409.46
13245.05
1992/12/31 14419.87 14586.70
13811.94
1993/01/31 14576.72 14709.22
14034.31
1993/02/28 15350.52 14909.27
14911.45
1993/03/31 15763.56 15223.86
15243.98
1993/04/30 15614.95 14855.44
15054.95
1993/05/31 15657.41 15253.56
15286.80
1993/06/30 16394.33 15297.80
15938.02
1993/07/31 16597.78 15236.61
16280.68
1993/08/31 17358.07 15814.08
16912.38
1993/09/30 17368.52 15692.31
16763.55
1993/10/31 17228.19 16017.14
16721.64
1993/11/30 16515.74 15864.97
15738.41
1993/12/31 16670.43 16056.94
15793.49
1994/01/31 17395.23 16602.88
15905.62
1994/02/28 16681.41 16152.94
15048.31
1994/03/31 16050.25 15448.67
14550.21
1994/04/30 16456.58 15646.41
14886.32
1994/05/31 16163.12 15903.02
14636.23
1994/06/30 16035.68 15513.39
14432.79
1994/07/31 16536.44 16022.23
14961.03
1994/08/31 16661.63 16679.14
15082.21
1994/09/30 16216.62 16270.50
14760.96
1994/10/31 16205.14 16636.59
14890.86
1994/11/30 15688.69 16030.68
14402.44
1994/12/31 15789.09 16268.42
14510.46
1995/01/31 16284.76 16690.26
15317.24
1995/02/28 16514.46 17340.68
15424.46
1995/03/31 16601.04 17852.40
15336.54
1995/04/30 17101.14 18378.16
15689.28
1995/05/31 17491.47 19112.73
16097.20
1995/06/30 17605.03 19556.72
16415.92
1995/07/31 18122.47 20205.22
16857.51
1995/08/31 18516.70 20255.94
17351.44
1995/09/30 19372.60 21110.74
18500.10
1995/10/31 19459.64 21035.37
18681.40
1995/11/30 19957.02 21958.82
19056.90
1995/12/31 20624.24 22381.75
19920.18
1996/01/31 20943.30 23143.63
20346.15
1996/02/29 20394.51 23358.17
19828.14
1996/03/31 20233.96 23583.11
19554.71
1996/04/30 20868.70 23930.72
19710.54
1996/05/31 20829.84 24547.89
19838.60
1996/06/30 21313.54 24641.42
20251.16
1996/07/31 20373.81 23552.76
18482.63
1996/08/31 20674.00 24049.49
18478.75
1996/09/30 20907.27 25403.00
18631.77
1996/10/31 21709.38 26103.61
19043.79
1996/11/30 22866.51 28076.78
19884.33
1996/12/31 22983.32 27520.58
20186.85
1997/01/31 23608.54 29240.07
20572.42
1997/02/28 23676.49 29469.31
20899.52
1997/03/31 22683.20 28258.42
19685.26
1997/04/30 23263.40 29945.44
19925.42
1997/05/31 24479.06 31768.52
20955.56
1997/06/30 25071.71 33191.75
21624.04
1997/07/31 25864.33 35832.82
22086.80
1997/08/31 25155.15 33825.47
21492.66
1997/09/30 26940.80 35678.09
23175.54
1997/10/31 27010.77 34486.44
23724.80
1997/11/30 28942.11 36082.82
26149.47
1997/12/31 30245.00 36702.36
27577.23
1998/01/31 30493.67 37108.29
28029.50
1998/02/28 31628.25 39784.53
28511.61
1998/03/31 34072.77 41821.90
31111.87
1998/04/30 33392.90 42242.63
30026.06
1998/05/31 33282.22 41516.48
29695.78
1998/06/30 33804.79 43202.88
30616.34
1998/07/31 33884.18 42742.77
31044.97
1998/08/31 29978.13 36563.02
28964.96
1998/09/30 32809.53 38905.24
31861.46
1998/10/31 34148.70 42069.80
33225.13
1998/11/30 35280.61 44619.65
34248.46
1998/12/31 38876.06 47190.63
37952.77
1999/01/31 40435.80 49164.14
39874.44
1999/02/28 39781.72 47636.12
38624.37
1999/03/31 40267.04 49542.04
39380.60
1999/04/30 42869.51 51460.81
41923.52
1999/05/31 44010.32 50245.82
43539.34
1999/06/30 44849.29 53034.46
44716.86
1999/07/31 44581.37 51378.72
44046.55
1999/08/31 42187.98 51124.40
41062.84
1999/09/30 42615.96 49723.08
41863.24
1999/10/31 45745.54 52869.56
44530.97
1999/11/30 47086.79 53944.39
45172.44
1999/12/31 49274.43 57121.72
45109.38
2000/01/31 50058.38 54251.92
44349.74
IMATRL PRASUN SHR__CHT 20000131 20000211 090335 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Utilities Fund on January 31, 1990. As the chart
shows, by January 31, 2000, the value of the investment would have
grown to $50,058 - a 400.58% increase on the initial investment. For
comparison, look at how both the Standard & Poor's 500 Index and the
Russell 3000 Utilities Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 in the S&P 500
Index would have grown to $54,252 - a 442.52% increase. If $10,000 was
put in the Russell 3000 Utilities Index, it would have grown to
$44,350 - a 343.50% 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
Market followers know that every
year is interesting, but the 12 months
that ended January 31, 2000, were
more than interesting. They were
intriguing. Never has a particular
group of stocks led the market's
charge as technology stocks did
during this period. The
technology-oriented NASDAQ
Index returned a startling 57.68%
during this time, fueled mostly by
investors' insatiable appetites for
Internet and dot.com stocks. The
technology burst wasn't limited to
large-cap stocks, either, as scores of
small- and mid-sized tech companies
performed extraordinarily well. The
Russell 2000(Registered trademark) Index - a popular
performance benchmark for smaller
stocks - generated a 17.75% return
during the 12 months. In contrast, the
Standard & Poor's 500 Index, a
broad measure of U.S. stock
performance, returned 10.35%.
What made the tech rally intriguing
was that investors seemed to discard
the generally accepted notion that stock
prices reflect a company's earnings.
Many of these technology stocks rose
despite having no sound earnings
platform - of the 100 top-performing
stocks within the Russell 2000 at the
end of 1999, 43 of the companies
were actually losing money.
Meanwhile, the NASDAQ kept
climbing, crossing the 4000-point mark
between Christmas and New Year's.
Sensing that the Federal Reserve Board
would raise interest rates in early
February, tech stocks sold off
throughout January. Time will tell,
though, if it's only a temporary
obstacle.
(photograph of Peter Saperstone)
An interview with Peter Saperstone, Portfolio Manager of Fidelity
Utilities Fund
Q. HOW DID THE FUND PERFORM, PETER?
A. Both absolute and relative performance were strong. For the 12
months that ended January 31, 2000, the fund had a total return of
23.80%. By comparison, the Russell 3000 Utilities Index returned
11.22% during the same period, while the utility funds average
monitored by Lipper Inc. returned 17.11%.
Q. WHAT FACTORS ENABLED THE FUND TO OUT-
PERFORM THE INDEX AND THE PEER AVERAGE?
A. I overweighted telecommunications stocks and underweighted electric
utilities relative to the index. That strategy helped because the
telecommunications sector continued to experience strong growth, while
electric utilities suffered from weak performance due to higher
interest rates and fears of slowing earnings growth as a result of
deregulation. Within the telecommunications sector, the fund benefited
from a concentration on newer entrants and less emphasis on more
established companies. My rationale was that newer companies have more
to gain and less to lose from deregulation than established companies
like the regional Bell operating companies (RBOCs). Within the
electric utilities group, I stressed independent power producers
(IPPs) over traditional electric utilities. IPPs generally have much
stronger growth prospects than conventional electric utilities because
of their lower overhead and greater flexibility to choose projects
with high profit margins, and their performance helped the fund
substantially.
Q. WHAT WERE SOME EXAMPLES OF HIGH-GROWTH AREAS IN THE
TELECOMMUNICATIONS MARKETS?
A. One high-growth area for new entrants was the local telephone
service market, which until a few years ago was served exclusively by
the RBOCs. The new players on the block in that market are called
competitive local exchange carriers (CLECs). These companies have far
less overhead than the RBOCs, and they have taken away considerable
market share by offering extremely competitive service plans and
rates. Another area experiencing dramatic growth was the wireless
industry - I'll explain more about that in the callout box on page 8.
One indication that fledgling companies in these industries are for
real is that they have been able to attract top-flight senior
management - in many cases from the more established companies against
which they are competing.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. The two stocks that contributed most positively to performance were
IPPs - Calpine and AES. As investors became aware of the large number
of potentially profitable projects coming on line for these two
companies, the price-to-earnings ratios considered reasonable for
their stocks increased dramatically. In addition, AES was boosted by
its acquisition of New Energy Ventures, which investors felt would
enhance AES' competitive position. Three wireless stocks also made the
list of holdings that performed well - Vodafone AirTouch, Nextel and
Sprint PCS. All three benefited from rapidly growing demand as a
result of falling prices and new features such as Internet access and
voice activation. Finally, a CLEC - McLeodUSA - continued to gain
market share and expand its capacity to handle data traffic.
Q. WHAT STOCKS TURNED IN DISAPPOINTING PERFORMANCES?
A. SBC Communications exemplified the poorly performing RBOCs group.
Investors shunned the stock as they saw the company's market
increasingly penetrated by competitors. The stocks of established
long-distance companies AT&T and MCI WorldCom also hurt performance.
These two core holdings suffered from slowing growth and eroding
market share. Another lackluster performer, electric utility PG&E, was
representative of the twin problems facing many companies in that
industry during the period - slowing earnings growth and higher
interest rates.
Q. WHAT'S YOUR OUTLOOK, PETER?
A. The utilities market - especially the telecommunications industry -
should remain one of the premier growth areas of the economy for the
foreseeable future. Deregulation and technological innovation are
powerful forces benefiting telecommunications companies worldwide.
While there may be occasional periods in which values get ahead of
themselves, the utilities sector should continue to appreciate faster
than the overall market in the long run. I plan to continue my
strategy of emphasizing "attackers" over "defenders" for the reasons I
mentioned earlier. For now, rising interest rates offer another reason
to underweight the RBOCs and traditional electric utilities since
those stocks often follow bond prices lower in such an environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER 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: high total return
through a combination of
current income and capital
appreciation
FUND NUMBER: 311
TRADING SYMBOL: FIUIX
START DATE: November 27,
1987
SIZE: as of January 31,
2000, more than $2.9
billion
MANAGER: Peter Saperstone,
since 1998; manager, several
Fidelity Select Portfolios, 1996-
1998; joined Fidelity in 1995
PETER SAPERSTONE ON
GROWTH PROSPECTS FOR
THE WIRELESS INDUSTRY:
"Several factors are converging to
make wireless (cellular) stocks
particularly attractive to investors
at the moment. First, rapid
technological advances have made
wireless usage convenient and
affordable for the average
consumer, resulting in exploding
demand for wireless products and
services. It's now an everyday
occurrence to see someone using a
cell phone, but personal computers
are still far more prevalent than
cellular phones in the U.S., leaving
lots of room for the industry to
grow.
"Another reason to like the
industry is the appeal of using
wireless products to receive
Internet data traffic. Internet-ready
cellular phones - already being
marketed in Japan and some
other countries - are just being
introduced in the United States.
Initially, the applications will be
mostly text-based, such as receiving
stock quotes. However, in the next
few years we should see video and
multimedia applications for the
wireless Internet market.
"The fund has substantial
investments in wireless service
providers. While most of the fund's
holdings are U.S.-based, it
occasionally has wireless
investments in Latin America,
Asia and Europe."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JANUARY
31, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
MCI WorldCom, Inc. 8.7 13.4
SBC Communications, Inc. 6.8 5.4
AT&T Corp. 6.5 7.2
AES Corp. 5.4 4.5
Vodafone AirTouch PLC 5.3 5.2
sponsored ADR
Sprint Corp. - PCS Group 5.2 0.0
Series 1
MediaOne Group, Inc. 4.9 4.8
BellSouth Corp. 4.8 3.1
Nokia AB sponsored ADR 4.6 0.0
Nextel Communications, Inc. 4.5 0.4
Class A
56.7 44.0
TOP UTILITY INDUSTRIES AS OF
JANUARY 31, 2000
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
Telephone Services 40.3 48.8
Cellular 18.1 8.0
Electric Utility 14.9 18.9
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF JANUARY 31, 2000 * AS OF JULY 31, 1999 **
Stocks 97.7% Stocks 92.3%
Convertible Securities 0.3% Convertible Securities 0.3%
Short-Term Investments and Short-Term Investments and
Net Other Assets 2.0% Net Other Assets 7.4%
* FOREIGN INVESTMENTS 11.7% ** FOREIGN INVESTMENTS 7.2%
Row: 1, Col: 1, Value: 97.7 Row: 1, Col: 1, Value: 92.3
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.3 Row: 1, Col: 4, Value: 0.3
Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 2.0 Row: 1, Col: 8, Value: 7.4
</TABLE>
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS JANUARY 31, 2000
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 97.7%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 3.2%
Cordant Technologies, Inc. 978,500 $ 32,352
Howmet International, Inc. (a) 3,317,900 60,966
93,318
ENERGY - 1.1%
OIL & GAS - 1.1%
The Coastal Corp. 907,000 33,446
MEDIA & LEISURE - 6.8%
BROADCASTING - 6.8%
AT&T Corp. - Liberty Media 1,105,906 56,539
Group Class A (a)
MediaOne Group, Inc. (a) 1,849,300 147,019
203,558
RETAIL & WHOLESALE - 0.2%
RETAIL & WHOLESALE,
MISCELLANEOUS - 0.2%
Streamline.com, Inc. 750,000 6,000
TECHNOLOGY - 7.5%
COMMUNICATIONS EQUIPMENT - 4.6%
Nokia AB sponsored ADR 750,000 137,250
COMPUTER SERVICES & SOFTWARE
- - 1.7%
Covad Communications Group, 500,000 35,375
Inc.
Equant NV (Reg.) (a) 157,900 16,333
51,708
ELECTRONICS - 1.2%
Motorola, Inc. 250,000 34,188
TOTAL TECHNOLOGY 223,146
UTILITIES - 78.9%
CELLULAR - 18.1%
ALLTEL Corp. 877,700 58,586
Nextel Communications, Inc. 1,252,600 133,245
Class A (a)
SBA Communications Corp. 822,000 24,917
Class A
Sprint Corp. - PCS Group 1,397,600 153,823
Series 1 (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
CELLULAR - CONTINUED
Vodafone AirTouch PLC 2,839,500 $ 159,012
sponsored ADR
Western Wireless Corp. Class A 150,000 8,175
537,758
ELECTRIC UTILITY - 14.6%
AES Corp. (a) 2,000,000 160,250
Calpine Corp. (a) 1,746,800 127,735
Citizens Utilities Co. Class B 458,331 6,789
CMS Energy Corp. 1,100,000 33,000
DPL, Inc. 100,000 1,919
Entergy Corp. 800,000 19,950
Illinova Corp. 186,100 8,142
IPALCO Enterprises, Inc. 1,000,000 19,438
Niagara Mohawk Holdings, Inc. 2,375,400 29,841
(a)
Northeast Utilities 323,000 6,622
PG&E Corp. 5,900 129
Unicom Corp. 530,300 20,748
434,563
GAS - 5.9%
Columbia Energy Group 54,200 3,523
Consolidated Natural Gas Co. 82,800 5,506
Dynegy, Inc. 1,406,400 43,598
Enron Corp. 756,446 51,013
KeySpan Corp. 309,800 7,261
Kinder Morgan, Inc. 2,192,100 57,680
Williams Companies, Inc. 201,440 7,806
176,387
TELEPHONE SERVICES - 40.3%
Alaska Communication Systems 780,000 11,213
Group, Inc.
Allegiance Telecom, Inc. (a) 50,000 5,269
AT&T Corp. 3,653,280 192,711
BCE, Inc. 341,000 34,741
Bell Atlantic Corp. 695,700 43,090
BellSouth Corp. 3,038,800 143,014
CenturyTel, Inc. 868,300 33,212
GST Telecommunications, Inc. 250,000 2,172
(a)
GTE Corp. 340,300 24,948
Intermedia Communications, 750,000 32,250
Inc. (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
IXnet, Inc. 1,012,300 $ 36,949
MCI WorldCom, Inc. (a) 5,603,195 257,394
McLeodUSA, Inc. Class A (a) 1,158,600 79,654
NEXTLINK Communications, Inc. 50,000 4,219
Class A (a)
Primus Telecommunications 315,000 10,060
Group, Inc. (a)
Qwest Communications 588,950 23,190
International, Inc. (a)
SBC Communications, Inc. 4,656,134 200,796
TALK.com, Inc. (a) 1,852,700 30,222
TALK.com, Inc. rights 2/28/00 20,000 0
(a)
U.S. WEST, Inc. 50,000 3,325
WinStar Communications, Inc. 400,100 28,332
(a)
1,196,761
TOTAL UTILITIES 2,345,469
TOTAL COMMON STOCKS 2,904,937
(Cost $1,987,014)
CONVERTIBLE PREFERRED STOCKS
- - 0.3%
UTILITIES - 0.3%
ELECTRIC UTILITY - 0.3%
Citizens Utilities Trust 141,300 8,284
$2.50 EPPICS (Cost $7,065)
CASH EQUIVALENTS - 19.0%
SHARES VALUE (NOTE 1) (000S)
Central Cash Collateral Fund, 444,134,200 $ 444,134
5.56% (b)
Taxable Central Cash Fund, 121,830,605 121,831
5.45% (b)
TOTAL CASH EQUIVALENTS 565,965
(Cost $565,965)
TOTAL INVESTMENT PORTFOLIO - 3,479,186
117.0%
(Cost $2,560,044)
NET OTHER ASSETS - (17.0)% (506,261)
NET ASSETS - 100% $ 2,972,925
</TABLE>
SECURITY TYPE ABBREVIATIONS
EPPICS - Equity Providing
Preferred Income
Convertible Securities
LEGEND
(a) Non-income producing
(b) The rate quoted is the annualized seven-day yield of the fund at
period end.
Distribution of investments by country of issue, as a percentage of
net assets, is as follows:
United States of America 88.3%
United Kingdom 5.3
Finland 4.6
Canada 1.3
Others (individually less 0.5
than 1%)
100.0%
INCOME TAX INFORMATION
At January 31, 2000, the aggregate cost of investment securities for
income tax purposes was $2,563,631,000. Net unrealized appreciation
aggregated $915,555,000, of which $976,783,000 related to appreciated
investment securities and $61,228,000 related to depreciated
investment securities.
The fund hereby designates approximately $271,338,000 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 AMOUNT) JANUARY 31, 2000
ASSETS
Investment in securities, at $ 3,479,186
value (cost $2,560,044) -
See accompanying schedule
Receivable for investments 969
sold
Receivable for fund shares 6,081
sold
Dividends receivable 3,501
Interest receivable 470
Other receivables 114
TOTAL ASSETS 3,490,321
LIABILITIES
Payable to custodian bank $ 88
Payable for investments 63,536
purchased
Payable for fund shares 7,678
redeemed
Accrued management fee 1,384
Other payables and accrued 576
expenses
Collateral on securities 444,134
loaned, at value
TOTAL LIABILITIES 517,396
NET ASSETS $ 2,972,925
Net Assets consist of:
Paid in capital $ 1,922,823
Accumulated undistributed net 130,956
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 919,146
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 113,568 $ 2,972,925
shares outstanding
NET ASSET VALUE, offering $26.18
price and redemption price
per share ($2,972,925
(divided by) 113,568 shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED JANUARY 31, 2000
INVESTMENT INCOME $ 27,472
Dividends
Interest 7,851
Security lending 384
TOTAL INCOME 35,707
EXPENSES
Management fee Basic fee $ 12,278
Performance adjustment 2,538
Transfer agent fees 4,416
Accounting and security 754
lending fees
Non-interested trustees' 15
compensation
Custodian fees and expenses 60
Registration fees 229
Audit 45
Legal 9
Miscellaneous 35
Total expenses before 20,379
reductions
Expense reductions (277) 20,102
NET INVESTMENT INCOME 15,605
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 313,651
Foreign currency transactions (94) 313,557
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 222,634
Assets and liabilities in (232) 222,402
foreign currencies
NET GAIN (LOSS) 535,959
NET INCREASE (DECREASE) IN $ 551,564
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED JANUARY 31, 2000 YEAR ENDED JANUARY 31, 1999
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 15,605 $ 29,740
income
Net realized gain (loss) 313,557 247,638
Change in net unrealized 222,402 259,674
appreciation (depreciation)
NET INCREASE (DECREASE) IN 551,564 537,052
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (17,558) (29,380)
From net investment income
From net realized gain (306,125) (111,326)
TOTAL DISTRIBUTIONS (323,683) (140,706)
Share transactions Net 933,858 835,843
proceeds from sales of shares
Reinvestment of distributions 293,170 126,670
Cost of shares redeemed (727,037) (852,099)
NET INCREASE (DECREASE) IN 499,991 110,414
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 727,872 506,760
IN NET ASSETS
NET ASSETS
Beginning of period 2,245,053 1,738,293
End of period (including $ 2,972,925 $ 2,245,053
undistributed net investment
income of $0 and $2,051,
respectively)
OTHER INFORMATION
Shares
Sold 37,713 39,125
Issued in reinvestment of 12,247 5,990
distributions
Redeemed (29,509) (40,585)
Net increase (decrease) 20,451 4,530
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED JANUARY 31, 2000 1999 1998 1997 1996
SELECTED PER-SHARE DATA
Net asset value, beginning $ 24.11 $ 19.62 $ 17.37 $ 16.41 $ 13.47
of period
Income from Investment
Operations
Net investment income .15 B .35 B .43 B .48 B .54
Net realized and unrealized 5.15 5.78 4.46 1.50 3.22
gain (loss)
Total from investment 5.30 6.13 4.89 1.98 3.76
operations
Less Distributions
From net investment income (.18) (.35) (.44) (.48) (.54)
From net realized gain (3.05) (1.29) (2.20) (.54) (.28)
Total distributions (3.23) (1.64) (2.64) (1.02) (.82)
Net asset value, end of period $ 26.18 $ 24.11 $ 19.62 $ 17.37 $ 16.41
TOTAL RETURN A 23.80% 32.60% 29.16% 12.73% 28.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,973 $ 2,245 $ 1,738 $ 1,280 $ 1,546
(in millions)
Ratio of expenses to average .80% .85% .87% .84% .80%
net assets
Ratio of expenses to average .79% C .83% C .85% C .81% C .77% C
net assets after expense
reductions
Ratio of net investment .61% 1.63% 2.34% 2.96% 3.69%
income to average net assets
Portfolio turnover rate 50% 55% 57% 56% 98%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 2000
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Utilities Fund (the fund) is a fund of Fidelity Devonshire
Trust (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of
1940, as amended, 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. Foreign securities are valued based
on quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of the business of the fund, are expected
to materially affect the value of those securities, then they are
valued at their fair value taking this trading or these events into
account. Fair value is determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. 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. 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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES - CONTINUED
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.
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.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
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.
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
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
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, Federal Agency,
and other obligations found satisfactory by FMR 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.
CENTRAL CASH FUNDS. Pursuant to an Exemptive Order issued by the SEC,
the fund may invest in the Taxable Central Cash Fund and the Central
Cash Collateral Fund (the Cash Funds) managed by Fidelity Investments
Money Management, Inc., an affiliate of FMR. The Cash Funds are
open-end money market funds available only to investment companies and
other accounts managed by FMR and its affiliates. The Cash Funds seek
preservation of capital, liquidity, and current income. Income
distributions from the Cash Funds are declared daily and paid monthly
from net interest income. Income distributions earned by the fund are
recorded as either interest income or security lending income in the
accompanying financial statements.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,646,732,000 and $1,205,478,000, 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 .2167% to
.5200% for the period. The annual individual fund fee rate is .20%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
to a performance adjustment (up to a maximum of (plus/minus).15% of
the fund's average net assets over the performance period) based on
the fund's investment performance as compared to the appropriate index
over a specified period of time. For the period, the management fee
was equivalent to an annual rate of .58% 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 .17% of average net assets.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $29,000 for the
period.
5. SECURITY LENDING.
The fund lends portfolio securities from time to time in order to earn
additional income. The fund receives collateral in the form of U.S.
Treasury obligations, letters of credit, and/or cash against the
loaned securities, and maintains collateral in an amount not less than
100% of the market value of the loaned securities during the period of
the loan. The market value of the loaned securities is determined at
the close of business of the fund and any additional required
collateral is delivered to the fund on the next business day. If the
borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the fund could experience
delays and costs in recovering the securities loaned or in gaining
access to the collateral. At period end, the value of the securities
loaned amounted to $445,744,000. The fund received cash collateral of
$444,134,000 which was invested in cash equivalents.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $241,000 under this arrangement.
In addition, through arrangements with the fund's custodian and
transfer agent, 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 $4,000 and $32,000, respectively, under these arrangements.
7. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF TRANSACTIONS WITH
AFFILIATED COMPANIES
AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
TALK.com, Inc. $ - $ - $ - $ -
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Fidelity Utilities 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 Utilities Fund (a fund of Fidelity Devonshire Trust) at
January 31, 2000, and the results of its operations, the changes in
its net assets and the financial highlights for the periods indicated,
in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Utilities 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 auditing standards generally accepted in
the United States 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 January 31, 2000 by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 10, 2000
DISTRIBUTIONS
The Board of Trustees of Fidelity Utilities Fund voted to pay on March
6, 2000, to shareholders of record at the opening of business on March
3, 2000, a distribution of $.90 per share derived from capital gains
realized from sales of portfolio securities and a dividend of $.02 per
share from net investment income.
A total of 32% 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 2001 of amounts for use
in preparing 2000 income tax returns.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE (FASTSM)
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0To speak to a Fidelity representative.
BY PC
Fidelity's web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-0240 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5587
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5587
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity Investments
Japan, Ltd.
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Robert A. Lawrence, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Maria F. Dwyer, Deputy Treasurer
John H. Costello, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
Donald J. Kirk *
Ned C. Lautenbach *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
UIF-ANN-0300 95627
1.700458.102
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity (registered trademark) Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II Portfolio
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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)
Fidelity Automated Service
Telephone (FAST) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
